Politics of the Day
Hey, look, it's someone who has no idea what they're talking about:
"...Wait a minute! It's illegal in California to give "preferential treatment to friends of top management"? ... Obvious points: a) It's rational for efficient managers to promote their friends, whom they probably trust more (and who may owe them a greater loyalty) than other employees; b) Business--indeed, virtually all organized human activity--might not grind to a halt if this rule were imposed, but it would grind to a half-halt."
1) In no sense is this rational. In fact, cronyism and nepotism are what we might call completely irrational. It should be patently obvious why - even if we say trust is worth something, it should always be worth less than ability, because we have mechanisms to ensure trust, but NOT to ensure ability. The only way this argument works is if you first admit that our trust-making mechanisms (contracts, the SEC, Friendster) don't work - which defeats the whole point of the argument in the first place.
2) Human activity wouldn't 'grind to a half-halt' - in fact, it would become much more efficient. All the evidence in the known universe suggests that the vast majority of us would be immensely better off without nepotism and cronyism. You may want to consider moving to Zimbabwe - I hear Mugabe's a fan of theories like this.
Dear Mickey, I suggest you read a nice book called Saving Capitalism From the Capitalists, which is written, paradoxically, by two of world's top finance profs.