Opinion and Economic Analysis

HICKS: Penn State abuse case offers lessons for us all

November 19, 2011

The cascading revelations about Pennsylvania State University’s storied football program surely will continue to repulse and sadden us. But within the horror of the events are many lessons, economic and otherwise.

First, the issue is not about football. While the moral failures that accompanied the sexual abuse cover-up were predicated by a desire to protect Penn State’s reputation, it was not the cause. Anger over the notion that football is important enough to warrant hiding child rape begs a question: Just what is? This cover-up isn’t the failure of an idea, but of men. Therein lie the lessons.

What’s clear from grand jury testimony is that the critical moral failure was that of a then-28-year-old graduate student at Penn State who allegedly caught a rapist in the act. Perhaps shock prevented him from stomping the perpetrator into unconsciousness? Whatever the reason, his failures afterward clearly mark him a coward.

The personal failings of this man were magnified by others in an organization whose renown was largely built on integrity—and courage. Their actions were quite the opposite, though, combining cowardice and incompetence into a strong brew of personal and organizational failure.

Organizations today, whether they be universities, churches, schools, businesses or not-for-profits, exist in an environment where potential mistakes of a very few have huge consequences. Rightly or wrongly, Penn State will suffer enormously from these crimes and subsequent errors.

Lawsuits in the hundreds of millions of dollars are inevitable, sponsorships and donations will plummet, enrollment will suffer, and Penn State’s bond ratings will be downgraded. Perhaps the bond ratings don’t matter, however, since it likely will be a generation before the school undertakes an expansion. But Penn State athletics will never be the same again.

That is the nature of our legal system, and the risks to illegal behavior and incompetence that organizations face. We live in a world that demands high-stakes leadership, and Penn State is a prime example of its failure.

This high-stakes leadership has another consequence: huge pay differentials. In organizations where no one person holds sway over the entirety of the group’s future, we should expect fairly equal salaries. Like it or not, in a world where a few leaders are the difference between supreme glory and abject humiliation, we must expect similarly large gaps in compensation.

While the full suite of issues with the legal system, the media and executive compensation are too much for this column, it is we who have created this high-stakes world with our legal system and immediate connection to the news media.

There’s another lesson as well: The men involved in the cover-up all have been described as “good men” and Penn State as an example of virtue. If this is true, it demands that we redefine the terms.

Virtue cannot mean living on reputation, but continuously fighting ineptitude and pursuing excellence.

Goodness in men cannot be merely the passive avoidance of evil. True goodness requires we actively oppose it.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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