The Wall Street Journal - 26.11.2019

A14| Tuesday, November 26, 2019 THE WALL STREET JOURNAL.

Proxy Advisers Should Serve the Stockholders

Carl Icahn is an activist investor

with a penchant for confronting in-

competent, misguided or complacent

corporate management, but he is

wrong to oppose the Securities and

Exchange Commission’s proposed

new rules for proxy advisory firms

(“Let Proxy Advisers Do Their Work,”

op-ed, Nov. 19).

Investment managers are fiducia-

ries and therefore can be held liable

for decisions that aren’t prudent or

not in the best interests of their cli-

ents. Importantly, their clients are

owners of stock (including shares

held in mutual funds), not other

stakeholders. A clear legal obligation

to first represent the interests of

stockholders would help keep the

proxy advisory firms’ focus where it

belongs. Proxy advisers can still do

their work, but they’ll need to do it

better.

PAULBRYAN

Tarpon Springs, Fla.

Regarding your editorial “The

Proxy Protection Racket” (Nov. 11):

The duopoly of Institutional Share-

holder Services (ISS) and Glass Lewis,

two proxy advisory firms that control

97% of the market, is a desirable one

for social activists who normally de-

cry such concentration of market

power. Public- and private-union pen-

sion plans and investors buying or

selling products with environmental,

social and governance (ESG) goals are

happy with the proxy advisory status

quo and don’t want their silent part-

ners (ISS and Glass Lewis) subject to

the proposed SEC regulations.

ISS and Glass Lewis have a pretty

sweet gig using their proxy advisory

power to nudge companies toward so-

cially conscious policies and at the

same time selling research reports

that provide support for ESG invest-

ment products to the firms and funds

that are their proxy advisory clients.

For many years, the proxy duopoly

operated under the radar, but influ-

ence has skyrocketed as ESG invest-

ing has taken off and index funds

gained in popularity. The goal in in-

dex-fund management is to cut ex-

penses to the bone to attract more

assets. More often than not, large in-

dex-fund managers vote proxies with

the crowd, and the crowd is guided

by ISS and Glass Lewis.

Under current SEC regulations, it

is a free lunch for proxy advisory

firms to tilt recommendations of sup-

port toward proposals favored by so-

cial activists and unions. It also is a

free lunch for ESG investment firms

to use proxy advisory firms as a buf-

fer on contentious votes. With assets

pouring into index funds, where proxy

voting is more of an administrative

nuisance than an opportunity for sub-

stantial value added versus peers (a

reality that no fund manager would

ever admit), giving proxy advisory

firms a free pass on legal liability

along with an outsize influence over

governance matters could be costly to

shareholders and, over the long term,

detrimental to capital allocation.

JOHNGREER

Jacksonville, Fla.

LETTERS TO THE EDITOR

Letters intended for publication should

be addressed to: The Editor, 1211 Avenue

of the Americas, New York, NY 10036,

or emailed to [email protected]. Please

include your city and state. All letters

are subject to editing, and unpublished

letters can be neither acknowledged nor

returned.

“I cancelled the cable, turned off the

phone, shut down the internet...

where am I?”

THE WALL STREET JOURNAL

It Isn’t Racist to Honor the Military’s Dead

Regarding Elliot Kaufman’s “Politi-

cal Correctness Claims a Tough Guy”

(op-ed, Nov. 13): The firing of Cana-

dian hockey commentator Don Cherry

for his “discriminatory” and “offen-

sive” comments is a another example

of what’s wrong with our Western so-

ciety. Patriotism no longer counts. He

was suggesting immigrants should

respect and honor the men and

women who serve and those who

died for the country in which they

now live. Don’t so many people immi-

grate to have this freedom? Suggest-

ing they buy and wear poppies is in-

nocent and shows honor to the

veterans who sacrificed for the free-

dom today’s immigrants enjoy.

Anyone who knows or ever worked

with Mr. Cherry knows how much he

loves the men and women in uniform,

veterans and those who died in the Ca-

nadian and the U.S. military. For years

any time a Canadian died in service, he

would take the last 30 seconds of his

hugely popular Coach’s Corner and

honor them and their family in what

was always a moving and emotional

tribute. Love of one’s freedom is an-

other casualty in identity politics.

JOHNBONEMA

Bloomfield Hills, Mich.

I would say that all those dancing on

Mr. Cherry’s grave are more invested in

getting rid of an old guy who doesn’t

follow their trends than in easing some

hypothetical immigrant’s hurt feelings.

NANCYBARNARD

Golden, Colo.

Look Out Below for Falling School Standards

Regarding C.J. Szafir and Cori Pe-

tersen’s “Beware Warren’s ‘Madiso-

nian’ Plan for Public Education”

(Cross Country, Nov. 16): Sen. Eliza-

beth Warren’s plan for K-12 educa-

tion, if she wins the White House, is

to “increase federal funding for public

schools by $800 billion...strengthen

teachers unions, and halt the growth

of public charter schools.” Madison’s

spending per student is the highest

relative to comparably sized districts

in Wisconsin, but the city has one of

the worst black-white achievement

gaps in the state and perhaps the

country. Black students in Madison

also are far more likely than whites to

attend dangerous schools.

The test scores that reveal Madi-

son’s poor results and racial achieve-

ment gap come from the National As-

sessment of Educational Progress, a

congressionally mandated program.

The NAEP was created in the 1960s

when a Democrat was president and

Democrats controlled Congress. If

Sen. Warren is the next president and

Democrats win the House and Senate,

NAEP’s mission, practices and stan-

dards could be updated to align with

21st-century progressivism. Standard-

ized tests that are unwelcome in col-

lege admissions could be deemed un-

acceptable measures of K-12 perfor-

mance. Discard or discredit test

scores and, voilà, no racial achieve-

ment gap and no problem for Sen.

Warren’s bringing the Madison model

to the nation. Students unmeasured in

K-12 and unmeasured in college ad-

missions finally will have a level play-

ing field, regardless of how poor their

education, and teachers unions will

realize an obscene return on their in-

vestment in their Democratic patron

saints.

ANDERSSMITH

Durham, N.C.

For Millennia, Philosophy

Underperformed Physics

Nicholas Stang’s review of A.C.

Grayling’s “The History of Philoso-

phy” (Books, Nov. 16) is one more

example of navel gazing, orompha-

loskepsis, by a philosopher. A history

of philosophy records the ideas of

Thales, Socrates, Hegel and others,

but so does a textbook of philoso-

phy. In contrast, a textbook of phys-

ics is different from a history of

physics because physics has ad-

vanced from Aristotle to Galileo to

Newton to Einstein and on. Current

knowledge in physics is quite differ-

ent from previous knowledge. But a

textbook of philosophy is written as

a history of philosophy because

knowledge in philosophy hasn’t pro-

gressed: The original questions ha-

ven’t been answered.

ANTHONYWOODWARD

Portland, Ore.

Pepper ...

And Salt

Hurting People You Help,

But for Their Own Good

While I agree with Fred Hatfield

(“Sanders’s Tax Would Hit Small In-

vestors,” op-ed, Nov. 18) about the

negatives of Bernie Sanders’s finan-

cial transaction tax, why stop there

with the critique of Democratic Party

economic proposals? Concerns that

Democratic proposals would impair

economic growth and hurt the middle

class surely must apply to other ele-

ments of the emerging Democratic

wish list as well, including the Green

New Deal, Medicare for All, etc. In my

view, virtually the entire menu of

Democratic economic proposals is an-

tigrowth, and the financial transac-

tion tax seems to be relatively small

potatoes compared with some of the

other ideas being discussed.

DANAR.HERMANSON

Marietta, Ga.

Trump and the SEALs

P

resident Trump has done much to lift
military morale with his rhetorical and
financial support after the Obama years
of indifference. So it’s trou-
bling to see the Commander in
Chief get crosswise with the
officer corps over what the
military calls “good order and
discipline.”
That tension has come to a
head in the case of Chief Petty Officer Edward
Gallagher. He’s the Navy SEAL who was court-
martialed but acquitted of all charges except for
posing for a photograph with a dead enemy cap-
tive. Mr. Trump intervened to restore his rank,
but SEAL commanders and senior civilians and
military officers in the chain of command
wanted to empanel a review board to consider
his continuing as a SEAL.
Mr. Trump intervened again to ensure that
Chief Gallagher wouldn’t lose his trident as a
SEAL. Navy Secretary Richard Spencer dis-
agreed with the President, and Mr. Spencer was
dismissed on the weekend by Defense Secretary
Mark Esper for going to the White House to ne-
gotiate a compromise without Mr. Esper’s
knowledge. Mr. Spencer says he resigned as a
matter of principle.
It’s hard to sort the truth from fiction given
the tendentious media coverage, but we’ll give
it a try. Mr. Trump has the clear authority to act
as he did, and he isn’t the first Commander in
Chief to intervene in military discipline. Jimmy
Carter pardoned thousands who dodged the
draft in the Vietnam War. Mr. Esper was also
right, even obliged, to fire Mr. Spencer if the
Navy Secretary went behind his back.
The question is whether Mr. Trump was wise
to intervene and what unintentional damage he
might be doing to discipline in the war-fighting
ranks. Chief Gallagher seems to have been
brought to Mr. Trump’s attention after he be-
came a cause célèbre on TV. “We train our boys
to be killing machines, then prosecute them
when they kill!,” Mr. Trump put it in an October
12 tweet.
This is wrong. The military doesn’t train
young men and women to be killing machines.
The services train them to be soldiers with
judgment who will kill when needed but within
the laws of war. Mr. Trump has loosened the
rules of military engagement in some theaters,
which has made sense. But that doesn’t mean
killing unarmed combatants and civilians or
abusing captives. This is a key difference be-

tween American soldiers and the unlawful en-

emy combatants in Islamic State.

The military’s disciplinary process is also

multilayered and fair. Typi-

cally allegations arise from a

soldier’s fellow troops,

which is what happened in

the case of Chief Gallagher.

The facts are then reviewed

by the immediate command-

ing officer, who may recommend review by

officers independent of the immediate chain

of command.

Those officers may then make a recommen-

dation to a senior admiral or general, who will

decide whether to call for a court-martial. The

jury typically includes combat veterans who can

examine the facts with first-hand experience of

the pressures of battle. If the accused is found

guilty, the punishment may also take into ac-

count his previous service record and other mit-

igating circumstances. As former Army General

Jack Keane puts it, if you have to be accused of

something, better in the military justice system

than in civilian courts.

In Chief Gallagher’s case, the first prosecutor

seems to have been biased and the presiding

judge dismissed him. He was also detained with

some hard military prisoners until Mr. Trump

intervened to have him moved. In the end the

Chief received a fair military trial.

iii

The concern among senior naval officers is

that Chief Gallagher’s behavior is symptomatic

of a larger cultural problem of ill-discipline that

they say has developed in some SEAL units.

This includes episodes of substance abuse, sex-

ual harassment or assault, mistreating detain-

ees and generally bending the rules.

Our sources say military leaders want to

clean this up, and they are worried about a mes-

sage of tolerance for misbehavior that Mr.

Trump’s intervention into Chief Gallagher’s

case might send. This is the reason those offi-

cers, backed by Mr. Esper and Secretary Spen-

cer, wanted a review board to consider Chief

Gallagher’s standing as a SEAL.

A generation of officers had to rebuild the

war-fighting culture after Vietnam, which they

did with great success, and the military is a rare

institution that Americans say they still trust.

As Commander in Chief, Mr. Trump will under-

mine the officers under his command if he runs

roughshod over their effort to maintain good

order and discipline.

Senior officers worry

about tolerance for a

culture of ill-discipline.

Thanksgiving at the Supreme Court

T

he Supreme Court didn’t issue a land-
mark decision Monday, but it did shoot
off a couple of flares. Notably, the
Court rebuked the Ninth Cir-
cuit Court of Appeals for
again flouting its precedents
while Justice Brett Ka-
vanaugh put a stake down on
the Constitution’s non-dele-
gation doctrine.
The Court unanimously vacated a Ninth Cir-
cuit decision inThompson v. Hebdonthat up-
held Alaska’s $500 annual limit for individual
contributions to political candidates and groups.
Lower court judges had willfully ignored the
High Court’sRandall(2006) decision invalidat-
ing similar contribution limits in Vermont.
As Justice Stephen Breyer wrote in the
Randallplurality opinion, “contribution limits
that are too low can...harm the electoral
process by preventing challengers from
mounting effective campaigns against incum-
bent officeholders, thereby reducing demo-
cratic accountability.”
The High Court is policing its precedents, but
the folly of contribution limits has been under-
scored by the Democratic presidential race as
non-rich candidates spend half their time
pleading with small donors. Meantime, Michael
Bloomberg can spend hundreds of millions of
dollars of his personal wealth.
Eugene McCarthy mounted a competitive
campaign in 1968 backed by antiwar million-
aires. Perhaps lesser-known Democrats like
John Hickenlooper or Amy Klobuchar could
have gained more traction if they could raise

unlimited funds from wealthy supporters.

On Monday the Court also declined to reliti-

gate its 5-3Gundydecision last term (Justice Ka-

vanaugh wasn’t yet seated) by

declining to hearPaul v. U.S.

Both cases challenged the Sex

Offender Registration and No-

tification Act’s delegation of

authority to the Attorney Gen-

eral. Justice Samuel Alito, a

hawk on criminal enforcement, joined the four

liberals in the majority.

Readers may recall Justice Neil Gorsuch’s ex-

cellent dissent explaining why it is unconstitu-

tional for Congress to delegate power to other

branches to decide major political and economic

questions. “If a majority of this Court were will-

ing to reconsider the approach we have taken for

the past 84 years,” Justice Alito noted in his con-

currence, “I would support that effort.”

The news Monday is that Justice Kavanaugh

wrote separately in thePauldenial of certiorari

to announce his support for considering an-

other non-delegation challenge. “Justice Gor-

such’s scholarly analysis of the Constitution’s

nondelegation doctrine in hisGundydissent

may warrant further consideration in future

cases,” Justice Kavanaugh declared.

So there are now five Justices for reviewing

broad Congressional delegations to administra-

tive agencies. And there are no shortage of po-

tential challenges—for instance, the EPA’s au-

thority to establish fuel-economy mandates. Or

how about the Financial Stability Oversight

Council’s power to say what is a too-big-to-fail

institution? This could be fun.

Two notable opinions

on speech and the non-

delegation doctrine.

Bloomberg No News

M

ike Bloomberg joined the Democratic
race for President on Sunday, creating
a conundrum for his journalists at
Bloomberg LP. Do they quit
covering 2020? Do they stand
on the principle of editorial in-
dependence, while promising
to treat their billionaire pro-
prietor like any other Joe, Pete
or Elizabeth?
Neither, per a memo Sunday from John Mick-
lethwait, Bloomberg’s editor in chief. “We will
write about virtually all aspects of this presi-
dential contest,” he said, adding that a
Bloomberg reporter has already been assigned
to Mr. Bloomberg’s campaign. But “we will con-
tinue our tradition of not investigating Mike
(and his family and foundation) and we will ex-
tend the same policy to his rivals in the Demo-
cratic primaries.”
That same courtesy won’t be given to Presi-
dent Trump, at least for now. Bloomberg’s re-
porters will “continue to investigate the Trump
administration, as the government of the day.”
This question will be reassessed, the memo said,
if Mr. Bloomberg eventually wins the Democratic
Party’s nomination.

What an awkward kludge. Start with the ban

on investigating Democrats, but not Mr. Trump.

There’s a name for folks who dig through only one

political party’s trash: opposi-

tion researchers. Bloomberg LP

has about 2,700 journalists and

analysts, according to the Jour-

nal’s news story.

Now Bloomberg is telling

readers that its investigative

reporters will sit on their hands for 2020 Demo-

crats: No digging into Joe Biden’s conflict of in-

terest in Ukraine, or Elizabeth Warren’s bio-

graphical fibs, or Pete Buttigieg’s record as

mayor of South Bend.

Yet the GOP President, Mr. Micklethwait said,

is fair game for muckraking. So if an anonymous

source mails Bloomberg a copy of Mr. Trump’s

tax returns, they’ll happily write that up? Rather

than debate “what ifs,” the memo suggests let-

ting Bloomberg’s coverage “speak for itself.”

It hardly matters that Mr. Bloomberg may not

win the Democratic nomination. His campaign is

premised on the idea that, as his launch video

says, Mr. Trump is a “menace.” If Bloomberg can’t

pledge to cover both parties equally, it would be

better not to cover the election at all.

His reporters won’t

investigate Democrats—

but Trump is fair game.

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