In Business (or China), It Really Is All About Who You Know

There's a fine line between helping the child of good friend get their first job, and giving a kid a job in order to bribe their powerful parent into giving you a sweet deal.

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There's a fine line between helping the child of good friend get their first job, and giving a kid a job in order to bribe their powerful parent into giving you a sweet deal. The global investment giant JPMorgan Chase is dancing on that line right now, as the Securities and Exchange Commission announced it is investigating charges that they hired the children of high-ranking Chinese officials in order to win favor and secure lucrative business deals in their country. It's against the law to bribe a foreign official to win a business, and the bank could face serious consequences if they're found guilty.

To some people, this might seem like the height of corruption. To rest of the world, however, it's just plain old nepotism — a.k.a., business as usual. If every firm on Wall Street were prevented from hiring the children of the rich and powerful.... well, there wouldn't be many people working on Wall Street.

Perhaps that's why reporter Andrew Ross Sorkin of The New York Times took to the pages of his paper to defend the idea that nepotism isn't necessarily corruption. In most cases, it's simply smart business:

Given that many of the children of the elite have some of the best educations and thriving networks of contacts, it is hard to see how businesses are supposed to not seek them out, let alone turn them away.

Sorkin is essentially throwing up his hands and saying, "that's the way it is." But as Hamilton Nolan at Gawker counters, just because something is "the way it is" doesn't mean it's "the way it should be." (He counters with a few other choice words, like "bootlicker," but he probably doesn't have to worry about getting an angry call from his parents.)

Worse, Sorkin goes even further than surrendering to the inevitable, to imply that nepotism is probably for the best. He cites numerous examples of children of rich, well-connected people getting jobs that have allowed them to become rich, well-connected people themselves. In each instance, he insists that the young heir (often someone he knows personally, of course) is a good person; super-smart and eminently qualified. Take Chelsea Clinton, Sorkin suggests, "a Stanford graduate who is considered intelligent by virtually everyone who has spent time with her, had as genuine a claim on those jobs as anyone else graduating the year she did."

Sure... but did she have the best claim? The Stanford class of  '01 included plenty of intelligent graduates, few of whom have the kinds of jobs that Chelsea Clinton has or had: McKinsey consulting, Avenue Capital hedge fund, NYU teaching gig, plus board seats on IAC, the School of American Ballet, and the Weill Cornell Medical College — to say nothing of the foundations launched by her parents. And how did she get into Stanford in the first place? Would the daughter of two unknown lawyers in D.C. have had "as genuine a claim" to her admission slot as she did?

The problem, of course, is that these are unknowable answers. Children of smart people are generally going to be smart themselves, and many of them willingly pursue the career path of their parents. You can't begrudge someone for using the advantages that have been given to them. Yet, how can one ever really know if they shot up the corporate ladder due to connections or talent? Especially when in some areas (like sales or politics) making connections is their talent? No one cares how you built your "golden Rolodex," as long as you know how to turn it into money.

The problem with Sorkin's piece is that he seems to be taking it on faith that the connections earned by the scions of the rich and powerful must have been both earned and deserved. Nor has he seemed to consider the self-perpetuating nature of this system. Yes, the son of a CEO may have his own impressive resumé, but those qualifications were built on the back of his privileged background. Those who are less fortunate are left standing on the outside, and the ability of Americans to move (or down) on their own merits becomes stifled.

Not to take anything away from Sorkin's proven ability as a reporter, but let's not forget that the company that he works for is in the hands of a dynastic family empire. Was it wrong for Arthur Sulzberger to pass the family newspaper to his son, who would later pass it to his grandson? Not really. Was it good for business? Maybe, maybe not. Is it fair? Depends on who you ask... and if you have their phone number on speed dial.

This article is from the archive of our partner The Wire.