Remarks as prepared for delivery
Thank you, Professor Blouin for that kind introduction. I am grateful to the Penn Wharton Public Policy Initiative for inviting me to speak with you today about business, ethics and the rule of law.
The most important advice that I am going to give you today, is from a cartoon book by Dr. Seuss, called Oh, the Places You’ll Go.
For those who have not read it, it is about a child who sets out on his way, overcomes all obstacles, and always succeeds.
I cannot promise that each of you will succeed, even with a prestigious Penn degree. Unfortunately, I can guarantee that you will face obstacles. When you do, I encourage to keep this advice in mind:
You're on your own. And you know what you know.
And YOU are the [one] who'll decide where to go.
You'll look up and down streets. Look 'em over with care.
About some you will say, "I don't choose to go there."
With your head full of brains and your shoes full of feet,
You're too smart to go down any not-so-good street.
Your world is filled with ethical rules. So many rules that sometimes you cannot keep track of them all. When the rules are unclear, it is usually best to fall back on your own moral principles.
Take the advice of Robert Fulghum, who published a book called All I Really Need to Know I Learned in Kindergarten.
OK, it is a bit of an overstatement. I do not recommend that you disregard everything you learned since first grade!
But first principles matter most. My favorite Fulghum advice is this: Remember the little seed in the Styrofoam cup. With proper care, the roots grow down and the plant grows up. We are all like that seed.
I grew up in the small town of Lower Moreland, Pennsylvania, about 20 miles from here. You may acquire many new homes throughout your life, but you never lose the feeling that your old home is still your home.
Thirty-five years and a few weeks ago, I moved into a dorm room around the corner, to start my freshman year at Wharton.
I had done well in my public high school. But I was so intimidated by the scholarly professors and brilliant students I met here at Penn. I think I spent most of the first year in my room and in the library, struggling to keep up with the workload.
But eventually I did leave my room. I made some lifelong friends. I joined some valuable organizations. I learned an awful lot.
Your path through life always seems predestined in retrospect. Wherever you happen to be at any moment, it seems to be the logical result of choices you made and things that happened. But that appearance conceals an extraordinarily high degree of randomness. Your chances of planning your career in advance, and having them go as planned, are extremely low.
What you can do is to best prepare yourself for whatever opportunities may arise. Learn as much as you can. You never know when knowledge may be useful.
I studied economics, marketing, management, public policy, political science and various other topics in college. Then I went off the law school.
On my first day of tax class, I showed up with my HP financial calculator. Who knew that tax law does not require math!
I became a white collar prosecutor, and I got to use some of those math and business skills. Then I became a supervisor, and my management and marketing training came in handy.
In my current job, I draw on many things that I have learned over the years. The Attorney General functions as the Chief Executive Officer of the Department of Justice, and the Deputy Attorney General is the Chief Operating Officer.
I am accountable for managing the operations of the Department, and for advising the Attorney General about our policies and programs. Sometimes, I serve as the Acting Attorney General.
The Department of Justice employs 115,000 people, in every state and territory, and in many foreign countries. We also employ tens of thousands of contractors.
We confront many of the same challenges as C-suite leaders in corporate America.
We worry about our budget, and how best to manage it. I testified in Congress about our budget a few months ago. My younger daughter read about it and called me on the phone. She said, “How much money did you ask them for?” I replied, $27.7 billion. She asked, “Well, when do you find out whether they will give you the money?”
It takes a while. Obviously, the Department of Justice is fundamentally different than a business. Our mission is not to earn a profit, so we need other success measures.
The Department is divided into many separate divisions and agencies, which loosely resemble the business units and corporate functions of a large company.
I strategize with each component about how best to achieve its mission and implement President Trump’s priorities.
I work to defend the Department’s brand – meaning its good will and reputation – in the eyes of the public and other components of the government.
Sometimes I get to testify in Congress.
When I took the job, my younger daughter asked me whether my picture would be in the newspaper. I told her, “No. Deputy Attorney General is a low-profile management job.”
My older daughter is here with me today. She is the same age now that I was when I first came to this campus. She is a high school senior, going through the college search process.
Your generation has a lot more information than mine did. That can make decisions more difficult. I do not envy you. Choices impose costs.
Last spring, I toured Penn with my daughter. Seeing it through her eyes reminded me of how time changes your perspective.
This school houses many current and future leaders, and some of the most informed and inspiring faculty and administrators in the world.
Keep in mind that you are part of a long and proud tradition. This school was developed by Benjamin Franklin, one of the most important people ever to live in America.
Franklin was one of the authors of the Constitution in 1787. Yesterday, September 17, was the 230th anniversary of the signing of the Constitution.
Benjamin Franklin’s house was just a few blocks away from Independence Hall. The story is told that a woman named Elizabeth Powel approached Franklin when he was walking home after the Constitutional Convention.
Mrs. Powel asked Franklin what type of government the Founders had created. Franklin replied with these words: “A republic, madam, if you can keep it.”
Mrs. Powel’s question illustrates that it was not inevitable that our nation would begin as a democratic republic.
Franklin’s answer reminds us that it is not inevitable that we will remain a democratic republic.
The Constitution comes with a condition: we need to keep it.
Some people think that it is up to politicians to keep our government. But Franklin spoke to an ordinary citizen — a woman, who at that time did not even have the right to vote. Yet Franklin said it was up to her to keep the republic.
The lesson is that each of us should help to keep the republic.
In the United States Department of Justice, where I work, the most important thing we do to keep the republic is to promote the rule of law.
The term “rule of law” refers to the principle that the United States is governed by law and not arbitrary decisions of government officials.
Rule of law systems are characterized by consistency and predictability. They allow people to plan their lives – and their businesses – understanding in advance what rules will govern them.
But the rule of law is not just about words on paper. Any nation can write a good Constitution and adopt reasonable laws. The question is whether people will faithfully implement them.
The rule of law depends upon the character of the people who enforce the law.
It is not just about officials of the executive branch. It is about your elected representatives in Congress who write the laws. It is about the judges and justices who interpret the laws.
But, most importantly, it is about the citizens.
Abraham Lincoln said that we should: “Let reverence for the laws … be breathed by every American mother … let it be taught in schools, in seminaries, and in colleges; let it be written in Primers, spelling books, and in Almanacks — let it be preached from the pulpit, proclaimed in legislative halls, and enforced in courts of justice…. [I]n short, let it become the political religion of the nation.”
The goal is to enshrine reverence for the rule of law in the hearts of the people, and not just in the words of the law books.
What happens if the rule of law is eroded?
Robert Bolt considered the issue in his brilliant play about Sir Thomas More, A Man for All Seasons. More defends the rule of law in an argument with his son-in-law, William Roper. Roper is angry that More would respect the rule of law even for the Devil himself.
Using trees as a metaphor for laws, Roper insists that he would cut down every tree if it were necessary, in order to destroy the Devil.
More replies, “Oh? And when the last law was down, and the Devil turned round on you – where would you hide, Roper, the laws all being flat?”
We are all responsible for maintaining the rule of law. That includes hard-working businesspeople in the private sector – from Wall Street and Fortune 500 corporations to small neighborhood business owners. They make critical choices every day about whether to follow the law, even when doing so may be difficult or burdensome.
Corporate crimes and misconduct hurt people, businesses, and economic markets. It is misleading to characterize white collar offenses as “victimless” crimes.
We live in a society in which property rights matter. Financial fraud, bribery and corruption, price-fixing, insider trading – all those crimes harm victims, although the damage is not always obvious.
White collar crimes damage the level playing field that should exist between law-abiding competitors. They erode the public’s belief that hard work, discipline, and talent can be used to improve one’s station in life.
However imperfect our system of governance and our markets may be, they are far better than those found in places that lack our ideals.
The rule of law is critical in upholding the integrity and reliability of the financial system. It provides assurances to investors and consumers, and thereby influences their behavior. Markets do not respond well to widespread fraud, or even to suspicions of fraud, because it defeats expectations and undermines the ability to make stable plans.
That is part of what it means when we speak about “investor confidence.” The savings and loan crisis of the 1980s and ‘90s; the corporate fraud scandals involving companies like Enron and WorldCom in the early 2000s; and the recession of 2008 – all were exacerbated – if not caused – by disregard for the rule of law.
In each of those scenarios, when investor confidence flagged – that is, when people began to question whether the numbers on the books were reliable – it was only a matter of time before individuals and businesses pulling their money out of the market.
From the average American investing for retirement to the most successful fund managers in the country, people began to hold onto their money more tightly, creating a cascading series of economic problems.
The 2008 financial crisis profoundly illustrates the relationship between business and the rule of law. It is remarkable how quickly major banks – including huge investment banks with the best and brightest finance minds around – stopped trusting each other.
High-powered educations and successful shared histories were not enough to persuade people that other players in the market were following the rules. In 2008, experienced businessmen and women simply stopped believing that the numbers were reliable.
The kinds of people who were once sitting in a room like this one, at great institutions like Penn – they looked to their left, and to their right … and they were no longer willing to lend money. No promise, no IOU, no personal plea was enough, in a time of crisis. And the market collapsed. It is a reminder about the importance of public confidence.
It is so easy to forget those principles, especially at prosperous times like we are experiencing today. Under President Trump’s leadership, unemployment is down, the Dow Jones Industrial Average exceeds 22,000 points, and American businesses are on the rise.
Incidentally, when I graduated from college, just over 30 years ago, the Dow Jones average had never hit 2,000!
At the Department of Justice, we are doing our part to avoid unnecessary interference in law-abiding enterprises.
For instance, our Department, along with other agencies, is in the process of implementing a series of regulatory reform efforts to reduce regulations and to control costs. The President ordered us to identify two regulations to eliminate for every new one that we propose – a meaningful, concrete change in the way we operate.
But the path ahead for our country depends on you. It depends on those of you who may join me in public service, but it also depends on those of you who dedicate your careers to the private sector.
Future leaders like you are critical partners in the goals we hope to accomplish. We want your help to identify and implement the very best solutions to some very challenging problems. In that regard, I want to emphasize a few final points.
First, your commitment to ethical business practices and to corporate compliance is the country’s first line of defense against business crimes and other threats to our nation’s safety and security.
The world is interconnected, and criminal organizations are transnational and complex. Drug cartels, smugglers, terrorists and other criminals rely on the ability to engage in what might otherwise appear to be ordinary commercial activity with ordinary businesses.
That includes activities like banking, using cell phones, transnational shipping, and purchasing goods over the internet. When you listen earnestly to your employer’s compliance professionals and attend trainings about compliance and internal controls, you are doing more than just respecting corporate policies. You are a meaningful part of the vigilance that makes bad outcomes more difficult for criminals to achieve.
Second, the Department’s ability to rely on the business ethics of the private sector is like a concept that you may hear about in finance class – leverage.
The resources of the Department of Justice and our state and local law enforcement partners are finite. When you support the rule of law in your professional life, and when you show leadership in encouraging others to do so, you become a force multiplier, supporting our efforts.
When ethical business practices are widespread, law enforcement can focus on the most dangerous categories of criminals, for whom law-abiding conduct and self-policing would never be a reasonable expectation.
For example, drug traffickers and street gangs are causing havoc right now in many cities across the country.
Street gangs do not adopt compliance programs.
In 2016, about 64,000 Americans lost their lives to drug overdoses – more than 1,000 dead every week. The United States lost fewer lives in battle during the entire Vietnam War. Drug overdoses are now the leading cause of death for Americans under the age of 50. The total was just 17,000 in 1999 and 41,000 in 2012, so it is accelerating dramatically.
If corporate fraud spikes, it may take resources away from other important issues like drug enforcement, national security, violent crime, and cyber hacking.
Justice Department is always fighting all forms of law-breaking on all fronts, but the collective actions of the business community affect our allocation of resources.
Attorney General Jeff Sessions observed last week, “Enforcing the law saves lives, protects communities and taxpayers, and prevents human suffering. Failure to enforce the laws . . . put[s] our nation at risk of crime, violence, and even terrorism.”
Inaction always comes at a cost, although sometimes the cost is hidden. If government fails to enforce the law, then honorable people may be forced to choose between being cheated and becoming corrupt themselves.
A society that allows crime to flourish may soon lose its commitment to the rule of law.
Consider what life would be like without the rule of law.
Last spring, my younger daughter gave a presentation about North Korea to her 9th grade government class. She focused on the case of Otto Warmbier, the University of Virginia college student – a student the same age as many of you. Otto allegedly took a poster off a hotel wall while he was on vacation in North Korea. He was sentenced to 15 years of hard labor.
While my daughter was giving her presentation, one of her classmates checked his cell phone. During her presentation, the class learned that Otto had returned home. Unfortunately, North Korea sent Otto home with brain damage. He died a week later.
North Korea will not hold anyone accountable for Otto’s death. It is a totalitarian government with no concept of the rule of law. No civil rights. No due process. No apology for concealing Otto’s condition from his family and his country.
Not coincidentally, North Korea is also one of the most closed and underdeveloped economies in the world. Entrepreneurial activity is virtually impossible, except through the black market. The state mandates employment options and wages. Citizens suffer food shortages and even starvation. A comfortable lifestyle is available only to select members of the ruling party.
North Korea is a case study in the horror of a society that is not governed by the rule of law.
If we keep the rule of law, it will never happen here.
I want to conclude as I began, with sage advice that is not original to me. It is from a country song written by Lori McKenna and made popular by Tim McGraw, called Humble and Kind. How many of you know it?
This is the advice that I give my kids. No matter where life takes you, keep these words in mind:
Hold the door. Say please. Say thank you.
Don’t steal. Don’t cheat. And don’t lie.
I know you[‘ve] got mountains to climb.
But – always stay humble and kind.
Your Penn degree will open many doors. Choose wisely when you decide which ones to go through.
Expect nothing, and be grateful for everything. Remain gracious in times of defeat, and humble in moments of victory. And try to leave things better than you found them.
Here’s a toast to dear old Penn!
Thank you very much.