“Well written and an interesting perspective.” Clan Rossi --- “Your article is too good about Japanese business pushing nuclear power.” Consulting Group --- “Thank you for the article. It was quite useful for me to wrap up things quickly and effectively.” Taylor Johnson, Credit Union Lobby Management --- “Great information! I love your blog! You always post interesting things!” Jonathan N.

Saturday, February 17, 2018

On Educated Representatives and Large Districts: A Critique of Democracy

Democrat Georgia Congressman Hank Johnson said during an Armed Services Committee hearing in late March, 2010 that Guam would be in danger were more US troops sent there. “My fear that the whole island will become so overly populated that it will tip over and capsize,” he said in all seriousness. “We don’t anticipate that,” responded Adm. Robert Willard. Did Hank Johnson's constituents want their representative in the U.S. House of Representatives to be at least nominally educated?  Lest one replies with "of course," it could also be that people may want their representatives to be like them, or at least to reflect what they value. 

God's Gold on Wall St.: A Vaunted Self-Assessment of God's Work

A year after the financial crisis of 2008, Lloyd Blankfein, the CEO of Goldman Sachs,  found himself vilified for his firm’s quick return to risky trading in spite of its new bank holding company status. Populist resentment at the time was especially pitted against the hefty bonuses from the trades. Also, people were upset about the benefits that the bank had obtained from the decisions of its alums in the U.S. Government—specifically, in the U.S. Department of the Treatury. For instance, Goldman Sachs and other AIG counterparties got a the dollar-for-dollar payout from AIG thanks to an infusion of funds for that specific purpose by Treasury. Regardless, in an interview with the London Times, the highest-paid CEO (at least in the financial sector) dismissed such talk and defended his money-making machine and its compensation.  In addition to being the engine of economic recovery, according to Blankfein, Goldman Sachs provides a social function in making capital available to companies so they can expand. Stunningly, he adds, “I’m doing God’s work.”[1]  Such a claim is a far cry indeed from Thomas Jefferson’s warning that banking institutions are more dangerous to our liberties than standing armies.[2]  Perhaps God intends to undo our liberties by bailing out the banks.

The full essay is at "God's Gold on Wall St."
See related books: God's Gold and Essays on the Financial Crisis

[1] John Arlidge, I’m doing ‘God’s work. Meet Mr. Goldman Sachs, The Sunday Times, 11/9/09.
[2] Thomas Jefferson to John Taylor, Monticello, May 28, 1816, in Paul L. Ford, ed., The Writings of Thomas Jefferson (New York: G.P. Putnam’s Sons, 1892-99),  XI, 533.

Physicians and Lawyers: On the Presumption of Ignorance

It would surprise virtually every American (but only a few Europeans) to know that neither the JD nor the MD degree is a doctorate.   Each one is the first degree in its school, or discipline.  Yet we presume them to evince advanced knowledge, even allowing people with two undergraduate degrees to be "professors" (really instructors) in American law and medical schools. In the school of law, the sequence of degrees is: JD (same as the LLB), LLM (hint: M...Masters), and JSD (Doctorate in Juridical Science). The JSD degree includes advance study, a comprensive exam (an academic exam graded by faculty--not a industry-qualifying exam like the bar), and a defended dissertation. A doctoral degree must be the terminal degree of a field, contain a comprehensive exam, and include significant original research in a defended dissertation. The JD misses on all three points. The title of the first degree in law, the LLB (bachalors in letters of law) was replaced with "JD" largely for marketing purposes in 1901 in the founding of the U of Chicago law school (by three Harvard professors) because prospective students were complaining about having two "B" degrees after seven years of school.  People don't like to think they have gone to school for seven or eight years for two undergraduate degrees, but this is precisely what they have done. Nevertheless, the new law school in need of students complied with the "customer" complaint with a feat of mirrored marketing that was perhaps intentionally ambiguous.  To eviscerate the ambiguity in  Juris Doctor and a doctorate, one must look beyond the mere words.

The full essay is at "Professionals Over the Top." 

Corporate America's Apathy toward Federalism

In October of 2009, the U.S. House Financial Services Committee voted to give the federal government the power to block the states from regulating large national banks in some circumstances. The compromise approved by the House allows the Comptroller of the Currency to override the states, but only if that office found that the state law “significantly” interfered with federal regulatory policies.  This clears the way for a new federal agency to protect consumers from abusive or deceptive credit cards, mortgages and other loans.  Adoption of the compromise was a partial setback for the banking industry, which would have preferred to avoid having to comply with state laws that are sometimes stricter than federal rules.  Barak Obama and Barney Frank were pushing in the other direction—for subjecting banks to the relatively strict state laws with no chance of appeal to the US. Government.

The full essay is at "Apathy toward Federalism."

Off Target: Corporate Spending as "Speech" against Gay Rights

In a 5-4 decision on January 21, 2010, the US Supreme Court ruled in Citizens United that federal restrictions on corporate spending in elections constituted a violation of free speech. Critics called it wrong to equate corporate “speech” with individual speech and said the ruling would allow special-interest money to flood election campaigns. The bipartisan nature of the opposition to this ruling is striking in these largely partisan times. The court’s ruling is opposed, respectively, by 76, 81 and 85 percent of Republicans, independents and Democrats; and by 73, 85 and 86 percent of conservatives, moderates and liberals. Majorities in all these groups, ranging from 58 to 73 percent, not only oppose the ruling but feel strongly about it. Even among people who agree at least somewhat with the Tea Party movement, which advocates less government regulation, 73 percent oppose the high court’s rejection of this particular law. In addition to overwhelming opposition to the decision, there’s also bipartisan support for Congress to try to reinstate restrictions on campaign spending by corporations and unions.

The full essay is at "Target's 'Free Speech'." 

Tuesday, February 13, 2018

Instant Gratification Rules in American Fiscal Policy

With an expected deficit of $1.2 trillion for 2018-2019, the U.S. Government in December, 2017 enacted a tax cut with an expected revenue loss of nearly $1 trillion over a decade (assuming some growth from the tax stimulus) and, two months later, a budget deal passed adding $300 billion to federal spending in the next fiscal year.[1] All this was done with the U.S. debt at over $20 trillion—higher than the annual GDP at the time. With the  economy humming along with a low unemployment rate, the prospect for any fiscal discipline was bleak. Put another way, if budget surpluses could not come at the boom end of an economic cycle, then deficits would be likely in good times and bad. Behind the structural imbalance of contiguous deficits and an ever-growing debt is the all-too-human preference for instant gratification without a corresponding value being placed on self-discipline.

The full essay is at "$20 Trillion in Debt!"


[1] Neil Irwin, “Austerity Era Comes to End,” The New York Times, February 10, 2018.

Sunday, February 11, 2018

Foreign Policy in International Business: BP Trading a Libyan Terrorist for Libyan Oil

Senator Kirsten Gillibrand, D-NY, claimed in July of 2010 that the UK government should investigate what role BP played in Britain’s decision to free Abdel Baset al-Megrahi in August 2009. Al-Megrahi is the only person convicted of carrying out the 1988 bombing of a Pan Am airliner in which 270 people were killed over Lockerbie, Scotland. This is not to say that he acted alone. In February, 2011, Gadhafi's justice minster, Mustafa Abdel-Jalil, who resigned in protest against Gadhafi's massacre of unarmed protesters, told a Swedish newspaper that Gadhafi had ordered the attack. Abdel-Jalil also claimed that Megrahi threatened to "spill the beans" unless his return to Libya were secured. It would appear that BP, a publically-traded stock corporation, played a vital role between Gadhafi and the British government. If so, then aside from Gadhafi's sordid role, this case presents us with an issue of business ethics. Specifically, does a corporation, which is essentially private wealth but with responsibility befitting the power that comes with such wealth, cross a line when its employees engage in foreign policy? The ethical problem inherent in interfering in a juridical sentence is troubling enough; if an unelected corporation becomes so powerful that it can affect international relations between (and foreign policies of) countries, then the issue involves not only business ethics, but also democratic governance. As the line between private and public blurs, the respective bases of legitimacy can become conflated or transposed.

The full essay is at "BP Conducted Foreign Policy."

On the Danger to the United States of Living off Government Debt: The Case of the Dollar as World Reserve in 2010

Given the $13 trillion of U.S. Government debt in 2010, the dollar was losing out at the time in percentage terms to other currencies as the global reserve currency. To be sure, in absolute terms, there were still more dollars being held abroad than twenty or thirty years earlier, but as a report from Emma Lawson of Morgan Stanley showed, other currencies were taking on more of a relative presence. The lesson concerning excessive public debt was not grasped at least through the 2010's, as the debt continued to increase trillions of dollars more.


Sunday, January 28, 2018

Wealth as a Societal Value in the E.U. and U.S.: The Case of Financial Reform

The E.U. and U.S differ markedly in the degree to which the interests of big business are etched in the respective societies and polities. That is to say, the difference goes beyond the question of the relative influences of the lobbyists. I contend that the relative proclivity societally in favor of business in the U.S. tilts the political playing-field excessively in the direction of the financial interests at the expense of the public good, which I take to be well represented generally by a full, equally-weighted spectrum of views. I further contend that influence is easier for financial-sector lobbyists in the United States than in the European  Union because the societal values in the former lean more in their favor. By analogy,  it is easier to run downhill than even on a flat surface.

The full essay is at "Wealth as a Societal Value."

On the Influence of Wall Street in Congress: The Proposal to Distinguish Financial and Commercial Derivatives

In the process whereby financial reform legislation made its way through Congress after the financial crisis of 2008, the U.S. House and Senate had different approaches concerning who would be required to go through a clearing house to buy or sell derivative securities. According to Michael Masters, "The clearing house would stand in the middle of the transaction and guarantee both sides of the trade. If one counterparty to the transaction fails, then the central counterparty absorbs those losses, protecting the system as a whole from collapse."  Masters claims that "Wall Street firms hate this idea because their prodigious profits will dwindle when derivatives are traded in the light of day, letting their counter-parties see the true costs. So Wall Street is pushing hard to exempt as many transactions as possible."  Given the culpability of Wall Street in the financial crisis, they were in no position to "push hard." That they did nonetheless is a telling sign of the underlying character, or lack thereof, "on the street."  Furthermore, that the representatives and senators were listening to them ought to cause the voters some concern.  Yet because of the reality of the banks' muscle on the hill, the power of the banks to exploit any loopholes in the final legislation should have been salient as the legislation made its way through Congress. This can be seen in whether to favor the House or Senate version.

The full essay is at "Wall Street's Influence in Congress."

Westboro Church's Anti-Gay and John Galliano's Anti-Semitic Opinions: The U.S. and E.U. Contrasted

The First Amendment protects free speech in the U.S. even if it is as hurtful as signs at a Marine funeral proclaiming "Thank God for Dead Soldiers," the U.S. Supreme Court ruled on March 2, 2011. The Westboro Baptist Church celebrated the death of Lance Cpl. Matthew Snyder in Iraq with signs such as "God Hates You," along with anti-gay messages at his funeral in Maryland in 2006. The late Marine's father sought damages for emotional distress. An appellate court had reversed the $5 million award granted by a district court, and the U.S. Supreme Court concurred with the appellate court's decision.  The Wall Street Journal notes that "Chief Justice Roberts nodded to the wrenching set of facts in the case, writing that 'the applicable legal term— 'emotional distress'—fails to capture fully the anguish Westboro's choice added to Mr. Snyder's already incalculable grief.'"  Crucially, however, the justices of the majority opinion would not fall to the temptation of acting on the emotion that naturally follows hearing of such harm.

Interestingly, on the same day as the American high court's decision, the designer John Galliano was being fired by Dior's CEO and investigated by the French police (for inciting racial hatred with anti-Semitic statement, which is illegal in at least the French and German states of the EU) for having made anti-Semitic insults to a couple with whom he was arguing late at night in a trendy bar (cafe) in Paris. There, the emotions got the best of both the designer and those who reacted to the video posted of his comments (albeit showing only a part of the argument). Perhaps a grieving father at his son's funeral reading signs that thank God for dead American soldiers can be likened to a Jewish couple at a bar hearing that they are lucky their grandparents or parents were not exterminated by the Nazis. It is difficult for the rest of us to know how either feels, or how to compare the pain.

In any case, that any human being would want to hurt another so much is truly a sad commentary on our species that otherwise vaunts itself as being in the image of God. Perhaps the question is what kind of God is being envisioned here. A vengeance is mine, sayth the Lord sort, which Nietzsche condemns in his writings as already discredited on account of having such a sordid divine attribute as vengeance?  The deed is done, according to Nietzsche.  So too, the pain has already been inflicted on the grieving parents and the Jewish couple.  The rest is merely mopping up. 

I contend that the impulsive reaction in Europe to the fashion designer's drunken anti-Semitic slurs is inferior to the majority opinion of the American court in the Westboro case because the tolerance of reason is more in keeping with a free society than is vengeance or retribution against a disliked opinion. 

The full essay is at "Anti-Gay and Anti-Semetic Statements."

Friday, January 26, 2018

Lessons Learned from the Arab Spring: Reforming International Organizations and Invoking Principled Leadership in Defense of Human Rights

"When a leader's only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now." The White House issued this written statement five days after Qaddafi had turned in violence on his own people who were protesting unarmed in the street. Nearly three weeks after the first day that Qaddafi had lost legitimacy, President Obama tried to raise the pressure on the Libyan dictator further by talking about “a range of potential options, including potential military options."  Yet by then the politics of such intervention were getting more complicated by the day, according to the New York Times. The paper reported that critics were contending that the White House was too much concerned about perceptions, and that the administration was too squeamish on the military options on account of the preceding administration's invasion of Iraq based on a claim of danger to the United States from Saddam's access to WMD.
Even the critics acknowledged that the best outcome militarily would be for the United States to join other nations or international organizations rather than go it alone. About a week after the president's hint of military options, the E.U. decided not to impose a No Fly Zone. A few days later, the Arab League, which, according to the Huffington Post, had already barred Libya's government from taking part in League meetings, issued a statement that Qaddafi's government had "lost its sovereignty." The League decided to establish contacts with the rebels' interim government, the National Libyan Council, and to call on the Security Council of the U.N. to impose a No Fly Zone on Libya. 
In a statement, the Arab League asked the "United Nations to shoulder its responsibility ... to impose a no-fly zone over the movement of Libyan military planes and to create safe zones in the places vulnerable to airstrikes." It would not be until March 18th, nearly a month after Qaddafi had first had weapons used against the protesters, that the Security Council would act. According to The New York Times, "After days of often acrimonious debate, played out against a desperate clock, as Colonel Qaddafi’s troops advanced to within 100 miles of the rebel capital of Benghazi, Libya, the Security Council authorized member nations to take “all necessary measures” to protect civilians, diplomatic code words calling for military action." Within days, according to the New York Times, "American and European forces began a broad campaign of strikes against the government of . . . Qaddafi, unleashing warplanes and missiles in the first round of the largest international military intervention in the Arab world since the invasion of Iraq.

The analysis is at "Lessons Learned from the Arab Spring."


The Banking Lobby Amid Goldman Sachs' Culpability: A Danger to the Republic?

To simplify how Goldman Sachs got into trouble with the SEC: According to Annie Lowrey, the hedge fund Paulson & Co. handpicked mortgage-backed securities that were doomed to stop performing, being backed with subprime mortgages, and Goldman packaged them into a kind of bond. Paulson & Co. bet against the bond by buying short-sales, with Goldman acting as the broker. At the same time, Goldman sold the bond to other clients without disclosing that Paulson had engineered the bond to fail. The SEC filing notes that those other clients lost $1 billion. Goldman had no direct stake in the success or failure of the CDO. It made money either way. “This litigation exposes the cynical, savage culture of Wall Street that allows a dealer to commit fraud on one customer to benefit another,” Chris Whalen, a bank analyst at Institutional Risk Analytics, said in a note to clients on April 16, 2010. Someone at Goldman said on the same day that “the SEC’s charges are completely unfounded in law and fact.” If the SEC charges hold up (and it is doubtful that the agency would bring such charges without supporting documentation; it is more apt to miss something than go overboard), I am astonished that the people at Goldman simply dismissed the matter out of hand. It might make sense as their legal defense, but if the bankers are convicted, those lying ought to be fired even if they were not a party to the scheme. It also appears that the bankers lied about whether they made money in betting against the housing market. “The 2009 Goldman Sachs annual report stated that the firm ‘did not generate enormous net revenues by betting against residential related products,’ ” Senator Levin, chairman of the US Senate’s committee on investigations, said in a statement in April, 2010. “These e-mails show that, in fact, Goldman made a lot of money by betting against the mortgage market.” When a spokesperson for the bank says something in the future, a rational person will be wont not to trust him or her. Lying has (or ought to have) consequences rather than being dismissed as harmless PR or a legal defense. The bank’s credibility is at issue here. The SEC has accused Goldman of outright lying to customers in order to make money both ways on a deal. Even though this ought to reflect negatively on Goldman’s future business, bigger issues involved that ought to consume more of our attention than how Goldman fares.

The full essay is at "The Banking Lobby and Goldman Sachs."

The Increasing Decadence in American Business (and Society): The Case of On-Screen Distractions during Television Programs

While watching Lord of the Rings on TBS in 2010, I noticed that the network was posting not only its logo on the bottom right of the screen, but also advertising for its programming on the bottom left. Also, “more movie, less commercials” was written to accompany the logo. What really got to me during the movie was when pictures advertising a television show were shown. They took up almost an eighth of the screen and thus could not but distract the viewer from watching the movie. I decided I would not watch movies on networks that compromise or prostitute their own programing in order to sell themselves while "in progress." It is like sitting down at a restaurant and having the waitor sell me on other dishes while I am trying to enjoy the one that I'm eating. “I just want to enjoy this fine meal, thank you,” any discerning customer would be wont to say. Once at Starbucks, the customer in front of me at the register was paying $25 for a variety of products.  As I was thinking that the store had made a good sale, the clerk tried to sell the customer on a certain food item for the next visit--as if the present sale was not enough.  The same propensity wherein nothing is ever enough is evinced by the television networks that can't seem to restrain themselves from adding more and more self-promotions onto the screen during their own programming.  These networks are playing off the mitigated nature of the additions being incremental, and thus not objectionable to the average viewer. 

The full essay is at "Business Over-Reaching."

The Volcker Rule: Taking in Water on Proprietary Trading

Under the Dodd-Frank financial reform law of 2010, Goldman Sachs had to break up its principal strategies group, the trading unit that had been very profitable. Goldman was considering several options, including moving the traders to another division or shutting the unit altogether. Morgan Stanley was considering ceding control of its $7 billion hedge fund firm, FrontPoint Partners. At Citigroup, executives had sold hedge fund and private equity businesses and were discussing reducing proprietary trading, which relies on a bank’s own capital to make bets in the financial markets. JPMorgan Chase had already begun dismantling its stand-alone proprietary trading desk and was modifying the structure of some investments of One Equity Partners, its internal private equity business. “This is the real stuff,” said Brad Hintz, an analyst at Sanford C. Bernstein & Company. “It shows that if you squeeze Wall Street, like a balloon it will come out somewhere else, and we really are squeezing Wall Street. Their business models are changing.”

The complete essay is at "The Volcker Rule."