Democracy and Infomediaries

Abstract

We can improve our political and economic systems by redesigning our use of informational intermediaries (infomediaries). Examples of infomediaries are political parties, the news media, proxy voting advisory firms and auditors. An infomediary's source of funding influences the information it produces -"follow the money". Political campaign finance reform is one approach to redesigning our infomediary systems. This paper proposes another approach: starting a few companies with a new corporate bylaw structure designed to enhance management accountability to shareowners. Shareowners would vote annually to hire an infomediary (paid with corporate funds) to advise them on proxy voting. If this system proves effective, it can spread to existing corporations and then to the political arena. Copyright Blackwell Publishing Ltd 2003.