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Saturday, December 29, 2012

Mario Monti: Succumbing to Power?

He was supposed to have been reluctantly pushed into briefly stepping in as prime minister in Italy to push austerity measures through the state legislature.  According to Deutche Welle, “The 69-year-old former European Commissioner was appointed to lead Italy’s government . . . to restore Italy’s finances following Berlusconi’s departure.” The technocrat was not supposed to so interested in power that he would want to stay on. At the end of December 2012, Mario Monti announced that he would lead a centrist group of politicians against the Democratic Party and Berlusconi’s People of Freedom party in the upcoming election.  Had the former bureaucrat “found religion” in some political cause, or had he developed a taste for power? If the latter, we might ascribe the motive to the human propensity to resist giving up power willingly.
  Mario Monti at the European Commission. A launching point for Italian politics?    source: nytimes
The full essay is at Essays on the E.U. Political Economy, which is available at Amazon in print and as an ebook.

Friday, December 28, 2012

Averting the "Fiscal Cliff": A Solution Overlooked

With just days to avert the beginning of automatic, across-the-board cuts in the U.S. federal budget and the end of the Bush tax cuts and payroll tax reductions, President Obama met with Congressional leaders at the White House following a brief respite over Christmas. The discussion was doubtless on what could pass Congress in time. The U.S. Secretary of the Treasury was also attending, so the upcoming debt-limit could also have been part of the discussion. It could be argued that the perspective itself at the meeting must have been too narrow—too small—even though the crisis demanded leadership.

The complete essay is at Essays on Two Federal Empires, which is available at Amazon in print and as an ebook. 

Speaking after meeting with Congressional leaders, President Obama could have used the crisis to propose a seismic shift in American federalism in line with reducing the federal debt. Getty Images

José Manuel Barroso: Picking Romania’s Government?

On December 9, 2012, Romanian voters approved of the coalition of the then-current Prime Minister Victor Ponta, by a two-thirds majority. However, because Ponta had been in a bitter political feud with President Traian Basescu—Ponta’s coalition tried and failed to impeach the president—it was not clear that the president would nominate Ponta for prime minister even though that post must be approved by the parliament. Basescu did wind up nominating Ponta. The interesting point here is that President Barroso of the European Commission publicly waded into the choice on behalf of Ponta. 
 Prime Minister Ponta of Romania: Propped up by Barroso?           exclusivnews.ro

The full essay is at Essays on the E.U. Political Economy, which is available at Amazon in print and as an ebook.

Thursday, December 27, 2012

Pot in Colorado: Getting High on American Federalism

On November 6, 2012, Colorado’s citizens approved with a 55% majority a marijuana-legalization measure that allows residents over the age of 21 to possess up to an ounce. The measure also allows for the commercial growing and selling of pot. More than a month later, the government of Douglas county in Colorado passed a law prohibiting companies from growing or selling cannabis. Meanwhile, the U.S. law continued to make the growth, sale, possession or use of pot illegal. Over all, it would seem to be a case of federalism as a pretzel of sorts, all twisted up into itself. This case study can be used to point to a more perfect union in terms of federalism.

The complete essay is at Essays on Two Federal Empires.

The pot leaf.   source: Mother Jones (who else)

Thursday, December 20, 2012

Is a Stronger E.U. in America’s Interest?

Is a stronger E.U. necessarily in the interest of the U.S.? According to Ed West of the Telegraph, “it’s not clear whether a united Europe would necessarily be more pro-American, automatically siding with the US against the rest. European countries have their own interests with regards the Middle East, Africa and China, which often don’t coincide with America’s, and on a range of world issues European public opinion is fairly hostile to America, decades of American military protection having inspired not gratitude, but resentment. Britain is something of an anomaly in Europe, popular opinion being unusually hostile to the EU and warm to America.” This passage can be taken to task on at least two points.

The complete essay is at Essays on Two Federal Empires, which is available at Amazon in print and as an ebook.

Thursday, December 13, 2012

A British Referendum on the E.U.

Legislators can make the task of getting instructions from the popular sovereign, the people, unduly difficult. In November 2012, the Florida legislature confronted its people with several proposed constitutional amendments written in legalese that even some lawyers found difficult to navigate through. The next month, Boris Johnson and Liam Fox of Britain pressured their state’s legislature to put forth a referendum that, unlike that of Florida, would present the people with a clear choice.

The flags of Florida and Britain             Source: allposters.com
The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Wednesday, December 12, 2012

How to Beat the Rap, HSBC Style

In HSBC’s settlement with the U.S. Government, the bank has to pay $1.9 billion—about half a quarter’s profit—but avoids criminal charges. The New York Times quotes government officials who said they were hesitant to indict the bank because formal charges could mean bankruptcy, which in turn could roil the financial system itself owing to the bank being too big to fail. That is to say, one of the advantages of being TBTF is apparently that of effective immunity from criminal charges.
 The full essay is in Cases of Unethical Business, which is available at Amazon.

Tuesday, December 4, 2012

SEC Goes After Chinese CPA Firms: Beyond Diplomacy

The Securities and Exchange Commission brought an administrative proceeding against the Chinese affiliates of five major CPA firms, including the “Big Four,” in 2012. Chinese companies had raised billions of dollars on American (and Canadian) exchanges only for the share prices of the companies to plummet due to questions about bookkeeping and disclosures. The SEC alleged that the CPA firms in China refused to hand over documents in connection with the investigation of alleged accounting frauds at nine Chinese companies. The SEC maintained that firms that audit U.S.-traded companies must follow U.S. law, and the Sarbanes-Oxley Act requires foreign audit firms to hand over documents about U.S.-listed clients at the SEC’s request. SEC Commissioner Luis Aguilar said that the investigations “have been hampered by the lack of access to relevant documents.” For their part, the CPA firms in China (affiliates of American-based CPA firms) pointed out that their audit papers are treated like state secrets in mercantilist China, and that the auditors could therefore be imprisoned for handing the material over a foreign government without permission from the Chinese state. 

The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

Bailouts Without Stimulus: E.U. Policy on Spanish Banks

Directly and indirectly, the housing bust that began in 2007 put “the bailout” on the map in the lexicon of industrial policy both in Europe and North America. Whereas in the U.S., few restrictions were placed on the recipients, the E.U.’s first €37 billion ($47.9 billion) for Spain’s banking sector required the four major state banks “to make sharp cuts in their balance sheets and payrolls,” according to the Wall Street Journal. Bankia, the largest of the banks to be bailed out, planned to cut its number of employees by more than 6,000, close more than 1,000 branches, pass on any further real-estate lending, and reduce its assets by €50 billion as the bank focuses on retail banking—getting back to the knitting, as it were. Presumably the bankers were not allowed to grant themselves bonuses as a condition of the bailout. If so, it would differ appreciably from the U.S. bailout of Wall Street banks.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Saturday, December 1, 2012

Bad PR and Bad Banking: BOA

How to do bad PR: Announce plans to raise fees effecting low-income customers, then pull back, wait a year, then announce such plans again, then pull back yet again. This sort of PR strategy gives rise to headlines such as, “Bank of America Backs Down on New Fees.” The Wall Street Journal could have added, “yet again.” Besides the obvious PR downside to announcing unpopular fees—and on one’s least well-off customers—is the implication of weakness or vulnerability in repeatedly backing down. In the animal kingdom, Bank of America would not exactly be the alpha male lion. Rather, the bank would be one of the other males, which may or may not get to reproduce.
The full essay is in Cases of Unethical Business, available in print and as an ebook at Amazon.com.  

Monday, November 26, 2012

The Filibuster: States' Rights or a Partisan Ploy?

Before 1917, senators could filibuster only by talking continuously on the U.S. Senate floor. There was no mechanism to stop them. Such filibusters were rare until entering World War I was debated. In 1917, the Senate passed its first “cloture” rule, whereby two-thirds of the Senate could cut off debate and force a final vote. Between that year and 1971, no two-year session of Congress had more than 10 such votes. Even so, in 1971 the rules were changed to allow other legislation to be taken up during a filibuster—relieving a senator of having to continuously talk to maintain one. Making it easier to filibuster quickly led to the predictable result of more filibusters. In the 93rd Congress (1973-74), the number of cloture motions jumped to 31, from an average in the 1917-1971 period of two per Congressional session. In 1975, the number of votes needed to stop a filibuster was lowered from 67 to 60. However, this change did not curtail the use of the device, as it is rare for a party to control 60 votes out of 100 in the U.S. Senate. By 2010, the average number of cloture motions per two-year session had risen to 129, which suggests that the filibuster had become more typical in how senate business was to be conducted. In effect, legislation and even executive business, such as confirming presidential nominations, needed a supermajority (60 out of 100) in the upper chamber of Congress.

The complete essay is at Essays on Two Federal Empires.

Non-Tariff Barriers to Trans-Atlantic Trade

Karel De Gucht, the E.U. trade commissioner, said in late November 2012, “There is now, for the first time in years, a serious drive towards an E.U.-U.S. free-trade agreement.” The office of his counterpart, Ron Kirk, the U.S. trade representative, indicated that a high-level working-group consisting of Europeans and Americans was working on “how best to increase U.S.-E.U. trade and investment.” The sticking point concerned non-tariff barriers, such as different regulatory standards.
Karel De Gucht, the E.U. Trade Commissioner, advocating a free-trade pact with the U.S.  (Reuters).

The complete essay is at Essays on Two Federal Empires.

Sunday, November 25, 2012

Steve Jobs: The Sad Truth about Visionary Leadership

According to Joe Nocera, Steve Jobs was not a consensus-builder but a dictator. Lest it be objected that this disqualifies him from being admitted to the “true leader” hall of fame, Nocera hints at an explanation for why visionary leaders may not be all that touchy-feely after all. Nocera suggests that Jobs was a dictator because he “listened mainly to his own intuition.” He “never stopped relying on his singular instincts in making decisions” on Apple products. This makes complete sense, as his sense was singular. 
Steve Jobs at Apple. Is it the vision or charisma that accounts for the focus on such pictures?   Getty

Friday, November 23, 2012

Mexico’s Name-Change: A United States No Longer?

Shortly before leaving office, Mexican President Felipe Canderón sent to the Mexican legislature a proposal to amend the state’s constitution by renaming the country “Mexico,” from the “United Mexican States.” His rationale was that Mexico didn’t need “a name that emulates another country and which none of us Mexicans uses on a day-to-day basis.” Indeed, the emulation evinces a category mistake in that it treats what was province in an empire, that of New Spain, as an empire.
                                   Mexico's head of state, Felipe Calderon, who proposed the name-change.  
The full essay is at Essays on Two Federal Empires.

Thursday, November 22, 2012

Moody’s: Statist France Lagging in the E.U.

Bashing the French in a major article on their lack of business competitiveness, the Economist was the target of la colère en Paris in November 2012. Just after the magazine’s warning that France could be the next danger-zone for the euro due to relatively high labor costs and unemployment, Moody’s cut the state’s rating to Aa1 from Aaa and kept a negative outlook on the rating. Moody’s cited the state’s economic weakness and the risks to the finances of the state government “posed by” France’s “persistent structural economic challenges.” In this way, Moody’s analysis dovetails with that of the Economist. Both pointed to a sort of impotence in French industrial policy. Moody’s decision excluded factors from the broader debt crisis in the E.U., focusing instead on the French government’s continued “reliance on borrowing to finance generous social-welfare programs” even as businesses in the state were laying-off employees. In other words, Francois Hollande had not gone far enough in his policies to make a dent in the state’s deficit as well as the downward trajectory of French competitiveness in the E.U. Meanwhile, deteriorating economic conditions in the E.U. were effectively closing the window of opportunity on even a one-party government being able to enact substantive reform. I contend that the gap between what the Socialist party could do, given its absolute majority in the legislature, and what it was actually doing contributed to the criticism.
Changes in real GDP in the state of France. A general downward trend-line is apparent.     Source: World Bank
The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon. 

Wednesday, November 21, 2012

House of Commons Undercuts Cameron on E.U. Budget

In 2012, David Cameron of Britain “suffered his first major House of Commons defeat” in governing  “when some in his party failed to back his position on the budget negotiations and urged him to secure deeper cuts” in the pending 1 trillion euros E.U. budget for 2014-2020.  Although Cameron had stated he would veto the European Commission’s proposal to increase the overall E.U. budget by 5% annually for the seven-year period, he did not support cutting the federal budget. Because the vote in his state legislature for cuts in the federal budget was non-binding, the governor was free to ignore it in the European Council, where the state governments are represented. The European system of public governance suffered from at least two major weaknesses here.

The complete essay is at Essays on Two Federal Empires.

 David Cameron representing his state at the E.U.         AFP/Getty

Tuesday, November 20, 2012

States Pull Ahead of E.U. on Syria: A Compromised Foreign Policy?

In November 2012, the New York Times reported that the European Union was offering “crucial support for the new Syrian political opposition,” which the E.U. referred to as the “legitimate representative for the Syrian people.” The E.U. stopped short of “conferring full diplomatic recognition” to the new group—the National Coalition of Syrian Revolutionary and Opposition Forces—even though one of the E.U.’s states, France, had conferred such recognition one week earlier, and another state, Britain, would soon do likewise.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Thursday, November 15, 2012

The U.S. Producing More Oil: A Panacea or Obstacle?

The International Energy Agency projected in 2012 that a shale-oil boom would catapult the United States over the state of Saudi Arabia as the world’s largest oil producer by 2020. In the words of the Wall Street Journal, the global energy map was “being redrawn by the resurgence in oil and gas production in the United States.” Although the United States would benefit in the period from the trajectory, the drawbacks should not be ignored. In fact, the trend could be harmful in the long term if preparedness for a world without oil is put off as a consequence.

The entire essay is at "The U.S. Producing More Oil"

Tuesday, November 13, 2012

Women on Corporate Boards: Britain vs. the E.U. Justice Commissioner

In 2012, women made up 13.7% of board positions in large listed companies in the E.U., and 15% for nonexecutive board positions, according to The Wall Street Journal. In the U.S., according to Kay Koplovitz of USA Network, the number of women on corporate boards had been stalled at more or less 15 percent for over ten years. Whereas in the U.S., people would look at Congress to enact a uniform inter-state standard or else leave the matter to individual corporations, the E.U. has other alternative means, such as the directive. That device relies on the state governments to decide on the penalties as well as enforcement against violators of the E.U. law. Even though the Commission could take a state refusing to implement a directive to the European Court of Justice, the “cost” of the flexibility in the state-based implementation is a possible dilution in the law’s aims being achieved throughout the E.U. rather than just in a few states. Put another way, even as the ideological diversity within the empire-scale union is accommodated, advocates of more female representation on corporate boards may be disappointed as some states give non-complying companies only a slap on the wrist.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Thursday, November 8, 2012

Divergent Fiscal Policies in the E.U.

States on divergent fiscal paths can test the flexibility of an empire-scale union, particularly if it is relatively new and still developing. Simply having different industrial/agricultural make-ups can put states at odds with each other. That the richer states can use fiscal policy to become even richer, while the policies imposed on poorer states may aggravate their fiscal conditions, can mean that the economic distinctions between states can become an increasing problem in a federal system, even given the allowances enabled by federalism itself (e.g., by the principle of subsidiarity). 

The complete essay is at Essays on Two Federal Empires.

Monday, November 5, 2012

Romania’s Monetary Policy in Federal Europe

Sometimes monetary policy and federalism can interact in interesting ways. To grasp a particular relation, such as that of Romania in the European Union, it is first necessary to keep in mind that monetary policy is not federalism and vice versa. An anti-federalist, for example, might have an incentive to conflate the two concepts out of a desire to deny the existence of a federal system already underway.

The complete essay is at Essays on Two Federal Empires.

      Romanian currency.     Source: banknotes.com

Sunday, November 4, 2012

Clearinghouses Profit as Too Big To Fail

According to Gretchen Morgenson of the New York Times, “failing to confront the too-big-to-fail question is a serious oversight.” Lest it be assumed that the financial reform law passed in 2010 after the financial crisis of 2008 makes it less probable that taxpayers would again be made to bail-out financial institutions without any strings attached, Morgenson argues that the legislation “actually widened the federal safety net for big institutions. Under the law, eight more giants were granted the right to tap the Federal Reserve for funding when the next crisis hits.” Those institutions, including the Chicago Mercantile Exchange, the Intercontinental Exchange, and the Options Clearing Corporation, were even able to avoid the penalties for failure specified in the Dodd-Frank Act of 2010.
The clearinghouses successfully argued that even though only banks had been allowed to borrow from the Fed’s discount window, the clearinghouses are not financial institutions (rather, they are “financial utilities”) so they should not have to be “wound down” by regulators according to Dodd-Frank should they fail. This is essentially having it both ways and getting away with it. To explain this nice arrangement, we would need to look under the hood, where I suspect we would find an exclusive world wherein vast private wealth is itself political power, even apart from any lobbying activity.
In 2011, the CME Group, the parent company of the Chicago Mercantile Exchange, made almost $3.3 billion in revenue. Craig Donohue, the CEO, received $3.9 million in compensation and held an additional $10 million worth of equity outstanding. With this kind of money comes inherent influence, politically speaking.
At the very least, great wealth has an intrinsic status, particularly in American culture. Even though some non-rich people might sympathize with the interest of riches in hopes of being rich someday, I suspect it is the power in the wealth itself that accounts for the “gravitational pull.” This subtle force operates on legislators and regulators too, and thus complements both the influence of lobbying and campaign contributions, and the ability or wherewithal of great wealth to “reward” and “punish.”
Abstractly speaking, great wealth has inherent political power by virtue of its status. In addition, the wealth can fund lobbyists and even political campaigns. Lastly, it can be used more generally to “help or harm” specific individuals. The systemic risk of such wealth to the viability of a republic thus goes beyond simply regulating lobbying and even campaign contributions. The sheer existence of the huge concentrations instantiates a risk to the system as a whole. If this thesis seems novel or different, it may because it is not in the interest of the subterranean power-brokers that it be made known. They would much prefer that secondary issues be debated or used as talking points.  
It should be no surprise that when the managers at the clearinghouses “were drooling at the prospect of having access to loans from the Fed,” according to Sheila Bair, the former head of the Federal Deposit Insurance Corporation, “top officials at the Treasury and the Fed, over the objections of the F.D.I.C.,” pushed Congress to allow the non-banks access to the Fed’s discount window as part of the Dodd-Frank Act even while saving the clearinghouses from being subject to the law’s “wind-down” requirements.  
According to Morgenson, the “clearinghouses have considerable clout in Washington. From the beginning of 2010 through [November 2012], the CME Group . . . spent $6 million on lobbying.” If I’m correct, the sheer wealth of the Group (and its executives!) and the related ability to “reward and punish” added to the efficacy of the lobbying. There are precious few Davids willing to sling-shot a giant; most people consider it entirely reasonable to simply step out of the way.
As though a rationale were needed, managers at CME argued that once their institution received Dodd-Frank’s designation of “systemically important,” the Fed “should provide access to emergency lending” and without strings. Not included in the Act’s penalties for failure, CME hardly deserved an “offsetting” benefit. The lack of symmetry here is the “smoke” indicative of “fire”—the conflagration here being the furtive, innate political power of huge amounts of concentrated (i.e., in one organization) private wealth.
As an alternative to Dodd-Frank, legislation could have mandated that clearinghouses too big to fail be broken up in terms of not only operation (i.e., product lines), but also management, physical location, and ownership (i.e., stockholders). Too big to fail means that the very existence of the institution represents too much systemic risk for the economy and financial system. In answer, the institution itself would have to be downsized or split apart until no such institution exists. Unfortunately, such reasoning must push off from the gravity of the tremendous mass that is hyper-concentrated capitalism—an economic system far indeed from that theorized by Adam Smith., wherein each producer is a price-taker, and thus by implication not off significant gravity even in the market, let alone Congress.
In short, the clearinghouses got it both ways when they should have been broken up. I contend that the culprit behind this feat or acrobatics is none other than the political power of large concentrations of private capital or wealth. Ultimately, it is the sheer mass itself that is too big to fail, both economically and in terms of representative democracy. It is as though mega-corporate kidney stones were passing uncomfortably through society’s innards with society itself heavily sedated. Everything is fine.

Systemic risk goes involves much beyond its financial or even economic dimension. When, according to Morgenson, “large and systemically important financial utilities that together trade and clear trillions of dollars in transactions appear to have won the daily double—access to federal money, without the accountability [in being wound down after failing as per Dodd-Frank’s process for systemically-important financial institutions],”—we can and should ask, at what cost to us as a people and even as a society to be passed on to posterity?


Gretchen Morgenson, “One Safety Net That Needs to Shrink,” The New York Times, November 3, 2012.

Friday, November 2, 2012

E.U. Directives: Applicability to American Federalism

Far from having gone off the court to an easy retirement in the Bahamas, U.S. Supreme Court justice John Paul Stevens found a calling in advocating the addition of four words to the U.S. constitution, here put in italics: “The laws of the United States . . . shall be the supreme law of the land; and the judges and other public officials in every state shall be bound thereby.” While the proposal seems innocent enough, and even a matter of progress after the fashion of the E.U. Stevens’ rationale befits the more general shift at the time from federalism to consolidation in American governance.

The complete essay is at Essays on Two Federal Empires.

Thursday, November 1, 2012

Florida Ballot 2012: Legalese Disenfranchising Voters

In elections, popular sovereignty is exercised by an electorate. Such sovereignty is above that of governments (i.e., governmental sovereignty). Typically, popular sovereignty (i.e., the will of the people) is limited to filling public offices from candidates or write-ins. In the last few decades of the twentieth century, California effectively expanded the power of popular sovereignty by adding a number of referendum questions to the ballots. Even though the popular sovereign (i.e., the direct will of the people) can make mistakes—such as requiring a 2/3 legislative majority to pass a tax increase in California—the expansion from merely filling public offices to actually making policy and even law is from a democratic perspective a good thing. The problem, it seems to me, lies in how the questions are written. In particular, they must be written in such a way that they are understandable to the typical voter. Writing a question, whether on policy, law, or a constitutional amendment, in legalize circumvents popular sovereignty. Such an approach defies common sense itself, and yet it was done in spades (and impunity) by the Florida legislature in 2012, placing the Florida electorate in a nearly-impossible position as the popular sovereign.

                                                                                                                             Flag of Florida 

Concerning the 2012 election in Florida, The Florida Times-Union in Jacksonville wrote, much “of what’s on the ballot is legalese and difficult-to-understand wording associated with the amendments.” The newspaper advises Florida’s citizens, “To save time, it will help to know what each amendment does, how you want to vote, and if a “Yes” or “No” achieves that desired vote. In short, be prepared.” Much too much is assumed in this advice concerning the wherewithal of the typical citizen to make sense of the technical legal words, and even to research each question before voting in order to understand what the  technical language means (assuming that the typical voter is going to wade through even the newspaper’s own deciphering).  In general, assuming too much of an electorate reflects negatively not on the electorate, but, rather, on the legislators who crafted and approved the ballot’s language.
For example, the matter of the third proposed amendment on the Florida ballot was put to the voter in the following words (from the ballot): “This proposed amendment to the State Constitution replaces the existing state revenue limitation based on Florida personal income growth with a new state revenue limitation based on inflation and population changes. Under the amendment, state revenues, as defined in the amendment, must be deposited into the budget stabilization fund until the fund reaches its maximum balance, and thereafter shall be used for the support and maintenance of public schools by reducing the minimum financial effort required from school districts for participation in a state-funded education finance program, or, if the minimum financial effort is no longer required, returned to the taxpayers.” Besides the basic, rather obvious point that the typical voter could not possibly be expected to understand this language (and yet someone approved it nevertheless!), the language assumes that the voter knows what goes into the existing revenue limitation (and can thus compare it with basing a limitation on inflation and population changes). Furthermore, the voter is assumed to be familiar with what a budget stabilization fund is, and able to assess its dynamic (e.g., maximum balance, etc.). The proposal is so specific, moreover, it may be misplaced as basic or constitutional law rather than as a mere statute. Indeed, the decision on the question is more along the lines of governmental than popular sovereignty (i.e., the elected representatives, who write laws and thus either understand the legalese or have a staff that does).
Supposing perhaps that the typical voter has a real estate brokerage license, the fourth proposed amendment on the ballot states in part: “In certain circumstances, the law requires the assessed value of homestead and specified nonhomestead property to increase when the just value of the property decreases. Therefore, this amendment provides that the Legislature may, by general law, provide that the assessment of homestead and specified nonhomestead property may not increase if the just value of that property is less than the just value of the property on the preceding January 1, subject to any adjustment in the assessed value due to changes, additions, reductions, or improvements to such property which are assessed as provided for by general law.” The legislators erred, in my view, in projecting their own language onto the general public, and, moreover, in conflating what is actually a statute with constitutional language, which is (or at least should be) much broader.
Another proposed “amendment” would provide “an exemption from ad valorem taxes levied by counties, municipalities, school districts, and other local governments on tangible personal property if the assessed value of an owner’s tangible personal property is greater than $25,000 but less than $50,000.” Besides the latin term and legal jargon, the specification of the dollar figures is clearly statute-level rather than constitution. I have a bachelor’s degree in Accounting and I would have trouble with defining “ad valorem taxes.” I cannot imagine a person, especially if elderly, who has not worked in business being able to make sense of the proposal.
As a final example, one might wonder how the following proposed “amendment” is at all constitutional, not to mention being of sufficient importance that the legislators—the agents of the popular sovereign—could not be entrusted with making the decision. The proposed “amendment” would “replace the president of the Florida Student Association with the chair of the council of state university student body presidents as the student member of the Board of Governors of the State University System.” The typical voter might legitimately wonder, what is the council of state university student body presidents, and is it really much different than the Florida Student Association? Moreover, why am I being asked to decide this?
The truly unfortunate thing about Florida’s bastardization of popular sovereignty is that sensible proposals to expand popular sovereignty could face rejection based on experiences such as Florida's attempt in 2012. So many reasons go into why voters elect a person to an office that it is impossible to say that the voters have expressed a will on a given policy by electing a particular candidate. Whereas the typical voter does not have a basis in real-estate, accounting and law (i.e, all three!), he or she could be expected to reflect on and give an answer to questions such as, should abortion be illegal, should the U.S. give aid to Israel, should military spending be cut, should Florida provide subsidized health insurance to residents unable to afford it, and should property taxes be cut to reduce the deficit or raised to add funding to roads and education? A legislature could even add some non-legal terms to such questions to clarify them without losing the typical voter, and testing such questions by using focus groups could add confidence that the legislators have not unwantedly projected too much of their own world into the wording. Additional specificity could be handled by the agents (i.e., the legislators), as per the nature of principal-agent relationships.
In short, expecting too much from the electorate is not only utterly unfair to the voters, it also risks undercutting real progress on popular sovereignty, an electorate being fully capable of deciding general policy and even law, with the legislative agents then being tasked with writing the expressed general will into legal language.
Concerning proposed constitutional amendments, the legalese could be provided below a description that voters can understand without any assumed expertise beyond a high-school reading level, as if to say, this is how the amendment would look in the constitution. In fact, statute language could be provided under general policy language on questions regarding policy or an important statute. Because popular sovereignty is superior to governmental sovereignty, that which a legislature puts to the electorate to decide must reach a certain threshold of importance. Deciding on contending student representatives so obviously does not meet this test that one might wonder whether the Florida legislature is fit even to legislate, much less address matters to the agents’ principal—the voters as a group.
Lastly, to the extent that legislatures have been confusing statute from constitutional levels in terms of breadth, legislators would be wise to assign to a committee the task of distinguishing what is properly constitutional from what is of such specificity to be statute law. I suspect that state constitutions in the U.S. would have to be redrawn to correct for decades of category mistakes. Although Florida’s approach to popular sovereignty in 2012 was particularly, well, stupid (to state it bluntly), I suspect that other state legislatures are fully capable of making similar mistakes, particularly in trivializing their constitutions into a way to add statutes as though they were amendments. One might wonder whether the legislators knew much at all about their respective constituents.
Ironically, the legislative decision in Florida to ask the electorate to decide questions on the basis of technical language that could not possibly be understood by the general public is in itself a good reason to expand popular sovereignty at the expense of governmental sovereignty. However, this must not be done so as to put the voters in an impossible situation—that of being asked to decide matters by reading language that they cannot possibly understand. This is not rocket science, folks, even in the state where rockets had been launched for decades.


Matt Dixon, “Florida Constitutional Amendments: Voter’s Guide,” The Florida Times-Union, October 13, 2012.

Read more at Jacksonville.com: http://jacksonville.com/news/metro/2012-10-13/story/florida-constitutional-amendments-voters-guide#ixzz2Azfj6zDL

Monday, October 29, 2012

Wiley Punishing Resellers: Beyond Profits

Publishers sell English-language textbooks at lower rates in developing countries. Such “cut-rate foreign goods” are a staple on e-Bay. In late October 2012, the U.S. Supreme Court heard arguments on a case that pits the practice against the claims of publishers of copyright infringement. The case began when Wiley accused a USC doctoral student of copyright infringement and won a $600,000 judgment. The student not being able to afford the judgment, Wiley successfully urged the judge to take the student’s golf clubs and his computer after his graduation—as if sending the student to his room without dinner even though the vase is still broken. Clearly, the clubs and computer could not come even close to covering the judgment. Given the lack of publicity on the particulars, I doubt that the terms were even designed to be a deterrent. If I am correct, the motive comes from more of a “stick it to him” mentality. Whereas a legal analysis of the case is doubtless most typical, I want to try to uncover the sordid nature of this mentality behind the “clubs and computer” slap-down.

The full essay has been incorporated into (or swallowed up by) On the Arrogance of False Entitlement: A Nietzschean Critique of Business Ethics and Management, available in print and as an ebook at Amazon.

German Conservatives Ease Up on Greece

During the summer of 2012, it was all too easy, especially for financial analysts (whose expertise is on finance rather than politics), to summarily conclude that the E.U. was not capable of keeping the states of Greece and Spain from default. Perhaps the human brain has an innate proclivity to think in bipolar terms in the sense that something (or someone) is presumed either “good” or “bad.” Empirically, social organization, which includes politics and finance, is typically more gray than “black and white.” This is undoubtedly the case concerning the political risk analysis that goes into assessments of systemic risk, especially where uncertainty is salient. In general terms, I would say that as of 2012 the anticipated demise of the euro (and even the E.U.) was much exaggerated. Somehow or other, European policy-makers were able to hold the federal ship-of-state together in spite of its vulnerabilities.

The full essay is at "Essays on the E.U. Political Economy," available in print and as an ebook at Amazon.

Friday, October 26, 2012

Cameron to Van Rompuy: No Negotiation on E.U. Budget

Just days before the House of Commons debated whether Britain should secede from the E.U., Prime Minister David Cameron and his deputy, Nick Clegg, met with Herman Van Rompuy, President (or chair) of the European Council, to discuss Cameron’s threat to veto any proposed seven-year E.U. budget that is higher than the previous budget (allowing for inflation). The European Commission had proposed a 5% increase over the current budget, setting the stage for a clash of the titans across the federal and state levels. The British refusal even to negotiate on the federal budget exposed a major vulnerability in the E.U. itself just as it was being relied on internationally to protect the euro from succumbing to the systemic risk of Greece or Spain defaulting.

The complete essay is at Essays on Two Federal Empires.

Anti-Federalist Britain: South Carolina on Steroids

If Douglas Carswell, a member of the House of Commons, had his way, Britain would secede from the E.U. before Prince Charles could say, “hip hip!” Carswell's Private Member's Bill, submitted for debate in late October 2012, would repeal the European Communities Act (1972), by which Britain became a state in the former European Economic Community in 1973 (after France had vetoed Britain’s first request). Although Private Member’s Bills rarely become law in Britain, merely having a debate on whether to have a referendum on the question of whether the Kingdom should secede from the empire-level union would stir the pot. The Prime Minister, who was on record in support of not pulling out of the union, but for only economic reasons as his state had been benefitting from the large common market. So even if Carswell’s effort is ultimately unsuccessful, even such a revolt by Tory back-benchers could undercut David Cameron’s power in the midst of a languid economy in the state.

The complete essay is at Essays on Two Federal Empires.

                                     PM David Cameron of Britain at the European Council. Is he onboard?     AFP/Getty