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Friday, May 31, 2019

Encroaching Political Consolidation: The Weakening of the U.S. Federal System

It is much easier to point out the sliver in the other person's eye than the plank in one’s own. Regarding the gradual political consolidation of power at the federal level in the U.S. at the expense of not only the member-state governments, but also the federal system itself, it is easier for a political party to dismiss its own contribution than to take a wider stance including the continued viability of the federal system, or federalism, itself. As a result, both of the major parties has contributed to the increasing political consolidation at the expense of the check-and-balance feature that a balanced federal system has.

The full essay is at "Encroaching Political Consolidation in the U.S."

Thursday, May 30, 2019

Facebook’s Mark Zuckerberg: Power beyond Corporate Governance

Facebook’s Mark Zuckerberg and Sheryl Sandberg did not attend a committee hearing at Canada’s Parliament on May 28, 2019 in spite of having received summons from Bob Zimmer MP, the committee’s chair. Instead, Facebook sent its director of public policy and its head of public policy for Facebook Canada. “Shame on Mark Zuckerberg and shame on Sheryl Sandberg for not showing up today,” Zimmer said toward the end of the hearing.[1] For sending two representatives rather than themselves, Zuckerberg and Sandberg faced the possibility of being held in contempt. They had testified before the U.S. Congress, so by sending two representatives the two leaders of Facebook may have acted rather dismissively concerning Canada’s federal legislature. At the time, Zuckerberg had virtually unchecked power at Facebook, including over the other stockholders. From his perch, the power may have been going to his head; even after two years of user-privacy scandals, Facebook’s CEO and Chairman of the Board may have determined that summons from legislatures where the company was operating were beneath him. Such a mentality is dangerous for a person with autocratic control of such a large company.

1. Donie O’Sullivan and Paula Newton, “Zuckerberg and Sandberg Ignore Canadian Subpoena, Face Possible Contempt Vote,” CNN.com, May 28, 2019.

President Obama Took Care of Wall Street below a Public Persona of Reform

In April, 2010, President Obama gave a speech in New York City to counter what he called “the furious efforts of industry lobbyists” geared to weakening or stopping the new financial regulations that Obama claimed would be needed to stave off a second Great Depression.[1]  It is telling that the banks that had contributed to the financial crisis of 2008 were trying to diminish or block any new regulation. The very legitimacy of industry calls for deregulation in the wake of a market failure caused in part by the industry flies in the face of the rationale for regulation. In short, the rationale for government regulation has to do with market failures, which includes fraud and over-zealous profit-taking at the expense of the public good. The root of the rationale is the difference between the interests of an organization and society (i.e., the public good). 

The full essay is at "Obama Took Care of Wall Street."

1. Peter Baker, "Obama Issues Sharp Call for Reforms on Wall Street," The New York Times, April 22, 2010.

Tuesday, May 28, 2019

On Fiat-Chrysler’s Merger Proposal to Renault: Too Broad?

As Renault was considering Fiat Chrysler’s proposal to merge, industry executives and analysts believed “that car makers must link up to share the cost of a transition from internal combustion engines to avoid being run over by fast-moving tech industry challengers like Tesla or Uber.”[1] To be sure, (b)y purchasing parts together, combining their manufacturing operations and sharing the cost of research and development,” the merger could “eventually save 5 billion euros per year,” according to Fiat.[2] The R & D would include funds spent on developing new models as well as on high tech oriented to the future. Although significant efficiency could be achieved due to under-used factories and all the money going into product development, the basic problem was one of insufficient scale (i.e., revenue) to support (i.e., finance) the very costly research and development needed on electric and/or self-diving cars. In its statement, Fiat Chrysler pointed to “the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification, and autonomous driving.”[3] The insufficient scale was particularly troubling given the declining E.U. auto market at a time when Tesla, Google and Uber were making progress on electric and self-driving cars. Fiat Chrysler could really use the expertise at Renault and Nissan on electric cars. However, I'm not sure a merger was the optimal route forward.

The full essay is at "Fiat-Chrysler's Merger Proposal."

[1] Jack Ewing et al, “Renault Considering Fiat’s Offer to Merge Into a New Auto Giant,” The New York Times, May 27, 2019
[2] Ibid.
[3] Ibid.

Monday, May 27, 2019

Democracy Impaired in the E.U.: The State-Level Vortex

In interpreting exit polls released on May 26, 2019 on the E.U.’s Parliament election, The New York Times pointed to two issues, only one of which pertained to the federal level. “Observers looked to [the election] to gauge the popularity of the various anti-immigration, anti-elite, Euroskeptic parties across the union.”[i] Had the E.U. electorate focused on such a matter so central to the European Union itself, democracy at the federal level would have been nearly perfect. However, the encroachment of state-level politics in the federal election, the other point, contributed to the democratic deficit at the federal level. This takes away from the viability of the federal system itself.

1. Steven Erlanger, “European Election Results: The Mainstream Loses Ground,” The New York Times, May 26, 2019.