Reforming U.S. Corporate Taxation: On the Virtue of Simplification

As the Republican Party assumed control of the U.S. Senate, and thus of Congress itself, since they would continue in the majority in the U.S. House, Republican Congressional  leaders and President Obama all emphasized policy areas where common ground could be found. Suddenly, the day after the midterm election of 2014, talk of bipartisanship was in the air. In this essay, I discuss the domain of corporate taxation in order to suggest that the common ground can be deeper than typically thought.

The full essay is at "Reforming U.S. Corporate Taxation"

An Ebola Vaccine: A Lesson for Obamacare

With the Ebola virus confined to impoverished states in Africa until 2014, drug companies had little financial incentive to develop a vaccine. “A profit-driven industry does not invest in products for markets that cannot pay,” Margaret Chan, the director general of the World Health Organization, said in late 2014.[1] At the time, at least 13,567 people were known to have contracted the virus in the outbreak, with nearly 5,000 people dead. It cannot be said that the profit-motive in a market economy is efficient in this case.

The full essay is at “Ebola Vaccine.”

1. Rick Gladstone, “Ebola Cure Delayed by Drug Industry’s Drive for Profit, W.H.O. Leader Says,” The New York Times, November 3, 2014.

Exclusivism Eclipses Veritas at Yale

Michael Simons, head of the cardiology department of the School of Medicine, made unwelcome sexual advances in writing to Annarita Di Lorenzo,  a researcher 18 years younger at the school in 2010. Simons wrote that he wanted to kiss the woman’s lips, and every part of her “body in every continent and city of the world.”[1] Referring to Frank Giordano, the woman’s boyfriend at the time and subsequently husband, Simon wrote that the woman was choosing the wrong man.  Simons would keep Giordano from important meetings and assignments. The relationship between the two men became so difficult that Jack Elias, the chairman of medicine, took over the direct supervision of Giordano to protect the untenured instructor from Simon.

Nevertheless, Yale’s provost, dismissed a university committee’s recommendation that Simons be permanently removed from his position in favor of an 18-month suspension. Faculty members claimed that Simons’ success in snagging $5 million annually from the U.S. Government in grants in 2012 and 2013 had been a factor, as well as the fact that the provost had been chair of the economics department, where Simons’ wife was a faculty member. The monetary element would not be lost on virtually any academic administrator at any university, but the “old boys club” sticky web of connections at the elitist Yale could mean that “outsiders” suffer considerable abuse there; the Provost’s dismissiveness of the university committee’s recommendation is but one indication of how distorted the moral compasses can be among the most powerful in the “club.” 

The complete essay is at "Exclusivism at Yale"

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1. Tamar Lewin, “Handling of Sexual Harassment Case Poses Larger Questions at Yale,” The New York Times, November 1, 2014.

The Bank of Japan’s Quantitative Easing: An Unnatural Imbalance

On October 31, 2014, the Bank of Japan made public its policy of buying larger amounts of government debt—80 trillion yen ($734 billion) a year—so as to stimulate the economy.[1] The Nikkei 225-stock index average rose almost 5 percent that day, while the yen fell to its lowest level against the dollar since the preceding month. In effect, investors and analysts were factoring in the likely stimulatory impact on the economy and the inflationary implication of more yen relative even to the expanded output, respectively. Put another way, the lower yen suggests that any strengthening of the currency from higher economic output would be more than countered by the weakening impact of inflation. Interestingly, not even the likely boost to exports from the cheaper yen was expected by the market participants to give the stimulus the edge in pushing the currency higher rather than lower.

 

The full essay is at "The Bank of Japan's Quantitative Easing"

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1. Jonathan Soble, “Japan’s Central Bank Unexpectedly Moves to Stimulate Economy,” The New York Times, October 31, 2014.

 

On the Federal Reserve’s Quantitative Easing: Impacts on the U.S. Debt and Inflation

With government-bond purchases of $3.9 trillion (including mortgage-backed bonds) from November 25, 2008 to October 30, 2014, the U.S. Federal Reserve Bank stimulated the American economy by keeping interest rates low. This in turn kept the U.S. Treasury department’s interest payments on the gargantuan federal debt lower than would have otherwise been the case. Put another way, the Federal Reserve Bank’s massive foray into stimulating the economy made holding debt and borrowing still more money less costly than it would otherwise have been, and thus enabled the government’s penchant for debt-financing over raising taxes and/or reducing spending. “Enabling an addict” would be a less charitable way of putting the Fed’s role vis-à-vis the U.S. Government. In this essay, I explore problems resulting from the Fed’s stimulus on the government’s debt-financing.

 

The full essay is at "The Federal Reserve's QE"

On the Credibility of the E.U.: Transfer Payments and State Deficits

In October of 2014, the prime minister of the E.U. state of Britain blatantly (and quite publically) refused to pay a “bill” that the E.U. Commission charged the state on account of upward revisions of its economic growth. “We won’t pay it,” David Cameron said defiantly into a microphone. Meanwhile, Jyrki Katainen, the E.U. commissioner for economic and monetary affairs, accepted the draft budgets of the states of France and Italy even though they violate the limit of 3% of GDP in the European Growth and Stability Pact. Those two states could face fines, however, and the commissioner also noted that the budgets would face strict scrutiny. I contend that these instances of tension between the state and federal levels speak volumes as to the attitude of state officials and likely their constituents toward the E.U. itself. The attitude does not bode well for the European Union as a system of public governance.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Religion and Business Meet in a Catholic Church’s Food Pantry

The sacred and the profane are like oil and water—oil for anointing and water for cleaning. The viability or value of the sacred does not depend on denigrating that which is exogenous to it. In other words, praising the sacred does not require trashing the world. Being in the world but not of it does not imply that the world is necessarily bad. From this perspective, the sacred and profane can both be viewed as viable in their own rights, respectively. The inevitable distance that distinguishes them so starkly is breached only with great difficulty, even if pressed out of sheer practicality. For example, a theological interpretation undergirding a religious organization’s food pantry can clash with a business calculus such as would be held by an auditor pouring over the numbers and procedures. As theology and business enjoy their own, sui generis (i.e., of its own genus or type) bases of justifications or rationales, unraveling a clash can be notoriously difficult for want of a common denominator. 

The full essay is at "Religion and Business Meet"

Is Daily Sustenance a Human Right?

Should healthcare, foodstuffs, and shelter be treated as commodities subject to the buyer’s ability to pay, or designated as rights because a person’s survival depends on them? In short, is the innate human drive of self-preservation worthy of being recognized societally as justifying a right to sustenance? In the E.U., this point of view tends to hold sway, whereas in the U.S., food, medical care (and medicine), and housing units tend to be treated as commodities subject to a buyer’s ability to pay. This difference in political socio-economic ideology is as telling as it is significant, yet in the U.S. at least the question is rarely debated directly rather than through ancillary issues. 

The full essay is at "Daily Sustenance"

The Age of Humans: Snuffing Our Species Out

With California entering its fourth year of severe drought and the planet having its warmest August and September since records began in 1880, one scientist at NASA’s Institute for Space Studies said in 2014 that the warm data points “point toward the long-term trends.”[1] At the time, scientists were already claiming that the planet had entered a new era—that of the Anthropocene—noted for the impact of the homo sapiens species in altering Earth. The implications are profound, even if the huge shift has not fully registered in human consciousness.

Source: “The Age of Humans.”

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[1] Nick Visser, “The Planet Just Had Its Warmest August on Record,” The Huffington Post, September 15, 2014.

Stifling Change: Columbus Day and Thanksgiving

In Canada, Thanksgiving is celebrated at harvest-time, on October 12^th, rather than a week before the first month of winter in the Northern Hemisphere. For the States south of Canada, whether their respective peoples are cold or warm on the third Thursday in November, the holiday’s date is etched in stone, given the illustrious aura of the U.S. president who had enshrined the date in the midst of a horrendous war between the USA and CSA in the 1860s. Few people would dare even entertain the natural assimilation of Columbus Day and Thanksgiving Day on October 12^th. So, well after harvest in most of the States and bunched in with Christmas and New Years—effectively ridding the latter of any left-over enthusiasm—people in the States in the northern climes are consigned to stuff themselves like Turkey birds while the surviving natural turkeys shiver outside. Human nature itself may be hardwired against change, and the massive scale of modern political association may exacerbate the paralysis. 

The full essay is at "Stifling Change."

Gandhi's Philosophy of Nonviolent Defiance: A Way to Freedom

Film is indeed an art form, but the medium can also function as a teacher in how it conveys values and wisdom. Both of these features of film are salient in Gandhi (1982), whose director, Richard Attenborough, says in his audio commentary that the film has done much keep Gandhi’s philosophy alive in the world. In using the film’s star protagonist to explain what is behind his approach, viewers become, in effect, students. The strength of film here lies in its use of both audio and visual means to engrave the lessons in memories. In Gandhi, the main concept to be explained and illustrated is nonviolent active non-cooperation or defiance of unjust laws or regimes.

The full essay is at “Gandhi”

Political Protests in Hong Kong: The Market Overreacts

Geopolitical risk is essentially uncertainty to the market. Given the nature of human fear, the psyche can add a “multiplier effect” to an objective calculation of uncertainty. Just as we are naturally so close to human nature that its most ubiquitous tendencies eclipse our notice, so too do we tend to assume that the market’s assessment of a political risk is accurate, given the efficiency and effectiveness of the stock market. The market’s initial reaction to the political protests in Hong Kong in September 2014 may demonstrate that the market’s participants even routinely overstate both the probability and severity of the downside of a mass political event.

The full essay is at “Political Protests in Hong Kong”

The New York Fed: A Case of Regulatory Capture

According to The Wall Street Journal, a study sponsored by the Federal Reserve Bank of New York in 2009 uncovered “a culture of suppression that discouraged regulatory staffers from voicing worries about the banks they supervised.”[1] Whereas the report points to excessive risk aversion and group-think as the underlying problems, a fuller explanation is possible—one with clear implications for public policy.

The full essay is at The New York Fed.

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1. Pedro N. Da Costa, “N.Y. Fed Staff Afraid to Speak Up, Secret Review Found,” The Wall Street Journal, September 28, 2014.

Steward Leadership: Duty-Based Fidelity

In the ancient Middle East, “steward” (oikonomos) most often applied to the position of household manager.[1] Economics in the ancient context, such as is described in Aristotle’s Oeconomica, concerned the household, which extended beyond familial relations, as the unit of production and managed by the head of household. According to Higginson, Jesus had this role in mind.[2] “Steward” may thus apply in a Christian sense more appropriately to managers than leaders, and more particularly to ethical leaders.

The full essay is at “Christianized Ethical Leadership”

[1] Richard Higginson, Transforming Leadership: A Christian Approach to Management (SPEK: London, 1996), p. 50.

[2] Ibid.

Proof

If you are not careful, you could come away from the film, Proof (2005) as a scientist, for the scientific method enjoys a starring role, albeit mostly in subtle undertones rather than in stark instructional flourishes in Technicolor. Essentially, the message is that confirming proof eludes the human mind and its scientific method. Yet interestingly, the film also captures genius, even if its source cannot be proven.

The full essay is at “Proof”