Abstract
This paper proposes a radical solution to the problem of economic and financial illiteracy. It examines the legal implications of proposing a “new” model which credits transparency, regulation, oversight and control as necessary and beneficial, but cannot measure the effect of continued malfeasance, ignorance or hierarchical incompetence. The paper first re-examines the theory proposed by Menard, that organizations matter, and that contractual arrangements which benefit profit-seeking are affected by organizational governance; specifically, by the triad of shareholders, workers and managers. The view of regulation, held by Menard and Williamson is examined in light of anti-competitive pressures; and the imposition of regulation, restriction and reporting obligations is examined to argue that only fixed models based upon past performance create certainty of result. Secondly, the paper develops an alternate model which attempts to analyze the new participants of organizational governance, a quartet of shareholders, workers, managers and consumers who influence profit-seeking and policies more rapidly than those policies can be recognized or analyzed. Finally, the implications of economic and financial illiteracy is examined in light of the ultimate failure of regulators, shareholders, consumers, workers and managers to recognize essential flaws and react accordingly. The paper concludes with a query regarding the best approach to change economic and financial illiteracy and revolutionize the system to achieve efficiency, transparency and certainty; did Shakespeare say it wrong?