Obama Caved to the Agribusiness Lobby

Faced with political pressure from Republicans and farming groups, the White House decided in April 2012 not to go ahead with rules that would have prevented children from “operating heavy machinery, handling tobacco crops, working in grain silos or performing other jobs considered potentially dangerous.”[1] The Labor Department issued a statement indicating it was withdrawing the rules due to concern from the public over how they could affect family farms. “The Obama administration is firmly committed to promoting family farmers and respecting the rural way of life, especially the role that parents and other family members play in passing those traditions down through the generations,” the department announced.[2] I contend that this rationale was a ruse intended to cover up the true source of the political pressure. Family farms were actually exempted from the proposed rules.

The full essay is at "Obama Caved to the Agribusiness Lobby."

1. Dave Jamieson, “Child Labor Farm Rules Scrapped by White House under Political Pressure,” The Huffington Post, April 27, 2012.

2. Ibid.

The E.U.: The Growth Union

In relying only on austerity and cheap bailout loans, the German-led strategy has proffered a false sense of European integration in the E.U. Even as expanding the bailout funds to roughly 800 billion euros and strengthening the E.U.’s means of enforcing limits on state deficits and debt are along the line of continued incremental shifts of governmental sovereignty from the state governments to that of the E.U., the related austerity (and recession) sparked a populist backlash in several states. At the state level (and this level has a major role at the E.U. level—unlike in the U.S.), the state-rights (i.e., anti-E.U.) parties have been the beneficiaries even if they could not gain outright majorities. The National Front in the state of France is an obvious example, as it captured 18% of the vote in the run up to the general election in 2012.  Other things equal, such a spike translates into brakes on further European integration in the medium term.

The full essay is in Essays on the E.U. Political Economy, available in print and as an ebook at Amazon.

Hollywood Bribes China

The Foreign Corrupt Practices Act, known as F.C.P.A., “forbids American companies from making illegal payments to government officials or others to ease the way for operations in foreign countries.”[1] The practical difficulty facing American companies doing business around the world is that in some cultures bribes are so ubiquitous they are simply a part of doing business.  For American companies to refuse to participate in what is generally expected can be a competitive disadvantage, particularly if substitutes exist and the practice is widespread.

The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.

1. Edward Wyatt, Michael Cieply, and Brooks Barnes, “S.E.C. Asks if Hollywood Paid Bribes in China,” The New York Times, April 25, 2012.

Oil and Gas Companies: Citizens Buying Government

“Corporate campaign contributions have historically been split among incumbents of both political parties, with a decided advantage for whichever controls Congress and the White House.”[1] From 2008 to 2012, however, “companies in some major industries that [saw] a threat from federal regulations—most notably the energy sector—[appeared] to have deepened bonds with the Republican Party, with which they share increasingly indistinguishable goals.”[2] One implication is that the party would block regulations to protect the regulated even at the expense of the public safety.

The full essay is at "Oil and Gas Companies."

1. Dan Froomkin, “Corporate Campaign Contributions Show Some Industries Giving Up Appearance of Bipartisanship,” The Huffington Post, April 26, 2012. 

2. Ibid.

Spanked by Stockholders: Citigroup

In April 2012, Citigroup’s shareholders voted against the bank’s proposed $15 million compensation for the CEO, Vikram Pandit. This was the first time a majority on a stockholder vote—in this case, 55 percent—united in opposition to what was considered “outsized compensation at a financial giant.”[1] Shortly thereafter, a major stockholder sued Citigroup for breach of fiduciary duty (owed to the stockholders) for excessive executive compensation. Nevertheless, the prognosis is not so bad for the “top brass” on Wall Street; they need not worry unless the votes were to become binding and managements were barred from voting proxies.

The full essay is at "Spanked by Stockholders."

1. Jessica Greenberg and Nelson Schwartz, “Shareholders in Citigroup Reject Executive Pay Plan,” The New York Times, April 18, 2012.

U.S. President Obama on Executive Power

In February 2011, U.S. President Barak Obama directed the U.S. Justice Department to stop defending the Defense of Marriage Act, which bars federal recognition of gay marriages, against constitutional challenges. “Previously, the administration had urged lawmakers to repeal it, but had defended their right to enact it. In the following months, the administration increased efforts to curb greenhouse gas emissions through environmental regulations, gave states waivers from federal mandates if they agreed to education overhauls, and refocused deportation policy in a way that in effect granted relief to some illegal immigrants brought to the country as children. Each step substituted for a faltered legislative proposal.”[1] While not defying Congressional statutes, the use of executive power to thwart defending a statute violates the enforcement function of the executive branch. The other matters—enacting environmental regulations, granting relief to some illegal immigrants, and issuing state waivers presumably were under broader statutes that permit administrative action by the executive branch. The danger, however, is that the enforcement branch or arm could become a legislative branch or arm of the U.S. Government.

The full essay is at "Obama on Executive Power."

1. Charlie Savage, “Shift on Executive Power Lets Obama Bypass Rivals,” The New York Times, April 22, 2012.