Editorial | Corporate quotas

Editorial | Corporate quotas

The same people who have failed so miserably in running Illinois have decided to expand their management horizons.

The ability to exercise great power is a heady business easily subject to gross abuse, particularly when the only restraint that can be imposed is self-restraint.

Perhaps that's why the General Assembly has decided that it's time for it to decide the demographics of individuals — meaning race and sex — who serve on the boards of private corporations that are not only headquartered in Illinois but are incorporated in Illinois while headquartered elsewhere.

Earlier this year, the House passed legislation that mandates corporate boards have at least one black person and one female.

The proposal is patterned after similar legislation passed in California. Former Gov. Jerry Brown signed the first-in-the-nation measure ordering all California companies to have at least one female board member by the end of 2019.

The Illinois bill has moved from the House to the Senate, where the quota mandate has been expanded to include a Latino representative. In an accommodation to the business world, the Legislature has approved the infamous "two-fer," meaning that one appointee can fill two categories.

That expansion raises a question — what about appointing Chinese, Japanese, Indians and Pakistanis?

After all, the United States is a polyglot of ethnic groups, why should just a favored few benefit from the quota mandate?

The better question, however, is — aside from the fact that many legislators don't know any better — why should the state intrude on decisions by private businesses as to who serves on their board of directors?

There are obvious legal issues that surround this impending mandate.

Does state government have the legal authority to dictate personnel choices to private entities? If it does, how far does it extend?

Can the Legislature set quotas for upper-management positions like chief executive officer, chief finance officer, chief legal counsel and so forth.

If only one state can exercise regulatory authority over a private company, as is the case, why is Illinois trying to expand its regulatory reach to businesses headquartered in one state and incorporated in another.

Finally, if legislators take it upon themselves to decide which groups must be represented on a corporate board, can they do the opposite — decide which groups must not be represented on a corporate board?

Frankly, the state of Illinois is such a mess and so poorly run that it's amazing legislators would take it upon themselves to make governance decisions for the private sector.

But this has more to do with identity politics than public policy. It's a blatant appeal to members of specific groups that is designed to generate votes.

Proponents of this approach, doubtless, will make considerable political hay with these particularized appeals. But from a policy standpoint, it's a mistake. Private businesses are entitled to make their own choices about how they're run and who runs them.

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