Column: Good Governance


By Dan FitzPatrick

recently attended a wealth industry conference on family governance. While most of us are generally familiar with governance in a corporate or organizational setting, family governance is an entirely different kettle of fish.

The wealth industry is just now coming to the realization that the so-called “softer” issues (as opposed to the “harder” or more technical issues such as taxes, finances, investment management and estate structuring which family advisors traditionally focus on) play a much larger role in determining whether families of wealth will escape or succumb to the historic fate of “shirtsleeves to shirtsleeves in three generations.”

One of the more interesting insights shared at the conference was the critical interplay of Roles and Rules in interpersonal dynamics.

The Families & Wealth, LLC, Roles and Rules is a model of human development and interaction, originated by Richard Goldwater, MD. It maintains that:

• We form our identities in the roles into which we are born, such as brother, sister, oldest, youngest, American, Norwegian, and so on, and in the roles we choose, such as spouse, parent, teacher, artist, engineer, or entrepreneur. Roles are hierarchical in nature, and they confer social rank and responsibility.

• We interact according to rules that, by agreement, guide and govern our behavior. For example, all autos in traffic travel according to the same rules of the road. In a democracy, laws apply equally to us as citizens. Rules thus have an equalizing effect among people and enable them to participate in social structures that are governed by rules.

When roles are intact, understood and accepted, organizations and families can operate successfully by simply respecting the rules. However, the actual or substantive absence of a role (e.g., death or incapacity of family matriarch/patriarch or company CEO) predictably creates a governance crisis which rules alone are inadequate to resolve. Most corporate and other entities have succession plans (rules) which can help quickly resolve the crisis; most families do not.

A sadly instructive case in point is the Box family of Texas.

Cloyce Box was born in poverty, served in the Marine Corps in WWII (attaining the rank of Captain) and during the Korean War, played professional football for the Detroit Lions, graduated law school, joined and eventually served as chairman of the George A. Fuller Company, and made a fortune in the cement and energy business as president and chairman of Box Energy Corporation. His home and ranch in Frisco, Texas was used as the original Southfork Ranch for the TV series Dallas. Handsome, charismatic, successful, philanthropic — he was larger than life, the “Patriarch from Central Casting.”

When Cloyce died, his family was not prepared to fill his shoes. As Cloyce’s youngest son, Doug, puts it, “We knew all about corporate governance but nothing about family governance.” Doug was keynote speaker at our conference. His book Texas Patriarch: A Legacy Lost describes in honest, unsparing detail specific actions on the part of each family member which contributed to that failure to navigate the transition. He now has made it his mission to share the lessons he learned with other families.

It occurred to me that this roles/rules construct can offer some insight to the current state of our government.

Our Constitution sets out the roles and rules with respect to each branch of the federal government. All legislative powers are granted to Congress (Article I). Executive power (including the responsibility to faithfully execute the law) is vested in the President (Article II). The judicial power (including the interpretation of laws and adjudication of cases and controversies) is vested in the Supreme Court (Article III).

The role of each branch is equal in rank and authority, though not in scope. Each branch is expected to play its role and defend its authority; this dynamic provides the checks and balances critical to preservation of our personal liberties.

But over the years the branches have at times exceeded their roles and/or abdicated their responsibilities.

Congress has gradually ceded legislative authority to the Executive branch by allowing the expansion of administrative rulemaking by regulatory agencies. Some Presidents have refused to enforce validly existing laws, and recent revelations of actions by Executive branch agencies (Justice Department, FBI) raise serious about abuse of the very laws (rules) meant to protect personal liberties. The Judicial branch, charged with the task of officially interpreting the law, has at times strayed into the realm of lawmaking itself (i.e., creating new rules). In my opinion, this blurring of lines regarding roles and authority is a major cause of our current governmental dysfunctionality.

I consider Congress to be the main, but not sole, culprit. Congress has the power to legislate, the power of the purse, the power to declare war, the power of consent to appointments and treaties, the power of oversight, the power to impeach. But in recent years Congress has been unserious in fulfilling its Role.

The budgetary process is broken: operating the world’s most influential government by Continuing Resolutions is a disgrace. Legislators often don’t know the details of laws they vote on, leaving much of the drafting to unelected staff and special interest groups. Presidents have reached international agreements that were in substance treaties which should have been vetted by Congress, but Congress failed to object (i.e., insist on the following of Rules), and rather than provide constructive input into Presidential decision, Congress has “weaponized” the appointment process for purely political (and seemingly personal) purposes.

Congressional committees now spend significantly more time and resources on investigations than on legislating and problem solving. This will likely increase and coalesce around a quixotic attempt to impeach the current President for reasons that fall short of the standard (rule) of “high crimes and misdemeanors.” The spectacle that is our current government modus operandi unnerves our allies and gives encouragement to our enemies. It has to stop.

If we are to break out of the current crisis, we the people must insist that our elected and appointed officials return to, and fulfill, their original roles. And to realize that the drafters of our Constitution understood that the intensely competitive and contentious arrangement they created required cooperation and compromise in order to work.

We cannot allow entrenched interests and personal ambition to take precedence over the common good. Perhaps a new rule is necessary — Congressional term limits anyone?

Wealthy families are fortunate in having access to professionals who can help them navigate the governance challenge. Who do we look to help solve our governmental challenges?

Governments exists for the people; they work for us. We have the opportunity to have our voices heard in many ways, most powerfully at the ballot box. We have the ultimate power and authority (role) to determine the future state of our union.

We collectively have the power to turn the current situation around — if we only have the will to exercise our role in this grand American experiment.

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