Because it is not their fault, one of life’s saddest spectacles is watching the offspring of the rich and famous trying to legitimise their success. Would Stella McCartney have made it to the top of the fashion world without her last name? And what to make of 38-year-old James Murdoch’s promotion on Wednesday to deputy chief operating officer of News Corp as well as chairman and chief executive of all the group’s international businesses?
There are two ways of looking at the grooming of James Murdoch. The predictable response from corporate governance zealots – such as the pension funds who this month filed a suit against News Corp accusing it of nepotism for buying Rupert Murdoch’s daughter’s TV production company for $675m – is that such practices make a mockery of public companies. Microeconomic theory would add that discrimination (in this case against employees whose last name is not Murdoch) is a form of labour market failure.
The counter argument is that News Corp has always been completely open about the role of family in its business (the creation of non-voting shares for outsiders is a fairly big hint). If you don’t like the set-up, don’t buy the shares. Besides, who is to say that James Murdoch will necessarily do a worse job than anyone else? He is bright, works hard, and has a solid record in a variety of previous roles.