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|Featured Guest Speaker
Posted: March 6, 2005
William L. Livingston, PE
aka Bete Noire Engineering
Livingston's very cogent comments are relevant to the crafting of any policy, procedure, or regulation that expects to be useful in the uncertain future it intends to affect - whether done by a regulatory body or an organization wishing to influence internal behavior. Here is a glimpse at agile procedure crafting. Part 1 was published last month.
William Livingston is author of Friends in High Places, New Plague, and Have Fun At Work; with a book in process tentatively called Amicus Rex, about the engineering/law relationship. He is a Professional Engineer with more than 100 patents to his name, and has extensive background in the Energy and Utility sector.
From: William Livingston
Sent: March 5, 2005
Mr. Chairman and Honorable Commissioners:
You invited comments on proposed rulemaking for SROs [self regulation organizations], release No. 34-50699; File No. S7-39-04; RIN 3235-AJ33. Your proposal [www.sec.gov/rules/proposed/34-50699.htm] covers multiple issues regarding SRO operations, including governance, ownership and reporting. This comprehensive regulatory initiative is attended by 166 questions regarding rule design specifics. The commentary you have received from other veterans is excellent. Rather than echo those astute assessments and criticisms, the intent here is to add value from the paradigm of my engineering profession for internal control.
This solicited commentary spans two installments. The first provided the control design practitioner’s framework of institutional governance and derived the immutable limits of rules for regulation, from engineering first principles. It concluded that hindsight-based rules of action (check the box) cannot succeed in meeting your simultaneous goals. This concluding installment will apply the current standard of care in control engineering to this application, deriving a practical strategy that cannot fail to attain your end-state intentions - as Commissioner Glassman made clear in February 2005:
In the documentation repositories provided by the SEC to the public, the distinguished Commission complex provides a great variety of goal statements, visions and intents for the governing of SROs and others. For a licensed Professional Engineer, learned in the science and technology of system dynamics and control, it is necessary to be very clear on goals (objectives oriented) before commencing the (principles-based) assault on complexity. Even the act of criticizing internal control demands that the critic have a firm grasp on the mission statement. As a controls engineer tasked to design a system of corporate governance to specified intents, you can expect SEC goals to be expressed in terms a controls freak can attain with confidence, using his dynamics toolkit.
The PE controls engineer, upon registration, takes an oath to hold the safety, health and welfare of the public paramount. To uphold this obligation, established by the American Society of Mechanical Engineers in 1910, means that protecting the legitimate interests of stakeholders is always a design constraint. All control systems are tasked to avoid, prevent and otherwise preempt excursions from exceeding a satisfactory operational band. For commentary purposes herein, the SEC goal is stated in tort syntax as “Operational control of listed institutions so that the legitimate interests of investors and stakeholders are protected from significant foreseeable damage.” The regulatory aim of the control engineer is to transfer the responsibility for operational consequences from the regulated institution to the stakeholders, thereby removing all possibility of Enron class scandals. The all-encompassing, objectives-oriented lumping keyword herein is “transparency.” This keyword is peppered in every regulatory document relating to corporate governance throughout the globe, including works of the OECD and the SEC.
This goal statement, entirely compatible with the intent provided by Commissioner Glassman, automatically places rules of action in a supporting role. As discussed in the first installment, there are strict limits for the effectiveness of hindsight-based rules, going forward in operating time, set by universal law. It is impossible, for example, for any rule of action to prevent fraud. You can develop ingenious investigative techniques (analytical rules) to detect fraud after the fact, of course, but rules are unable by natural law to meet the “limit the possibility of fraud” goal of the SEC and the PCAOB. To the controls engineer, eliminating the possibility of fraud is a design goal he will meet in any case. Do your control job and fraud avoidance comes as an automatic.
To a competent regulating system, fraud is indistinguishable from any other species of error and disturbance to operational requirements. The controls practitioner doesn’t set out to avoid fraud as an explicit goal. He organizes the assault on complexity to detect and compensate for errors and disturbances to intended production. In this engineering affair, fraud is snared up front as an error, like any and all other errors, and compensated by the installed control system resources before it can cause damage. Put another way, it is impossible to design a competent control system meeting the specification that would allow fraud. Given vulnerability to fraud as an assignment, and carte blanche, the controls engineer would not know where to begin. The experiment to allow fraud, uniquely, and still govern, ends up with a non-control supervisory system exactly like the one the SEC operates. A regulating system is not a post-damage crisis response firefighting plan.
To regulate exclusively through rules of action (hindsight), limits regulator performance. The hindsight orientation means fundamentally that your control is incompetent to deal with novel disturbances. This is why loophole engineering is so easy. Just operate in a different way than history has recorded and the rules are helpless. In the real world of institutions, when a Commission chooses to regulate by rules of action, called supervisory control by engineers, the response strategy of the regulated is simply to comply with the rules of action (check the box). The SEC must be very careful to emphasize its disconnect between rules of action as means, from responsibility for objectives oriented outcomes as ends. The purpose of the system is what it does – POSIWID.
If you ever claimed to be controlling to attain an end goal, then corporate scandal would automatically become your purpose (POSIWID), with or without your consent. OSHA, for example, disclaims that compliance to its thick rule encyclopedias has any connection to a safer workplace. While you may think the SEC is a viable regulatory agency for listed institutions, what rules makes you (POSIWID) is a mega scandal response system. You can tell POSIWID is a natural law of dynamics because it never fails. Use it for personal enlightenment anywhere, anytime, for anything.
Note well the sleight of hand; that nowhere does this rules-in-rules-out scheme couple with the control system by which the regulated institution regulates itself! In this joint deception, the regulator promotes the illusion that its rule set is controlling something to a purpose and the regulated makes believe it is being so controlled. An example is in the subject SEC rules proposal: “The proposed governance rules are intended to strengthen the governance of exchanges and associations, and promote a greater degree of objectivity and impartiality in important SRO processes.” The SEC can have objectivity, impartiality and transparency – or the SEC can regulate by rules of action. You cannot speak of objectivity and rules together. Don’t bother with Congress; your quarrel is with natural law. Good luck.
The publication 2005 “International Corporate Governance Review,” Internet available, is an encyclopedia documenting the same gatekeeper collusion with listed institutions around the world. Therein, however, lies the rub. If you intend to regulate the institution to a compelling purpose (end), natural law mandates that you must be coupled to and be part of the control system by which the institution proactively regulates itself. Note how quietly the many SOX rules were assimilated, bumpless, compared to the endless ongoing brouhaha triggered by the objectives-oriented mandate of its section 404. The tumult provides the SEC a clear example of the great contrast between means and ends control. There is no escape from immutable, omnipotent, omnipresent universal law.
As an officer of the Court, I can neither advocate for objectives-oriented regulation (forward looking) nor advocate against hindsight rules. The purpose here is to inform you that the two schemes of control are institutionally incompatible by order of the supreme commander of all matter. To stand at the crossroads of rules and objectives-oriented control takes more strength than you possess. If you choose a mixture of means and ends control, you will destabilize your own institution. If you want to stay welded to rules; fine. Just don’t call it “regulation.” Rules have no need for control engineering technology. If you choose to go with principles-based, objectives-oriented control; fine. Now, however, you are engulfed by control theory and you desperately need all that the discipline of control has to offer. If you hang with rules, nothing matters. If you go with effective control to seek a compelling intent, everything matters.
As of March 2005, as the PBS reported, the US Chamber of Commerce funds the largest lobby in Congress. The expressed goal of the Chamber’s lobby is to repeal SOX 404 and eliminate tort law. By virtue of actions taken (POSIWID again), can anyone at the SEC seriously believe that listed institutions wish to meet the (objectives oriented) intent of the SEC?
When the principle of 404 was conceived many scandal cycles ago, it was an untested assumption that institutions self-regulated by an internal control system, providing management with pertinent performance data and other business intelligence. That assumption was based upon another fantasy, fully documented in the proposed rule, that institutions were managed on the basis of comparing actual performance against corporate business objectives (proportional control). Therefore, when the SEC required independent validation of the internal control system, it assumed little, if any, additional paperwork workload would be necessary for the regulated to comply. An electronic copy of internal audit’s routine work validating internal control’s viability would do very nicely. Management always has the internal control system it wants.
What the SEC is now witnessing is the fundamental incapacity of the institution, yours included, to operate in any but a rules-based chain of command framework. You thought all along that listed institutions used business performance intelligence to manage institutional affairs. That fiction is now in everyone’s face. As previously stated, this is why updates about future cone competency must come to you from an individual PE or not at all. When the SEC hoists principles-based, objectives-oriented goals for the regulated to attain, no boxes to check, the response can only be obstruction, delay and confrontation. By regulating to ends intended, 404, which is what all control systems do, rather than rules as full compliance, the regulated think the SEC has reneged on the unwritten contract. Control engineers, social outcasts to begin with, have no such contract to honor.
While the SEC task in designing an effective principles-based, objectives oriented control system contains all the constraints, thwarts and plagues that must be addressed by the PE control system designer working any application, you likewise gain all the benefits from scrutable connectivity to natural law. The advantages attending control design success, transparency, are many, material and mega - discussed later. The point now is that the control engineer labors with due diligence because of the great benefits package intrinsic to the process of engineering - and nothing else. He is drawn by the awesome functionalities he can establish. He cannot be pushed in this thankless endeavor by institutional force.
Starting with the answer is always the best way to ace the test. Is control engineering science fully applicable as benchmark to the regulatory process? The answer is an unqualified yes. In every respect they are one and the same challenge in design – interchangeable. Can the SEC objectives-oriented intents, as variously expressed for corporate governance, be met through control engineering technology? The answer is, of course. To solve the aging riddle of effective corporate governance, the control engineer need only apply the current standard of care of the discipline. There is nothing he needs to refer to other expertise in order to guarantee success.
Control design is a journey with faultless maps. The competency to deal with the cone of the future on an impersonal objective basis is a critical success factor. While the role of lessons learned is a primary input to the process of anticipatory controls design, the focus is on preventing, avoiding and attenuating operational excursions beyond defined, acceptable limits. For every practical purpose, the labor of controls design is centered on the future. The engineer’s future fetish is often called “What if? Engineering.” Controls must be transparent to natural law in order to shape the future to intent. That is what, exactly, engineers mean by transparency.
Absolute transparency is a riveting attribute of control design, even though it is a monster requisite and a hog for cognitive effort. As rules require robots, transparency demands intelligence. It is axiomatic that the process of deriving transparency must itself be transparent. The only platform possible to define transparency is natural law. The final product must be completely and scrutably connected to the fundamental laws governing the universe.
As transparency is obtained by removing non-transparent elements from the matrix, a transparent control system is attained by eliminating subjectivity. Transparent modules can be algebraically added to transparent modules without losing transparency in the merger. Any module with an impurity, however slight, destroys system transparency. In control system design, transparency is the control algorithm completely and scrutably connected to mathematical physics. Natural law always and automatically integrates with natural law. This feature of universal law can be a curse as well as a blessing to human intentions. Error removal is a large part of what control engineers do. It is natural law itself that announces when transparency is finally attained – the controlled system performs to the specification.
As the benchmark for control engineering, the distinction made by natural law compared to the Establishment’s rule of law, shows up in tort. As the institution commits the offense that causes the damage, punishment is unlikely. Tort litigation lags the malpractice period by several years, determining the transgression retroactively after damage. In contrast, when the hapless control engineer commits the offense against tort (foreseeability negligence), natural law tortures the engineer on the spot. Instant automatic punishment for negligence in pragmatic foresight, keeps the control engineer on track for contemporaneous compliance. He finds no advantage in ducking the responsibility for the foresight intelligence necessary to attain objectives-oriented corporate governance.
For the purpose of effective control, the artifact that must be forged to absolute transparency is not the regulatory rulebook. It is the very system the institution uses to deal with the future. First off, every institution has such a regulating system, even in bankruptcy proceedings, POSIWID. The system may have to be discovered and quantified through black box testing, but organizations cannot exist without a system for coping with the incessant flow of disturbances. Secondly, the essentials of the institution’s self-regulating system are undiscussable. The business judgment rule was invented by management expressly to safeguard the undiscussability of the de facto self-regulating system. The institutional system for dealing with the future is rigged with subjective elements in a complex hierarchical relationship. In short, every chunk of knowledge the control engineer must obtain in order to develop an effective regulating system with the attribute of transparency is institutionally undiscussable. You cannot change (or control) that which you will not acknowledge.
The turbulence stirred by 404 occurred because the necessaries for an attestable internal control system didn’t exist. Listed institutions have no working-level description of corporate objectives. Without fully developed goals, risk management becomes mental popcorn. The institutional head shed is clueless also as to the value system it actually uses to make significant navigational choices as disturbances pour in from the outside. Objectives and value systems, fundamental inputs to control engineering, have to be “discovered” through black box testing. This condition is routine context for the controls engineer’s work. The client never knows what he needs and the initial set of wants provided in the specification is always wrong. The client never knows, explicitly, his value system for making choices among control alternatives. Never, ever.
When it was generally held that dealing with the future was, of necessity, an act of the limbic system, regulators enjoyed the protection of the business judgment rule no less than the regulated. The best anyone in foresight mode could do was to learn from the past, consider a variety of factors, get high with the elders in the kiva, and go with the intuitions. As the fundamental essence of design, no discipline engages the foresight business more than engineering. While engineers could mathematically study their configurations in the static state, when it came to projecting system dynamics into future scenarios, engineers fell back on the business judgment rule like everyone else. In every example run on the History Channel’s “Great Engineering Disasters” will be found the limits of history, statics and judgment for design. That whole perspective became obsolete for PEs when intelligence amplification became practical through the grand synthesis of W. Ross Ashby and the democratization of computer power, circa 1985.
With the information requisite for transparency undiscussable, the control engineer cannot operate organizationally neutral as a loyal, obedient subordinate. Control theory instructs that an anticipatory regulating strategy must contain within it a reliable dynamic model of the system being controlled (Conant’s Theorem). It is by reference to the dynamic model of institutional behavior kept in synch with the operational reality that the control system detects deviations from predicted outputs and makes appropriate (value system) compensations projecting ahead in time (anticipating). No subjectivity anywhere. This goal seeking, self-control system is the precise definition of SEC intent. The institution, not the SEC, operates the organizational regulator – designed to meet SEC objectives-oriented intents. When the control system for the future is transparent, whoever it may concern, including the SEC, can evaluate what it is doing and the significance of what it is doing for themselves.
Corporate Governance by Algorithm
The institutional control design process
Interesting constraints emerge when engineers attempt to explain the process of engineering to those not trained as engineers. Society despises engineers as a cultural norm, and engineering speak reminds them why that is the case. Anyone caught in the act of actually learning about engineering process stands an excellent chance of being held in the same contempt. Since the methodology is easier done than said, demonstration on a particular selected by the client is, by far, the most successful means of communication and technology transfer. If the SEC were to issue an RFP for such demonstrations of absolute transparency for real-world application, it would be flooded with legitimate responses. The development work to meet this attribute, for a business concern, has already been done. Contrary to current SEC agitations, the smaller institution can so meet 404 via transparency with more ease than the large conglomerates.
The description here will be in the sequence that task modules are completed. Details of the modules will be provided upon request as we have an extensive and varied application history, spanning decades. The process described here is the standard of care for the engagement to design a control system for the purpose of meeting performance goals while avoiding, preventing and attenuating damage. In tort terms, the goal is contemporaneous transparent pragmatic foresight for corporate governance. The goal regulated is objectives-oriented and forward-looking. Accordingly, the control system must include error anticipation as well as error reaction to calm upsets. What does future reality demand of corporate governance that we might persevere to the objective?
The first module for the control engineer to complete is called the front end. A large quantity of knowledge must be developed and structured to define the controls goals in working terms. The faster the process, disturbed, can exceed acceptable limits, the closer the regulation response must be to the work face. The SEC keeps learning about this requisite the hard way.
Nothing is perceived by the institution as more alien to its cultural norms than engaging a front end. To the institution, dealing with the front end of pragmatic foresight (transparency) is submitting to vivisection without an anesthetic. The custodians of corporate culture are not free agents. Their ideas are subjected to the institutionalized forces and habits that militate against the intellect. All institutions exist at the mercy of their culture.
The entire domain of pragmatic foresight technology is, by default, engineering turf. Society entrusts the husbandry of pragmatic foresight to engineering because no discipline esteemed by society will get near it. As pariahs, engineers have nothing to lose socially by accepting this obligation. What society does not realize is that engineering has shot past the tipping point where advantages now far exceed the efforts to meet due diligence. Engineers are already self-compelled to advance the competency of pragmatic foresight for profound personal benefits. This compulsion will increase as success rolls in even if the legal obligation to advance is surgically removed.
Launching the assault on complexity
The front end specification of system control performance has three parts – goals, value system and delimiting scenarios. The goals must be described by the controls engineer down to working terms (functionalities), using a structure that tops with the abstract prime directive and bottoms with tangible “part numbers.” A key intermediate level where generalized functions pupate into physical functions is called the Franceschi Fitting. This level is where the central synthesis, intrinsically idiosyncratic, takes place. It is where abstraction transforms to material. No rules are anywhere around when synthesis is engaged.
The value system consists of those factors conventionally used by the institution to choose among alternatives of action. Values can be subjective as well as concrete objective. The sole source of values is the institution itself. Once the value system is configured by the controls engineer, the subjective elements have to be translated into objective terms that have engineering units. It is the institution that collaborates on the translation task and typically takes the lead. The crew in internal control/audit is good at it.
The scenario specification phase follows goals and values. Here the practitioner assists the institution in defining the design basis scenarios, what the NRC calls design basis events (DBEs) in the CFRs. Here all objectives and intents are fully expressed by the institution as a set of individual, specific scenarios (dots) that collectively mark the design envelope. Scenarios define the “proving ground” over which the control system will prove itself dynamically competent one way or the other. The simple reason for defining goals by design-basis events is that engineers can get their arms of objectivity fully around scenarios – leaving subjectivity out altogether. This is a benchmark for transparency attainment.
From its own experience base, the SEC can well imagine how unpopular the front end work is in an institution. Displacing soft, fuzzy subjectivity with hard brute facts is show-stopper. The gross embarrassment from revealing what is not behind the wizard’s curtain turns into hostility towards the controls engineer as the Toto who parted the curtain. You will find more practitioner war stories on this thankless task than you want to know about in my books, available on Amazon.com.
Synthesis and subjectivity
Only after the front end is completed, does synthesis of solution candidates begin. The knowledge developed by the front end, as comprehensive as it is, points nowhere. The gulf between the pile of facts about the problem and the pile of solution candidates can only be crossed by human ingenuity. All synthesis is idiosyncratic - a cognitive act that cannot be obtained by force. When a configuration is invented, is it dripping with the afterbirth of subjectivity? The next task, of course, is to remove all traces of the subjective elements smeared on the invention.
The first subjectivity filter is to investigate the configuration by FMEA techniques. Failure modes and effects analysis technology has matured and advanced in recent decades. There are excellent standards maintained by the NRC (regulatory guides) and others to structure this work. FMEA is a manual task augmented with proven software programs developed for the purpose. This screening is a check, mostly statics, that systematically sifts out the large errors exposed by the analysis.
The proving ground
After the FMEA and fault tree/event tree work has run its course, it is time to take the control and the system being controlled into the operational reality of the future - the dynamics test-drive phase. We don’t build many full scale proving grounds anymore. The prover of choice today is the computer-driven simulator. Dynamic simulation is often called virtual reality. Engineers have learned how to create realistic settings drawn by mathematical techniques that interact with the actors or dinosaurs of your choice. These interactions are rendered believable to audiences because they are all driven by the natural laws of dynamics and control. Accident reconstruction, now routine in litigation, is dynamic simulation looking backwards. Look forward on the same simulation, before the wreck, and you are making a movie of a possible future scenario.
The proving ground phase is where all the brute facts come together to make transparency. The work consists of configuration and parameterization of the model of the system, its control, the context and the event trigger. The script is, exactly, the design basis scenarios defined during the front end work. A dynamic simulation of each scenario is run – one scenario at a time. Very powerful modular modeling programs are now available that make building the simulator practical for just about anything. The modules are all based on natural law because that’s the only set of principles that works reality. Fly it before you buy it. All computer games are interactive dynamic simulations. When we gather to run a new model, the scene is a replica of arcade excitement.
In practice, the dynamic simulation phase is where the residuum of subjectivity is extracted from the end product. When dynamic data starts to pour out from the simulations, the knowledge is used immediately to make design changes to improve performance. Each candidate is subjected to each design-basis scenario. Validation of the final system design is achieved when all the design-basis scenarios are satisfactorily negotiated. No judgment is involved in validation. Grades are given by machine. Subjectivity has no entryway.
To the controls engineer, getting to transparency grade on system dynamics is his compelling purpose. With the critical issue of performance and the ability of the system control to avoid specified future possibilities settled before parts are ordered - the people problem plague is stopped in its tracks. There is no promotion, no persuasion chore on the punch list. The artifact and the derivation of the artifact now speak in brute facts for themselves. The responsibility for “understanding” is lifted from the engineer and placed on all others. “There’s the car; there’s the performance data – do as you wish.”
The corporate governance regulator is far less complicated to build than many of the controls for industrial processes. The transactions of interest are usually expressed in units of money, a primary engineering unit to begin with. Checks and balances are standard control issues also. Business operations lend themselves well to rationalization and quantification. The issues are more about quantity than complexity.
The critical link that finally enabled practical dynamic simulation for any engineer is the computer horsepower required to amplify intelligence. The trick is the conversion of all the differential equations of system dynamics and control theory into a form of mathematics powerful computers can solve by doing tons of arithmetic. Engineers define intelligence as appropriate selection. Algorithms and recursion produce the knowledge necessary to make selections from the astronomical numbers of unique states. Engineers can make better choices, now, by using intelligence amplification delivered on computers any engineer can afford.
This outline and overview of the making of transparency is aimed to begin the process of establishing credibility for the application of control engineering practice to institutional regulation. Neither of us expects that an issue of such significance and complexity can be fully addressed in a few paragraphs of nerd jargon. The jargon is supplemented, however, by the standing offer of demonstration on any issue of your choice. Workshops are available that train practitioners in these procedures in three days.
The benefits of transparency
Transparency attained is far more than something nice to do for the stakeholders. It amounts to a total transfer of responsibility for future outcomes to the stakeholders themselves, including the SEC. Liability insurance is not necessary. The transparent institution cannot be held responsible for unforeseen damage by any kind of legal rationale. Contemporaneous transparency automatically meets the escalating standard of care for foreseeability. If the institution is not doing right enough with pragmatic foresight, it’s up to the stakeholders to raise the discrepancies. There are no retroactive rights.
Transparent internal control/audit can do no more than husband its transparency. No regulator can ask for more. Raising issues with institutional process, now transparent, must be done by stakeholders before damage occurs. Transparency is self-regulation. If the future shaped by the transparent self-regulating system is not acceptable to the stakeholder, it is up to the stakeholder to call attention to this possibility.
With transparency operational, all subjective elements disappear and investor confidence is eliminated as an issue. There is nothing subjective requiring an act of faith. There are no issues of ethics, trust and personalities. No caveats, disclaimers, or safe harbors. Authority has no role.
It is the goal of the engineer to submerge his personality through leveraging natural law – to become institutionally invisible. The more significant and accepted the engineered artifact, the less likely anyone will know the author. Don’t embarrass yourself by trying to recall who invented the cell phone, the Internet, the DVD, or the wheel. While the process of engineering is fully idiosyncratic, the final stage of the process is especially designed, like an acid bath, to remove all traces of designer personality. It’s there in spirit, but you don’t care.
Transparency automatically provides a war-games simulator for management. The reverse is also true. If the regulating system in use cannot be adapted to serve as a what-if simulator for exploring the future, it is not transparent. A copy of the control system is easily adapted for management to take the institution for a spin in the future of its choice. Ideas can be tested for impact before implementation. Contemporaneous compliance is self-auditing. No special efforts have to be made to host external auditors, because the system is self-regulating to the same criteria of ends.
Scientific studies have affirmed what human history has recorded. Subjective methods of decision-making are no match for choices fully based on brute facts about the future. Over time, objectivity will displace subjectivity simply by being much better for survival of the species. Seeking goals, for us all, is just preparing for a series of collisions with the future - fired at point blank range.
Facing the peril of subjectivity is a fundamental constant of engineering life that we perceive from a very different perspective than the SEC. To the engineer, displacing subjectivity with objectivity is an unbridled passion. We race to deploy the advances in pragmatic foresight as fast as our guild brothers crank them out. Ridding ourselves of the hobgoblin of subjectivity is a compelling purpose. Engineers have everything to gain and nothing to lose by going objective transparent contemporaneous. It is rational exuberance. To management, of course, working a methodology that attenuates the personal equation is unthinkable.
The pace of displacement of subjectivism with objectivism, driven by engineering, is so rapid and reaching it is doubtful society will safeguard business as usual indefinitely. Institutional norms will not change on their own, of course, no matter what force is applied externally. The gulf between the professional standard of care and business as usual, especially regarding the competency of pragmatic foresight, will not be allowed to enlarge indefinitely. Society used the Enron debacle to gauge the effectiveness of its formerly trusted professional watchdogs and gatekeepers, including the SEC. Trust does not return at the speed it departs. There will be tort reform, of course, but society is not about to forego the only reliable protection the law affords against a menacing institution.
The SEC is commended for providing this convenient electronic means to submit comments.
William L. Livingston, PE
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