Mea Culpa

My feeling about shareholder proxy statements had long been: why bother? The small print, massive word count and abstruse language seemed meant to sow confusion and the deck was completely stacked. Just vote against management, lose in a landslide and get on with life. Irresponsible advice, cynical perhaps, and, it turns out, wrong. For yesterday the shareholders of Citigroup voted down the $15-million pay package for the bank’s chief executive officer in perhaps the first time stockholders have so defied the management of a giant corporation.

It’s about time. Citigroup has delivered little but heartache for its shareholders. Five years ago, in the heyday of Ponzi schemes and self-dealing collateralized debt obligations, the company’s shares were worth over $500 apiece and paid a dividend of $5.40. Today, after being pulled from the edge of bankruptcy by a huge federal bailout, the stock sells for $35; its quarterly dividend is one cent. According to one analyst, “Citigroup has had the worst stock price performance among large banks over the last decade but ranked among the highest in terms of compensation for top executives.”

I have no illusion that small shareholders swayed the nonbinding vote. Big institutions such as Calpers, the California pension fund, voted its 9.7 million shares against the proposal, and ISS Proxy Advisory Services recommended a no vote. Still, the outrage at corporate malfeasance and offensive pay packages clearly is having an impact.

When the modern corporation emerged a little over a century ago, many hailed it as the democratization of capitalism in a world of monopolies. It hasn’t worked out that way recently, but this is a good step.

Paying Attention

It’s exciting to engage in the big issues and philosophical debates of the day. But it’s also important to pay attention to the details where those matters work themselves out. On the surface, the General Services Administration’s $822,000 party in Las Vegas, the prostitution solicitation scandal in Cartagena, Colombia, and the Taliban’s coordinated attacks in Afghanistan don’t have much in common. They happened thousands of miles apart and have vastly different consequences. But in each instance, people who should have been paying attention were not.

Perhaps because the GSA’s party was the most frivolous, its images of people in hot tubs and tidbits of outrageous spending have gotten the most attention. Jeffrey Neely, the event’s organizer, pled the Fifth Amendment before Congress, even to the question of his job title, which will presumably soon be changing anyway. His rationale, I suppose, was “what happens in Vegas stays in Vegas."

A couple of dozen members of the military and the Secret Service undoubtedly feel the same way about Cartagena, where they spent the night carousing with prostitutes in preparation for the president’s arrival.

Lastly, while the Afghan military responded to the Taliban raids better than had been expected, the attacks caught U.S. personnel by complete surprise – what one western official called an “intelligence failure for us, and especially NATO.”

The federal government is the nation’s biggest employer, with almost 3 million full- and part-time civilian employees alone. Things slip through the cracks. But perhaps because it's the time when we pay the bill, it seems important to remember that all the details do add up.

Meet Your Lobbyist

The newest lobbyist on Capitol Hill is 55-year-old John Bowles, who registered last week on behalf of the American Nazi Party. The Nazis have never had a lobbyist before, and Bowles told ABC News he was going to “try out for the first time and see if it flies.”

And what will the Nazis lobby for? On his registration form Bowles cited “political rights and ballot access laws.” But not to worry, he told ABC, “I’m not going to go in and shove a swastika in their face.”

This is not Bowles’ first experience with national politics. In 2008 he ran for president as “The White People’s Candidate,” proclaiming that “White Americans need to start voting as a bloc . . . if they are to have an effective voice in government or America will turn into a third world country.”

Capitol Hill seems a good place to start, as white people have established something of a beachhead there – holding 96 of the 100 seats in the Senate and 83 percent of the House. As a bloc, these guys could really do something.

Laying aside such complicated constitutional issues as racial purity, tribal homelands and the Aryan Republic of Idaho, they could focus on more immediate matters they have in common. A universal health-care system, for example, modeled on the one they all enjoy at public expense. Or getting serious about the national debt, which they all insist they want to do.

Bowles has his work cut out for him, though, because thousands of other lobbyists are already working the halls to make sure these things don’t happen.

Stumble of the Week

Mitt Dumps Newt 

Withdraws Treasury Offer in Wake of Bounced Check

Amid the continuing fall-out over the return of the Gingrich campaign’s $500 check for insufficient funds, Mitt Romney has dropped Newt Gingrich from consideration as Secretary of the Treasury in his administration. The money was the filing fee for Utah’s presidential primary.

“After watching his handling of Callista’s Tiffany bills,” said a Romney spokesperson, “we were impressed with the Speaker’s nimbleness with large deficits. Unfortunately, the situation has called that into question, and Governor Romney will go in a different direction.”

Asked if the Koch brothers were now under consideration for the cabinet post, she declined comment.

Calling the matter “one of those goofy things,” Gingrich said he expected to be competitive in Utah now that Jon Huntsman is out of the race.

“Five hundred dollars!” Romney later told a convention of restaurant chain owners, “I wouldn’t leave that little as a tip.”

“Unless,” he chuckled, “the service was really bad.”

In other stumbles:

  • North Korea’s ballyhooed launch of its $450-million satellite lasted about a minute, at which point the Kwangmyongsong, or “Bright Shinning Star,” disintegrated and fell into the Yellow Sea.
  • Hilary Rosen apologized to Ann Romney in the so-called Mommy Flap, which is indicative of how irrelevant so much of this campaign is to most people’s lives.
  • France’s Beaujolais wine producers issued a statement denying any link to China’s disgraced former future leader, Bo Xilai.

Trayvon

George Zimmerman is in custody in Seminole County Jail, charged with second-degree murder in the death of Trayvon Martin on February 26th in Sanford, Florida. If convicted, he faces a sentence of 25 years to life in prison. Zimmerman’s arrest is long overdue. So why am I uneasy?

Because, in a world in which a bag of Skittles has become the icon of youthful innocence and a hoodie the symbol of ghetto behavior, almost everything about this case has become a dangerous cliché.

Because Zimmerman needs to be tried by a jury of his peers, not by an inflammatory press or an inflamed public.

Because the outcome we seek should be justice, not vengeance or justification.

We are in danger of losing sight of both the big picture and the small one. The small one is the human one: Trayvon Martin, a young man, is dead. President Obama struck the right chord when he said, “If I had a son, he’d look like Trayvon.” Without mentioning the matter of race, he called attention to the killing of a young black man, and he simultaneously urged us to transcend race by mourning the death of a son.

The big picture is the Florida law that encourages shooting first and explaining it later – a law that is the product of this country’s relentless gun lobby, which continues to insist that we are all safer when we are all armed, and that the horrendous noise of gunfire is just the sound of freedom.

Two Suspensions

There were two suspensions yesterday in two of America’s favorite pastimes: baseball and politics. The Miami Marlins suspended manager Ozzie Guillen for five games for praising Fidel Castro. The Venezuelan-born Guillen infuriated the Cuban-American community that his team had spent hundreds of millions trying to woo with a new $634-million stadium (built of course with taxpayers’ money), new uniforms and the most famous Latino manager in baseball.

Then Guillen said he “loves” Fidel Castro, continuing, "I respect Fidel Castro. . . .A lot of people have wanted to kill Fidel Castro for the last 60 years, but that (expletive) is still there." That didn’t sit well with the fan base, and ownership forced Guillen to publicly repudiate his comments, which he called “the biggest mistake I’ve made in my life so far.” His abject apology may not save his job.

Meanwhile, Rick Santorum, who has made comments far more egregious than those of Ozzie Guillen, “suspended” his presidential campaign. And while, mercifully, he will not be a candidate for president in 2012, he actually enhanced his standing in the party and his prospects for the future. Mitt Romney and the Republican establishment are grateful he is out of their way; his ultra-right-wing base is delighted to see him elevated to the status of national spokesperson; and he has been spared the need to submit his ideas to a national plebiscite.

So, a man involved in a boys’ game may lose his career for an offhand remark (which Joshua Keating pointed out was “as undeniably true as [it] was undeniably insensitive to Castro’s victims”), while a man seeking the presidency is being praised for the courage of his candor.

A Thought on Taxes

I watched yesterday one of those short “debates” on CNN in which a Democrat and a Republican stand around a table and respond to questions by reciting their party’s talking points. On the “Buffett Rule” – which sets a minimum tax rate of 30 percent for Americans whose incomes exceed $1 million – the Republican talked about the “job creators” who would be discouraged from the heroic role they play, while the Democrat talked about the national need for “fairness.” The journalist talked about polls that show 64 percent of Americans favor the Buffett Rule, named for Warren Buffett who noted that he pays taxes at lower rate than his secretary. The journalist also pointed out that the public is all for slashing spending . . . until people start to talk specifically about what programs to cut. Obviously we need to get real about this issue – about exactly where the cuts will be, about precisely what jobs, other than domestic servants, are created by the personal incomes of the very rich, etc.

Lost in yesterday’s discussion was why we pay taxes at all. A tax has become simply a burden, and therefore the lighter the burden the better. What happened to the notion that a tax is an investment in the country and in ourselves – one whose value we can measure by the return that investment brings? Yes, there is enormous waste that needs to be addressed. But there is so much that needs to be built and that we as a society should be building together.

Easter Morning

Yesterday was as beautiful a day as I have ever seen. The sky was blue and cloudless, the grass a regenerative green. The morning sun warmed the earth, while a northwest breeze took the humidity from the air. I sat with a cup of coffee, trying to take it all in. I was by myself but not alone, for dozens of birds – robins and finches, redwing blackbirds and a northern cardinal, crows and blue jays – flew among the trees and sang from the branches to each other and to me. I felt completely at peace. Early spring. Easter morning. A season of rebirth. A day of resurrection. It might have been on a day like this that Francis of Assisi stopped in the Spoleto Valley to preach to the birds. It is a day that reminds me that religion is not just about transcending our mortality; it is about connecting to life. There is the one we now hear so much about – the one in which Jesus will return to judge us as saints or sinners for eternity. This is the Christianity that tells us the earth is ours to subdue, nature exists for us. This is the gospel of division, exploitation and fear.

I prefer another one – the one in which, as Lynn White wrote 45 years ago, “Francis tried to depose man from his monarchy over creation and set up a democracy of all God's creatures.” But, White continued, that heresy was quickly stamped out.

I wouldn’t bet the farm just yet. I’m pretty sure I experienced it yesterday morning.

Stumble of the Week

Fewer than 48 hours after James Murdoch had resigned as chairman of its parent company, the editor of Sky News announced that he had authorized his reporters to hack into private emails at least twice in the past – one instance involved John Darwin, the “canoe man” who faked his own death and lived for years with his wife on his life insurance payout; the other involved a pedophile. Far from manifesting contrition, John Ryley said, “We stand by these actions as editorially justified and in the public interest,” noting that the satellite news organization had turned the emails over to the police in what turned out to be a successful prosecution of crime.

To suggest that it is a role of the press to gather evidence illegally to aid a police investigation insults all the reporters who have gone to jail or worse for refusing to turn their work into a tool of the state.

Compare Ryley’s comments with those of Anthony Shadid, The New York Times reporter who was memorialized in Cambridge last night. Shadid also broke a law when he entered Syria to cover that country’s carnage. He died there in February. Shadid was an impressive and humble man, who said shortly before his death that he believed some stories were worth risking his life for . . . because they were important to get out to the world and it was his job to do so.

There is a chasm between Shadid’s journalism and Ryley’s.

On a lighter note, this stumble didn’t happen last week but I only discovered it last night: http://www.youtube.com/watch?v=34phsb4e6Eg

Mitts Off

I write this morning about the power of negative thinking and positive cash flow. In the four-and-a-half years that Mitt Romney has been running for president, I have yet to hear him present a positive idea. Instead, his operating style is to tell us why his opponent is so dreadful and assure us that he represents the opposite.

Because Newt Gingrich is the consummate insider, Mitt Romney is the unsullied outsider. Rick Santorum was Mr. Earmark; Romney stands for rectitude. Obama wants to impose “government-centered society;” Romney will offer a non-government-centered society. Once he has defined his opponent, his SuperPAC rolls out the heavy artillery and scorches the earth.

It seems to be working, as Romney is now perceived as the inevitable nominee. Yet the reluctance remains, even in his own party. To date, Romney has won over 50% of the vote in only four states – and he is running against one man (Santorum) who lost his senate seat by 700,000 votes and another (Gingrich) whose party forced him to resign as Speaker of the House.

To present a negative image of others is not enough. At some point a candidate must fill his own empty vessel with substance and augment his attack ads with ideas. After having spent millions of dollars to demonize whomever gets in his way, Romney has given us almost no idea of what he believes in or how he would decide anything should he get the office he so desperately wants.

We Don’t Know

I have always had something of a crush on Aung San Suu Kyi, the leader of the opposition in Myanmar and 1991 Nobel Peace Prize winner, who was overwhelmingly elected to the Burmese parliament on Sunday. A woman whose combination of fragile beauty, steely resolve and quiet dignity has never wavered through a life of more tragedy than triumph, she is to me the personification of Hemingway’s dictum that “courage is grace under pressure.” She has endured much: her father assassinated when she was two; a brother who drowned at their childhood home; long separations from her two sons and from her husband who died of cancer in 1999; almost continual house arrest over the last 20 years.

Nothing in her life has been easy, but it is the life she has chosen. She is the same age as I am, and yet I cannot understand what is going on beneath her always-composed demeanor – other than that her life is a mission for which she has given up almost everything.  And she seems to have embodied the aspirations of her long-subjected people.

Just as we don’t know Suu Kyi from her images, so we don’t know what is really happening in her country either. We think of such totalitarian states as crushing all opposition and using propaganda and mind control to create future generations of automatons. So we thought of Stalin’s Russia and Mao’s China, of South Africa under apartheid. So we think now of North Korea and Iran. And yet somehow these places have never managed to crush the human spirit.

The Power of One

The Supreme Court has been accused of legislating from the bench at least since 1803, when John Marshall outmaneuvered Thomas Jefferson in Marbury v Madison to establish the power of judicial review. But the current Patient Protection and Affordable Care Act Cases represent the first time of which I’m aware that advocates are appealing directly to the politics of the justices – and to one justice in particular. For despite all the parsing of Justice Scalia’s concerns about broccoli, the hitherto inconceivable idea that the Court might actually declare the health care law unconstitutional appears to rest with the pen of one man: Anthony Kennedy. In the conventional wisdom, the court’s even split between ideological conservatives (Roberts, Alito, Scalia, Thomas) and liberals (Ginsburg, Breyer, Sotomayor, Kagan) leaves Kennedy as the decider – and both sides are aiming their arguments at his often fuzzy concept of “liberty.”

Anthony Kennedy decided who should be president in 2000 in Bush v Gore. Having him now decide the future of health care seems a lot of power for one man who has never been elected to any public office. It will also further erode the Court’s image as the neutral arbiter of the law.

Corrections:  Two corrections from Friday’s blog: one a typo (“renewal energy” should have read “renewable energy”); the other an inexcusable slip. The administration’s estimate of the impact of a one-cent rise in the pump price of gasoline is $220 million in increased quarterly profits, not $220 billion. Even in these times, being off by a factor of 10 to the third power is not a rounding error. I am thankful to a reader for questioning the number. He said, and I totally agree, that whatever credibility I have is based on not making sloppy errors. So, please let me know whenever I do.

Stumble of the Week

My old friend. This was my week for old friends, and one of them (who wishes to remain anonymous) got caught in the “grandpa scam” and ended up wiring his “nephew” several thousand dollars to get him out of jail. This telephone scam is apparently both rampant and effective. The callers are smooth, and they prey on both our gullibility and our better natures. Send your money to no one but me. The U. S. Senate. That august body again played games with oil company tax breaks, voting against repeal of the billions of dollars in tax subsidies the proponents of Small Government happily give to the owners of Big Oil. Republicans Susan Collins and Olympia Snowe voted for repeal, while Democrats Mark Begich, Mary Landrieu, Ben Nelson and Jim Webb crossed the other way. According to President Obama, each one-cent increase in the price of gas yields $220 million in increased quarterly profits for the oil companies. His proposal to invest the subsidies in renewable energy research seems a no brainer.

Il Papa. “What does a pope do?” Fidel Castro asked Pope Benedict in one of recent history’s more bizarre meetings. According to an NPR story, one thing he may do is preside over one of the world’s most secretive and corrupt financial empires. This is hardly the first such allegation – 30 years ago a scandal tied the Vatican to international money laundering and the Mafia – and with the ongoing revelations about child abuse, John F. Kennedy’s 1960 speech on the separation of church and state looks a lot more insightful than Rick Santorum’s throw-up on the rug.

Spaghetti Bolognese

After a two-day hiatus, we return to Woody Brock and American Gridlock. It is a fitting time to look at his discussion of the second great issue whose resolution has been lost in the politics of nastiness: entitlements, and in particular, health care, which is currently under discussion before the Anointed Nine. The issue of health care is enormously complicated –Brock calls it the “Spaghetti Bolognese of public policy problems – and his chapter addressing it is one of the book’s best. He is critical of “Obamacare,” but for reasons that have received little public notice – unless we address the supply side of healthcare, particularly by creating conditions that will produce more practitioners, America will end up both broke and rationing services. The logic that takes him there involves a fascinating discussion about the much-misunderstood law of supply and demand, but the essence of his argument is that the need to (1) provide access for 50 million currently uninsured Americans and to (2) control costs as a percentage of GDP are on a collision course unless the supply curve expands faster than the demand curve.

Universal health care is a public good, one in which the government must be involved, and so the focus on the “individual mandate,” which has become the centerpiece of the debate, seems nonsensical to me. We already have universal coverage, unless we are prepared to let the uninsured lie in the streets untended. This debate ought to be about making sure that does not happen.

Obamacare

In the almost two years I have been enrolled in Medicare, I have found it to be by far the best medical insurance plan I have ever had. I once said that to my doctor, who replied, “You know, many of us agree.” In fact, in our long – and so far successful – partnership to keep me alive, we went through a mini-crisis several years ago when he stopped accepting Aetna, which was the “gold plan” I was on at the time. He said he was fed up with the onerous paperwork the company demanded, its niggling oversight of his patient care, and what amounted to interference in his medical practice. Ultimately he had to return to the fold because a small group practice is no match for a huge corporate insurer. And as anyone who has to deal with Verizon can attest, just because you are not the government doesn’t mean you can’t be intractably bureaucratic and provide awful service. Moreover, at least for me, Medicare isn't cheap. I pay reasonable but not insignificant monthly premiums for the parts of the system that are not free.

Despite the constant allusions to the horrors of socialized medicine with its death panels asd rationed care, the United States currently spends more on health care than any other country, and the health of its people is no better as a result. The current law under scrutiny by the Supreme Court Nine is the first national effort to seek fair and full access to health care. It’s not perfect, but it’s a long overdue first step.

Due Process

Forty years ago a friend was staying with me, and as we went by a “Neighborhood Watch” sign, he said, “I know what that means. It means, ‘We have no police.’” Today it appears to mean, “Armed vigilantes on patrol.” Woody Brock must wait for a day. I need to try to understand what happened to Trayvon Martin, the unarmed black 17-year-old whom a neighborhood watch captain shot and killed last month in Sanford, Florida.

Here is what I know:

  • The young man’s death is a complete and needless tragedy, and a parent’s worst nightmare.
  • Florida’s seven-year old “Stand Your Ground” law, which was pushed by the National Rifle Association and opposed by police groups, is an abomination – one that is in effect in 21 states and needs to be repealed in all of them.
  • The police department’s response to the shooting is inexplicable.
  • The New Black Panthers’ bounty offer of $10,000 for the capture of George Zimmerman is repellent.

Here is what I don’t know: What happened the evening of Feb. 26th that led to Martin’s death.

Here is what I fear: That we will never know and that justice will never be done.

Trayvon Martin’s death has become a cause in which the pressure to take sides has overpowered the search for truth – and the rush to either canonization or demonization has displaced the humanity of victim and shooter.

These days, it seems, if you want your voice to be heard, your mind must be closed.

And that, too, is a tragedy.

 

Dr. Brock

I have known Woody Brock since we were six years old, and he has recently published a thoughtful book, American Gridlock, Commonsense 101 Solutions to the Economic Crisis. Since he is neither bashful about his cognitive abilities nor modest in his ambition, he has subtitled his book, “Why the Right and the Left are Both Wrong.” In line with that aspiration, he takes on five of the most contentious and important issues of the day – issues, he argues, that now seem intractable because (1) the public conversation has become a “dialogue of the deaf” and (2) unbending ideologues “cherry pick” data which they use to fortify their intellectual redoubts. “Gotcha,” he writes, “has become the game of our times.”

Brock calls for a return to a rigorous logic in which win-win solutions are deduced from first premises. A discussion of this method is perhaps the most interesting part of the book. Over the next couple of posts I will briefly present each of the issues raised in Brock’s book.

The Deficit. Brock, a serious mathematician, engages in simple math to distinguish between “good” and “bad” deficits. There is a huge difference, he argues, between spending and investing: a government’s negative cash flow is not a deficit if the borrowed money is invested in human capital and infrastructure improvements that will earn a positive return in the future.

“We eclipse all other nations,” he writes, “spending a whopping 71% of GDP on consumption.” In doing so we have created what John Kenneth Galbraith predicted over 50 years ago: an Affluent Society of “private splendor and public squalor.”

Next up: Entitlements; Preventing Perfect Financial Storms; China and Bargaining Theory; Distributive Justice.

Stumble of the Week

  • Mitt Romney. If he’s the candidate, said Rick Santorum, “we might as well stay with what we have instead of taking a risk with what may be the Etch A Sketch candidate of the future."
  • Rick Santorum. “[I]t is clear,” wrote Romney’s political director, “that he is becoming the most valuable player on President Obama's team."

Silver Lining. Etch A Sketch’s stock price nearly tripled in yesterday’s trading.

  • Georgia. In a report published by the Center for Public Integrity that ranked the most corrupt states, Georgia came in dead last. The other states receiving failing grades: South Dakota, Wyoming, Virginia, Maine, South Carolina, North Dakota and Michigan.

Silver Lining. The top two states were #2 Connecticut and #1 New Jersey. Huh? Apparently the horrendous ethical histories of both states (Connecticut supreme court justices, state officials and governors have been indicted for abuse of power; in the last decade in New Jersey, “at least five state legislators were convicted on corruption charges.”) led to such public outrage that the voters have demanded – and instituted – significant reforms.

  • Young and minority voters. When Virginia’s pending Voter ID bill becomes law, 13 states, with 189 electoral votes (70% of a majority) will have new laws that (take your pick) reduce voter fraud or disenfranchise voters, almost all in states with Republican legislative majorities. But the real problem is not that too many people vote in this country, but too few. In the 2010 elections, 37.8% of those eligible voted. Two years earlier, the figure was 56.8%, the highest since 1968. Question: why would groups who did better in 2010 want to dampen the turnout we saw in 2008?

Readers Write

Today some comments from readers (two from a public official who follows state activities and two from friends):

  • A resolution calling the UN program encouraging sustainable development as a dark scheme to crush people’s property rights through “extreme environmentalism” goes to the Tennessee House for a vote today.
  • The Missouri legislature has considered legislation to require equal treatment of global warming and evolution denial positions in a K-12 curriculum being created by the Heartland Institute. "[It] will be a nice counterweight to the many, many materials distributed that present an overtly political and alarmist message in regards to climate change. . . ," said James M. Taylor of Heartland. "By contrast, our materials would be based on sound science and fact."  Mark McCaffrey of the National Center for Science Education said the curriculum creates a debate where none exists. A 2010 study in the Proceedings of the National Academy of Sciences found that about 98 percent of active climate scientists believe human activities hasten climate change.
  • On yesterday’s blog: A little one sided.  Obama's abandonment of Simpson Bowles, a committee he had set up, is equally as egregious as Mitt’s flip flops, which can be somewhat forgiven considering the audience he has to appeal to. Obama had a chance to set our country on a different path and failed miserably, in my opinion.
  • Asked what surprises him most, the Dalai Lama said, "modern man:" "He works so hard for money and ruins his life in the process, then he uses the money he worked for to try to recover his life without getting it back where it was. Then he spends all his present preparing for the future and in the process dies without living in the future while he never lived in the present either.”