Private Association Fines Government, and Government Will Pay!

Much has been written about Penn State and the Jerry Sandusky child sex abuse scandal, but I want to mention two aspects about it that have been on my mind.

The first one is the idea of institutional culpability.  Jerry Sandusky has already been convicted for his actions, and when they came to light, the trustees at Penn State fired the university’s president, athletic director, and head football coach.  None of the individuals who had any connection to the scandal remain with the university, but apparently there is widespread support for the fine and sanctions that have been placed on those who remain at Penn State: those who are completely innocent of any wrongdoing.

Individuals should be responsible for their actions, but the NCAA penalties mean that those who remain at Penn State will have to pay for the actions of others who are no longer there.  I find this notion that the institution itself — the university — is responsible for the actions of individuals it dismissed once it discovered those actions to be curious.  Why are individuals accountable for the misdeeds of others in their organization when they had no knowledge of those misdeeds?

(I understand why the NCAA would penalize a program that violated the rules to gain a competitive advantage, such as paying their players, or allowing academically ineligible students to play.  But it does not appear that Penn State gained any competitive advantage in this case, so there is no inequity that needs to be redressed.)

Another aspect of this case is that the NCAA is a private association, and Penn State is a government-run university.  So, a private association — the NCAA — is fining the government, and it appears the government will pay up without protest.  Can private organizations really succeed in levying fines against government?

This may be a bit of an oversimplification.  The Penn State athletic department will ultimately pay the fine, but with help from the academic side of the university.  But isn’t this just a detail?  Stepping back, it appears that a private organization has the power to fine the government and make that fine stick!

Surely the Pennsylvania legislature could step in and refuse to allow this fine to be paid.  But, they won’t.  Partly, this is because nobody wants to appear to be defending Penn State in this case.  (But why?  See my point one above.)  And partly it is because Penn State is better off sticking with the NCAA and paying the fine than they would be risking being tossed out of the organization.  They would be shunned by other schools, and shunning is a way of enforcing social norms without the force of government.

This makes me wonder if there are other organizations that could impose sanctions on the government and make them stick.  Groups like the NRA, AARP, and NEA have lots of power, but I don’t think they have ever fined a government.

Randall G. Holcombe is Research Fellow at the Independent Institute and DeVoe Moore Professor of Economics at Florida State University. His Independent books include Housing America: Building Out of a Crisis (edited with Benjamin Powell); and Writing Off Ideas: Taxation, Foundations, and Philanthropy in America .
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