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Saturday, October 27, 2018

The Debt-Ceiling vs. the Fiscal Cliff as Negotiating Leverage


It is likely a drawback of democracy that hard decisions—that is, those in which fixing the problem goes against instant gratification or financial advantage—get pushed back, or “kicked down the road,” rather than addressed in a definitive way such that difficult problems are fixed. This structural problem can be seen in how Congressional leaders and the U.S. President delayed the “fiscal cliff” for two months at the beginning of 2013. More generally, the political tactic of holding the federal budget and the debt-ceiling as ransom evinces a fundamental flaw in democracy itself.



The full essay is at "Structural Flaws of Democracy."

The Underbelly of Corporate Charity as Corporate Social Responsibility

Why do corporate managements spend corporate money on charities? The obvious reason is to reduce the amount of corporate income tax due. Yet another motive, not as transparent, has to do with reputational capital, and that motive may also explain corporate social responsibility.


  Bernie Madoff, surrounded by police, after having been arrested. Wikimedia Commons

A Weak Economy as a Competitive Advantage to the Largest Corporations

Size matters, at least in the business world. Richard Fuld, the last CEO and Chairman of Lehman Brothers, overextended "his" bank with risky real-estate and financial derivatives in part so Lehman Brothers would be as big as Goldman Sachs. 


Empire-building (and ego) aside, the largest corporations can indeed perform differently than smaller firms in an economy. In April 2013, it was clear that the biggest companies were outpacing smaller ones. Analysts estimated profits for the 100 largest companies in the Standard & Poor’s 500 stock-index to rise 6.6% in the second quarter, while earnings for the bottom 100 were expected to fall by 1.6 percent. Of all the profits earned by the companies in the S&P 500, 22% would be coming from the 10 largest companies, enabling them relatively more wherewithal with which to gain still more market share. Put another way, beyond a certain point, organizational size can protect or buffer a company in the midst of a languid economy. It is not only the market mechanism that accounts for this phenomenon.

The full essay is at "A Weak Economy as a Bonus for Large Companies."

Is Corporate Governance Anti-Democratic?

Assuming all the votes cast in an election are accurately tallied, the pronouncement of the winner would seem to be straight-forward. What it means to have won, however, is considerably more complex. Specifically, is winning getting over 50% of the vote, or should a mere plurality of, say, 38% suffice? It could be argued that a super-majority of 60% or two-thirds is necessary for there to be a discernible will of the people behind the winner. To claim that 51% represents the will of the people seems a bit of a stretch, since almost half of the voters cannot be considered to be of that will. Typically, much is read (or projected) into the 1% over the 50% in terms of a mandate. All of a sudden, 51% of the voters become “the people.”  Certainly a winning plurality of 38% cannot be said to stand for or represent the will of the people, for 38% is a minority in the total votes cast. Yet in Delaware’s corporate law, which is binding for most American corporations, a mere plurality is sufficient for a candidate to be elected to a board of directors. While this arrangement is not ideal, it is a legitimate basis even if some stockholder activists beg to differ.

Tuesday, October 23, 2018

Canada Takes On the United States: A Case of Two Empires?

Two centuries after the War of 1812, the Canadian government sought to commemorate the “fact” that Canada had thwarted the invasion of troops of the American republics to the south.  “Two hundred years ago, the United States invaded our territory,” a narrator says over dark images and ominous music in the government’s ad. “But we defended our land; we stood side by side and won the fight for Canada.” However, the New York Times points out that “because Canada did not become a nation until 1867, the War of 1812 was actually a battle between the young United States and Britain.” The fight was not for Canada because the British troops were fighting for the British empire rather than for colonies in what is now Canada.

                                         The British are coming! A British hero in "Upper Canada."         rpsc.org

The real question is why the young American empire sought to take on the British empire--an empire within taking on the seat of the larger empire (as if an empire, the United Colonies,being in an empire makes sense and is durable).

The full essay is at "Empires vs. Kingdoms"

See also, British Colonies Forge an American Empire, by Skip Worden. 

Sunday, October 21, 2018

Jamal Khashoggi: A Double-Agent Killed in Istanbul by Saudi Operatives

The New York Times labeled Jamal Khashoggi “a journalist critical of the Saudi government.”[1] His day job was being a contributing columnist to The Washington Post. Articles he wrote “included criticism of Saudi Arabia’s government. On [October 2, 2018], he entered the [Saudi] consulate in Istanbul and never emerged.”[2] Khashoggi was also a double agent, and it is for this rather than merely critical articles that he was really killed and cut into pieces in the consulate. The U.S. Government had a self-interest in letting Saudi Arabia get away with the crime.


The full essay is at "Khashoggi: A Double Agent."


[1] Carlotta Gall and Ben Hubbard, “Turkey’s President Vows to Detail Khashoggi Death ‘in Full Nakedness,” The New York Times, October 21, 2018.
[2] Emily Rauhala and Anton Troianovski, “The World Has a Question for the White House: When Do Murders Matter?The Washington Post, October 19, 2018.