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Friday, November 17, 2017

Obama Standing Up to Wall St.: Fact of Fiction?

From the time of the Obama Administration, a major newspaper concluded: “What haunts the Obama administration is what still haunts the country: the stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression. There has been no legal, moral, or financial reckoning for the most powerful wrongdoers. Nor have there been meaningful reforms that might prevent a repeat catastrophe. Time may heal most wounds, but not these.”

For analysis, see "Obama Standing Up to Wall Street: Fact or Fiction?"

The Tail Wagging the Dog: Congress under the Influence

Congress may be like a drunk, unaware that it is being handed one drink after another by vested interests oriented to legislation with specific financial objectives. On February 28, 2010 on CNN’s State of the Union, Nancy Pelosi, Speaker at the time of the U.S. House of Representatives, said that the health insurance companies didn’t want a government-financed and operated "public option" for American citizens, so it was off the table. Her statement resonates with the earlier one by U.S. Senator Richard Durbin just after his forclosure-assistance amendment failed: "The banking lobby owns Congress." That the health insurance companies and Wall Street banks were generally viewed as at least partially culpable even as they still had Congress in their pockets points to a serious corruption in American government.

The full essay is at "Congress Under the Influence." 

Thursday, November 16, 2017

Occupying Wall Street: A Self-Regulated Protest?

The right to protest as a manifestation of freedom of speech is held societally as sacred the United States, but the question of how far protest goes before it becomes simply living in a park is one of those gray areas that tend to be decided by the judiciary far from the tarps and sleeping bags. The protesters’ premise that living in a public space eventuates in the achievement of their goals is tenuous where the goals are broad. Undergoing a hunger strike to get a certain anti-corruption bill voted on by India’s parliament is far different than camping out in Zuccotti Park in New York City until corporate capitalism is ended in the U.S. In short, the tactics used should be oriented to the sort of objective being sought. Moreover, the tactics and indeed the objectives themselves require a protest group to self-police such that it does not wander too far off course or spread itself too thin. Protest movements may be too prone to die a slow death from self-inflicted wounds without even the slightest recognition of the cause of death. The Occupy Wall Street protest movement had the capacity to self-regulate, but fell well short of that which was necessary for the group to achieve its anti-corporate goals.

The full essay is at "Occupy Wall Street Protests." 

Wednesday, November 15, 2017

Client-Centered Ethical Leadership: A Recipe for Trust at Goldman Sachs

With its incentive-structure that rewards a quick profit on the next trade even at the expense of advising clients in line with their long-term interests, Wall Street has its work cut out for itself even in maintaining trust, which, after all, is the basis of a market. On March 15, 2012, the New York Times reported that over all, “the percentage of people who have little or no faith in the fairness of investment companies rose to 41 percent in 2011 from 26 percent in 2008, according to Yankelovich Monitor 2011.” Even banks and insurance companies fared better, and household income played no role in the findings. At the time, Goldman Sachs was doing its industry no favors in terms of reputation. Indeed, the “best and the brightest” on Wall Street had created or enabled a rather narrow and self-serving corporate culture and a lack of ethical leadership that could otherwise turn around the bank by transforming its dysfunctional culture.

The full essay is at "Client-Centered Ethical Leadership."

Getting the Seasons Officially Wrong: A Case of a Category-Mistake

Joel Achenbach of the Washington Post has not quite turned the corner with respect to spring, and the seasons in general. You see, “season” is used in two distinct though related ways in English. It can refer to four distinct weather/plant-life conditions or to the four parts of the earth’s orbit around the sun. Given the tilt of the Earth, the two are related but they do not occur together. While Achenbach acknowledges that the vernal equinox typically on March 21st “is a moment of time specified by the motion of the Earth around the sun,” he refers to this as the official start of the meteorological spring. In actuality it is not. In the Northern Hemisphere, meteorologists record data from December, January and February as winter and March, April and May as spring. So in March 2012, meteorologists could already conclude that the preceding winter had been the fourth warmest since the record-keeping began.

The full essay is at "Confusing the Seasons."

Thursday, November 9, 2017

Selling Coal at a Conference on Climate Change

Peabody Energy, an American coal company and unlikely participant at a global conference on climate change in November, 2017, nevertheless previewed its presentation by trumpeting coal as part of the solution with: “As the world seeks to reduce emissions while promoting economic prosperity, fossil fuels will continue to play a central role in the energy mix.”[1] Besides interlarding economic growth at the conference that was on the climate, the company’s management felt the need—nay, even the obligation—to remind the world that coal would still play a prominent part in how the world obtains energy for its billions and billions of human beings. “The reality of it is the world is going to continue to use fossil fuels, and if I can throw myself on the hand grenade to help people realize that, I’m willing to do it,” said Barry Worthington of the U.S. Energy Association before the conference in the E.U. city of Bonn. Were people really unaware that reliance on coal was an intractable problem from the standpoint of reducing carbon emissions, or was the American company simply wanting to sell more coal?

The full essay is at "Shamelessly Selling."

1. Lisa Friedman, “For Climate Conference, a Sales Pitch on Fossil Fuels,” The Wall Street Journal, November 3, 2017.

Wednesday, November 8, 2017

The Saudi Crackdown: A Cause for Market Confidence

The Saudi government sought to confiscate cash and other assets worth as much as $800 billion in ostensibly cracking down on corruption in late 2017. More than 60 princes, officials, and business practitioners were initially detained. Both the figure and the number of arrests reflect merely “the initial stages” of asset seizures and arrests, according to a Saudi spokesman.[1] It was not long before 500 had been detained.[2] I submit that both the swiftness and scope left international investors and foreign businesses in Saudi Arabia unnecessarily rattled. Doubtless uncertainty as to the real reason for the crackdown unnerved the business elite. Corruption was endemic in the Saudi political economy, so the sudden need to crack down on it understandably left people to wonder as to the real reason, which, as it turns out, was nothing for business to fear.

The full essay is at "Political and Market Risk."

[1]Margherita Stancati, “Saudis Target Up to $800 Billion in Assets,” The Wall Street Journal, November 8, 2017.
[2] Nicholas Kulish and David Kirkpatrick, “Arrests Reveal Blending of Kin and Kingdom,” The New York Times, November 8, 2017.

On the Centenary of the Russian Revolution: Government as Artificial

On November 7, 2017, Russian soldiers marched in a military parade in Red Square in Moscow to honor the soldiers who had marched in a military parade on November 7, 1941 before going to the front to defend the city from invading Nazi troops. Commemoration of the centenary of the Russian Revolution was relegated to side streets “in a pale shadow of grand Soviet demonstrations on Red Square.”[1] Even though Russian communists and likeminded activists from around the world marched through central Moscow, the mood was subdued in spite of the milestone. 

The full essay is at "The Russian Revolution."

[1] Ivan Nechpurenko, “Communists Mark Russian Revolution’s Centenary in Moscow,” The New York Times, November 7, 2017.

Modern Society Reflected in Screenwriting: Actions Speak Louder Than Words

In what could be taken as a rendering of modern society, David Howard (p. 82) characterizes the “heart of dramatic writing” as thinking of “the actions of the characters and how they should be seen by the audience.” Howard is referring specifically to storytelling by screenwriters. Whereas the novel genre is particularly well-suited to exploring the interior lives of characters (e.g., their thoughts and feelings) via the expository word and the stage privileges dialogue due to the limits on action (and place), film is a visual medium, and thus uniquely able, or free, to capture actions and vistas. Hence, Charles Deemer (p. 64) advises aspiring screenwriters: “Always look for ways to tell your story visually without words.” It is as though he were stuck in the “silent” era, before the “talkies.” That films having soundtracks were referred to as talkies, at least initially, suggests that dialogue was (and is) no small matter in the film genre of storytelling. In fact, some stars who were quite notable during the “silent” era found the transition to “talkies” rather daunting, if not impossible, given the importance of voice, which pertains specifically to dialogue.

The full essay is at "Modern Society in Screenwriting."


David Howard and Edward Mabley, The Tools of Screenwriting: A Writer’s Guide to the Craft and Elements of a Screenplay. (New York: St. Martin’s Press, 1993).
Charles Deemer, Screenwright: The Craft of Screenwriting (Xlibris, 1998).

Screenwriting as Dramatic Sense-Making or Ideological Subterfuge?

Howard (p. 165) claims that the screenwriters of Witness (1985) were “wise enough not to attempt to coerce an answer out of the material, to make this an indictment or a thesis instead of an exploration. If they had the definite answer to force and violence in society, they shouldn’t [have made] a film but should [have gone] directly to the United Nations with it. What they have created is an exploration of a complex and troubling issue. Modern urban society isn’t depicted as all bad and the Amish aren’t all good; there are forms of force in both societies, just as there are admirable things about them both. While, in the end, one use of force triumphs over another, that can hardly be a universally applicable solution. Rather, what the filmmakers have done is to make the audience confront its own feelings about violence and the use of force, to see that it is complicated and there are no pat answers, but, most important, to explore how each of us feels about the various faces of force we come to know in the story.”

David Howard and Edward Mabley, The Tools of Screenwriting: A Writer’s Guide to the Craft and Elements of a Screenplay. (New York: St. Martin’s Press, 1993).

Bill Johnson, Essays on the Craft of Dramatic Writing. http://home.teleport.com/~bjscript/index.htm  See also Charles Deemer, Screenwright: The Craft of Screenwriting (Xlibris, 1998), pp. 117-19.

Federalizing the Criminal Code: Racial Opportunity Costs

On December 13, 2011, a bipartisan group of legal experts told a panel of lawmakers in the U.S. House of Representatives that the federal criminal code had grown so large that U.S. citizens could not possibly keep up with it. “We ought to get rid of the old myth that you’re presumed to know the law,” Rep. John Conyers (D-Mich.) said. About 4,500 criminal statutes exist, according to Ed Meese, a former U.S. Attorney General under President Reagan. “This is in addition to over 300,000 other regulations that don’t appear in the federal code but nevertheless carry essentially criminal penalties including prison,” he said. “So the vast array of traps for the unwary that lurks out there in federal criminal law is more extensive than most people realize.” The Administrative Office of the U.S. Courts figures some 80,000 defendants are sentenced in federal court each year.

The full essay is at "Federalizing Everything."

Monday, November 6, 2017

A Dysfunctional Trajectory of U.S. Presidential Debates: The Case of 2012

Just weeks before the 2012 elections in the U.S., the New York Times observed, “In 1960, John F. Kennedy was trailing Richard Nixon as they stepped into the crucible of the first nationally televised debate. While Kennedy soared, Nixon stumbled and never recovered. Network television played a definitive role, but those were very different times. There were three networks, not 500 channels, and the consumer Internet was still very much on the drawing board of the future. Half a century later, televised debates remain relevant, but the ritual is up against an always-on informational stream that surges with political messages.

Russia's Putin and Big Tobacco

In political economy theory, democracy is said to have the drawback of excessive consumption of public revenues at the expense of investment, such as in infrastructure relevant to foreign direct investment. Latin American countries were contrasted negatively with the Asian newly industrialized economies, whose relatively strong states could buffer popular calls for more in entitlements so that more could be invested in infrastructure attractive to foreign multinational companies. The implication is that a trade-off exists between democracy and economic development.
Apart from the economic aspects, the question may be whether a representative government can resist popular calls for more money to be spent by the government on popular consumption. In the U.S. case, it can be asked whether the fiscal stresses on Social Security and Medicare are due more to demographic factors (i.e., an aging population) or democracy itself. The ability of representative democracy to maintain a viable economy and republic in the long term is at issue.
Accordingly, Putin’s less than democratic approach to ruling Russia may have a bright side. Even though nearly 40% of the population smoked in 2012 and the world’s four big tobacco companies controlled 90% of the Russian market, the Kremlin was pushing strong anti-smoking legislation through the legislature. Besides the question of whether such legislation should be at that level in an empire-level federal system (there had been legislation at the republic level), the fact that the government was standing up to big business and 40 percent of its population (60% of Russian men) can be attributed to a strong state resisting popular pressure literally for consumption. This is not necessarily bad, as people do not always know what is best for them.

The full essay is at "Russia's Putin and Big Tobacco."

Should Citi Be Broken Up or “Prodded”?

In 2011, the office of the special inspector general for the Troubled Asset Relief Program published a report on the aid provided to Citigroup by the U.S. Government during the financial crisis of 2008. “Unless and until an institution such as Citigroup is either broken up,” the report concludes, “so that it is no longer a threat to the financial system, or a structure is put in place to assure that it will be left to suffer the full consequences of its own folly, the prospect of more bailouts will potentially fuel more bad behavior with potentially disastrous results.” The Dodd-Frank Act of 2010 was an attempt to provide such a structure, with the federal government’s role being oriented to upping reserve requirements for the biggest banks and ordering the liquidation of big banks in bankruptcy, rather than to break up the banks too big to fail. That is to say, rather than add systemic risk to the restraint-of-trade criterion of anti-trust law, Congress and the U.S. president decided in 2010 to allow the banks with $1 to $2 trillion in assets to decide whether to downsize of their own volition or continue to face the raised reserve requirements.

The full essay is at "Citibank: Too Big To Fail?"

Russia's Putin Embraced BP

The Russian state-owned company, Rosneft, reached separate agreements in October 2012 to buy TNK-BP from BP and a group of Russian billionaires. According to the Wall Street Journal, the deal represents “an acquisition that promises to reshape the Russian oil industry in favor of the state-owned company.” The Russian federal government was set to own or control nearly 50% of the Russian oil industry. Lest it be supposed that the legacy of inefficient state enterprise might compromise that industry in Russia, the state would have the benefit of literally sitting on the same board with representatives of the experienced oil producer from the private sector. By implication, the traditional dichotomy between public and private could be further blurred, such that the easy labels of “socialism” and “capitalism” may become less and less relevant or useful (except in the rhetoric of American presidential contests). Rosneft itself is a case in point of privateness and publicness coming together with a shared vocabulary or at least financial aim. Before addressing this point, I present the basics of the deal itself.

Robert Dudley, CEO of BP, talking with Vladimir Putin at the Kremlin.   Source: Telegraph

The full essay is at "Russia's Putin Embraced BP."

Morsi as Partisan in Constitution-Building: Lessons from Washington

Appealing for unity after the controversial ratification of a draft constitution in December 2012, President Morsi of Egypt pledged in a televised address to respect the one-third of the electorate that had voted against the proposed constitution. He claimed that “active patriotic opposition” should not annoy the president or the people in a democracy. I contend that the office of president should not be of the sort that would have partisan opposition, ideally at least. That is to say, presiding means safeguarding the process itself, as well as the good of the whole, rather than pushing a partisan agenda. That Morsi was on record in support of the partisan-drafted proposal undercut his role as presider in chief. Given the innate instability of a nascent democracy, the role for a presider “above the fray” was particularly valuable in Egypt at the time. Morsi fell short in this regard, and thus put the fragile democracy at risk.

The full essay is at "Morsi as Partisan."

Wednesday, November 1, 2017

Social Harmony and Toxic Chemicals in China

According to the New York Times in 2012, the Chinese had become increasingly willing “to take to the streets despite the perils of openly challenging the country’s authoritarian government.” Even more surprising, government officials had actually acquiesced in some notable cases. Given the raw nature of power, particularly under authoritarian auspices, revolution rather than gradual reform may still be the most likely means by which democracy can bloom under the golden, albeit hazy, sun.

The full essay is at "Chemical Pollution in China."

Absolute Sovereignty: The Case of Syria

By the end of 2012, over 60,000 Syrians had been killed and over half a million had fled as a result of the civil war in Syria. Shortages of food and shelter were worsening inside Syria for civilians. In early January of 2013, a spokesperson for the U.N. said that the international organization was unable to feed a million residents in combat zones. Acute fuel shortages in Syria were contributing to the rising price of bread—at least six times greater than the pre-conflict price. Additionally, an outbreak of violence in a large Syrian refugee camp of 54,000 refugees in Jordan amid a winter storm was reported. “The incident followed a night of heavy storms, during which torrential rains and high winds swept away tents and left parts of the camp flooded,” an official in Save the Children said in a statement. One might ask what was really behind the deteriorating conditions.

California’s Turnaround in 2013: Brown’s Budget Surpluses

By early 2013, California had turned the corner from deficits—$9 billion in 2011 and $25 billion in 2010—to anticipated surpluses—$785 million for the fiscal year ending June 2013 and $851 million in the year thereafter. The lack of balance between billions and millions suggests that Keynesian economics may contain a fundamental imbalance in favor of consumption, at least in a democratic context. The prudent proposals by Jerry Brown, California’s head of state and chief executive, point to the ability of a republic to responsibly manage its fiscal business even within the overall imbalance.
The full essay is at "California's Turnaround."

Political Risk Exaggerated on Catexit

On the day the Catalan parliament voted in favor of “Catexit” from Spain, the IBEX-35 stock-market index dropped 1.4 percent while the Stoxx Europe 600 gained 0.3 percent.[1] The IBEX-35 is an stock-index of companies based in Spain. Investors also sold state bonds; yields on 10-year bonds rose to 1.574% from 1.558. Even though these changes were hardly earth-shattering in magnitude, their directionality points to investor-anxiety. I submit that it was overblown, which suggests that investors generally tend to over-react to political events.

The full essay is at "Catexit: Political Risk."

[1] Jon Sindreu, “Stocks, Bonds Hit by Political Unrest,” The Wall Street Journal, October 28-29, 2017.

Friday, October 27, 2017

TARP Paid Off: But What about the Foreclosures?

TARP, the "bailout" for banks rather than mortgage borrowers, was the first big issue facing the Obama administration before the roughly $800 billion stimulus plan and the health insurance overhaul that stoked the rise of the Tea Party movement. After supporting TARP, several Republicans lost in the elections of 2010 largely because of their votes. For many Americans, TARP is a symbol of big government at its worst, intervening in private markets with taxpayers’ billions to save Wall Street plutocrats while average Americans continued to struggle to make mortgage payments or lost their houses outright.  “This is the best federal program of any real size to be despised by the public like this,” said Douglas J. Elliott, a former investment banker now associated with the Brookings Institution. “It was probably the only effective method available to us to keep from having a financial meltdown much worse than we actually had. Had that happened, unemployment would be substantially higher than it is now, the deficit would have gone up even more than it has,” Mr. Elliott added. “But it really cuts against the grain for a public that is so angry at banks to think that something that so plainly helped the banks could also be good for the public.” TARP was good for the public not in that the funds enabled Wall Street bonuses; rather, the good was solely on the macro level, as the frozen credit markets eventually thawed such that the financial system meltdown was averted.  However, this does not mean that it was "the only effective method available."

The full essay is at "TARP and Foreclosures."

The Receding Chinese-American Economic Paradigm in 2011: Imbalances within Mutual Benefit

“For decades,” according to The Wall Street Journal, “plentiful Chinese labor kept down costs of a range of goods bought by Americans.” Then, roughly in 2010, the Chinese government began supporting higher wages to reduce labor unrest and boost domestic consumption while reducing reliance on exports. Partially as a result of this, the world saw higher prices for commodities in 2011; oil was another factor as protests in the Middle East increased political risk in the calculations of future supply (amid speculation). A shrinking workforce in China was also putting pressure on the labor cost. Even though relatively cheap labor was still in the interior of the country, higher transportation costs mitigated the cost advantage. The prevailing paradigm was showing cracks. To be sure, it certainly had them.

Other Priorities and Side-Shows Eclipsing a Historical Debate on the U.S. Government's Deficits and Debt

Writing in November of 2010, Fareed Zakaria opined that the “fate of the U.S.” would be decided “over the next year.” In truth, the fates may have pronounced their verdict on the “city on the hill” long before the end of the first decade of the twenty-first century. Denial can be a strong palliative in the midst of a pattern of sustained lapses in self-disciple and civic virtue—qualities that the American Founding Fathers had presumed are necessary to any viable republic.

The full essay is at "Other Priorities."

Wednesday, October 25, 2017

Corporations as Citizens: A Right to Make Political Donations?

In Citizens United, the U.S. Supreme Court held that corporations and unions “should have the same right as individuals to pay for election ads and other electioneering,” according to The Wall Street Journal. Not addressed in the court’s decision was whether corporations and unions also have “the same right as individuals to donate money directly to candidates for Congress or the White House.”

Democracy and the Courts: Alternative Checks on Austerity in Greece

In May 2011, “Athens agreed to impose a new $9 billion round of tax increases and spending cuts and speed up nearly $75 billion in promised privatizations.” In early June, a new round of tightening was being planned by the Greek government. It was feared that those cuts would deepen the recession and thus further shrink the tax base, making it even harder for the government to cut its deficit. Meanwhile, Reuters reported, “Greeks are showing signs of reaching the limits of their endurance as budget cuts imposed under Greece's first bailout a year ago have helped to push unemployment close to 16 percent.” The news service cited police reports of more than 80,000 people packing the main Syntagma square outside parliament on June 6th—the 12th consecutive day of protesting there.


On the Myopic Hyperbole of Wall Street: Overblowing Small Changes

I suppose that after looking at something closely for a long period of time, virtually anyone would perceive a small change in it as huge. This is reflected in how people formulate graphs. In particular, typically only a small interval is shown, the perceptual impact of which is that small changes look big. For example, Msnbc.com reported on June 8, 2011 that the price of oil “soared” on that day “almost $2 to near $101 a barrel.” My reaction in reading the report was that the word “soared” indicates a lack of perspective on Wall Street and the media.

The full essay is at "Exaggerating Market Volatility."

The Fiat 500: The American Taste for Convenience Revealed

One means of doing cross-cultural comparison is by contrasting consumer tastes; such proclivities tend to evince societal mores by which societies can be perceived to be distinctive. In the case of the E.U. and U.S., Fiat, a European auto company that controls Chrysler, an American company, is discovering some societal differences as it refashions the Fiat 500 for American customers.

The full essay is at "American Consumer Tastes."

Monday, October 23, 2017

Marx and Chinese Dynasties: A Postmortem on Occupy Wall Street

My essay that suggests that the Occupy Wall Street protests should have focused on the large corporation itself (i.e., that the large corporate form be expunged from modern society) rather than on a myriad of redistribution agendas resonates with Marx’s theory of revolution. In that theory, the proletariat finally throws off the chains and subdues the hitherto hegemonic capitalists in a materialist reading of Hegel's idea that history progresses toward greater freedom of the human spirit. The redistributive push of the Occupy movement fellf short because even increased redistribution advocated would have been within extant the political-economic system that the corporations dominate and run (i.e., including Congress). If the protesters were in fact serious about confronting corporate capitalism, their movement should have been radical rather than reformist because reforms are within the system that works for and by corporations.

The full essay is at "Marx and Chinese Dynasties: A Post-Mortem on Occupy Wall Street." 

On the Unfairness of the Bonus System on Wall Street

Craig A. Dubow, Gannett’s former chief executive, had a short six-year tenure that was, by most accounts according to The New York Times, “a disaster.” David Carr reports: “Gannett’s stock price declined to about $10 a share from a high of $75 the day after [Dubow] took over; the number of employees at Gannett plummeted to 32,000 from about 52,000, resulting in a remarkable diminution in journalistic boots on the ground at the 82 newspapers the company owns. . . .  the company strip-mined its newspapers in search of earnings, leaving many communities with far less original, serious reporting. . . . Not only did Mr. Dubow retire under his own power because of health reasons, he got a mash note from Marjorie Magner, a member of Gannett’s board, who said without irony that ‘Craig championed our consumers and their ever-changing needs for news and information.’ But the board gave him far more than undeserved plaudits. Mr. Dubow walked out the door with just under $37.1 million in retirement, health and disability benefits. That comes on top of a combined $16 million in salary and bonuses in the last two years.”

Besides the inherent unfairness in an incompetent manager getting millions of dollars in compensation (for championing incompetence?), it is morally problematic when, as Carr puts it, “the consequences of bad decisions land on everyone except those who made them.” 

The full essay is at "Unfair Bonuses on Wall St."


 David Carr, “Why Not Occupy Newsrooms?” The New York Times, October 24, 2011. http://www.nytimes.com/2011/10/24/business/media/why-not-occupy-newsrooms.html

Two Conflicting Views of E.U. Federalism: Accounting for Brexit

"You have lost a good opportunity to shut up," Sarkozy said to Cameron during a bitter two-hour exchange which held up a meeting of all 27 European Union states on 23 October 2011, according to the Guardian. Translating the relatively polite European English into American slang, Sarkozy’s statement becomes, Shut the fuck up. "We are sick of you criticizing us and telling us what to do," Sarkozy added. "You say you hate the euro, and now you want to interfere in our meetings." Cameron had insisted on participating in the euro zone meetings because he anticipated that, perhaps along the lines of taxation without representation, unfavorable regulations would be imposed on Britain without its consent, according to The Telegraph. Cameron also claimed that the euro zone crisis was having a "chilling effect" on all European states, including Britain. He insisted that all 27 E.U. state governments, rather than just the 17 using the euro, should be able to have the final say over Europe's rescue package, according to The GuardianI submit that the argument portends in retrospect, at least, the decision taken by the British to secede from the Union. 

The full essay is at "Two Conflicting Views of E.U. federalism."


Bonnie Kavoussi, “Nicolas Sarkozy To David Cameron: ‘You Have Lost a Good Opportunity To Shut Up’,” The Huffington Post, October 24, 2011. 

Inequality in Corporate Capitalism: Beyond Redistribution

I contend that a concern that too much income or wealth is concentrated “at the top” in the U.S. does not necessarily translate into a demand for redistribution; rather, the inequality itself may be thought dangerous to the viability of a representative democracy (i.e., a republic form of government) and inherently unfair. Even though redistribution may be entailed as large banks and business corporations are dismembered, ridding the system of the concentrations of wealth does not in itself mean that those “at the bottom” should or would necessarily become richer. For example, to say that CEOs should not be allowed to make millions of dollars, especially when their companies or banks lose money, does not imply redistribution because there is no claim that the compensation be directed to others for their benefit. The point is that the compensation itself is unfair. Indeed, saying that corporate capitalism is itself unfair because some people benefit beyond what they deserve is not to say that their benefits should be redistributed; rather, the point is simply that such benefits should not be allowed.

The full essay is at "Inequality in Corporate Capitalism."

Chinese Censorship: Beyond the FCC in the U.S.

Regarding the Chinese government’s attempts to rein in microblogging and television programming, the New York Timeobserved in 2011, “Political censorship in this authoritarian state remains absolute.” It is therefore perhaps all the more surprising that bloggers in China have been able to post “whistle-blowing” reports at the expense (and embarrassment) of the political elite. That this has occurred at all suggests that once a Jennie gets out of its bottle, it is difficult to reverse course. This is the traditional Western view. Using television programming as a case study, I submit that the picture is actually more complex than the antiquated "black and white" version may suggest. 

The full essay is at "Chinese Censorship."

Sharon LaFraniere, Michael Wines, and Edward Wong, “China Reins in Entertainment and Bloggers,” The New York Times, October 27, 2011. 

China’s Strategy: Divide the Vulnerable E.U.

During the U.S. Constitutional Convention in 1787, delegates from the sovereign states feared that foreign states would seek to divide their American counterparts to the extent that the United States could split apart. So the delegates voted to move foreign policy from the state to the federal level. Unlike this case, government officials of the E.U. states held foreign policy closely rather than ceding it to the federal level. Whereas in the American case the delegates could adopt a federal perspective as distinguished from the immediate interests of the respective state governments, the state officials in the European Council can be taken even as personifications of their respective state interests. Foreign powers can take advantage of the state officials’ conflict of interest to the extent that the very functioning of the European Union is compromised.

China provides a case in point.

The full essay is at "China Carving Up the E.U."

Thursday, October 19, 2017

The SEC and the Courts on Wall Street Settlements in 2011

The SEC enforcement staff, including its chief, Robert Khuzami, decided to kick a gift horse in the mouth rather than to “take a lesson” and perhaps come out stronger for it. At issue was the rejection by U.S. District Judge Jed Rakoff of the SEC’s proposed $285 million settlement with Citigroup. In his ruling, Rakoff denounced the penalty as “pocket change” to the bank, which would not even have to admit to any wrongdoing. Investors duped into buying into a $1 billion deal called Class V Funding III had lost $700 million. Betting at the time of issue against half of the assets in the deal, Citigroup did not share knowledge of its hedge with the investors.

The reaction of the SEC staff in Khuzami’s department was simply to “put down their pencils” and wonder how they should go about arranging settlements with financial firms accused of misconduct before and during the financial crisis of 2008. The SEC “doesn’t know what to ask for anymore in the settlements,” one of the people familiar with the Citigroup settlement said. Rather than take the judge’s judgment to heart, Khuzami urged the five-person commission running the SEC to vote to approve an appeal, and they did so. Rather than take the less convenient course of insisting that the banks too big to fail that manipulated their own clients at least admit wrong-doing and reimburse the losses, Khuzami viewed the judge’s ruling as if it were a political obstacle to be obviated by asking an appellate court to ignore it. Given the political muscle that must surely go with Citigroup’s wealth, Khuzami could have been assuming that the bankers would see to it that sufficient pressure would plied on enough appellate judges to make the obstacle easily avoidable. In other words, Khuzami was likely assuming that Rakoff was a fluke, given Citi’s influence—perhaps even in the SEC itself.

The full essay is at "The SEC and the Courts."

A U.S. Visa Fast-Track For Rich Investors

The New York Times reported in December 2011 that affluent foreigners had been rushing to take advantage of a U.S. immigration program. The foreign applicants must invest at least $500,000 in construction projects within the United States. The number of applicants had nearly doubled since the end of 2008 to more than 3,800 in the 2011 fiscal year. The intent of the program is to spur economic development at a time of high unemployment. Yet the program has also been characterized as a cash-for-visas scheme. Besides the question of whether the program’s rules have been stretched in New York City to qualify projects in prosperous areas for special concessions, an ethical question can be raised concerning who should get a visa.

The full essay is at "Visa Fast-Track for the Rich."

Tuesday, October 17, 2017

The Kurds Betrayed: Iraq Retakes Kirkuk with U.S. Backing

For some reason, people tend to assume that the status quo has been around for a very, very long time—that it enjoys the perk of longevity. To mess with it even in part is typically assumed to “upset the apple cart.” The fear is excessive. A century after World War I, the fact that many of the extant countries in the Middle East had been artificially crafted by Britain and France paled under the presumption that those countries had been around for much, much longer. Accordingly, the fact that the Kurds voted overwhelmingly in 2017 to secede from Iraq was ignored or dismissed not only by Iraq, but also by other countries in the region and the United States. “Baghdad and most countries in the region had condemned the vote, fearing it would fuel ethnic divisions, lead to the breakup of Iraq and hobble the fight against the Islamic State.”[1] I submit that the fear was overblown and mistaken.

The full essay is at "Kurds Betrayed."

[1] David Zucchino, “Iraqis Capture Key Kurdish City with Little Fight,” The New York Times, October 17, 2017.

Monday, October 16, 2017

Climatic Presumption: What is the Forecast?

Al Gore stated that we face a choice regarding whether the earth’s ecological system will remain viable for our species.  He cites the carbon that is frozen in the permafrost in the north.  As the permafrost melts, carbon is added to the atmosphere, making it “difficult” for the human species to live.   I am not a scientist so I have no means of knowing what the state of the research is on these matters.  Nor am I particularly interested in debating it.   In my view, if there is a chance that we could be effectively ending our our species, we ought not to be held back from acting in a prudent fashion even if it is “just in case.”   I understand the economic costs, and that some are particularly attached to short-run costs (and less enamoured with long-term benefits).  Still, that the debate itself would be allowed to stall even a “just in case” response reflects badly on our species.   At a worse case, it could be something like two parents debating which of them will get their baby out of their burning house.  Meanwhile, the baby burns.   We would call that a dysfunctional family, would we not?  Still, no such appellation goes to those involved in the continuing debate on climate change.

The full essay is at "Climatic Presumption."

Paul Samuelson: The Model 20th Century Economist

Paul A. Samuelson, the first American Nobel laureate in economics and the foremost academic economist of the 20th century, died at the end of 2009 at 94.  Samuelson was credited with changing the academic discipline of economics, according to The New York Times,  ”from one that ruminates about economic issues to one that solves problems, answering questions about cause and effect with mathematical rigor and clarity.”  Essentially, he redefined twentieth century economics. Mathematics had already been employed by social scientists, but Dr. Samuelson brought the discipline into the mainstream of economic thinking. His early work, for example, presented a unified mathematical structure for predicting how businesses and households alike would respond to changes in economic forces, how changes in wage rates would affect employment, and how tax rate changes would affect tax collections.  He developed the rudimentary mathematics of business cycles with a model, called the multiplier-accelerator, that captured the inherent tendency of market economies to fluctuate.  Mathematical formuli that Wall Street analysts use to trade options and other complicated securities (derivatives) have come from his work (FYI: derivatives too complicated for outsiders such as the government to understand/regulate were at the center of the financial crisis in 2008).

The full essay is at "20th Century Economist."

An Ethical Dilemma for Cell-Phone Companies? Drivers Who Text & Talk

Long before cellphones became ubiquitous, industry pioneers were aware of the risks of multitasking behind the wheel. Their hunches have been validated by many scientific studies showing the dangers of talking while driving and, in 2009, of texting. Despite the mounting evidence, the industry built itself into a $150 billion business in the United States largely by winning over a crucial customer: the driver. For years, it marketed the virtues of cellphones to drivers. Indeed, the industry originally called them car phones and extolled them as useful status symbols in ads, like one from 1984 showing an executive behind the wheel that asked: Can your secretary take dictation at 55 MPH? 

The full essay is at "Drivers who Text & Talk."

Flavor of the Month: Achilles' Heel of American Democracy?

The New York Times Sunday Magazine ran a feature toward the end of 2009 on Joe Biden, who was then Vice President of the United States.  Besides his experience and knowledge from having been a seasoned U.S. senator, Joe Biden is a man genuinely content in his own skin, and, it might be said, genuinely happy.  This, perhaps more than anything else, is vital to high level public official because sound judgment is important in those jobs. Ruling is not simply about how much one knows, or even how much experience one has; it is fundamentally about feeling at ease in who one is.  Ultimately, a positive vision springs from one’s state of mind and innate values.  One need only contrast Joe Biden with Richard Nixon, for example. Foreign policy comes up for both, but their mentalities could not be different. My question is this: to what extent is our “Electoral College as popular election” geared to selecting the best candidate for president? 

The full essay is at "Flavor of the Month."

Saturday, October 14, 2017

Google’s Philanthropy: $1 Billion to Tech-Train America’s Unemployed

In October 2017, Sundar Pichai, CEO of Google, announced that the company would give $1 billion over the next five years to nonprofit organizations that help people “adjust to the changing nature of work.”[1] The digital skills philanthropic venture would essentially help otherwise unemployed Americans get jobs that require high-tech skills. This would also enable more people to use the internet, and thus the company’s products. So a reporter at USA Today can be said to gild the lily a bit in claiming that the initiative “is a tacit acknowledgement from one of the world’s most valuable companies that it bears some responsibility for rapid advances in technology that are radically reshaping industries and eliminating jobs in the U.S. and around the world.”[2] I submit that it is highly unlikely that such an acknowledgement ever took place at Google, given the more likely scenario wherein the company’s management saw an opportunity to enlarge (and hopefully enrich) its labor pool and customer base.

The full essay is at "Google's Philanthropy."

[1] Jessica Lynn, “Google to Give $1 Billion to Nonprofits and Help Americans Get Jobs in the New Economy,” The New York Times, October 12, 2017.
[2] Ibid.

Wednesday, October 11, 2017

De-Funding Obamacare

It is odd that even after a bill becomes a law, it can be defunded, thereby effectively killing it even though it has not been voted down.  One would think that it would be required to pass the funding that is required by the law. The Republican Party has strategized on how to deconstruct Obama’s health-insurance law through various means.

The full essay is at "De-Funding Obamacare."

A Bit of Federalism in ObamaCare

Senator Ron Wyden has written to government officials of Oregon to encourage them to “come up with innovative solutions that the Federal government has never had the flexibility or will to implement.” This is significant because he is a democrat. As long as a state covers the same number of uninsured and keeps coverage as comprehensive, the following can be waived:

1. the individual mandate to purchase insurance (i.e., what Virginia and Florida are suing over)
2. regulations about business taxes
3. federal standards for minimum benefits
4. allocation of subsidies in the insurance “exchanges.”

The full essay is at "Federalism in Obamacare."

Source: Wyden Defects on ObamaCare, WSJ, September 3, 2010, p. A16.

Making Too Big To Fail Costlier: A Check on Empire-Building

Testifying before the Financial Crisis Inquiry Commission on September 2, 2010, Ben Bernanke, chairman of the Federal Reserve, observed, “As of 2003 and 2004, there really was quite a bit of disagreement among economists about whether there was a bubble, how big it was, whether it was a local or a national bubble. We certainly were aware it was a risk factor, but frankly by the time it was clear it was a bubble” it was too late to address it through monetary policy. The NYT also reported that he spoke favorably of forcing huge banks to hold much more capital, particularly if they were systemically important — so much capital, indeed, that being big would be costly. He advocated that the increased capital requirements should include capital that is more aligned with risk and able to absorb losses more effectively, and that works in a countercyclical manner, so that banks have more of it during times of stress. Does his position make sense? Does it go far enough? 

The answer is at "Making Too Big to Fail Costly."

Source: http://www.nytimes.com/2010/09/03/business/03commission.html?_r=1&ref=business

Autocratic Regimes: Subject to the Domino Effect?

"In Beirut, gunfire broke out and crowds of people waved Egyptian flags. In Yemen, they gathered in front of the Egyptian Embassy chanting, 'Wake up rulers, Mubarak fell today.' In Gaza, they fired shots in the air and set off fireworks. . . . [However,] in a telling sign of the divide between the rulers and the ruled, the region’s leaders, presidents and monarchs remained largely silent." This depiction by The New York Times of ripple effects across the Middle East in the wake of the resignation of Egypt's Mubarak in February, 2011 intimates the hoped-for and feared possibility that the popular unrest could spread.  Moreover, the entire world, which had been been glued to the events unfolding in Cairo, wondered if a domino effect might be in store in countries under autocratic rule. Indeed, The New York Times wrote of a possible domino effect quite explicitly: "The popular uprising that started . . . in Tunisa had claimed its second autocratic government, this time in the largest country in the Arab world. With more protests planned in coming days, some governments were clearly worried they could be next." But do autocratic governments fall like dominos?  That is, is revolution contagious? 

The full essay is at "Autocratic Regimes."

Monday, October 9, 2017

Catalania as a State in the E.U.

When Catalania held a referendum on whether to break off from the E.U. state of Spain, the E.U.’s basic law was silent on whether a state’s region would be a new state. The Prodi Doctrine, however, states that a region seceding from a state is automatically no longer part of the European Union. Such a region would have to apply for statehood as if it had been outside of the Union. I submit that such a stance is problematic.

The full essay is at "Catalania as a State in the E.U."

Amtrak: Avoiding the Obvious

According to The New York Times, Amtrak’s management “knew for years that they would have to replace large sections of deteriorating track in Pennsylvania Station in New York City.”[1] The management instead had engineering crews apply “short-term fixes to rows of rotted ties, crumbling concrete and eroded steel.”[2] Incredulously, the management was putting off replacing the tracks in part “to give work time to a nearby passenger hall renovation.”[3] Additionally, the management sought to minimize taking tracks out of service even on weekends so as not to disrupt service. In 2017, three accidents at the station finally got the management to commit to undertake an emergency repair program that “cut back service through the summer for thousands of passengers daily.”[4] Even by the objective of minimizing impaired service, prioritizing a hall renovation and putting off needed track repairs are problematic. The deeper problem is that of seriously misjudging utility.

The full essay is at "Amtrak."

[1] Michael LaForgia, “Delaying Repairs on Decrepit Tracks,” The New York Times, October 9, 2017.
[2] Ibid.
[3] Ibid.
[4] Ibid.

Sunday, October 8, 2017

Spain’s Government: Measuring the Will of the People

“’No government in the world’ could tolerate the threatening of its unity,” said Mariano Rajoy, the prime minister of the E.U. state of Spain after a week of protests pro and con on whether the region of Catalonia should secede from the state.[1] On October 1, 2017, the region had held a referendum on the question in spite of the efforts of the state police to stop the vote. Ninety percent of the 40% of the region’s residents voted in favor of breaking off from Spain, but the active presence of the police means that the results could not be taken as an accurate reading of what the population of Catalan wanted.

[1] Patrick Kingsley and Jason Horowitz, “Amid Catalan Crisis, Thousands Hold Rallies in Madrid and Barcelona,” The New York Times, October 7, 2017.

The International System: Undermining a Ban on Nuclear Weapons

The 2017 Nobel Peace Prize went to the International Campaign to Abolish Nuclear Weapons for the group’s work on behalf of a global ban on nuclear weapons. Just a few months earlier, two-thirds of the U.N.’s General Assembly approved the Treaty on the Prohibition of Nuclear Weapons. “The risk of nuclear war has grown exceptionally in the last few years, and that’s why it makes this treaty and us receiving this award so important,” Beatrice Fihn of the group said.[1] Unfortunately, the stance to ban rather than merely limit nuclear weapons was already being marginalized as utopian and even potentially counter-productive even though ongoing efforts to limit the proliferation were falling short. I submit that the international system itself had become problematic, given the relatively new global threat of nuclear war.  

1.  Michael Birnhaum of the Washington Post, October 6, 2017. 

The full essay is at "A Ban on Nuclear Weapons."