“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.

Friday, November 16, 2012

BP Admits Criminal Guilt in Gulf Oil Disaster

More than two years after the worst oil disaster in U.S. history, BP agreed, according to the Wall Street Journal, “to accept criminal responsibility for the . . . disaster that killed 11 workers.” What does it mean for an association to “accept criminal responsibility”? The notion seems unwholesomely anthropomorphic, if not chimeric in nature. Taken even just practically, holding a corporation itself criminally responsible may not be make sense, even as a deterrent. I contend that the notion of criminality applies only to human beings, whereas civil charges are suitable for associations including corporations.
 
 
                                           The fire at the Deepwater Horizon rig leased by BP in 2010: Beyond a financial impact.  
 
 
From a corporate perspective, criminality would of course be viewed in financial terms, ideally from the standpoint of the financial welfare of the stockholders. Accordingly, the “criminal responsibility” translates into $4.5 billion in “fines and restitution.” The figure includes nearly $1.3 billion in criminal fines. The settlement includes payments of $2.394 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences over five years, and $525 million to the Securities and Exchange Commission for having misled investors by lying to Congress. The fines relate to BP pleading guilty on 11 felony counts of misconduct or neglect of ships officers, one felony count of obstruction of Congress and one misdemeanor count each under the Migratory Bird Treaty Act and the Clean Water Act. The 11 counts related to the workers' deaths are under a provision of the Seaman's Manslaughter Act.
 
It is the outflow of cash, rather than “pleading guilty” to 11 felony counts of “seaman’s manslaughter” relating to the deaths of the 11 workers onboard the rig and one felony count of obstruction of Congress in providing false information on the rate that oil was gushing from the deep-water well, that “translates” directly into corporate terms. During the three months in which the well was gushing uncontrollably into the Gulf, the U.S. Government relied on BP for accurate information on the rate of output, and the company executives in turn were aware of this reliance and yet chose to lie—misleading investors as well as the U.S. Government. It could be argued that the fines are essentially the same as pleading guilty, but then such fines are generally perceived as qualitatively different than those in the civil cases against BP. It is this qualitative distinction that does not translate into a business calculus other than in terms of the negative financial impact in terms of reduced reputational capital from headlines such as, “Oil Giant to . . . Plead Guilty to Criminal Charges.” What really registers in the bewindowed albeit closed offices at BP is the “to Pay $4.5 Billion” part of the headline.
 
Fundamentally, a company’s management is geared in its very perspective to the interest of the company, and ideally its stockholders, rather than to the business environment, even when the company has created harm to the latter. How does a corporation even accept responsibility for something like manslaughter or lying? It is not as though an organization has a mind, much less a conscience. A business mindset is more like that of a shark—a feeding machine. It does not make sense to hold a shark responsible; it can only be kept out of Sydney’s swimming areas, for example, by nets.
 
Organizations are basically the people who run and operate them. “Company” is actually a plural noun, as in “a company of men.” Accordingly, the individuals who formulate, sign off on, and implement a policy, procedure or decision that results in harm to others (or the environment) can and should be held criminally responsible. Put another way, human beings rather than associations can feel punishment and thus can be subject to it.
 
Fortunately, besides the criminal settlement, “three former BP employees were charged by a federal grand jury with felonies in the incident, two of them for allegedly failing to carry out a critical safety test properly” and “to alert onshore engineers to problems with the drilling.” The two oil well supervisors were charged with 11 counts of “seaman’s manslaughter,” 11 counts of involuntary manslaughter and one violation of the Clean Water Act. The third, “David Rainey, BP’s former head of Gulf of Mexico exploration, who took a lead role in the disaster response, was charged with obstruction of Congress and making false statements to a law enforcement officer for allegedly lying about how much crude was spewing from the well.” Unless decided on his own to lie, others at BP should have been charged criminally too.
 
The fact that criminal charges were made against particular persons at BP is extremely important, both in itself (i.e., justice) and as a deterrent. Two years after the disaster, BP was still the largest oil producer in the Gulf of Mexico. Additionally, the oil giant was exploring for oil and gas in Texas, Oklahoma, Arkansas, Louisiana, and Ohio. The company would likely have to send executives to the Hill to testify in the future, and those executives should know that they could go to prison for deciding to lie or even “just following orders” to mislead Congress.
 
As for the criminal fines, they may actually be insufficient financially, given the wealth of the oil giant. The $4.5 billion is merely 17% of the company's profit in 2011 alone. To cover most of the cost of the criminal fines, the company simply sold its Texas City, Texas refinery—where fifteen people had been killed in an accident in 2005—for $2.5 billion. Meanwhile, the multinational company was able to maintain “strategically important” refineries in Washington, Ohio and Indiana in the U.S. alone. Although “leaner,” the well-publicized company might even benefit in terms of public relations in the future from being rid of the sordid refinery in Texas.
 
To be sure, the civil claims pending at the time could include up to $20 billion under the Clean Water Act if the company is held grossly negligent (i.e., “conscious and voluntary disregard”). Additionally, the company has spent about $14 billion on spill response and clean-up and more than $9 billion in claims to business and individuals. A related claim was up to $7.8 billion when BP announced the criminal settlement in late 2012. Also, Louisiana, Mississippi, and Florida were suing BP for civil fines. Clearly, these fines dwarf the monetary element of criminality. I contend that the other elements of criminality do not register at the company level.
 
In spite of having agreed to have BP plead guilty, the company’s executives did not seem particularly interested in admitting guilt. "We believe this resolution is in the best interest of BP and its shareholders," said Carl-Henric Svanberg, BP's Chairman. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims and to contest allegations of gross negligence in those cases." This is hardly an acknowledgement of criminal guilt. Rather, it is a statement of how the settlement benefits the company! This is like boy sent to his room as a punishment bragging about being able to play video-games from his bed. Surely his mother hearing this would wonder whether she had in fact just punished her son or rewarded him for bad behavior.
 
From BP’s standpoint, the decision to plead guilty on criminal charges was done in the best interest of the shareholders by reducing legal risk. This is not to accept and acknowledge being blameworthy in a criminal sense. Accordingly, on the day in which the criminal settlement was announced, shares of BP actually rose 14 cents, ending the day at $40.30. Relatedly, the Journal reports that analysts “reacted positively to BP’s settlement of its criminal liability.” There is no sense in this reaction of how you or I might react to a person who “pleads guilty to criminal charges.” We would not exactly buy stock in that person. A company is different—it is a financial machine wherein a settlement that provides a ceiling on the cash to be spent translates as “limiting legal risk.”
 
In my view, the various civil fines are what must have registered at the company level at BP because of the sheer amount of cash involved. It can be asked from this case whether it even makes sense to hold a company criminally guilty. “Fighting crime” could be more focused against the persons involved—expanding what counts as who is “in the know” on a given policy or a decision that harms others—while the monetary aspect to a company is in civil crimes.
 
Alternatively, if a corporation truly is to be held criminally guilty in a given country, then it would seem to me that “going to prison” would mean that the company could not do business inside or even with that country or its businesses during the length of its sentence. Lest it be answered that an oil giant would hardly agree to a settlement under those terms, I answer that criminals don’t necessarily agree to plead guilty and there is, after all, the alternative of a criminal trial and verdict. A company being found guilty rather than agreeing to plead guilty deprives it of its share of control while still implying the ethical obligation to admit rather than deny the guilt implied in the verdict. In short, either being criminally guilty should mean something besides reducing legal risk (i.e., something bad ) or concept should not apply at all—to companies, that is.

 
Sources:

Michael Kunzelman, “BP Oil Spill Settlement Announced,” The Huffington Post, November 15, 2012.

Tom Fowler, “BP Slapped With Record Fine,” The Wall Street Journal, November 16, 2012.

Angel Gonzalez and Daniel Gilbert, “Accident Fails to Dent British Firm’s Ambitions in U.S.,” The Wall Street Journal, November 16, 2012.

 

 

 

Visionary Leadership at Zynga


Faced with a stock price down 75 percent since its IPO and conflict with subordinates throughout 2012, Zynga’s chief executive Mark Pincus had plenty on his plate as he met with Bill Campbell of Apple in September of that year. Zynga investor and venture-capital firm Kleiner Perkins Caufield & Byers had brought Campbell in to advise the CEO. While it is tempting to play around the edges and work on “communication processes” and hand out more employee stock-options, the bottom-line in such cases is typically the need to improve the products either simply to be better products or better tailored to changing consumer tastes and habits. Product development that can transform companies may result from the vision of a leader for whom strategy is simply a matter of reaching a destination already known.
 
                                                                             Mark Pincus, CEO of Znyga. From this picture, it is hard not to like the guy.       Reuters
 
According to the Wall Street Journal, Pincus “revamped Zynga’s structure and reshuffled his executive team.” Additionally, he tried “to remake himself as its leader by ceding more control to deputies.” Prime facie, jargon like “revamped,” “reshuffled” and “remake” can have the smell of superficial jazz rather than having an intention to get at the core of the problem facing the company. Beyond the revamping and reshuffling, and even remaking, Pincus could have focused on changing his attitude or mentality, especially in terms of working with other people in the company.
 
Even closer to the core problem was Pincus’s decision to spend more of his time in product development meetings and putting mobile product application in every product-division. Optimally, these changes would go along with market research on what was behind the rapid change in video-game player habits and research into how to counter Facebook’s changes that made it more difficult for consumers to find Zynga’s games on the social network. According to the Journal, the change in player habits (and tastes) as well as the changes in social media technology, “dictated fundamental changes at Zynga.” As the key source of innovation, knowledge is where the real game is to be played at Zynga. The stock market may simply have been reflecting the lack of sufficient knowledge while being unimpressed by the “revamping” and “reshuffling,” and, moreover, “remaking.” Leaders are not remade and they do not spend away their time revamping and reshuffling. Rather, leaders lead on substance that is vital to their organization.
 
Steve Jobs led at Apple not by having a “touchy-feely” personality or granting lots of employee perks, but, rather, by having visionary ideas on products that would change our daily life in the modern world. In the midst of a lack of such ideas being fused with leadership at Zynga, Jonathan Liu, the product director, described a mere manifestation or symptom in telling Pincus, “People couldn’t articulate what the main strategy was, or why they were coming into Zynga on a day-to-day basis.” Firing the chief operating officer might have been easy, but the true source behind the muddled strategy was a wan of ideas concerning products and knowledge concerning the end-users, coupled with a lack of real-time awareness of what middlemen such as Facebook were doing.
 
Put another way, strategy itself is but a means by which visions of future products can be implemented; strategy itself is not the decisive point. As for “the vision thing,” either someone has it or not; one cannot simply “remake” oneself as a “new” leader and trust that the ideas will come. Ultimately, vision is more than even ideas; it is an ideal, and thus something capable of being believed in. The morale problems and related conflict, as well as all the talent being snagged up by Twitter and Facebook, the lack of strategy and even the sort of leadership in Zynga can all be interpreted as symptoms of a void in terms of vision that is oriented to products.
 
It might even be asked whether any passion for playing the computer games was left at the company. In terms of vision, not even such passion may be enough. Steve Jobs was surely passionate about computer technology, but this alone does not account for his vision that effectively transformed even staple products like the telephone and even the laptop. One cannot be trained to come up with a vision, much less be passionate about something; these must already be inside. The quest at Zynga could have been in trying to locate it in others and bring them in, even if it means, as Pincus said, “it’s inevitable that some people will choose to leave.” That could include the leader-founder himself.
 
Source:

Evelyn Rusli, “The Education of Zynga’s Founder,” The Wall Street Journal, November 16, 2012.

 

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.”[1] 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"

“Fiscal Cliff” in U.S.: Real or Hyped?

As the U.S. economy slogged through a recession following the credit crisis in 2008 and the E.U. was weighed down by the ballast of austerity in the most indebted states, developing economies, including those of China and India, kept the world economy afloat. As a group, those economies grew 7.4% in 2010, 6.2% in 2011, and 5.5% in 2012. In keeping with this trend, the Global Economic Outlook of the Conference Board predicted 4.7% for 2013. Fortunately, the Board also predicted a pick-up in consumer demand in the U.S. to pick up the slack. “The only really short-term positive impact that we can have is that we can see a faster return of demand, particularly in the U.S.,” the Board’s chief economist said. As of 2012, such a return was not necessarily “in the cards.” The pessimism can be seen in the projected world economic growth of 3 percent, which is lower than the 3.2% expected in 2012 and the 3.8% achieved in 2011. That the projected growth rate of only 1.8% for the U.S. in 2013 is less than the projected 2.1% for 2012 indicates that increased demand in the U.S. was not expected to fully pick up the slack for the slowing-down of the developing economies. Here I want to point to a major factor in the U.S.: the possibly impending “fiscal cliff” of cuts in the federal budget and the end of the Bush tax breaks  that were scheduled to begin on January 1, 2013 unless Congress and the White House could come to a legislative agreement beforehand on an alternative way of holding down the deficits. Presumably that way would have a less recessionary effect.
 
In doing political risk analysis, one might be tempted to weigh in on predictions of a grand deal. I submit that predicting whether one comes together, as well as its differential economic impact would be, is not merely difficult, but also nearly impossible—unless one has “inside information” from the key players in Washington. Political risk analysis is not a sort of crystal-ball operation. Predicting the future is notoriously difficult for us mere mortals. However, we can assess how the prospect of a possible event, such as the “fiscal cliff,” is being played out in real-time. In other words, it is possible to determine whether the “fear-mongers” are exaggerating the probably economic impact (and why!). Assessing the severity of the worst-case scenario can thus be recalibrated, with implications for strategic planning.
 
Should the automatic cuts in the U.S. federal budget and end of the Bush tax cuts begin on January 1, 2013—a combined hit of over $500 million in that year alone—a “recessionary toll” was generally held to be the result. That is to say, the domestic demand made possible by increasing discretionary spending would be reduced as government spending decreases and federal income taxes increase. The Global Economic Outlook pointed to the prospect of Congressional and White House negotiations potentially obviating the sequestration as bearing on the global economic growth. Even though Congressional leaders could be counted on to rise to the occasion in delivering on sufficient dramatics at the last minute, the general public could not be sure that the denouement would involve a quick swerve away from “fiscal cliff” as though in some 1940s film noir.
 
Just by the numbers—around $500 million in 2013—the Conference Board may have been overstating the recessionary impact of the sequestration in an economy whose GDP was over $16 trillion. For one thing, the momentum in 2012 was in the direction of increasing demand. Also, corporate planning may have already “hedged their bets” so “going over the cliff” would not actually involve much change, at least initially, on their part.
 
I must add here the caveat that I not an economist. Hence, I do not have the quantitative expertise necessary to "run the numbers" on how much GNP would decline from the sequestration. However, I have run economic regressions, so I have some sense that the actual variables in a political economy are not as formulaic as those in a regression equation. The inherrent uncertainty in the political dimension in particular renders suspect the “empirical social science” approach of modern economics as determinative in political economy. Put another way, the political-risk-analysis dimension of an economic growth projection introduces considerable uncertainty in an otherwise quantitative economic numbers game, which might itself be overly deterministic or "exact." Even if we could untangle the myriad political factors going into political negotiations beforehand, we would still have to accept the uncertainty that is inherent in predicting the future, especially where human decisions are in the mix. That is to say, the future cannot be known for certain, given the respective natures of time and human beings.
 
I suspect the differential economic impact between a possible deal and sequestration was being exaggerated, particularly by the media but also by officials in government and CEOs—all of whom had subterranean reasons for doing so.  The media’s “fiscal cliff” label alone illustrates the proclivity to exaggerate. It is not as though a deal would have absolutely no drag on the economy, even if significantly less than that of sequestration. However, in distinguishing between “some” and “more” in terms of a drag on consumer demand in the U.S., the impact on the overall global economic output may be less than the “fiscal cliff” rhetoric implies because the world is much more than the American union. In other words, if the “differential” in terms of economic impact between a deal to cut the deficit and sequestration turns out to be less than portrayed in 2012, the resulting impact on the larger global economy would also be less.
 
In terms of a prognosis for 2013 from the vantage-point of late 2012, my best guess was that it would be largely similar to 2012 globally—the U.S. and E.U. continuing to climb out of deep recessions while struggling to inflict austerity on themselves for their own good, and the developing economies continuing to cooling their heels from growth rates that were probably unsustainable anyway. In terms of international business prospects, “continued languid” rather than “fiscal cliff” would be my headline.
 

Source:

Matthew Walter, “U.S. Seen Propelling Growth of Global Economy in 2013,” The Wall Street Journal, November 13, 2012.

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.
 
Initially, Viviane Redig, the E.U. Justice Commissioner, proposed federal fines for companies in the E.U. that fail to have female board membership of at least 40% by 2020. Facing opposition from Britain, the Netherlands, Malta, the Czech Republic, Latvia, and Bulgaria over legally binding provisions to be enforced by the Commission, she “revised and resubmitted” her propose now in the form of a directive whereby sanctions would be determined by the individual states. “In the new proposal,” according to the New York Times, “sanctions would apply only in cases where companies that fell short of the 40 percent threshold failed to establish adequate selection procedures.” Additionally, the states decide what are to be the sanctions. Hence, even though the states are required (i.e., directed) to implement the E.U. law under the commissioner’s amended proposal, the discretion, which is considerable, could be expected to result in substantive differences in enforcement throughout the union. In other words, the E.U. Commission would have a difficult case arguing before the ECJ that a state had refused to implement the directive. The court would have to wade in on what counts as minimally adequate selection procedures and sanctions. The device itself—the directive—is explicitly oriented to accommodating differences that exist between the states, so judicially-established “minimum standards” applicable to every state implementing a directive would doubtless be far lower than the advocates of the particular policy would prefer.
 
Meanwhile, in the US at least four states had recently decided not to expand health-insurance subsidies to the uninsured poor under the expanded Medicaid program that had been passed by Congress as part of “Obamacare.” In its ruling on the federal law, the federal Supreme Court decided that requiring the states to expand their participation in the program constituted an encroachment by the U.S. on the state governments.  Someone looking at this “opting out” by states including Florida, South Carolina, Alabama, Iowa, and Louisiana might conclude that the directive on women on boards in the E.U. would similarly enable “red states,” including Britain and the Czech Republic, to opt-out too. The respective costs are that uninsured poor in states like South Carolina continue to be uninsured (and thus without access to clinics) and women in states like Britain continue to be discriminated against at the board level. In short, accommodating real differences between states in empire-scale unions has a cost in terms of specific policy objectives, and one might even say equality itself.
 
At the time of the debate on a mandated quota by the college of commissioners, considerable diversity at the state level existed in the E.U. with respect to public policy on quotas. In the state of France, women made up 22.3% of board-membership at blue-chip companies at the time—the state having already introduced quotas with an aim of 40% by 2017. The Netherlands too had enacted mandatory quotas, but without major penalties. Spain and Italy had enacted only voluntary quotas, and as one might expect, the British House of Lords had criticized the very notion of mandatory quotas. This diversity is innate, and thus entirely reasonable in a union as large as the E.U. We could expect the same sort of spectrum from state to state in the U.S.
 
Inhibiting interstate diversity has a cost, as a one-size-fits-all federal rule does not accommodate the differences and thus builds political pressure within the federal system. Yet obviating this cost by the E.U. directive (and the expanded-Medicaid opt-outs from “Obamacare” in the U.S.) is bound to result in another sort of cost. In particular, the goal of 40% female representation union-wide will almost certainly by stymied by the states refusing to implement the directive by enacting an involuntary mandate with teeth. Either way, there is a cost. Giving each its due is difficult because the costs are qualitatively different and thus are difficult to compare and weigh with each other.
 
In the U.S. during the twentieth century, the overwhelming trend was to avoid the cost in terms of reaching goals union-wide on particular issues. This came at the expense of recognizing the legitimate differences between the states. Considerable pressure of pent-up or frustrated diversity had doubtless accumulated in the process, though an eruption could presumably be decades or even centuries off. The accent in American politics had been on achieving particular policy aims, union-wide, rather than on maintaining a balance in the federal system between the union and the states. It is an open question, at least as of 2012, whether the E.U. too would follow such a trajectory as it matures past its development stage.
 
That E.U. states had been extant far longer before creating a union may delay any such “inevitable” consolidation. More significant, however, may be the more direct involvement of heads of the state governments in the European Council (rather than having delegates, or senators) along with the established device of the directive as an alternative to union-wide rules. That is to say, rather than relying on the states’ rights ideology at the state level in the current generation (something that was also the case in the U.S. during its first hundred years), the federal design might turn out to be more decisive, though perhaps ultimately insufficient if a future generation wants or insists on union-wide achievement of particular policy-aims.
 
Ideally, particular policy-aims should be balanced against the need in any empire-scale federal system to allow its states some breathing room owing to the inherent differences between them. The viability of this principle does not depend on what the people prefer, as long as there are differences between the states culturally and ideologically and public-policy aims whose validity can claim to be universal in nature. As modern American history illustrates, it can be all too tempting to succumb to the normative point that women should not be discriminated against and thus suspend one’s concern for the viability of diversity within the federal system. Yet the hegemony of particular ideological or normative goals can unintentionally compromise the achievement of a more perfect union.
 
 
Sources:
Frances Robinson, “EU Directive to Balance Women in Boardroom,” The Wall Street Journal, November 13, 2012.
James Kanter, “Renewed Push in Europe To Seat Women on Boards,” The New York Times, November 14, 2012.
Kay Koplovitz, “Women on Corporate Boards in U.S. Lagging the Global Trends,” The Huffington Post, September 19, 2012.

Keeping the Palestinian Authority Down at U.N.

In “defiance of retaliation threatened” by the United States and the state of Israel, the Palestinian Authority announced in November 2012 that it planned to hold a vote in the U.N. General Assembly on the Authority’s request to become an observer state. According to The Wall Street Journal, “(s)uch a designation would give the Palestinian Authority the right over its airspace and territorial waters.” The Authority could participate in General Assembly debates, sponsor resolutions, and nominate candidates for Assembly committees. The Authority would be able to accede to treaties and join specialized U.N. agencies, such as the International Civil Aviation Organization, the Law of the Sea Treaty, the Nuclear Non-Proliferation Treaty, and the International Criminal Court. The Authority could thus press charges against Israelis before the Court.
 


                                    The General Assembly. Noticably larger than the Security Council.   Huffington Post


Because 132 states had already recognized the Authority as a sovereign state and the U.S. does not have a veto in the General Assembly, the vote was expected to be in the Authority’s favor. Rather than wade into the long-standing Israeli-Palestinian standoff, I want to investigate the nature of the responses of the Israeli government and the United States to the likely passage.
 
In retaliation, Finance Minister Yuval Steinitz said in Israel, “If the Palestinians continue to advance their unilateral move they should not expect bilateral cooperation. We will not collect their taxes for them and we will not transfer their tax revenues.” Had the Palestinian Authority had held a similar position concerning unilateral moves, the Israeli government would doubtless not have held off in its unilateral moves, such as building a wall. Perhaps taxation should be added to the rights of observer states. The hypocrisy alone would justify that, not to mention the threat being made.
 
I suspect the control over airspace and the membership at the ICC were of particular concern to Israel. Security concerns were a given. Given Israeli influence over the American Congress, I suspect that the Israeli officials would also bristle at Palestinian demands being enforced by an over-arching authority to which Israel was at least in theory subject. That is to say, being held accountable.
 
Also in anticipatory retaliation, the American Congress “threatened to cut off $500 million in security and economic aid” to the Authority. Here, the American Government having been accustomed to the comfort of its veto on the Security Council no doubt left officials feeling a sudden and as though terrifying loss of control. Hence, as though impulsively, the Congress acted out in a manipulatory fashion to circumvent being in the minority on a vote.
 
Furthermore, the American threat suggests that the Israeli government might have disproportionate influence in the halls of Congress and in the White House, even given the state’s ally status. The duopoly of two major parties in American politics may be complicit here. The result may be that Israeli interests come before even American interests in American foreign policy.

Concerning both the state of Israel and the fifty United States, it is the tenor of such blatant threats and manipulation that is particularly striking in this story. Might it be that the reactions, particularly if knee-jerk, are in essence cultural—meaning that manipulation and threats have come to be a common feature of human interaction in those states. Rather than being to criticize Israeli or American policy, my point is that the reactions themselves can be indicative of a certain cultural decadence concerning the way certain people “deal with” not getting their way. Beyond the sheer childishness in “taking one’s marbles” if one does not get to make the rules of the game is the sordidness of the mentality that threatens and manipulates as a matter of course. I suppose the real question is how—or even whether—such a value system can be changed. At the very least, one is inclined by the fitting moral disapprobation to see to it that that particular psychology does not get its way, or is at least frustrated in the pursuit of its particular tactics. Making them transparent can be a first step to a better world, at least as among persons.
 

Source:

Joe Lauria, “Palestinians Set U.N. Vote, Defying Retaliatory Threats by U.S., Israel,” The Wall Street Journal, November 13, 2012.

Sunday, November 11, 2012

Democratic Addiction to Congressional SuperPACs?

According to Rodell Molineau, executive director of the Democratic super PAC American Bridge, "The meta-lesson from [the 2012] election cycle is that showing up and participating in the process is key, which is something that we didn't do in 2010. I think a lot of Democrats ceded the field on super PACs because most people in progressive circles didn't believe in the Citizens United ruling." The fact is, sometimes you have to play by rules you don’t agree with in order to compete. The obvious danger is that one gets coopted by those rules in the process, even having a financial disincentive to push for a repeal of the problematic rule. In other words, the rule gains the benefit of being the status quo and thus becomes extremely difficult to dislodge. In this case, the rule is that of unlimited corporate and union spending made possible by the U.S. Supreme Court’s Citizen’s United ruling on January 21, 2010.
 
In 2010, the Huffington Post reports, “conservative outside groups held a three-to-one advantage in spending on House races and a slightly more than two-to-one advantage in Senate races, according to the Center for Responsive Politics. The formation of the Democratic super PACs and their coordination with traditional liberal groups—labor, environmental and women's groups—helped cut that advantage to less than two-to-one in both House and Senate races in 2012, according to Federal Election Commission data. . . . In the end, conservative groups reported spending $102 million on House races, compared with $79 million for Democratic groups. In Senate races, conservatives spent $135 million, compared with $89 million for Democrats.” However, former U.S. senator Russ Feingold, co-author of the 2003 campaign finance reform act, said, “I don’t think we won because of this thing.” This remark is crucial should it be necessary to ween Democratic Congressional leaders off an addiction to the sugary superPAC money.
 
One other major factor the former senator could have been referring to is the impact on Congressional races of the Obama campaign’s ground-game and related systematic data-collection efforts in 2012. Specifically, the campaign was able to identify new voters, track their opinions, and get them out to vote. Congressional campaigns and even groups such as MoveOn were able to tap into that resource in getting out the vote. Getting out the base made all the difference in the 2012 election, particularly as most counties in most states shifted back in a Republican direction after tilting blue for Obama in 2008.
 
Another factor is the mistakes that Congressional candidates themselves made, such as Richard Mourdock, the Republican candidate in Indiana for the U.S. Senate seat formerly held by Dick Lugar, claiming that a rape victim getting pregnant is “God’s will.” It is questionable whether any amount of superPAC money could undo such a gaffe.  A similar though less outlandish case involves Mitt Romney’s comment made in private to a group of rich potential donors that it would not be his job as president to worry about the 47 percent of Americans who did not own income taxes (but paid other taxes) in 2011. In other words, voters are capable of ignoring the political ads in such cases and voting on the basis of what they have reason to believe more accurately depicts the candidate’s judgment and opinions. One would like to think that voters could see through the slickly marketed political ads on television in every case, but having the ad edge can help a candidate, particularly in reducing the opponent’s support.
 
Sadly, having a lot of money counts in Congressional elections. In the constitutional convention in 1787, some delegates worried that Congress, unlike the state legislatures, would be an aristocratic body—even the U.S. House, which was to be the repository of democracy in the new federal government. By the twenty-first century, the populations of the states had become much more than they were in 1787, including relative to the number of members of Congress. The U.S. as a whole reached 300 million around the year 2000, with only 535 members of Congress. The aristocratic element can be seen in these numbers alone. It should be no surprise that candidates for those offices would attract a great amount of money, and with it private influence over public policy. Even were Citizens United upended by a future decision or an amendment to the U.S. Constitution, it would be difficult to hold back the flood of money attracted to all the power that Congress has amassed since the Great Depression in the 1930’s. 
 
In other words, the sound of money is simply a reverberation of the nature of power in an increasingly consolidated political empire. Whether or not the Democratic Party succumbs to its financial incentive to retain SuperPACs to which donors can give unlimited amounts of money, effective campaign finance reform would be part of a broader and deeper reform oriented to breaking up the concentration of power in what was once known as American federalism.
 

Source:

Paul Blumenthal, “Democratic Super PACs Trim Conservative Advantage in Congressional Races,” The Huffington Post, November 10, 2012.