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Thursday, May 16, 2013

Hollande Proposes Economic Government for Euro-Zone: Muddying the Water?

At a press conference marking French President Francois Hollande’s first year in office, the powerful head of the large E.U. state called for an economic government for the euro zone.  One might be tempted to ask, what exactly is an economic government? By definition, a government is a political entity. Show me a government without politics and I’ll pack up and head to the Himalayas for a life of other-worldly contemplation. What, pray tell, is an economic government exactly?
           President Francois Hollande of France proposing an economic government for the euro-zone. What exactement is an economic government?    Source: Reuters

The complete essay is at "Is the E.U. a Federal System?"

Half of the American Population Disagrees with 97% of Climate Scientists on Global Warming

Thomas Jefferson and John Adams concurred on the following preference—namely, a natural aristocracy of virtue and talent over the artificial sort of birth and wealth. Talent here is not merely skill, but also knowledge. Hence the two former U.S. presidents agreed that citizens ought to be given a broad basic education in free schools. The corollary is that as a citizenry lapses in virtue and knowledge, decadence will show up in public discourse and consequently public policy. If kept unchecked, the tendency is for the republic to fall.
Therefore, as governor of Virginia, Jefferson proposed a Bill for the More General Diffusion of Knowledge in 1779. His rationale was that because even “those entrusted with power” who seek to protect individual rights can become tyrants, popular education is necessary to render a republic secure. Jefferson’s hope was that by teaching “the people at large” examples of despots in history, the electorate would be more likely to recognize despots in their own time and throw the bastards out on their noses. As for those whom voters put in public offices, Jefferson believed that “laws will be wisely formed, and honestly administered, in proportion as those who form and administer them are wise and honest.” Hence, “those persons, whom nature hath endowed with genius and virtue, should be rendered by liberal education worthy to receive, and able to guard the sacred deposit of the rights of their fellow citizens.” This is why, beginning at around 1900, law schools in the American states began to admit applicants to the undergraduate degree in law (LL.B. or J.D.) who had already earned an undergraduate degree in the liberal arts and sciences. It was not as though the undergraduate degree in law had been promoted to graduate status.
Having had largely self-governing, popularly-elected colonial legislatures for much of the seventeenth century, the nascent American republics would stand on the two pillars of virtue and talent (including knowledge) instilled in the self-governing peoples themselves as well as their elected and appointed public officials. It is said that the only constant is change, as in the extent to which an electorate is virtuous and generally knowledgeable, as well as in the related rise and fall of republics. One notable example is ancient Rome, which went from being a republic to a dictatorship under the purported exigencies of war. Lest the rise and fall of republics seems a bit too dramatic to be considered realistic, I offer the more modest thesis that a decline in virtue and knowledge among an electorate renders the public policy increasingly deficient in dealing with contemporary problems. The matter of climate change is a case in point.
According to a study at Yale in April 2013, Americans’ conviction that global warming was happening had dropped by seven percentage-points over the preceding six months to 63 percent. The unusually cold March—quite a reversal from the previous March—explains the drop, according to the poll’s authors. The cold may actually have resulted from a loosening in the artic jet-stream southward—like a rubber-band whose elasticity has been compromised—due to more open water in the arctic ocean and thus less temperature differential in the air. Even so, only 49% of Americans believed that human activities were contributing to global warming. In fact, only 42% of Americans believed at the time that most scientists had concluded that global warming is really happening. Thirty-three percent of Americans were convinced that “widespread disagreement” exists among scientists.
In actuality, a study showed of more than 4,000 articles touching on human-sourced climate change, 97% of the scientists having written the articles conclude that human-caused change was already happening. Less than 3% either rejected the notion or remained undecided. “There is a gaping chasm between the actual consensus and the public perception,” one of the study’s authors remarked. “It’s staggering given the evidence for consensus that less than half of the general public think scientists agree that humans are causing global warming. This is significant,” the author concludes, “because when people understand that scientists agree on global warming, they’re more likely to support policies that take action on it.” Going back to Jefferson and Adams, ignorance among the electorate in a republic can be sufficient to divert enough political will that legislation sufficient to deal with the problems facing that republic is thwarted.
It is likely that some of the apparent ignorance on global warming could actually be partisan aggression. If President Obama favors policies predicated on the assumption that human-sourced global warming is underway, his support could be enough for some Republicans to hold firm in their denial of even other-sourced global warming. In holding knowledge hostage to score cheap partisan points, those citizens are not evincing much virtue. James Madison in particular would say that the partisanship itself should be counted as a vice.
If Jefferson and Adams were correct that a virtuous and knowledgeable citizenry is vital to the continuance of a republic, the extent of ignorance and partisan vice related to global warming in spite of the nearly unanamous scientific conclusion and the huge stakes involved may suggest that the American republics and the grand republic of the Union may be on borrowed time (and money). Moreover, that the ignorance and vice pertains to global warming enlarges the implications to include the continuance of the species. That is to say, a virtuous and educated species may be necessary for its very survival.

See this PSA on global warming: http://www.thewordenreport.blogspot.com/2013/05/global-warming-psa.html


Academic Sources:
Philip Costopoulos, “Jefferson, Adams, and the Natural Aristocracy,” First Things, May 1990.
Yale Project on Climate Change Communication, “Americans’ Global Warming Beliefs and Attitudes in April 2013,” Yale School of Forestry and Environomental Studies, 2013.
John Cook, Dana Nuccitelli, Mark Richardson, et al, “Quantifying the Consensus on Ahthropogenic global warming in the scientific literature,” Environmental Research Letters, 8 (2013) (2), pp.
Press Source:
Tom Zeller, “Scientists Agree (Again): Climate Change Is Happening,” The Huffington Post, May 16, 2013.

Tuesday, May 14, 2013

A "Banking Union" or Coordinated State Laws and Regulations?

A subtle though important difference exists between American and European federalism, each of which covers both the "kingdom" (i.e., early modern, now mostly republics) and "empire" (i.e., ancient and early modern, now usually huge federal systems) scales. So I am referring to federal systems like the U.S., E.U. and Russia (and U.S.S.R), rather than to federal systems within any of their respective political subunits (e.g., Belgium, the Netherlands, and Germany). The difference between the E.U. and U.S. that I discuss here can be grasped by looking at the two competing proposals for federal bank regulation in the European Union. The crucial question facing the E.U. finance ministers concerns which system of government--the federal or state--should take the lead legislatively and in enforcement. Under one of the proposals, the regulations would begin as a broad directive formulated at the E.U. level. The state legislatures would then translate the general (i.e., shared) principles into statute law and hand enforcement over to state regulatory agencies.  With both federal and state legislative bodies involved, this type of coordinated federalism could be an improvement on the American model. The other proposal is more in line with that model, with E.U. legislative and regulatory bodies constructing the "banking union."  Although the motivations doubtlessly have much to do with money, the question of whether the E.U. will become more European or American is also relevant.
This picture depicts the distinctive European model of modern federalism wherein the state governments play a salient role in implementing (and modifying) federal law.   source: mapperywordpress.com

The full essay is at "E.U. & U.S."

Monday, May 13, 2013

Bloomberg News "Speed" Journalists Exploiting Terminal Subscribers: On the Failure of Firewalls

In 2012, I was stunned to hear an official of Deloitte place all his faith in the internal firewalls that he had constructed in the CPA firm to inhibit the exploitation of the conflict of interest that exists between the auditing and consulting divisions. A year later, Matt Winkler of Bloomberg apologized because reporters in the news division had used clients’ proprietary information from the Bloomberg terminals to report financial news stories before other news organizations. The firewall between selling terminals and reporting news had not been sufficient to prevent exploitation of the conflict of interest. There is a lesson here for any multi-divisional company or bank that is relying on firewalls.
 
The New York Times reported in May 2013 that reporters at Bloomberg News had been “trained to use a function on the company’s financial data terminals that allowed [the journalists] to view subscribers’ contact information, and, in some cases, monitor login activity in order to advance news coverage.” Login activity includes email, the content of which could be quite valuable to a hungry journalist. Even though Bloomberg News is a separate division at the company founded by Michael Bloomberg, who went on to be mayor of New York City, reporters were “nonetheless told to use the terminals to get an edge in the competitive world of financial journalism where every second counts.” The journalists’ training “included informal tips on how to use a function called UUID to locate sources who were also subscribers.” In terms of understanding why internal firewalls are insufficient to prevent the exploitation of structural conflicts of interest for gain, the mention of “informal tips” is significant. The overcoming of the walls can be “informal,” and thus beyond the radar screens of the firewalls’ enforcers. It need not be that a company official of sufficient rank over both divisions involved in a conflict of interest sanctions one side to jump over. The people on one side can seep through the semi-porous walls informally, and thus without prodding.
 
Simply stated, some journalists at Bloomberg News “favored breaking news over strict subscriber confidentiality.” Those journalists, not being based in the division selling terminal subscriptions, had little regard for the subscribers, or at least less regard for them than being the first to break a news story. Like speed-trading, the focus on breaking news at Bloomberg News has been oriented to splicing seconds to gain an advantage over the competition. Whereas the speed-trades are at the expense of individual investors who do not have access to the technology, the “speed-journalism” at Bloomberg has been at the expense of the customers who were subscribing to the company’s financial-information terminals. This is ironic because the news division at Bloomberg had been established to increase terminal subscriptions.
 
Ethically, both the speed-trading and Bloomberg’s speed-journalism are unethical in that gain is achieved by harming others who do not deserve to be harmed thusly. In Kantian terms, the people harmed are not being treated as ends in themselves, as any rational being should be treated due to the absolute value of reason itself as the assigner of value. Put another way, were every journalist in Bloomberg to exploit terminal subscribers, they would unsubscribe and Bloomberg itself would go out of business, in which case the journalists could not invade subscribers’ privacy because there would no longer be any subscribers (or Bloomberg).
 
In Humean terms, the exploitation of confidential information could be expected to give a normal bystander a sentiment of disapprobation, or feeling of disapproval, which to Hume is the moral judgment. In utilitarianism terms, the harm to subscribers would probably outweigh the benefit to the relatively few journalists and to the company itself from being the first to break a story. In terms of the company, the loss of subscribers would likely cost more than the company would gain from beating out other news organizations by seconds in breaking news.
 
With the exploitation of the conflict of interest being unethical, so too is relying on an insufficient firewall. In other words, such reliance is not only naïve, but also unethical. Ethically, companies in which firewalls are being considered would do better in selling off one of the two divisions that are involved in the potential conflict of interest. Admittedly, at Bloomberg this would involve giving up a means of promoting the terminals, but as we have seen, that means could also be used in such a way as to deflate the number of subscriptions. Even if there were no financial downside, giving up the means of promoting the other division’s product could be a good investment, ethically speaking, as the internal firewall could not really be relied on to forestall exploitation of the conflict of interest. Put another way, the investment would pay off in keeping the company’s reputational capital from falling.  
 

Source:

Amy Chozick, “Bloomberg Admits Terminal Snooping,” The New York Times, May 13, 2013.

Obama Mimics Cameron's View of the E.U.

President Obama has said he “wants a strong UK in a strong EU.” In his joint news conference with David Cameron of the EU state of Great Britain on May 13, 2013, the president elaborated on his earlier statement in a way that reveals his view of the EU as an entity. In short, he shares Cameron’s view that the EU is essentially a number of economic relationships rather than a political union of states.
                                                                      President Obama's remarks on Great Britain in the E.U. were particularly interesting.   

In the news conference, Obama said, “With respect to the relationship between the UK and the EU, we have a special relationship with the United Kingdom, and we believe that our capacity to partner with a United kingdom that is active, robust, outward looking and engaged with the world is hugely important to our own interests as well as the world, and I think the UK’s participation in the EU is an expression of its influence and its role in the world as well as obviously a very important economic partnership.” Interestingly, the EU is portrayed here as an economic partnership, tantamount to being a number of trade treaties between sovereign countries acting in their respective national interests.
In terms of Britain’s place in the EU, Obama referred to it as a relationship, implying that the UK and EU are partners. Specifically, he said, “You probably want to fix what is broken in “a very important relationship.” Finally, stressing the EU as an alliance of sorts, the president pointed to the “tough negotiations” in the EU, as “you have a lot of countries involved.” That is, the EU is essentially a number of countries negotiating to reach deals on multilateral treaties.
Barak Obama’s construal of the E.U. ignores the vital point that the states have ceded significant governmental sovereignty to the Union. It is therefore not simply a nexus of relationships between countries. Unlike NAFTA, the E.U. has a supreme court, the European Court of Justice, a parliament, and an executive branch. Considering these institutions and the dual sovereignty qualifying the E.U. as a modern federal system, Obama’s decision to mimic Cameron’s view of the EU can indeed be subjected to criticism. Obama's antiquated view of the E.U. and one of its states is ironic, given that the U.S. itself is an empire-scale federal system.

Source:
Joint News Conference with PM David Cameron,” CSPAN, May 13, 2013. Accessed on May 13, 2013.