The Boom Starts With A Rush

Overturned Eagle Mine TruckThe news that an ore truck overturned last week on its way from Eagle Mine to Humboldt Mill brought me back to a conversation some friends and I had in the lobby of the Landmark Inn this past October. Earlier that day we’d been touring the Yellow Dog Plains on the smooth wide roads that the Marquette County Road Commission cut through the wilderness for the mining company, keeping count of the big trucks we saw. All the trucks were outfitted with double loads — two side-dump trailers worth of ore — and the ore was covered with black tarps, neatly tied down.

The ties caught my attention. I wondered how long it would be before human nature set in, and workers started getting lackadaisical about how they tied down the tarps, or stopped bothering to secure and check each tie.

I was not even thinking of anything so scientific as studies by Ludovic Moulin, which find that over sixty percent of industrial accidents can be attributed to “organizational and human factors.” I had in mind something closer to the line about the field of the slothful in Proverbs: “yet a little sleep, a little slumber, a little folding of the hands to sleep,” and disaster can ensue. Eventually, someone in the course of the day was going to shrug and say to himself, “good enough,” slacken his attention, or hurry off to a break, I thought, and things could go downhill from there. A loosely tied load might spill on the highway or on the roadside, even if the driver was taking every precaution on his route. Repeat that small human error enough times, and you have a trail of sulfide ore from the mine to the mill, running through the Yellow Dog Plains and right through the center of Marquette.

Turns out I’d failed to fully grasp the reality of the situation. I didn’t imagine at the time that the tarps used to tie down the ore on the Eagle Mine trucks would rip in the case of an accident. In this case, the tarp of the second trailer was “torn open,” according to Save the Wild UP; Yellow Dog Watershed Preserve has a photograph of the torn cover here. I was also unaware that the Michigan Department of Environmental Quality allowed these soft-cover tarps only after Eagle Mine had requested a special amendment to its permit. Hard covers would take longer to remove; with soft covers, the trucks could be more easily unloaded. Time is money.

Special amendments and exceptions seem to be the rule when it comes to Eagle. For instance, though Lundin Mining CEO Paul Conibear has repeatedly boasted to investors about the great transportation infrastructure already in place at Eagle when Lundin bought the property from Rio Tinto, the truth is that the current haul route for Eagle Mine was never part of the plan. It was a last minute concoction — an “upgrade” of roads hastily authorized by the Marquette County Road Commission. No surprise, then, that a full environmental assessment of the haul route — as required by Part 632 of the Michigan Nonferrous Metallic Mining Law — has never been made.

Last week’s accident might be yet another sign that Eagle Mine was not actually ready for prime time when Lundin announced, at the end of November, that Eagle had entered commercial production ahead of schedule. But consider things from the company’s point of view. Lundin had acquired the Candelaria copper mine from Freeport only a month earlier for $1.8 billion — taking on huge debt — and by the end of November copper prices were declining precipitously. That made it all the more urgent to start delivering nickel at Eagle. After all, analysts expect “Lundin to introduce a dividend in 2015 once its Eagle mine is ramped up.”  Pressure is mounting. The Lake Superior mining boom appears to have gotten underway in a slightly panicked rush.

Philosophy and Coercion: Boethius on Torture

I’ve written a few posts about non-coercive power and how it can be created and shared through genuine co-deliberation — or what I’ve been calling serious conversations. In the course of my work on this topic, I’ve discovered that good examples of non-coercive power, the kind of real-world examples that illustrate the concept with anecdotal detail and stick with you after you read them, are not so easy to find.

More often than not, history shows us the other side of the coin — namely, coercive power. This is the case when it comes to the history of philosophy as well; and philosophers have written and thought about coercive power and its exercise by the state at least since the days of Socrates.

The release of the Senate CIA Torture Report today sent me back to one of my favorite philosophers: Boethius (480-525 AD), who discussed coercion and torture in a work called The Consolation of Philosophy.

Boethius wrote the Consolation while he himself was imprisoned — and, according to some sources, tortured — before being executed by Theodoric the Great. The Consolation takes the form of a dialogue between Boethius and Lady Philosophy, who appears to Boethius when he is at his most wretched.

Philosophy consoles Boethius


The  passage I remembered today is from Book 2 (Pr 6), where Philosophy argues that what we ordinarily prize as power is actually weakness, or just a temporary advantage that we are likely bound to lose. Another turn of Fortune’s wheel, and the torturer might suffer the very torments he inflicts: a vicious circle. Virtue lies in self-possession:

What, indeed, is this power which you think so very desirable? You should consider, poor earthly animals, what it is that you seem to have in your power. If you should see a mouse seizing power and lording it over the other mice, how you would laugh! But if you consider only his body, what is weaker than a man who can be killed by the bites of insects or by worms finding their way into him? For who can force any law upon man, except upon his body, or upon his fortune which is less than his body. You can never impose upon a free spirit nor can you deprive a rationally self-possessed mind of its equanimity. Once, when a certain tyrant tried to torture a free man into betraying the partners of his conspiracy against the tyrant, the man bit off his tongue and spat it in the raging tyrant’s face. In this way the torments which the tyrant inflicted as the means of his cruelty, this wise man made the means of virtuous action. Indeed, what can any man do to another which another may not do to him? We recall that Busirus, who was accustomed to kill his guests, was himself slain by his guest, Hercules. Regulus had bound many of his African captives in chains; but before long he was himself chained by his captors. How slight is the power of a man who cannot prevent someone else from doing to him what he does to others.

A Response from Maidlow’s Office

Karen Maidlow’s office responded this morning with what appears to be a form letter regarding the proposed lease of a parcel next to the Yellow Dog River for mineral exploration by Lundin Mining.

The letter I sent last week urged Maidlow to look into Fisheries’ sudden — and perplexing — reversal of Kelley Smith’s 2003 “non-development” classification of the parcel.

In 2003, Smith deliberately reversed a 2002 “development” recommendation by Fisheries field staff. Why? Madison of Fisheries said he must have done it “for some reason” and Stampfly of Forestry was “at a loss” to account for it. Maidlow realizes she can’t ignore Smith, so she puts him in his place: “Mr. Smith was not part of the review process, only the approval process”; the former Fisheries Chief was reversed “on the basis of the most recent field review.” The field wins out over the office. The bureaucracy repudiates the bureaucrat. Fisheries’ recent reversal of Smith will likely be upheld.

Here is the salient paragraph:

On November 21, 2002, field staff reviewed the parcel under consideration here for a direct metallic mineral lease request from Prime Meridian Resources, Inc. (Prime). Field staff’s recommended parcel classification was development. Although the parcel did not contain water or aquatic resources, its classification was changed to nondevelopment on August 21, 2003 at the request of Mr. Kelly Smith, former DNR Fisheries Division Chief, as a condition of lease approval. Please note that Mr. Smith was not part of the review process, only the approval process. On the basis of the most recent field review, the proposed classification for this parcel is Leasable Development with Restriction. This means that the sub-surface minerals can be mined, subject to other regulatory review, and any proposed development on the surface would face further review by DNR staff before being permitted.

I’m afraid this already sounds like a done deal, even though nobody at DNR seems to know — or is willing to discuss — why Smith wanted to protect Parcel NE1/4 SE1/4, Section 13, T50N, R29W on the Yellow Dog Plains from industrial development.

A Letter to Karen Maidlow, Michigan DNR

Karen Maidlow, Property Analyst, Minerals Management
Michigan Department of Natural Resources (DNR)
P.O. Box 30452
Lansing, MI 48909

Dear Karen Maidlow,

This letter is with regard to land owned by the State of Michigan on the Yellow Dog Plains and next to the Yellow Dog River in Michigamme Township, Marquette County (40 acres, NE1/4 SE1/4, Sec.13, T50N, R29W).

As you know, in a 2003 review, this 40-acre parcel was designated “non-development” by former Fisheries Chief Kelley Smith. Fisheries biologist George Madison, who works out of the Baraga office of the DNR, reversed Smith only this year. It is unclear why, and I urge you to look thoroughly into the matter as part of your review and clarify for the public whether and on what grounds the DNR thinks Fisheries’ reversal of its position on this parcel should stand.

Madison himself says that he was unable to tell why Smith had placed the non-development restriction on the parcel in the first place.

For some reason Kelley Smith (former Fisheries Chief) had placed a non-development restriction recommendation on this parcel during an 8-21-2003 review. Indeed while there is no water or aquatic resources on this parcel, with care and respect for the 2003 review I carried Mr.Smith’s recommendations forward in case there was an element of uniqueness to this parcel that we are not aware of.

For this 8-12-2014 review, I have changed Fisheries Division’s recommendation to “development” with no restrictions.

What reason did Kelley Smith have for restricting development on the parcel? Madison cannot say, and in May of this year Forestry Supervisor Jeff Stampfly admitted he, too, was “at a loss” when it came to accounting for Smith’s review. But then they both recommend its reversal.  Both Stampfly and Madison seem to suggest that Smith was simply mistaken, or at least they see his 2003 review as problematic. What exactly did Smith say? Isn’t it possible that Smith discerned some “element of uniqueness” here that Madison and Stampfly are unable to appreciate? The prudent thing would be to find out.

To that end, the DNR should publish Smith’s August 2003 review — undertaken before the mining boom had really gotten underway — and take what Smith says there under advisement. To help clarify things, Smith himself (now in retirement) should be interviewed about the parcel and what, if anything, makes it unique or deserving of non-development status, and his statement entered into the public record. If Smith and Madison still disagree on the status of this parcel, then that disagreement should be aired publicly and accounted for in whatever report you file. The public deserves this measure of transparency.

For his part, Madison could state more clearly why he reversed Smith in this 2014 review and did not do so previously. Why proceed with “care and respect” for Smith’s review, then suddenly change course after Lundin Mining shows interest in the parcel? Madison seems to be arguing in his comment that Fisheries should place no restrictions on the parcel because he can identify “no water or aquatic resources” directly on the parcel; this seems to be Stampfly’s position as well. But the Yellow Dog River is only a few hundred feet away from the boundary of the proposed site. Maybe, for Smith, that proximity was enough.

As Smith may have known, there are a number of ways in which industrial development on this parcel might seriously compromise the Yellow Dog River. Groundwater flow in the glacial aquifer underlying the Yellow Dog Plains would make it difficult to limit water contamination from drilling to the parcel itself. Even a well-run drilling operation will see lapses: Yellow Dog Watershed Preserve has “photo documentation of ripped sump pit liners, drill bit wash basins that are overflowing, and broken fences” from the exploratory drilling done for the Eagle Mine. Exploratory drilling is also bound to require some roadwork and other infrastructure build-up on the Yellow Dog Plains, and it will increase traffic to and from the parcel. That, too, puts the Yellow Dog River at risk.

YellowDogRupture

Roadside mitigation efforts in October of this year. The Eagle Mine haul route has already put the Yellow Dog watershed at risk and contaminated the Salmon Trout River.

As you are no doubt aware, just this past summer, a road crew working on the Eagle Mine haul route ruptured a perched groundwater seep, dumping sediment and releasing turbid water into the Salmon Trout River, in violation of the Natural Resources and Environmental Protection Act. Mining’s risks never end at the mine’s gate.

In closing, I urge you to take your time looking into the confusion over Smith’s 2003 review and all other questions and comments you receive regarding this parcel. One newspaper account I read has you saying that you intend to finish your analysis by January, having received written comments from the public only a month before that. Wouldn’t it be better to allow time for follow-up interviews or requests for further information? I trust that you and the DNR do not want to give the impression that this request for public comment is merely pro forma, and want to do the right thing by the public you serve.

Sincerely,

Louis V. Galdieri

Sustainable Development, Derailed

train-derailment-sept-ilesOn Thursday of last week, an avalanche derailed a Quebec North Shore and Labrador Railway freight train owned by Iron Ore of Canada as it made its way north along the banks of the Moisie River.

Divers recovered the body of Enrick Gagnon, the train’s engineer,  just this morning. The train’s lead locomotive is still completely submerged in the Moisie and another is partly submerged. Each locomotive holds about 17,000 litres of diesel fuel, and a 20 kilometer slick — “a silvery layer” — has spread over surface of the Moisie. The train was not hauling ore; its freight compartments were empty for its northbound run.

The Moisie and its watershed are part of a designated aquatic reserve, so the river is technically protected from mining activity; but so far as I can tell, the 16 mile stretch that the Quebec North Shore and Labrador Railway line runs along the Moisie was built in 1954, when mining first began in the region, and more than fifty years before the Quebec government published its conservation plan.

One stated aim of that plan is to protect native species, including and perhaps especially the Atlantic salmon running in the Moisie. As nearly every report on the Moisie catastrophe notes, the pristine waters of the remote northern river are internationally renowned for salmon fishing.

For the Innu of Uashat mak Mani-utenam, whose traditional territory the Moisie crosses, the river is much more: it is, in the words of one newswire report, a thing of “inestimable cultural value.”  So development in Innu territory continues to risk the inestimable for the merely estimable: in this case iron ore, jobs, growth. The Innu, who call themselves “the true owners of the land,” say they never consented to the tradeoff, and that the mining operation in their territory violates “international law, particularly the principle of ‘free, prior and informed consent.’”

Now, with this trainwreck, the Innu have an environmental crisis on their hands; but over the past couple of decades, the Innu say, they have also witnessed a gradual and “cumulative” effect on the environment and their community due to “the intensification of industrial activities” in the Sept-Îles region.

Iron Ore of Canada has a lock on the region’s economy, and development opportunities in the Labrador Trough are, in the words of IOC’s CEO Zoe Yujnovich, “potentially unconstrained.” Rio Tinto, which owns the majority stake in IOC, recently increased annual production capacity for the region from 18 to 23 million tons of ore concentrate, and plans to open a new mine called Wabush 3 to help meet that goal.

A 2013 publication touting Rio Tinto’s “Sustainable Development” plan for the region notes that the additional revenue generated by IOC’s “wholly owned rail company” will keep pace with growth: “use of the railway is set to increase significantly in the next few years as a result of our own expansion projects and junior mining startups in the area.” In other words, more trains than ever will be traveling along the Moisie, from Labrador to Sept-Îles Junction.

A Liturgy of Loss and Hope

I was supposed to travel to Lake Superior at the end of this month. I’d hoped to visit some of the spots R. B. Roosevelt mentions in Superior Fishing, talk to some people along the way, and see for myself the Eagle Mine, the Humboldt Mill and the haul route from mine to mill.

Then I found out that today the Concerned Clergy of Marquette would be offering a community benediction — “a liturgy of loss and hope,” as they describe it, to “mourn” the changes the new mining has already brought to the area, and to invite people to “recommit to preserving what remains of our beloved land and her people.” (You can find out more about today’s two-part event here.) liturgy

The “quiet reverent time” promised by the benediction superseded what plans I had. I changed my ticket and flew to Marquette yesterday.

On the way here I reflected a little on the idea that rituals of mourning (like funerals) are for the living, not the dead. Mourning, which nowadays we so often do in private, can be a powerful social act. Funerals have stirred rebellions; mourning rites can also give communities a chance to heal and atone.

Today’s liturgy on the Yellow Dog Plains was a quiet reckoning, but a reckoning all the same. People spoke from the heart. There were prayers, poems and songs. A fire burned at the center of the circle. Snow graced the ceremony’s end.

To the Edge of the Gap with Satya Nadella

It’s hard to believe that the people around Microsoft CEO Satya Nadella did not prepare him for a question about the pay gap at the Grace Hopper Celebration of Women in Computing conference, and even harder to believe that they would advise him to tell women to stop asking for a raise and place their “faith,” instead, in “karma.” Nadella must have gone off script, or lost his talking points on the way to Phoenix. He tried to backpedal on Twitter later in the day, but by then the damage was done.

There is a transcript of the mess here. Nadella starts by talking about the inefficiencies of “HR systems” and ends up endorsing a corporate caste system, in which karma determines station. He advises talented women that the arc of Microsoft universe is long, but bends toward justice: they should keep the faith, keep working and just keep quiet about the whole equal pay thing.

Today, he’s repented, in an email to Microsoft employees: “if you think you deserve a raise, just ask for it.” He’s also committed, he says, to closing the pay gap at Microsoft. The trouble is, telling women they should “just ask” for raises may indicate that the CEO has found a formula that will allow him to remove his foot from his mouth, but it isn’t going to solve the problem.

In fact, research by the organization Catalyst — which I’ve written about in another post — shows that while the system may reward men in roughly the way Nadella describes, giving them “the right raises as [they] go along,” it does not so reward women; and when women ask for raises, their requests go unmet. It’s hard to have faith in a system like that.

The whole incident brings me back, of course, to my ongoing interest in the power of asking, which is the power in question here.

“Just ask” sounds like permission; but permission does not necessarily entail power. What’s fascinating about the Catalyst research on what happens when women ask for raises is that it clearly shows that the power of asking is a power we have to confer on others: it’s the power we give the other to make claims (or demands) on us.

We confer that power when we recognize the other’s status as a second person, or — to put it another way — when we recognize in them an authority equal to our own.

Respect that authority, and we are mutually accountable to each other. Disrespect or disregard it, and we deny others the status of persons, make them instruments of our will or means to our ends. We dehumanize them, or fail to acknowledge them as fully human.

Of course, respect of this fundamental order is not something Nadella can institute at Microsoft by tweeting about “bias,” emailing his apologies or by executive fiat. But a good place to start the broader conversation about closing the pay gap (at Microsoft, in the tech industry or throughout the business world) might be to see it, and approach it and address it as a basic power gap that only true respect for persons can bridge.

A Postscript on Weird Timing and Pending Collapse

Since I wrote my last post on Eagle Mine, I’ve been thinking about the thing I most wanted to say and never managed to say. I’d hoped in that post to call attention to the weird timing of Conibear’s announcement, but I couldn’t quite figure out how to do that. The company announced the start of mining operations in the Yellow Dog Plains right in the wake of the People’s Climate March, and during a week when world leaders were gathered at the UN to discuss the global climate crisis and acknowledge the fragile condition of the biosphere.

The Eagle announcement never takes any of that into account. It makes some predictable noises about environmental responsibility. You don’t have to listen very hard to hear the dissonance.

Hands up during the 12:58 moment of silence at the People's Climate March. Just before this, a group led a chant that went something like: "Keep the tar sands in the ground / Close the mines and shut them down." Other than that I didn't hear too much talk about mining at the march.

Hands up during the 12:58 moment of silence at the People’s Climate March. Just before this, a group led a chant that went something like: “Keep the tar sands in the ground / Close the mines and shut them down.” Other than that I didn’t hear too much talk about mining at the march.

That this mining operation poses an immediate threat to the Yellow Dog watershed hardly needs saying. As I mentioned in my last post, Lundin Mining cannot point to a nickel and copper mining operation in the U.S. or Canada that has not polluted groundwater or surrounding waters, and there is no reason to believe that Eagle will be the magical exception — despite the company’s claims that the water they are discharging is drinkable. No one who makes that statement should be taken seriously, let alone believed, unless he follows it with a nice big glass of minewater, and fetches one for the kids while he’s at it.

Eagle is just the start. The bigger mining, leasing and exploration boom all around Lake Superior only magnifies the threat. One of the busiest mining operations in the world is about to be staged around one of the largest freshwater lakes in the world. The timing couldn’t be worse. Freshwater ecosystems are under greater pressure than ever before. Just this week, the Living Planet Index reported a 76 percent decline in freshwater species since 1970. That alarming statistic is one very clear indication of pending environmental collapse, and reason enough to protect Lake Superior from any further encroachments by risky mining operations.

It’s disconcerting, too, that the new mining around Lake Superior was spurred, in no small part, by Chinese growth and urbanization, which put a new premium on copper and nickel; and of course urbanization in China — which starts with pouring cement and raising stainless steel — will only aggravate emissions, further compromise China’s freshwater resources, and hasten environmental collapse. It is hard to see how this can end well, and it’s difficult for me to understand why anyone would pretend it is sustainable.

The weirdest twist in all this may be that this new mining operation goes into production just as China appears to be slowing down, after two decades of heady growth. As a result, “money managers are bearish on copper,” reports Bloomberg’s Luzi Ann Javier in a review of commodity ETFs; and “global inventories of nickel tracked by the London Metal Exchange are at an all-time high.” There is a glut. The warehouses are full. Right now, at least, it looks as if the rush is over.

Does Eagle Mine Have Social License to Operate?

Lundin Mining CEO Paul Conibear hit all the right notes when he announced last week that Eagle Mine is now in production. Completed ahead of schedule and on budget, the new nickel and copper mine on Michigan’s Upper Peninsula marks “a tremendous achievement”:

The Eagle Mine is a significant new, high-quality, low-cost mine, that has been constructed to the highest of safety, environmental and social responsibility standards.

Our team has done an exemplary job in bringing the mine into production, and we look forward to the operation becoming a significant cash flow generator for the Company and a significant contributor to the local and regional economy. We would like to thank all employees and contractors for their dedication and excellent work in addition to all local stakeholders for their ongoing support.

Analysts and investors seemed pleased as well, and happy to take Conibear at his word. The company’s share price, which had been trending downward, ticked up the day after the announcement. Lundin Mining is “hitting the ground running,” declared one enthusiast, who goes by the pseudonym The Investment Doctor and published his report right on the heels of the company’s press release; “and it’s rare to see a large scale project being completed ahead of schedule. The production is starting just in time to benefit from a strong nickel price.”

Those inclined to follow the Doctor’s advice may wish to consider that his analysis focuses solely on nickel production, and makes no mention of what’s happened to copper prices lately: they’ve plummeted (though, to be fair, they now seem to be rebounding slightly).

In any case, the whole picture may be a little more complicated than the mining company and its boosters would have us believe. Eagle will count as “a significant contributor to the local and regional economy” only if you overlook the effect the mining operation is bound to have on tourism (which currently makes up around 20 percent of the Marquette area’s economy) and the many other detrimental and distorting effects mining will have on the economic life of the Upper Peninsula. Economist Thomas M. Power has run these down. For one thing, he observes, mining operations can hinder entrepreneurship and innovation, and drive away creative professionals and knowledge workers. They prefer not to live around a mine, or on the haul route from mine to mill; nowadays even the miners would rather commute. It remains unclear, too, how the region will benefit in the long term, after the accessible ore runs out and Eagle shuts down.

So one has the feeling that the tepid term “contributor” in Conibear’s statement about the broad economic benefits of the new mining operation was chosen with care: it positions the mining company as a social benefactor, but it reserves any talk of wealth generation for the “flow” of cash into the company coffers. Some will trickle down: the contribution Eagle makes to the economy will be “significant”; but even saying that leaves wiggle room to back away from stronger and more specific language about job creation that was used to promote the project in the first place. The main object here is to reassure Lundin’s creditors.

To bring the bigger picture into focus, we also have to take into account the social costs and environmental risks associated with this new mining operation. When Conibear says that Eagle Mine was built to “the highest of…standards,” I guess he’s talking about mining industry standards. At least some environmental and community groups have different and even higher standards, and they are not satisfied with DEQ enforcement to date or with the Community Environmental Monitoring Program established by Rio Tinto and the non-profit Superior Watershed Partnership (for which Lundin Mining will pay $300,000 annually). For local stakeholders like the Keweenaw Bay Indian Community, who opted out of the Superior Watershed Partnership deal, the new mine falls short on many important counts. Together with the National Wildlife Federation, the Huron Mountain Club and the Yellow Dog Watershed Preserve, the KBIC sued, only to lose in the Michigan Court of Appeals in August of this year; but that loss hardly means the concerns that motivated the twelve-year legal challenge to the mine were without merit.

The stark fact remains that like Rio Tinto before them, Lundin Mining cannot point to a single example of copper and nickel mining in the United States or Canada that did not pollute surrounding waters or groundwater. Questions raised by Jack Parker about the geological stress field of the Yellow Dog Plains — and the risk of “sudden collapse” he alleges was covered up by regulatory collusion — continue to be “studiously ignored.” Haul road construction has been mired in controversy: it took corporate wrangling of the County Road Commission and exercise of eminent domain to push through the the current route; and that road work has already violated the Natural Resources and Environmental Protection Act.

The point is not to multiply examples or revisit all the controversies that still surround Eagle Mine. Now that the mine is in operation, some of these issues may even be “moot,” as a writer in Crains suggested after the decision by the Court of Appeals in August. But taken together, they raise the question whether Lundin Mining has done enough (since purchasing the Eagle operation from from Rio Tinto) to earn the trust, let alone gain the support, of local stakeholders who were not already in the mining camp or the mining company’s pocket. So far, Lundin has demonstrated that it can bulldoze ahead and get stuff done. Its claim to social license remains unsettled.

A Fifth Note on the First CEO: The Postwar Fad

We don’t usually think of corporate boardrooms as places where fads start or take hold. But that’s probably the the best way to account for the adoption of the CEO title by American corporations in the postwar period. Or at least that’s the view urged in this 1999 paper by Allison and Potts, which a reader shared in a comment on my post about the postwar provenance of the term CEO: from the mid 1950s to the mid 1970s, the adoption of the Chief Executive Officer title spread, primarily through “board interlocks” — or through individuals serving on multiple corporate boards.

Allison and Potts present the title’s diffusion through corporate networks as a “no brainer,” “an innovation largely without consequence to adopters.” It was a case, they say, of “contact-only diffusion” or “diffusion with contagion,” in which no serious choices or business decisions had to be made; the title may have helped clarify the difference between President and Chairman, but for the companies Allison and Potts study there was no “non-trivial economic benefit or cost” involved. Companies adopted the title Chief Executive Officer largely because they were emulating other companies: “diffusion of the CEO title was strictly mimetic, a true fad.”

cumulativeCEO
Everybody was doing it. Container Corporation of America started the trend in the late 1940s: why, Allison and Potts don’t explain, but I hope to make some sense of that at some point in the future; it’s intriguing, to say the least, that the company led by Walter Paepcke — Aspen booster, patron of the arts, and promoter of big ideas — led the way. In 1955, CCA was the only one of the largest 200 industrial companies in the United States that had a Chief Executive Officer. By 1975, all but one of the bunch had adopted the title.

CEO Titles

The fad takes hold in four stages: an early period, from 1955-1961;1962-1965, when adoption rates climb dramatically; a late middle period, from 66-71; and a final period where we see adoption rates drop off, mainly due to the remaining number of small adopters.

Though Allison and Potts don’t distinguish the adoption of the Chief Executive Officer title from the use of the acronym CEO, it’s in that late middle period, which they call the “inflection point” of the fad, where we start to see the first traces of the acronym “CEO” in the Harvard Business Review and other business publications. Shareholder value theory makes its debut in 1970. By the time the fad has run its course, in 1976, Jensen and Meckling have published their theory of the firm: the CEO has been identified as the primary “agent” of the firm’s success. He has also begun to enjoy unprecedented political influence, social prestige and cultural celebrity. What began as a boardroom fad has produced a new icon of American power.