Independence

Independence is a very important concept here in the U.S. In fact, I would go as far as to say it is the concept that made America great.

Now, I’m not actually talking about the independence that we celebrate on the fourth of July, though that is important, too. I’m talking about the independence of the checks from the balances.

I’ll get back to that, but let me start a little smaller. Have you ever gone to a used car dealership and had the salesman tell you how great a car was? Do you just believe them, or do you take it to a repair shop to get it checked out? Obviously, the salesman has a conflict of interest between selling the car and telling any defects.

I don’t know how many of you deal with the issue of independence in your career fields, but as an auditor, it is vitally important. As an auditor, I am required to be independent of the companies that I audit. This means that I can’t have any business dealings with the company outside the normal course of business, and I can’t have family members who are in any sort of decision-making positions within the company.

For example, let’s say I audit a shoe store. I can buy shoes from that store at the regular price, but I can’t be given shoes as a gift from the owner, or own stock in the company, or be in any position to effect management decisions. I also can’t have a family member who works there as the store manager or the CFO or anything like that. Basically, I cannot have or do anything that would cause someone else to think I am biased in any way toward the company.

I was appalled to hear recently that elected judges do not have the same restrictions as auditors. There was a case heard before the Supreme Court this last week that highlights the importance of independence. The facts were these, as far as I remember them: a small company sued a large company for something (okay, so I don’t remember all the details, but it’s not really relevant). The small company was awarded around $50 million in damages. It went to appeal, of course. However, between the time that the original judgment was passed and the appeal was heard, the appellate judge ran for reelection. The larger company donated around $3 million to his reelection campaign, and – surprise, surprise – he overturned the $50 million judgment against that large company. Anyone else see a conflict of interest here? It was appealed to the Supreme Court, and luckily a slim majority of them saw the damage that could be done if this was allowed to stand and ruled that the judge could not here the case. It baffles me that a judge would not have to be independent of the parties in something like that.

There are many other professions where this isn’t required, but the consumer uses the same general principle. Second opinions on medical diagnoses, for example. But perhaps one of the most important is the established government.

The constitution set up three sections of the government, as you all know. These three sections, Executive, Legislative, and Judicial are set us as a set of checks and balances, with each section intended to be independent of the others, and this is what has allowed our government to be so successful. Yes, it can be argued that a monarchy could be more efficient, (in fact, the book I am reading about Martin Luther said that the peasants in most cases were better off in a feudal system because they had direct access to the person in charge – the duke or whatever), but if you get a corrupt person in charge of that type of government there are too many chances for them to mess everything up.