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Saturday, October 7, 2017

Earmarks and Congressional Campaign Fundraising: A Structural Conflict of Interest

In 2009, Congress appropriated $16 billion in earmarks. In March of the following year, the U.S. House of Representatives eliminated earmarks to for-profit companies. However, enterprising managers soon found a way to get around the new obstacle by creating related non-profits. As long as companies can make political contributions to Congressional campaigns, there will be a structural conflict of interest in the legislators legislating on earmarks.


The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.




Investment Bank Dinners with Corporate Executives and Hedge Fund Managers: The General Public Not Admitted

“One day in early March [2011], the phone lines of hedge-fund traders around London and New York suddenly lit up. A stock that many of them had placed hefty bets on—Pride International Inc., an energy company in the process of being sold to a rival—was falling. The traders had no idea why. They soon figured it out: J.P. Morgan Chase & Co. had hosted a meeting that day between a handful of hedge-fund traders and executives from a company that was considered a prime candidate to start a bidding war for Pride. One of those executives had indicated they weren't likely to make a bid.”

“The prospect of a bidding war had lifted Pride's shares above where they likely would have traded in the absence of a potential interloper. . . . At the March 8 lunch, though, as the traders munched on scallops and fish, Seadrill vice president and board member Tor Olav Trøim splashed cold water on the idea of a bid. He recalls telling traders that the company's Feb. 24 statement was ‘not normally what you would say if you were interested in bidding yourself. His intended message, according to one person familiar with the matter, is that Seadrill was "very unlikely’ to launch a competing offer for Pride. The information was market-moving, traders say. In the hours after the lunch, some traders wagered that the odds of a bidding war had declined. Seadrill's shares rose more than 1% as it was viewed as less likely to pursue a costly acquisition. Pride's shares fell by about 0.5% in the minutes before markets closed.”


“The moves may seem small, but they were significant for ‘merger arbitrage’ traders, who make short-term bets on deal stocks. In the case of the Ensco-Pride deal, the movements translated into a sudden 64% spike in the deal's ‘spread.’ That arcane measure reflects the difference between a target company's stock price and the per-share value of the acquirer's offer. The spread is closely watched by hedge funds that focus on merger arbitrage, which stand to gain or lose large sums based on the spread's movement. As the shares moved, anxious investors bombarded Seadrill's investor-relations office with phone calls, trying to figure out whether the company had issued new guidance about its appetite for bidding on Pride, according to a person familiar with the matter. Company officials responded that they hadn't released any new information. . . . Trøim says Seadrill executives regularly meet with large and small investors and that it is appropriate to help them understand the company's strategy. ‘We cannot see that we in any way have crossed any lines for giving privileged information,’ he says.”

The full essay is at "Investment Bank Dinners."


Source:

David Enrich and Dana Cimilluca, “Banks Woo Funds with Private Peeks,” The Wall Street Journal, May 16, 2011.

Leadership by Elected Representatives: Transcending the Politics of Slashing Vulnerable Federal Programs and Avoiding Tax Increases

On January 20, 2011, months before the Republicans would use leverage of a baleful debt-ceiling-default to extract additional cuts, the Republican Study Committee (RSC)—a group of fiscally conservative members of the U.S. House of Representatives—announced a plan by which $2.5 trillion could be cut from the U.S. Government's spending over ten years. According to The New York Times, the proposed cuts “would exclude the military, and would not touch the big entitlement programs, Medicare and Social Security. As a result, [their] effect on the entire array of government programs, among them education, domestic security, transportation, law enforcement and medical research, would be nothing short of drastic." The leaders of the RSC claimed that the cuts were “appropriate and necessary, given the government’s $14 trillion debt and annual deficits at their highest levels since the years just after World War II." The RSC "proposed generally reducing agency budgets to their levels in 2006 — the last time Congressional Republicans controlled the budget process — and then freezing them, with no annual inflation adjustments.” The RSC also recommended “slashing the federal workforce by 15 percent and canceling pay raises for five years, for a total of $2.29 trillion in savings.” Finally, the proposal included “an additional $330 billion in cuts to specific programs, including Amtrak, foreign aid and even the Washington subway system" (Source #1).



On the Obama Administration's Inconsistency on Syria and Libya

In his foreign policy speech on May 19, 2011, U.S. President Barak Obama attempted to justify his administration’s policy of selective military action against violent rulers. “(W)e cannot prevent every injustice perpetrated by a regime against its people, and we have learned from our experience in Iraq just how costly and difficult it is to impose regime change by change by force – no matter how well-intended it may be.” The Obama administration was assuming that facilitating the removal of a ruler who is violently betraying his people must involve a multi-year American occupation, as in Iraq. However, the case of the U.N.-sanctioned international coalition enforcing a no-fly-zon and protecting civilians in Libya proffers a counter-example.

The full essay is at "U.S. Policy on Syria and Libya."

E Pluribus Unum (One out of Many): Unity without Uniformity

On January 12, 2011, President Obama spoke at the memorial service for the fallen victims of the assassination attempt on Rep. Giffords. “What we can’t do is use this tragedy as one more occasion to turn on each other,” the President said. “That we cannot do. As we discuss these issues, let each of us do so with a good dose of humility.” Had we really been turning on each other? It is as though a bystander had pointed out to two people arguing that they were indeed shouting.  "Were we really shouting?" one might ask the observer in astonishment--to which the observer would nod and add, "You guys might try a bit of humility," rather than, as the President observed, "pointing fingers or assigning blame.” 

The full essay is at "Unity without Uniformity."

Wednesday, October 4, 2017

Nature’s Caste System: Character-Based Clusters

Pushing good characters down for no good reason in a sort of “collective judgment” that applies to an entire group of people—as in the case of the untouchables in the caste system in India—and accepting the false entitlement of “professionals” to membership in the highest caste simply because they tend to be wealthy—as in the case of lawyers and physicians in America—violates the clusters that naturally cohere—like gases that form distinct planets having their own separated orbits—on the basis of character. Being “on one planet,” it is immediately obvious that someone else is on another. In this essay, I attempt to sketch some of the basic mechanisms by which nature’s caste system is sustained and articulate the nature of the differences that occasion there being appreciable distance between the clusters.

The full essay is at "Nature's Caste System."

Capitalism & Caste: Melting Untouchability in India

In what has become known as India, the caste system of Hinduism has for millennia served as the template for the socio-economic ordering of people into family-based groups. By the end of the first decade of the twenty-first century, the economic liberalization policy put in place in 1991 to replace the stagnant “import-substitution” domestic-favoring model of economic development had enabled some people in the lower castes to vault into social acceptability by virtue of what The New York Times calls “the newest god in the Indian pantheon: money.” Given the advent of the prosperity gospel in Christianity and the associated eclipse of the “camel getting through the eye of a needle” much-earlier-hegemonic association of wealth with greed, a similar statement could be made with regard to the Trinity (see “Godliness and Greed” and "God's Gold," both available at Amazon).

The full essay is at "Capitalism and Caste." . 

Vertical and Horizontal M&A: A Bias in Antitrust Policy?

The Obama Justice Department developed a track record in challenging horizontal mergers and acquisitions—those in which a company buys a direct competitor—in industries that are already highly concentrated. In deals that are not between direct rivals, such as those that occur in vertical integration, the Obama Administration approved the deals, albeit with the imposition of legally binding restrictions on the acquirer’s ability to use its “in house” supplier to engage in unfair competition.

The full essay is at "A Bias in Obama's Antitrust Policy?


The U.S. House of Representatives: An Aristocratic or People’s House?

Between 1984 and 2009, the median net worth of a member of the House rose by more than 2 1/2 times, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home ­equity. Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.” This comparison excludes home equity because it was not included in congressional reporting.

The full essay is at "An Aristocratic or People's House?"

Anti-Corruption and Federalism in India

At the end of 2011, India’s coalition government adjourned the upper chamber of the federal legislature without passing legislation that would have created an independent anti-corruption agency. India was a the time rife with governmental corruption. A college wants its foreign students protected from crime? A payment is made to local police employees, who pocket the money for themselves. Someone wants a government contract? Well, that goes without saying.

The full essay is at "Anti-Corruption and Federalism in India."



Source:


Jim Yardley, “Bill to Create Anticorruption Agency Stalls in India,” The New York Times, December 30, 2011. 



Leadership Consulting: Stances on Scholarship

As the field of leadership consulting continues to proliferate, fringe-elements have developed that risk taking down the credibility of the field itself as well as its more solid practitioners. In this essay, my objective is to make those practitioners aware of the damage to their field (and indirectly to their own practices) that is being committed on the periphery. Relatedly, my task extends to making scholars of leadership aware of how leadership itself is being undermined as a concept used (and abused) in the business world. I contend that maintaining the distinction between consulting (including writing on it) and scholarship is in everyone’s interest, even if some “coaches” believe they have a momentary interest in blurring the lines for personal gain.

The full essay is at "Leadership Consulting."

Did Obama Press Israel to Compromise for Peace?

Seeing to “capture a moment of epochal change in the Arab world,” U.S. President Obama delivered a foreign policy speech on May 19, 2011 in which, according to the New York Times, he sought “to break the stalemate in the Israeli-Palestinian conflict” by “setting out a new starting point for negotiations.” In particular, he suggested that the Israelis go back to the 1967 borders, adjusted somewhat to account for settlements on the West Bank. Meeting with Obama on the following day, Israeli Prime Minister Netanyahu said, “We can’t go back” to the 1967 borders, according to MSNBC.com. This put the U.S. at odds with one of its foremost allies. Considering the amount of financial and military aid involved, Netanyahu could have been accused of biting the hand that was feeding Israel. Yet due to lobbying no doubt, the Obama administration did not fully play its hand in pressuring the ally. 

The full essay is at "Pressing Israel."