“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, June 14, 2013

Regulating Snus in the E.U.

Should the E.U. be able to regulate sales of a product that can legally be sold only in one state? Would such regulations encroach too much on the governmental sovereignty of the state? In the U.S., Congress has steadily extended its power to regulate interstate commerce to the point that commercial transactions taking place entirely within one state are routinely covered. Is the E.U. headed toward the same outcome?
The full essay is at "Essays on the E.U. Political Economy," available at Amazon. 

Thursday, June 13, 2013

On the Impact of Political Rhetoric: From “Global Warming” to “Climate Change”

Words matter in politics. The side that can frame a question by definitively naming it in the public mind enjoys a subtle though often decisive advantage in the debate and thus in any resulting public policy as well. For example, “pro-choice”privileges the pregnant woman, while “pro-life” defines the abortion debate around the fetus. Similarly, “global warming” implies a human impact, whereas“climate change” defines the issue around nature. Even though the shift from“global warming” to “climate change” is more in keeping with the evolving science and won’t be bumped off by a cold winter, political players have been the driving force—language hardly being immune to ideological pressure.
Regarding the weather shifting popular perception on the issue, research published in Public Opinion Quarterly in 2011 claims that a bad winter can indeed discredit the “global warming” label.[1] The Washington Policy Center claimed two years later that the heavy snowfall during the latest winter had led to “climate change” replacing “global warming.”[2] The cold refusing to relent in March 2013 seemed to undercut or repudiate the scientific “global warming” hypothesis even though science demands long-term data.
However, the societal impact of “the usual suspects,” political actors who routinely attempt to manipulate the public toward particular policies by using words to frame debate, dwarfs the perceptual impact of one season. In 2002, for example, Frank Luntz wrote a confidential memo to the Republican Party suggesting that because the Bush administration was vulnerable on the climate issue, the White House should abandon the phrase “global warming” in favor of “climate change.”[3] As if by magic, although “global warming” appeared frequently in President Bush’s speeches in 2001, “climate change” populated the president’s speeches on the topic in 2002.[4] In other words, the president’s political vulnerability on the issue was answered by changing the label to reframe the debate. Not missing a beat, critics charged that the motive was politicalin downplaying the possibility that carbon emissions were a contributing factor.[5]
Similarly, the Obama administration likely went with “climate change” because it is less controversial among detractors. In September 2011, the White House decided to replace the term “global warming” with “global climate disruption.”[6] The administration subsequently annulled its own decision. So much attention to the matter of a mere label indicates that just how important it is to the outcome. Research published in the academic journal Public Opinion Quarterly in 2011 reported at the time, “Republicans are far more skeptical of ‘global warming’ than of ‘climate change.’” Whereas the vast majority of Democrats were indifferent to the label being used.[7] With “global warming” carrying “a stronger connotation of human causation, which has long been questioned by conservatives,” Obama stood to gain some republican support simply by changing how he refers to the issue.[8]
Beyond the media’s own agenda and public perceptions of the weather, politicians who understand that words can be used to manipulate people have been the major force behind the label change. In their exchange of letters, Jefferson and Adams agreed that the citizenry of a republic must be virtuous and educated in order for a democracy to survive. The debate on whether the climate is changing and what “imprint” we as a species might be leaving on the planet does not give me much confidence in the future of American democracy, let alone the future of our species climatically.
1. Tom Jacobs, “Wording Change Softens Global Warming Skeptics,” Pacific Standard, March 2, 2011.
2. Washington Policy Center, “Climate Change: Where the Rhetoric Defines the Science,” March 8, 2011.
3. Oliver Burkeman, “Memo Exposes Bush’s New Green Strategy,” The Guardian, March 3, 2003.
4. Oliver Burkeman, “Memo Exposes Bush’s New Green Strategy,” The Guardian, March 3, 2003.
5. Washington Policy Center, “Climate Change: Where the Rhetoric Defines the Science,” March 8, 2011.
6. Erik Hayden, “Republicans Believe in ‘Climate Change,’ Not ‘Global Warming’,” The Atlantic Wire, March 3, 2011.
7. Tom Jacobs, “Wording Change Softens Global Warming Skeptics,” Pacific Standard, March 2, 2011.
8. Tom Jacobs, “Wording Change Softens Global Warming Skeptics,” Pacific Standard, March 2, 2011.



Wednesday, June 12, 2013

Reinsurance as a Shell Game: Another Bailout to Come?

In the stock market, investors can be quite fastidious in demanding a certain quarterly profit or internal rate of return. The increasing activism of institutional investors exacerbates this trend, as they have the wherewithal to investigate the companies in which they hold stock and the incentive given the number of shares they typically hold in a certain company. This pressure can tempt managements to “go outside the box” in developing novel ways to inflate revenue or hid expenses and risk. In theory at least, companies owned by their employees or customers do not have to contend with that sort of pressure, and thus can manage their books with more transparency and honesty. Has managerial capitalism become too reductionistic in relying so much on the corporate form of ownership? Have we as societies been opening ourselves up to too much financial risk as a result? Further, if shifting more regulatory authority from the state to the federal level in the US (and presumably in the EU as well), what would be the cost to the federal system? The answers for the U.S. and E.U. could differ, given where each union is in its development. The insurance industry in New York is a case in point.

The full essay is in Cases of Unethical Business, which is available at Amazon.

Sunday, June 9, 2013

Should the ECB Spend an Unlimited Amount on Bonds?

The European Central Bank did not place any limit on its program in which the bank purchases bonds of heavily indebted states so as to keep their borrowing costs (i.e., the bonds’ interest rates) from increasing. The program, called Outright Monetary Transactions, had already accomplished that even before spending a euro. Anticipation that the ECB would enter a state bond market if its interest rate rose high enough was enough to keep the rates from skyrocketing.  So, the announcement that the ECB would spend what “would be adequate to meet [the] objectives” is perhaps more important than how much the central bank actually spends.[1]  According to Joerg Asmussen, an executive board member of the ECB, the OMT was “economically necessary, legally permissible and effective.”[2]  He made the comment as a court in the state of Germany was preparing to consider whether the OMT “infringes on the constitution’s insistence on sovereign parliamentary control over budget matters.”[3]  Hence, a tension between “legally permissible” and “infringes on . . . sovereign parliamentary control” threatened to kill a program that had already succeeded before buying one bond. Fortunately, legal experts were saying that the German court might defer to the European Court of Justice, the E.U.’s supreme court.

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