President Obama and Goldman Sachs: A Quid Pro Quo?

Wall Street and the White House may be closer than the typical American thinks. One way this is accomplished is for a bank to contribute heavily to both presidential campaigns so as to be able to hedge political risk by getting ex-managers into strategic posts in the executive arm of the U.S. Government. This can be the case even when one of the candidates has campaigned on holding Wall Street accountable, such as after the financial crisis of 2008. There is the campaign slogan, and there is the political-economic reality underneath. 

The full essay is at "Obama and Wall Street."

General Electric: Tax Avoidance with Former IRS Employees In-House

The name of the game in all too many corporate tax departments is to minimize the tax due as much as possible. No countervailing notion of “corporate citizenship” or even “fair share” exists in that economic world of single-minded minimization of what is to be paid out. Put another way, responsibility does not compute in the business calculus. Advocates of corporate social responsibility got this wrong for decades by naively assuming that people who work in management roles cannot compartmentalize. Whether due to the strictures of a job description or financial pressures on a company, managers themselves may regret having to compartmentalize in order to keep their respective jobs. Sadly, all too often, a manager faces internal and external pressure to sign off on something that is admittedly unfair or too greedy. That the playing field itself may be slanted in the financial interests of large businesses goes beyond a manager's pay-grade, and even that of a corporation itself. For one to speak out in order to make the tilt explicit in society would deny the operative role of compartmentalization. Managers, even CEO's, may personally want a level playing field wherein corporations cannot yield an undue amount of wealth at the expense of other entities or persons, such a desire is outside of the business calculus. 
One manifestation of the tilted field is the ability of companies to bring IRS agents in-house as employees. In the debate on whether to end the George W. Bush Tax Cuts, the nominal (or statue) tax rates were salient. Much less was said of the effective rates, which are calculated by dividing the actual tax paid by total income (individuals) or net income (corporations). The New York Times reported in 2011: Although “the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.”[1] Although perfectly legal, the undue advantage means that the U.S. Government has had to look for other sources of revenue to make up for the lost revenue or do without the revenue, using debt to compensate. The "perfectly legal" aspect points back to the tax laws, and, more particularly, at the undue or even improper influence of the business sector in Congress. In fact, lest it be concluded that the business calculus is the reason for the tax avoidance (which is legal, unlike tax evasion), the financial power of business tilts the field not only by having too much influence in the crafting of tax legislation, but also in being able to hire ex-IRS employees to get "the inside scoop" on avoidance tactics. I now turn to the case of General Electric (GE) in 2010. 

The full essay is at "General Electric."

1. David Kocieniewski, “G.E.’s Strategies Let It Avoid Taxes Altogether,” The New York Times, March 24, 2011.

Mary Poppins Returns

Films are commonly known to have two or three dimensions in terms of perspective. Animated films were for decades in the twentieth century in two dimensions—a flat story-world—until the advent of animated films made to show depth, hence three dimensions. Still another, third or fourth respectively, dimension is the element of time in the story-world. Literally, as the still frames are moved one to the next, changes can be perceived in the story-world; you won’t see any change by looking at a frame. Then we get to the dimensions that extend outside of the story-world. One possible dimension is how the narrative or the story-world in a film relates to the book upon which the particular film is based. This dimension becomes visible in terms of meaning particularly when similarities exist, but differences too can prompt attention the dimension itself. In this essay, using Mary Poppins Returns (2018), I discuss another dimension that involves the content in a film but extends out into the world of the audience. When made manifest, this dimension can carry significant meaning for the audience, for this dimension involves both a society’s “social reality” and what is shown in a film.

The full essay is at "Mary Poppins Returns."

The U.S. Department of Justice: Big Banks May Legitimately Be above the Law

The Financial Times reported in 2013 that lawmakers in the U.S. Congress were claiming that the Department of Justice had been “too soft on big banks and their executives by failing to bring criminal cases related to the financial crisis.”[1] In the five years following the financial crisis of 2008, no Wall Street executive was criminally charged with fraud. The U.S. Justice Department chose not to go after the bankers for their lack of due diligence regarding their purchases of sub-prime mortgages from mortgage originators. This in spite of the fact that at Citibank, for example, a manager in the bank’s due diligence department estimated that 50% to 80% of the approved mortgages did not meet the bank’s credit policy, and yet Robert Rubin, the CEO at the time, did not act on the manager’s email. This suggests that a criminal complaint could have been lodged against the bank itself, but then what would be the implications for the financial system should Citibank had gone under after being found criminally guilty? Does it even hold that a guilty verdict would mean bankruptcy? Simply stated, a company can be so large that its failure due to a guilty verdict could harm innocent third parties, including stockholders, employees, suppliers, and even the general public if the bankruptcy triggers a systemic collapse of the financial system. Such concerns are called collateral consequences. After the collapse of Lehman Brothers in September 2008, systemic risk became a particularly salient concern for criminal prosecutors at the U.S. Department of Justice. Swayed by a desire to minimize the potential disproportionate harm to innocent parties from a verdict-triggered major bankruptcy, the prosecutors believed they were obligated to consider collateral consequences even if that meant that the really big banks would be immune from criminal prosecution. To such banks, this could be used as a competitive advantage because keeping within the constraints of law in making money would not apply. I contend, therefore, that the U.S. Government should not have taken collateral consequences into consideration. 

The full essay is "Big Banks above the Law."

 Mythili Raman testifying before Congress. mainjustice.com

1. Shahien Nasiripour and Kara Schannell, “Holder Says Some Banks Are ‘Too Large’,” The Financial Times, March 7, 2013.

Big Bankers and the U.S. Government: A Coalition Circumventing Accountability on Wall Street

It is interesting that the U.S. Department of Justice did not pursue the fraudulent bankers on Wall Street not only during the Bush presidency, but also the following presidency, that of Barak Obama.  Not coincidentally, Goldman Sachs was the single biggest campaign contributor to Obama’s 2008 candidacy for president. It would seem that Wall Street had both political parties in a net by the time of the financial crisis in September, 2008. A sector of the economy being able to control both major parties is bad for not only industrial policy (i.e., favoritism), but also democracy. In short, a government should have enough strength to constrain a business sector, rather than being subject to it. The latter condition implies continued vulnerability should greed again get ahead of itself on Wall Street. By nature, greed, if allowed to go on running on its own steam, accumulates more and more momentum.

The full essay is at "Wall Street and the U.S. Government."

The Case for a Presiding President in Russia

On December 31, 2010, a Russian judge sentenced Mikhail Khodorkovsky, the Russian tycoon who had been imprisoned in 2003 after defying Vladimir Putin, to an additional six years in prison. According to The New York Times, "It was a politically tinged decision that undermined President Dmitri Medvodev."[1] Leonid Goman of the Right Cause Party in Russia agreed. "It was obviously a political, not a judicial, decision." He went on to say that in general terms, "corruption is endemic, government power is often abused and senior politicians are rarely, if ever, held accountable for misdeeds."[2]  Clearly, Prime Minister Putin was still very much in control in Russia.  His message was that wealthy businessmen should not interfere in Russian politics. What a contrast to American politics, especially after the U.S. Supreme Court's Citizens United case!  Khodorkovsky was at one time the richest person in Russia, having been one of the oligarchs who bought government assets at bargain prices after the fall of the USSR, but he financed opposition parties in a political system that was anything but democratic.

Analysis is at "The Case for a Presiding President in Russia."

1. Clifford Levy, "Russia Extends Prison Sentence of Tycoon 6 Years,” The New York Times, December 31, 2010, p. A1.
2. Ibid. 

Glimpsing behind the Curtain: Vice President Lyndon Johnson and the Kennedy Assassination

Robert Ross interviewed Lyndon Johnson’s mistress, Madeleine Duncan Brown what Ross titled, “The Clint Murchison Meeting in Dallas November 21, 1963.” The interview took place sometime before her death on June 22, 2002. The content is revealing, and she comes across as very credible as it is obvious she still had feelings even then for the late president. She also had a credible motive for opening up to the American people. So in watching the interview, I did not view it as just another conspiracy theory; I paid attention. Sometimes the truth finally emerges in plain sight, rather than through complicated theories as in Oliver Stone’s film, JFK (1991). The most revealing facts to emerge from the interview are that Jack Ruby, who killed Oswald just two days after the assassination, had been at the meeting at Murchison’s mansion on the night before the assassination, and that LBJ told Madeleine while leaving Murchison’s house after the meeting, “After tomorrow, those SOB’s will never embarrass me again.” That the official narrative from the Warren Commission would still carry weight as the default account at least in the first two decades of the next century astounded me. At the very least, all of Madeleine’s knowledge of the players should have caused at least a tremor when the interview was made public. The status quo has that much inertia. Even so, the American public can gleam from Brown’s account just how different the reality of the power-brokers in (and outside of) the U.S. Government can be from what the public knows. Unfortunately, the patina or gloss even of acting can have incredible staying-power even in the face of the facts revealed. Members of the political elite and their companions may want to protect their legacies in old age, or want the freedom of conscience that comes from the impunity that can only come with death. The resulting piecemeal facts must justify themselves, however, whereas the long-standing official version often has the benefits of not only protective power and entrenchment that comes with having been the default for so long, but also a coherent (i.e., contrived) narrative. 

The full essay is at "On President Lyndon Johnson: The Man."

A Star Is Born

The film, A Star Is Born (2018), has the narrative structure chiefly of two intersecting character arcs. They are multi-level in the sense that both interior emotional states and exterior vocational popularity change for both Jackson and Ally. Each of them must deal with feelings of insecurity at some point and both are singers. The antagonist is interesting as well, as it is a character that plays a small but decisive role in how the narrative ends.

The full essay is at "A Star Is Born."

Eight Good Behaviors of Managers: Googled by Google

In early 2009 at Google, "statisticians . . . embarked on a plan code-named Project Oxygen. The 'people analytics' teams at the company produced what might be called the Eight Habits of Highly Effective Google Managers. 'My first reaction was, that’s it?' says Laszlo Bock, Google’s vice president . . .  for human resources. 'The starting point was that our best managers have teams that perform better, are retained better, are happier — they do everything better,' Mr. Bock says. 'So the biggest controllable factor that we could see was the quality of the manager, and how they sort of made things happen. The question we then asked was: What if every manager was that good? And then you start saying: Well, what makes them that good? And how do you do it?' He tells the story of one manager whose employees seemed to despise him. He was driving them too hard. They found him bossy, arrogant, political, secretive. They wanted to quit his team. 'He’s brilliant, but he did everything wrong when it came to leading a team,' Mr. Bock recalls. Because of that heavy hand, this manager was denied a promotion he wanted, and was told that his style was the reason. But Google gave him one-on-one coaching — the company has coaches on staff, rather than hiring from the outside. Six months later, team members were grudgingly acknowledging in surveys that the manager had improved." (1)

The full essay is at "Good Behaviors of Managers."

1. Adam Bryant, "Google's Quest to Build a Better Boss," The New York Times, March 12, 2011.

Savage Beatings in a Government's Toolkit: A Case of Pathology Writ Large

The psychology of someone acting on behalf of or in line with a government in beating another person who has not done or said anything personally against the beater is perplexing. The transmission of anger towards what a group stands for onto a particular human being who may be just walking has not been uncommon in human rights lore; even so, the component of strong emotion in the beating itself is bizarre; it may evince a pathology affecting some people when they think about, or engage in, the political domain. So considering violence against the nonviolent as a government tool that depends on the pathology is also problematic.

The full essay is at "Savage Political Beatings: Pathology Writ Large."

Getting More For Doing Less: Bank Board Directors

Executive compensation is an art rather than a science. It is not as if numbers are fed into a computer and the correct compensation pops out. More discretion is involved than meets the eye. “Since the financial crisis,” The New York Times reported in 2013, “compensation for the directors of [America’s] biggest banks has continued to rise even as the banks themselves, facing difficult markets and regulatory pressures, are reining in bonuses and pay.” [1] Just five years after the financial crisis, it is interesting how the banks' respective managements decided to spend the TARP money from Congress and even more money from the Federal Reserve Bank. Also of note, board and upper management compensations seemed to be going in different directions in spite of both being presumably tied to the same firm performance. Even a performance-incentive approach tied to firm-performance can accommodate a lot of latitude, such that banks differ in how much they pay their respective boards. The discretion permits inside collusion and even outlandish demands by "celebrity" members whose advice does not necessarily come up to celebrity status. 

The full essay is at "Bank Boards Getting More for Doing Less."

1. Susanne Craig, “At Banks, Board Pay Soars Amid Cutbacks,” The New York Times, April 1, 2013.

Christianity and the Non-Affiliated in America: A Changing Mix

The 2018 General Social Survey found the proportions of Roman Catholics, Evangelical Christians, and people not affiliated with any institutional religion to each being within the margin of error around 23 percent of the American population. To be sure, to claim no institutional religion does not necessarily mean not being religious, or at least spiritual. Where the heart is concerned, religious institutions, or organizations, do not monopolize religious or spiritual sensibilities or sensitivities. In fact, I contend that a spiritual or even religious instinct exists in humans that can differ among individuals in salience or force. To be sure, people in whom the instinct is pressing may tend to belong to religious organizations, but this is not to say that the latter are necessary for feeling and manifesting the instinct. This is particularly true, I submit, where programmed worship is unwittingly formulated in a way that actually interrupts or thwarts outright the experience of transcendence, whether in sustained prayer, worship, communion, or meditation.

The full essay is at "Christianity and the Non-Affiliated in America."

Too Big To Fail: The U.S. Is Still at Risk

On March 20, 2013, more than two years after the Dodd-Frank financial reform legislation had become law, Federal Reserve chairman Ben Bernanke made it clear that the problem of too-big-to-fail banks had not been solved. “Too Big To Fail is not solved and gone,” he said in a press conference. “It’s still here.”[1] That is, providing an orderly liquidation process for bankrupt banks would be insufficient in keeping the U.S. economy free of vulnerability from even one of the biggest banks taking down the financial sector merely by going bankrupt. Congress should not have missed or minimized this point while working on the Dodd-Frank Act. The self-interested power of Wall Street in Washington and the need of campaign funds in Congress coalesced to dilute the law in spite of the detriment to the public good.

The full essay is at "Too Big to Fail."

1. Mark Gongloff, “Ben Bernanke: ‘I Agree With ElizabethWarren100 Percent’ On Too Big To Fail,” The Huffington Post, March 20, 2013.

Behind Corporate Loopholes: Wealth and Power

A company in the U.S. wants a tax loophole to apply. Starbucks, for example, wanted to be able to use the manufacturing deduction by stretching manufacturing to include the roasting of coffee beans. So in 2004 the company hired Michael Evans, a lobbyist at K&L Gates who had just a year before worked as a top lawyer on the U.S. Senate Finance Committee, which writes tax law. Evans was able to urge his former colleagues in the Senate to expand the definition of manufacturing to include roasting in a clause added to a 243-page tax bill called the American Jobs Creation Act.  As you might imagine, Starbucks was not the only company to get a tax break written into that law. By 2013, the manufacturing deduction had saved Starbucks $88 million that the company would otherwise have had to pay in corporate income tax. In 2012, corporate tax breaks and loopholes added $150 billion in lost revenue for the federal government, increasing the budget deficit by that amount.[1] Three lessons can be gleamed from the hidden corporate loopholes.

The full essay is at "Behind Corporate Loopholes." 

1 Ben Hallman and Chris Kirkham, “As Obama Confronts Corporate Tax Reform, Past Lessons Suggest Lobbyists Will Fight For Loopholes,” The Huffington Post, February 15, 2013.

Regulating Wall Street after a Financial Crisis

On Columbus Day 2011, The New York Times observed that the regulations known as the Volcker rule, “intended to limit trading when the bank's money is at risk, a sweet spot for banks, is seen as a centerpiece of the sprawling financial overhaul of the Dodd-Frank Act of 2010. In anticipation, the nation's biggest banks, like Goldman Sachs and Bank of America, have already shut down their stand-alone proprietary trading desks.”[1] Even so, the long and tortuous route by which any regulation is written was leaving its own mark in the sense that promising loopholes were finding their way into the rule. In other words, the regulated would have a disproportionate influence on the writing of the regulations. This conflict of interest is dangerous from the standpoint of not being vulnerable to another financial crisis in which the greed on Wall Street knows no bounds. 

The full essay is at "Regulating Wall Street after a Financial Crisis."