April 10, 2008
That's Jacques Rogge, President of the International Olympic Committee, trying to contain the damage. Of course, he can't admit that Beijing was the wrong choice for the Olympics, but isn't it obvious? Rogge:
It is very easy with hindsight to criticise the decision. It's easy to say now that this was not a wise and a sound decision. Without any doubt, the bid of Beijing was the best. It offered something that no other country could: bringing sport and Olympism to one fifth of mankind. That was the reasoning behind awarding the Games to Beijing.
Did he really say "Olympism"?
Anyway, the lesson here is that the IOC lost its leverage when it awarded the games. Reform then reward, not the other way around. That's not hindsight. That's just common sense.
March 31, 2008
Ann has the details behind the Clinton campaign's charges of "embellishment" (oh, my!), but calls the issue a "distraction from the list as a whole."
March 21, 2008
Last month, at the Wisconsin Contracts Conference, a few of us independently concluded that Bill Richardson would be the VP choice for Barak Obama, when it came to that. Richardson's endorsement of Obama today strengthens my suspicion that this is the direction the campaign is heading.
Change? Richardson is a Washington insider, but he is also Hispanic. Change enough, I suspect.
But if that weren't enough, how about the beard?
Richardson could be the first Vice President with facial hair since Charles Curtis (Herbert Hoover, 1929-33), who also happened to be the first and only Native American Vice President ...
Based on my extensive research, the last VP to have a beard was Charles Fairbanks (Theodore Roosevelt, 1905-09).
Lots of people are commenting on Richardson's beard, but I hope to become the definitive link on this VP research. Otherwise, I just wasted ten minutes of my life.
UPDATE: Ok, I just couldn't give up until I found a VP with more than a goatee. Levi Morton (Benjamin Harrison, 1889-93) sometimes sported mutton chops:
Then there's Schuyler Colfax (Ulysses S. Grant, 1869-1873), who has a beard, but no mustache:
To get a Vice President with a full beard and mustache, you have to go all the way back to George Clinton (James Madison (George Clinton, 1809-1812):
see below the fold for his magnificent photo ...
Haha! I couldn't resist. I had a couple of Parliament albums when I was a teenager, and this brought back the memories. The VP George Clinton did not have a beard:
So in the end, Richardson really could have a claim as the first Vice President with a full beard. I think he should definitely play that up.
March 19, 2008
In a freakish turn, new NY Governor David Paterson and his wife held a press conference yesterday in which he admitted to having several extramarital affairs, including one with a state employee he supervised. He also revealed that his wife had also been unfaithful. This bizarre scene reminded me of advertisements I had seen for a new TV reality show Moment of Truth, which hooks contestants up to a lie detector machine and asks them important questions of the day such as whether they would leave their spouses for ex-lovers and whether they think their moms are fat. Perhaps we should combine this Fox show with the presidential debates and cut right through political spin to get at the truth behind the "boxers v. briefs" questions.
Paterson's revelations do force us to examine why we are disturbed by revelations of politicians' infidelities. Regarding Eliot Spitzer, we frame our contempt in terms of engaging in illegal activities, using state funds to engage in illicit activities, oppression of women, acting hypocritically, and even becoming vulnerable to blackmail by having secrets. Paterson is daring us to admit that it really is the crime, not the cover-up. If President Clinton had said, "Yes, I did have sex with that woman," would we have all gone back to our own business? If the woman had been older and had an independent career? More interestingly, if Paterson said that he and his wife have had affairs in the past and might in the future because they feel that monogomy is an outdated and unrealistic ideal, would we all be OK with that? Is a disclosure regime all we really demand of our politicians now?
Yesterday evening, I attended a Court of Honor for my twin sons, Christian and Conrad, who are avid Boy Scouts. Though only 11 years old, they each have earned 20 merit badges, and last night they advanced to the rank of Star. That means only 12 months, four required merit badges, and a service project stand between them and the rank of Eagle Scout (which my oldest son earned almost exactly three years ago).
We view Scouting as an important part of their educational experience, and we attempt to provide similar experiences for our daughters. The merit badges require the boys to stretch their abilities and to step out of their comfort zones. They are required to interact with adults and to learn a wide variety of new things. For example, Christian is helping his mother to create a garden in our backyard, while Conrad is learning to play hymns on the piano. Both of them are learning to manage finances from a business consultant in our neighborhood, and I am preparing to sit them down for a session on contracts.
Anyway, I had Scouting on my mind when I received this story via email from Glom-friend Don Clarke. When the Los Angeles Dodgers and the San Diego Padres played in Beijing last week, about 50 Cub Scouts (mostly Americans) went to the game. They were particularly excited because the Dodgers had invited them onto the field to meet the players after the game. Here is what happened next:
Just before the game, the Haidian district police barred the scouts from the field. Why? Because thousands of kilometers away, in the Himalayas, monks and others in Tîbet had launched protests against Chinese rule. The government apparently feared that the young Americans would use their moment on the grassy infield to agitate for Tîbetan independence. This fear that a pack of cub scouts would politicize a baseball game drove the government to politicize the event more effectively than any Tîbetan splittist could hope for, and disappointed a group of bright-eyed kids in the process.
Oh, well. It's not like they missed out on meeting the Twins.
March 11, 2008
The Times asks: what is it about politicians and affairs? And then it lists a bunch of politicians who have had affairs. Of course, it could be that school teachers have tons more affairs than politicians, or that politicians today have tons less affairs than the politicians of yesterday. A list isn't the same thing as a phenomenon. But it's fun to be able to write about Fanne Fox and Gary Condit again.
For more law profs on Spitzer, see Orly Lobel, who thinks prostitution isn't the vilest of crimes and Rick Hills, who thinks this is a strange crime to prosecute. I'm somewhat sympathetic to both views, though I wouldn't take Hills's federalism angle. My DC scandal-fighting days - and it's a subject I write about, for goodness sakes - would suggest that the most important thing for the guy to do would be to WAIT. That's what Clinton did, that's what Vitter did, and precipitous resignations mean that it's over forever. If you wait, you can finish out your term chastenedly and go on to be a consultant or lobbyist or whatever it is that Clinton does. If you resign immediately, you can't. Eliot Spitzer will never be president, but he should really try to see if it's so clear to prosecutors, state politicians, and the media that he shouldn't be governor by next Monday.
UPDATE: He didn't wait. And maybe he couldn't. Though I've never understood why quick surrender in these circumstances beats any alternative. Anyway, here's Elizabeth Nowicki with more.
March 10, 2008
I am poised at the computer, refreshing the NYT front page every few minutes so I don't miss the statement from Gov. Eliot Spitzer, who "has informed his most senior administration officials that he had been involved in a prostitution ring."
What most interests me about this story is that on Friday, the NYT reported on the uncovered prostitution ring, Emperor's Club V.I.P., which advertised high-price escorts on a website that showed pictures of women (without faces) with "names like Sienna and Christine." Just to be clear, I don't think I was on that website. Also, with all due respect to women named "Sienna," "Christine" is just not that exotic a name. That escort must have appealed to customers who have very refined tastes.
UPDATE: Spitzer's super-short statement is here. He apologizes. I do not want to dwell on Gov. Spitzer's misery, but I am interested to know what the future holds. He owned up to his failing and apologized, but what next? Remember, he is a superdelegate. . . .
March 03, 2008
is exactly the attribute that is most difficult to assess in advance: "the ability to successfully cope with the uncertain and the unknown." Dan Drezner cogently expresses a sentiment that I have felt for years. I tend to use "character" as a rough proxy for this attribute, though I suspect the correlation is rather weak.
February 27, 2008
Busy day today, but I couldn't let it pass without some acknowledgment of William F. Buckley's death. I read a fair amount of Buckley's writing during college, law school, and for a few years thereafter. And I recently rediscovered him in reading George Marsden's The Soul of the American University: From Protestant Establishment to Established Nonbelief, which devotes a chapter to Buckley's God and Man at Yale: The Superstitions of "Academic Freedom" (1951). Much has been written today about William Buckley, so I will offer only a simple tribute: my life would be poorer without him.
February 13, 2008
Justice Scalia on tough questioning: "Is it really so easy to determine that smacking someone in the face to determine where he has hidden the bomb that is about to blow up Los Angeles is prohibited in the Constitution?" I've been wondering - been wondering about this ever since "WMDs" somehow turned into a shorthand for "WMDs that could be potentially used outside of 300 miles from Baghdad" - what the logical move is for this kind of statement. Is this the .00001% doctrine - and a claim that a B>PL? Or a claim that we're on a slippery slope, and that the justifiable but unlikely means that everything else like it is potentially justifiable as well? Someone better ask Eugene Volokh.
Justice Scalia, btw, seems to think it's the latter: "It would be absurd to say you couldn’t do that. And once you acknowledge that, we’re into a different game. How close does the threat have to be? And how severe can the infliction of pain be?"
February 06, 2008
We tend to steer away from political coverage here at the Glom, but Super Tuesday was worth some toe dipping. With a former, albeit brief, career as a Beltway political on my resume, I'm predisposed to be distracted by election coverage. And this election is taking the cake. I'm finding the blog coverage of the horse race to be especially distracting Marc Ambinder is newsy, Christopher Beam and Chadwick Matlin are insightful, Jonathan Martin is fantastic on the GOP side, and Matthew Yglesias and Ben Smith ain't bad on the Democrats. And then I have to stop reading so that some actual work can get done. With the exception of Kevin Drum, every blogger I read on politics is under thirty and a lot are under 25. I've found the coverage to be a cheery testament to blogging's-still-got-it claims, an exemplar of the wisdom of youth, and evidence that those rumors you sometimes hear that the best journalists these days would rather do online instead of print might be on to something.
February 05, 2008
Happy Voting Day! Illinois is part of Super Tuesday, but you wouldn't know it around here. I suppose the conventional wisdom is that the state will go to its hometown Senator, Barack Obama, so we've had very little campaign advertising. I guess I shouldn't complain!
This primary marks the 20th anniversary of the first time that I voted in a primary. Woo-hoo! In case you're up for some trivia, I'll tell you the candidate I voted for in the 1988 primary below the fold. . . .
George H. W. Bush. This was the only time that I have voted in the Republican primary.
January 03, 2008
In honor of my state of origin, site of the first caucuses, I'd like to clear up something about "Iowa Nice." Misbegotten coastal elites increasingly use the term to describe the Solonic politesse of the denizens of the state. But there is no "Iowa Nice." There has been a "Minnesota Nice" for decades, but although they might look like two flyover states near each other to some, they're actually pretty different. Minnesota has trees and lakes, Iowa is pancake flat. Iowans sound like John Wayne and Walter Cronkite, Minnesotans sound like the Swedish chef. The states make jokes about each other. They have a football rivalry. There's not an Iowa Nice, there's only a modest Iowan wisdom that may or may not be reflected in the byzantine results of the caucuses tonight.
December 03, 2007
I suppose that presidential campaign trivia is no sillier than other types of trivia. "Teams that win the toss at the Super Bowl and score a field goal in the next possession and have some sort of red in their jersey go on to win 50% of the time." So brace yourself for political trivia: "Candidates who place second in Iowa and who hail from a state that starts with M-Z go on to win the general election 50% of the time." The NYT today jumps in with this factoid: Very few of the presidential choices studied Latin.
Apparently, Latin, whose death has been long exaggerated, is on the demise. As the classical education has given way to more practical majors, so has Latin been pushed aside as well. Should we mourn this turn or try to revive this classical language? I say revive! I was a Latin student and proud member of the National Junior Classical League. In Latin class, I learned the basics of language, more grammar than I ever learned in English, Roman history, mythology, literature and more. I learned helpful historical insights such as "all wars are economic." I am generally a proponent of practical language training, such as the learning of Spanish for all Texas schoolchildren, but I think Latin is a practical language to learn. Latin increases one's own English vocabulary, for one thing. My eight-year-old takes Latin (in addition to Spanish), and I could not be happier.
October 09, 2007
Harry Reid spoke at BYU today, and I am happy that I attended his talk. He was funny and engaging in a way that doesn't come across on television soundbites.
He said that he is often asked, "How can you be a Mormon and a Democrat?" His response, "I'm a Democrat because I am a Mormon, not in spite of it." Ok, a ridiculous question deserves a ridiculous answer, so I will give him that.
At one point in the talk, Senator Reid drew contrasts between his views and those of his opponents using the "I say ... Others say ..." format. This divided the crowd of several thousand as applause followed each position.
For the most part, however, Senator Reid's message was intended to be unifying, not divisive. He said that he hoped Mitt Romney's presidential bid would be judged based on Romney's political positions, not on his religion. We all know that is not going to happen from many supporters or detractors, but here's to hoping! Reid also made a pitch for public service, citing a long Mormon tradition.
He was rewarded for his efforts with a standing ovation. From about half of the audience. Maybe BYU really is that competitive.
August 11, 2007
When I was in Germany for the Fulbright program earlier this summer, I had a conversation with one of the other participants, a history professor. I can't remember how we came to the topic, but she told me about a collection of posters she owned featuring Vladimir Lenin, which she displayed in her office.
Being in Berlin at the time, I asked whether she also displayed posters of Adolf Hitler.
"Of course not," she replied. "But Lenin is different. Lenin gets a bad rap."
Yeah, he's a regular Che Guevara.
July 18, 2007
Rudy is trying to convince conservatives that he is the genuine article by appointing a Justice Advisory Committee. According the press release, "Members will advise Rudy Giuliani on a wide range of legal and policy issues including judicial appointments, tort reform and reducing frivolous lawsuits in our country."
About those judicial appointments ... candidates want to precommit, so why don't they just do it? Why not say, "If elected, my first nominee to the Supreme Court would be Judge X"? Or, if that is too daring, how about providing a short list of candidates?
Well, I can think of a number of potential problems with these strategies, but as a voter, I would find this sort of disclosure much more valuable than a Justice Advisory Committee or a promise to look into an unnamed nominee's heart.
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July 17, 2007
The front-page squib reads: "Private-equity firms are giving more to Republican candidates than to Democrats, who are proposing to tax executives more heavily."
The W$J story comes with the tagline: "Democrats' Idea Of Increasing Taxes Stunts Donations." In the story:
The numbers could be the first indication that private-equity managers are reversing their trend of giving most of their donations to Democrats. Since the 2000 election, the same private-equity firms were the source of an increasing share of their donations to Democrats, according to historical data provided by the nonpartisan Center for Responsive Politics.
Before you get carried away, however, note that this dramatic conclusion is based on an analysis of "donations to the six leading presidential candidates from the 11 private-equity companies that make up the Private Equity Council, an industry trade association." Those donations sum $493,000, and Republican candidates received 53.1%.
But here is the real kicker: among the 11 private-equity companies in the Council is Bain Capital, Mitt Romney's old firm, and employees of Bain donated $100,000 of the $156,000 received by the Romney campaign.
Not counted in the study was $150,000 contributed to the Edwards campaign by Fortress Investment Group LLC. As noted in the W$J story, "Mr. Edwards worked at the firm after losing the 2004 presidential race."
So what's the real news here? Private equity funds support candidates with whom they have relationships.
Not very dramatic.
July 10, 2007
I posted Part I of this series a few weeks back from my hotel in Berlin. I was reminded of another big difference between Americans and Germans (Europeans?) when I read this snippet from a report about Live Earth:
Given a choice of four major issues before the United States today, 36% named the war in Iraq as most important. Twenty-five percent (25%) named immigration, 20% selected the economy and only 12% thought Global Warming was the top issue.
I heard people proclaim more than once during my recent stint in Brussels and Berlin that the most important political issue in Germany -- indeed, in most of Europe -- was climate change. The Europeans seem focused on this issue to a degree that is unimaginable in the U.S. Notice the prominence of the issue in this recent interview with German Chancellor Angela Merkel. By contrast, neither Mitt nor Rudy lists the issue among the top ten (though Mitt features "energy independence," he does not tie this to global warming). Hillary and Barack, on the other hand, both feature this issue alongside "energy independence."
June 20, 2007
I am nearing the end of a two-week Fulbright German Studies Program in Brussels and Berlin. It has been a fabulous learning experience, which has brought me into contact with many people associated in one way or another with the European Union or with the German government. Unfortunately, I haven't had much spare time or internet access for blogging, but I hope to share some insights over coming months. In the meantime, here are two quick items from earlier today.
This morning, we visited the Stiftung Wissenschaft und Politik (a think tank of sorts for the German Parliament), where I asked the head of the Americas Unit if he expected any material changes in U.S. foreign policy after the next presidential election. The short answer was "no," though he thought that a Democrat might be slightly more European in style. That is, "Bush acts unilaterally when he can and multilaterally when he must. Europeans act multilaterally when they can, unilaterally when they must." That captures, in a nutshell, my impressions, too.
This afternoon, several members of the German Parliament turned up the heat on the U.S., expressing their deep frustration with the U.S. decision to go into Iraq. We were told that the drawings of the supposed mobile weapons lab in Iraq, used by then Secretary of State Colin Powell before the UN Security Council, were first shown to the German Parliament, which decided that they were an insufficient basis for invasion. Somewhat later in the program, one of the MPs observed, "American politicians act without thinking, and German politicians think without acting."
Right now, I am blogging from an Internet cafe in the Dunkin Dounuts on Potsdamer Platz. This is my first trip to Berlin, but based on the photos I just saw on a street display, it would be hard to find a more striking portrait of the effect of the fall of the Berlin Wall than Potsdamer Platz: before and after. If you are coming to Berlin for Law & Society in July, you are in for a treat.
June 04, 2007
The NYT story about Mitt Romney linked by Vic includes a brief reflection on whether Romney ever "ran a corner store." Eric Kriss, a former partner at Bain Capital, is quoted as saying (with the whiff of petulence?), "Mitt ran a private equity firm, not a cement company. He was not a businessman in the sense of running a company. He was a great presenter, a great spokesman and a great salesman."
The author of the piece, David Kirkpatrick, follows this quotation with the following statement: "Supporters of Mr. Romney argue that those skills also equip him for public office, whether as governor of Massachusetts, which he was for four years, or as president."
I am not sure whether this is just sloppiness on Kirkpatrick's part or design, but that is truly ridiculous. Romney's supporters are not convinced that being a "great presenter, a great salesman and a great spokesman" qualify him to be president. That sounds more like Fred Thompson supporters. (Remember that Fred's career consists of being a lobbyist, actor, and U.S. Senator.) Romney's supporters, by contrast, are persuaded by a bevy of real-world accomplishments, including the building of Bain Capital, which is the subject of that NYT story.
I am ambivalent towards Romney's candidacy -- I don't endorse candidates just because they are Mormons, and indeed, may be more reluctant on that ground because I have something personal at stake -- but the notion that running a private equity firm is not "running a company" is sort of silly, isn't it? Perhaps even sillier is Kirkpatrick's suggestion that Romney's business "exposes him to criticism that he enriched himself excessively, sometimes by cutting jobs to increase profits."
First, the charge of excessive enrichment is based in part on the point, made persuasively by Vic, that partners in private equity firms are undertaxed on their service income. In Vic's words, they "defer income derived from
their labor efforts and convert it from ordinary income into long-term
capital gain." Vic proposes reforms that would tax those amounts at the higher (ordinary income) rate in the future, but Romney can hardly be blamed for minimizing his tax bill.
The other part of the excessive compensation charge is that Romney managed to negotiate fees of 30% of profits for Bain Capital rather than the usual 20%. I agree with Vic: "Impressive."
The second claim Kirkpatrick lays against Romney is that he enriched himself at the expense of ordinary people, who lost their jobs when Bain swooped in. Ah, the "labor question" again. Many journalists and commentators promote the idea that firing people is prima facie evidence of evil intent. Indeed, Kirkpatrick quotes James E. Post, a BU professor, for the notion that private equity fund managers are "robber barons." Nice soundbite, but what is the basis for this claim?
With respect to Romney, Kirkpatrick observes: "He made his money mainly through leveraged buyouts — essentially, mortgaging companies to take them over in the hope of reselling them at big profits in just a few years." The word "mortgage" has bad connotations for most people and "big profits in just a few years" sounds like ... what? Gambling? Cheating? Or possibly making the choices that incumbent managers were incapable of making or unwilling to make.
I am not being a Pollyanna, and I am not arguing that every private equity transaction is good for America or whatever. But to insinuate that Romney was engaged in something other than a productive activity by this sort of "connect the dots" argument is offensive. In some instances, companies need to fire employees and that act is not necessarily irresponsible, even if the equity owners of the company subsequently profit from the company. This is the issue I attempted to broach the other day in response to Leo Strine's new article, Toward Common Sense and Common Ground? Reflections on the Shared Interests of Managers and Labor in a More Rational System of Corporate Governance.
David Kirkpatrick has a story in today's NYT (quoting yours truly) about Mitt Romney's background in private equity. I personally view Romney's successful background in PE as a net positive in a political candidate; the readership of the NYT may differ. He does come across as a little slick, and the "putting companies at risk" angle won't help him in the general election, should he get that far. Of course, leverage can also be a useful efficiency-enhancing restraint on managerial slack, and Bain's historical returns suggest they've managed portfolio company debt levels quite well.
Speaking of historical returns, Bain's track record allowed Romney to negotiate for "Two and Thirty" (a thirty percent carry) from Bain's LPs instead of the industry standard two and twenty. Impressive.
The story says that most of Romney's fortune came from his work at Bain. If, say, $250 million of his $350 million net worth is attributable to carried interest distributions, and during most of that period carry was taxed at 20% less than ordinary income (I think the rates were 20% and 39% during some of the relevant time frame; it's 15% and 35% now), then the generous tax treatment of carry accounts for about $50 million more in Romney's pocket than if he'd made the money in a regular job. (More, actually, since he's reinvested the tax savings since then.) That $50 million+ will pay for a lot of campaign ads.
Between Romney and John Edwards' work for Fortress, this is shaping up to be the first private equity/hedge fund presidential election.
May 15, 2007
I am not sure when the term "sleaze factor" entered the national lexicon -- my hunch is that it was first applied to the Reagan Administration -- but Bush and Gonzales have been redlining the sleaze-o-meter for months years. The latest.
April 26, 2007
Hillary Clinton wants to take another shot at fixing health care in the United States, which reminded me of my recent dinner with the CEO of a major hospital. Addressing a group of mostly liberal Democrats around the table, the CEO said, "many of you think you want universal health care, but the cost of universal health care is a cost you are unwilling to pay: access and innovation."
Hillary returned to the theme when asked whether Wal-Mart were a good thing or a bad thing for America. Hillary said Wal-Mart is a "mixed blessing." Low costs are great, but Wal-Mart needs to be a leader in providing health care. This reminded me of Arthur Leff's great statement about the doctrine of unconscionability embodying "our incoherent hearts' desires."
April 23, 2007
Would it be disrespectful to play word association with Yeltsin upon hearing news of his death?
My initial thoughts were not about his quirky personality or his battle with alcohol, but about his political legacy. How about "hope unrealized"?
Notice the contradictions in the NYT story about his life and times: "the country's democratic father and a reviled figure"; "giant, if flawed, legacy"; "a democrat [who] often ruled in the manner of a czar"; "heroism and weakness"; etc.
More detail:
Mr. Yeltsin may well be remembered less as a builder of institutions than as a destroyer of them. He dismantled the Soviet Union and the Communist Party, put an end to the centralized Soviet economy and crushed the putsch that threatened to return the country to the old ways.
But he could only begin the transition to a democratic, capitalist Russia based on the rule of law. The system he put in place, after fending off both legislative and military challenges, remains fragile, often incoherent and based on personality.
Nevertheless, Mr. Yeltsin brought about fundamental economic change: a market economy, however distorted and corrupt; an emerging younger class of business executives; and, in the last years of his presidency, a gradual reduction in crime.
Politically, too, his reforms had impact. The legislature began to shape politics, the news media kept most of their newly acquired freedoms, and political rivals competed openly in elections.
In his lifetime, the worst that many in Russia and the West had feared — a Communist revival or new fascism built on chaos — never materialized, although press freedoms have been curtailed under Mr. Putin and fears about the fragility of democracy in Russia have been stirred.
Ok, another attempt at word association: "complicated."
April 15, 2007
I got back this evening from the terrific Critical Tax Theory Conference held at UCLA. Yesterday was a full day of presentations on a wide array of interesting topics. This post focuses on the intriguing paper that Kirk Stark, one of the organizers of the conference, presented, entitled "Rich States, Poor States: American Federalism and the Politics of Fiscal Equalization." The project analyzes the use of fiscal equalization grants to reduce disparities in resources between rich states (or provinces) and poor states. These grants are "no strings attached" grants from a country's central government to states with lower-than-average taxing capacity (regardless of the amount of tax each state actually collects). Kirk listed numerous countries that use such grants, including Canada, where they are a constitutional requirement.
A focus of Kirk’s project is the political issues that fiscal equalization would raise in the U.S. If fiscal equalization were adopted here, most of the recipient states would be in the south. For example, based on fiscal capacity data from a 2006 Tax Policy Center study, Kirk determined that the top seven recipient states by size of per capita payment would be Mississippi, West Virginia, Arkansas, Alabama, Oklahoma, Louisiana, and South Carolina. In addition, most of the states that would receive equalization grants are "red states," and red states would get the bulk of the grant monies. The question of whether Canadian-style fiscal equalization should be adopted in the U.S. thus raises interesting political questions. As Kirk asked, are we currently in an era in which fiscal equalization would be possible? Desirable?
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March 24, 2007
I've been following the Elizabeth Edwards story very closely because I'm a great admirer of hers. Perhaps I feel an affinity toward her -- an attorney, a mother, even once a legal writing instructor. At the end of the 2004 campaign, as we know now, she was diagnosed with fairly advanced breast cancer. And, as we learned on Thursday, that cancer has now metastacized, at least to her rib, creating an incurable condition with an uncertain prognosis. Yet, John and Elizabeth Edwards announced on Thursday that the John Edwards for President campaign will go on; and now, the critics come out to proclaim this brave and noble or selfish and misguided.
Here is my take on their decision. What would you do if you were told that on average, you might have 4-5 years to live, but on one side of the tail you could have far less and on the other possibly 10? Many of us would drop everything, liquidate assets and travel the world. The Edwards family has had unlimited resources for quite awhile. If it is Elizabeth Edwards' dream to travel the world, she would have done so already, and she may already have. She grew up in a military family and lived in different parts of Asia, so foreign travel may not be a lingering desire. We might want to quit our jobs to spend every single second with our children, especially small ones like Jack (6) and Emma Claire (8). But how long can you snuggle with them, hunkered down waiting? A few years? What about 5? What could you give them that would last after you were gone?
I believe that Ms. Edwards, who grew up in a military family, has always had a sense of public life and a sense that some things are bigger than her, whether her father's missions, one of John Edwards' class action cases or his senatorial duties. She went to law school, and her daughter is in law school now. She enjoys public speaking, and she enjoys meeting people and talking to them about what is troubling them. I can imagine that she asked herself, if she is only going to be here for 4-5 years, what would she like to do, and I think the answer was campaign for and be First Lady of the United States. Write my children's names into the history books and help my husband accomplish a long-term goal of making a difference. Sure, whenever someone runs for high office, there is an element of selfish ambition, but there's also a sense of contribution and service. I'm sure both these elements contribute to the final decision, but I like to think that the main motivation is a sense of calling.
I think many of us would want to spend the remainder of our lives, however short, fulfilling our calling. I think Elizabeth Edwards deserves to try to do the same.
March 21, 2007
The SEC recently proposed a new hurdle to qualify individuals seeking to invest in hedge funds and other privately offered investment pools. Not only would these individuals have to be accredited investors (for which a million in net worth qualifies), but they’d also have to have $2.5 MM in investments, a figure that would be adjusted for inflation every 5 years.
The million-dollar net worth threshold for accredited
investor status was set in 1982 and has
not been adjusted since. It doesn’t seem
so far fetched to think that a million bucks ain’t what it used to be, and if
the idea is that being rich proxies for investor sophistication, a million in
net worth doesn’t really mean you’re rich these days, especially if the lion’s
share of that is in home equity. So why
not include an adjusted, higher net worth threshold for investors in private
investment pools? Admittedly, the new
$2.5MM hurdle might be a little high. It
would not include home equity, and it overadjusts for inflation if the target
is $1MM in 1982 dollars. The comment
period for this SEC rule change recently expired, and the comments appear to be
overwhelmingly negative, to my initial surprise.
Raising the bar, of course, would reduce the pool of investors eligible for private offerings. So of course, one would expect hedge fund interests to object. What initially surprised me—and in retrospect, probably should not have—was the vehemence of the objections by individual investors who saw themselves being cut out of possibly lucrative hedge fund investments. Some saw the new hurdle as elitist:
I have no need to have the SEC save me from myself. This is elitist and completely unnecessary. Please reconsider.
Others questioned the use of net worth as a proxy for brains generally:
You have to be rich to be smart?
or
If I gave you $2.5 Million would it make you any smarter?
This latter criticism of course challenges the whole notion of individual accredited investor status built into Reg D. Very few comments favor the new rule.
In retrospect, I probably should not have been surprised. There is an enormous selection effect going on here. The millionaires who have no interest in investing in hedge funds are indifferent as to the new rule. It won’t affect them. So even if in the abstract they favor more investor protection, they’re not chomping at the bit to make a public comment. Only investors on the cusp—accredited investors who would not meet the additional $2.5MM hurdle—and who are interested in hedge fund investments care enough about the issue to comment. Mystery solved.
But it led me to wonder more generally just how valuable the public comment process is if there are not concentrated interests on both sides of any proposed rule change. Viewed through a conventional public choice lens, this sort of unbalanced issue must arise all the time.
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January 11, 2007
Dave Hoffman blogs about how silly the Political Compass test is, and I prove how silly I am by taking the bait. Although I ultimately finished the survey and received scores similar to Dave (barely off center of the Economic scale (-.13) but far down the Libertarian scale (-6.36), the very first question made me just stare at the computer for awhile:
If economic globalisation is inevitable, it should primarily serve humanity rather than the interests of trans-national corporations.
I only had the options of Strongly Agree, Agree, Disagree, and Strongly Disagree. There was not the option of "I do not believe this is a binary choice."
December 30, 2006
How much do you want to see? I don't want to see any of it. Seeing a person die at the end of a rope does not appeal to me, no matter who that person is.
December 27, 2006
Much of my adult cynicism regarding politics probably stems from my earliest political recollections surrounding Watergate. I was nine years old when five men broke into the offices of the Democratic National Committee at the Watergate hotel and almost 11 when Spiro Agnew resigned and Gerald Ford was nominated as his replacement. When Ford later became President, he inherited an impossible situation, and I still remember thinking that his pardon of Nixon was a sham. (Of course, this was the prevailing view at the time, and it may have cost Ford the 1976 election. The NYT attributes the lost to a different incident.)
Today, after hearing of Ford's death, I reflected on those days. If we were playing word association, these would be my first choices after Nixon: WIN buttons (ack!) and Chevy Chase, who first performed his impression of Gerald Ford on Saturday Night Live on November 8, 1975.
Of course, I also knew that Gerald Ford was a football player ... a very good football player, in fact. But I didn't know all of this:
During a 1934 game against the University of Chicago, Ford became the only future U.S. president to tackle a future Heisman Trophy winner when he brought down halfback Jay Berwanger, who won the first Heisman the following year.
"When I tackled Jay in the second quarter, I ended up with a bloody cut and I still have the scar to prove it," Ford said after Berwanger's death in June 2002.
Ford was the Wolverines MVP his senior year in 1935. He also was the captain of his football team at Grand Rapids South High School and was an all-state center in 1930, his senior prep season.
Following his graduation from Ann Arbor in 1935, Ford received contract offers from at least two professional NFL teams. Perhaps as an indication of where Ford would eventually end up, he spurned offers from the Detroit Lions and Green Bay Packers to instead attend law school at Yale. Ford put himself through law school as an assistant varsity football coach and a freshman boxing coach.
A member of the 1935 Collegiate All-Star football team, Ford's No. 48 jersey was retired on Oct. 8, 1994 during halftime of the Wolverines' game against Michigan State. His jersey is one of only five numbers that have been retired in the history of Michigan's storied football tradition.
Rest in peace, President Ford.
November 07, 2006
I thought a little food for thought might be in order on this election day. In October the Washington Post ran a story about homophily—the idea that people are drawn to others like themselves. In other words, among other areas, people are drawn to others with the same political views. Not a unique idea, but a recent study by Duke sociologists suggests that homophily is on the rise in the US. Indeed the study found that the Internet and other forms of technology facilitate homophily by allowing people to interact with like-minded people across geographic boundaries. The study also found that the proliferation of multiple news stations also facilitates homophily because it enables people to pick their news in a biased fashion.
Interestingly, the study found that subtle factors increase homophily as well. No surprise—people with shared experiences and characteristics tend to have shared viewpoints. But, outside of the Internet, how do these people find each other in their everyday life? According to the study, organizations, schools and workplaces—instead creating diverse settings—actually play a role in creating homogenous groups. This is because those institutions attract people with similar characteristics. That is, the person you meet at your child’s day care center probably has a similar demographic background and experience that you do. Indeed, the cost and location of the day care serve as a filter in this respect. Then too, the person who puts his child in day care tends to share your philosophy about work and child-care issues. The same notion applies with respect to your work and other organizations.
While finding like-minded people may be comforting, the study suggests that this phenomenon has negative consequences. First, it means that more people tend to find the views of others inexplicable. Second, and related, many people do not have cause to examine their own views—that is, there is no need for them to challenge or question their own views because everyone they know shares them. The result is that the nation is more polarized and it is very hard to find common ground. This is why the election results may appear inexplicable to some. To the extent the victor is not someone for whom you voted, chances are “no one you know voted for her” either.
Here at the Glom, we try to stay away from political issues (although we get sucked in from time to time), and that's easy to do today. Although other blogs will be posting throughout the evening on the red/blue/purple balance, we'll be waiting for the news to turn its attention back on important events, like business and markets. Now that we're officially in the post-post-Enron period, the politicians seem to be silent on these issues but more vocal on important issues, such as romance novels and defrocked evangelists.
So, here's to tomorrow and the end of campaign advertisments! ("My opponent has charged me with being the spawn of Satan, when it was she who time again voted for measures that led to the spread of disease, poverty and gluttony.")
September 12, 2006
Eliot Spitzer will be the next governor of New York, and as his political star rises, this book will serve as a useful account of his Attorney General years. Masters has assembled a valuable collection of facts and stories about Spitzer's various prosecutorial endeavors, and Spitzer comes off exactly as I would expect: bright, energetic, brash, and ambitious. Though hardly a page turner, the book is notable for solid research and balanced presentation.
As for the legacy of Spitzerism, any conclusions now would be mere speculation. Today's primary in New York suggests that it plays well among the voters, though the mix of political ambition and prosecutorial discretion seems like poison to me.
If you would like to rate this book on the Conglomerate Bookshelf, go here.
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July 31, 2006
Mississippi State University is getting $37.2 million dollars in federal R&D earmarks this year, just as its senior senator Thad Cochran has ascended to the chair of the appropriations committee. Its earmarks from last year totaled only $19.8 million, while Ted Stevens of Alaska was chair. Among the past beneficiaries of government largess in Mississippi are the Thad Cochran National Warmwater Aquaculture Center at MSU Stoneville, the Thad Cochran Research, Technology and Economic Development Park at MSU Starkville, and the Thad Cochran Research Center at his alma mater Ole Miss. 
According to CSM:
"Universities have long mastered the whole vanity game of naming rights [for new campus facilities], and in recent years they've added politicians who, unlike philanthropic donors giving their own money, are the Thad Cochrans of the world giving someone else's money," says Ron Utt, a budget expert at the Heritage Foundation, a conservative think tank in Washington.
Besides the interesting tale of MSU's success in garnering federal funds, CSM has a companion piece detailing the increasing efforts of academic institutions to lobby Congress for "directed appropriations."
Academic earmarks jumped from $15 million the first year of the Reagan presidency to $336 million in fiscal year 1989, the year he left office. By the 1990s, academic institutions rivaled defense contractors as consumers of lobby services to win federal earmarks - and helped define a new lobbying specialty in Washington's K Street corridor.
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May 24, 2006
Photo-op, plus fluff piece! I'm surprised no one mentioned that the gorilla now is a staunch Republican who plans to support Frist in his presidential run.
(This is why I don't blog much about politics. My cynicism runs too deep.)
May 12, 2006
During breaks in the graduation ceremony today, I chatted with Congresswoman Tammy Baldwin about all sorts of things. It turns out that she's a fan of Stephen Colbert, too. She asked whether I thought he was, at heart, a liberal or conservative. (Apparently, this is a matter of dispute among members of Congress.) I told her that I assumed he was a liberal, but she said that the congressman who claims to know Colbert best is convinced that he is a conservative.
Hmm. Interesting.
April 27, 2006
We stay away from blogging about politics, but since Miranda reminds me that I'm the "decider" today, I'll take this point of personal privilege to quote from the opening of an article in The Economist last week on immigration. I feel very passionate about immigration reform after living in Houston, a city made vibrant by immigration from countries south of there. That being said, here is the quote:
In France the nation's youth marched for the right to work half-heartedly and not be sacked. By contrast, hundreds and thousands of immigrants in more than 100 American cities marched for a chance to work hard and not be deported. The French demonstrators forced their government to back down. The mostly Latino masses on America's streets, despite impressive numbers, less violence and a worthier cause, are still some way from victory.
April 15, 2006
WaPo is featuring bloggers on the "angry left," including Maryscott O'Connor of My Left Wing. I visited Maryscott's blog and had a good chuckle that her main concern about the story was the photo of her gnashing her teeth: "There have been worse pictures taken of me than the one in the paper... but I can't recall any at the moment. Sometimes, I actually look pretty." Of course they didn't run a pretty photo! You are supposed to be angry, remember?!
This quip really had me in stiches:
I have become one of those people with all the bumper stickers on their car. I am this close to being one of those muttering people pushing a cart.
That certainly is my impression of people who plaster their car with bumper stickers. The only bumper sticker I have ever had on my car is one of those country stickers from Europe (Austria for me and Sweden for my wife), but that was a long time ago. We were young and impetuous. We have been sticker-free for years.
Having stickers with political messages is like driving with a hat. It marks you as someone who is unstable. I try not to drive directly behind such people because who knows what they are going to do? It starts with stickers, but what's next? Screeching stops to start a spontaneous protest?
Campaign stickers featuring failed candidates look especially silly. Kerry stickers are all over Madison. (No, I didn't take this photo, but it fits.)
Cars with lots of bumper stickers in this part of the country are almost exclusively anti-Bush, anti-war, anti-corporate, pro-abortion rights, pro-environment, etc. Is that what you would expect? I mean, it's not like people with such views are in the minority here. Why are they screaming?
If memory serves, you see roughly the same pattern in Utah, the most-pro-Bush state in the Union. Sure, you also see lots of pro-Mormon stickers of various kinds (preaching to the choir, so to speak), but the cars plastered with stickers? Almost always liberals.
Why is that?
March 27, 2006
Like many states, Wisconsin is at a crossroads regarding whether to recognize same-sex marriages. Much of this debate takes place in the letters to the editor section of the Milwaukee Journal-Sentinel. My friend and colleague Shirley Wiegand published such a letter yesterday entitled "If This Isn't Marriage, Parenting, What Is?" Shirley chronicles the battles that her 60-year-old sister and her partner have encountered trying to raise their younger sister's son, who lost both biological parents by age 8.
February 20, 2006
Just in time for President's Day, the NYT has an op-ed defending Mary Todd Lincoln. I am persuaded. In the movies, MTL is always depicted as ugly, small and shrewish, but apparently she was attractive and vivacious. Perhaps, MTL has suffered the fate of many outspoken women who were ahead of their time and geography. One can imagine that if MTL had lived in the Northeast that she might have been a part of the Seneca Falls movement. Of course, even today we like our First Ladies fairly subdued and noncontroversial, so one can hardly say that she would have had an easier history in our time.
Or, as Scarlett O'Hara would say, we like our women "mealy-mouthed," like that Melanie Wilkes. I decided when I was about 12 that I would rather be Scarlett than Melanie. We all know what happens to Melanie.
January 03, 2006
Sometime in the past 15 years, Democrats have all but disappeared from the political landscape of Texas. There are some pockets where a Democrat can still be elected, namely Austin, but for the most part, if you want a political career, you have to declare yourself a Republican. And, over the years, many Democrats have switched parties, including the current Governor, Rick Perry. So, if you want to mix it up and run against the photogenic, popular successor to W, what do you do? You declare yourself an Independent. Carole Keeton Strayhorn has declared herself an Independent (and left the Republican party) to run against Rick Perry. Of course, she'll have to face Kinky Friedman now, who would definitely have my vote.
And why is this interesting to law readers? Because CKS is the daughter of Dean W. Page Keeton.
December 31, 2005
I wasn't planning to write about James Taranto's editorial about Mitt Romney in today's W$J, but Steve Bainbridge is writing about it, and I can't resist. For those of us who have been following Romney-talk, Taranto's editorial is mostly old news, but Steve picks up on this observation: "Romney, a devout Mormon, abjures not only tobacco but also alcohol and coffee."
Steve's response: "I don't find Romney's religion disqualifying, but I can't help being skeptical of any politician who would abjure all of my favorite vices."
Taranto failed to mention the vice that most troubles me with regard to Romney: gambling.
By the way, I have met several people who worked with Romney at Bain Capital, and he gets nothing but rave reviews. I suspect that he is going to be an appealing candidate.
December 08, 2005
I've never quite gotten a handle on what conservatives such as Larry Ribstein and Stephen Bainbridge have against New York A.G. Eliot Spitzer. Spitzer has brought changes to the markets unrivaled by any other financial regulator in a generation. He radically changed the internal structure of the ten biggest investment firms through a Global Settlement that required a separation of market research and investment banking. He cracked down on the mutual fund industry for cheating: funds were cutting special deals allowing late-day and market-timing trades. And in another creative settlement that got less press, Spitzer got roughly 200 city greengrocers to agree to pay their immigrant employees the minimum wage, to give the employees limited vacation and sick days, and to permit a monitor to have access to their records to ensure complance. (I've written about the Greengrocer Agreement here.) All of these accomplishments took creative application of the laws, as well as the settlement process, to bring systemic changes to entire industries.
Now, apparently it makes one a naif to believe that Spitzer has improved things. But really, what is so controversial about what he has done? Who was in favor of the gross conflicts of interests at play in analysts' recommendations, so luridly displayed in emails? Who thought the rigged bidding in the mutual fund industry was a practice to be encouraged? Really, where's the problem?
In this column, Stephen Bainbridge attacks Spitzer's negotiated settlement which got Alliance Capital to cut its fees by 20 percent. Bainbridge argues that Spitzer overstepped his role and went beyond his proper authority. But Alliance agreed to the cut, and arguably, such a cut was linked to Spitzer's overall mission: a fairer deal for mutual fund customers. If, as Bainbridge acknowledges, "the SEC admittedly seems to have been asleep at the switch" in regulating mutual funds, then why is it wrong to Spitzer to step in and engineer a creative settlement to which Alliance voluntarily agreed?
In a post a couple of weeks ago, the good professor presented more of a laundry list of Spitzer's sins. The list seems a combination of, oddly, lack of prosecutorial success ("losing the Wall Street cases he actually takes to trial") with allegations of too much success. Some of the criticism seems to be that he is effective in using the Martin Act in curbing corporate abuses. (See here and here.) Yes, he has amassed a lot more power than most attorneys general. But that doesn't mean it was ill-gotten, or that he is not using it properly. Some of the criticism seems to be that people appreciate what he does and, therefore, he gets a lot of publicity. But getting publicity, in itself, is no crime -- in fact, sometimes it's just a side effect of a job well done. In other situations, getting publicity is part and parcel of getting the job done -- publicity helps to inform the public and deter bad conduct. The allegations of political influence don't really seem that powerful -- really, is it so bad to take money from wrongdoers and give it to charities and schools? There's a conflict of interest charge that seems like a serious allegation, but it's made in a letter to the editor in Business Insurance magazine. Any more substantiation for what, it appears, should be matters of public record? Finally, there are declarations of abuse of prosecutorial power. Suddenly, conservatives are anti-states' rights and are big fans of the APA.&