Quote of the day from The Economist:
"The Republicans have failed the most important test of any political movement—wielding power successfully. They have botched a war. They have splurged on spending. And they have alienated a huge section of the population. It is now the Democrats’ game to win or lose."
I just finished Matthew Scully’s amazing take-down of former Bush speechwriter Michael Gerson. Judging by Scully’s account, no bigger phony than Gerson ever walked the corridors of the White House–and that’s saying a lot. Apparently, Gerson spent just about every waking hour trying to figure out how to take credit for anything good that came out of the West Wing and had any number of gullible accomplices in the press corps that were happy to oblige him in his effort. Gerson was also shameless about hogging credit for every important Bush speech even if his contribution was minimal. I’m sure that in coming days, this issue of The Atlantic will become the most heavily read at the White House since William Greider’s article about OMB Director David Stockman appeared back in December 1981.
I’m especially grateful to Scully for writing this article because it confirms what I wrote in an earlier post about compassionate conservatism. As I suspected, it was mostly campaign hokum cooked up by Karl Rove. Another reason I’m grateful to Scully is that I could never understand why the Washington Post gave Gerson a column when he clearly has nothing interesting to say about anything. Apparently, it is payback for all the leaks Gerson was spilling to the Post all these years. Unfortunately, the Post erred by not also hiring the speechwriters who did all the work Gerson took credit for as well.
In President Bush’s 2006 State of the Union address, he proposed an American Competitiveness Initiative "to encourage innovation throughout our economy." Today he announced:
As part of this initiative, I asked Congress to expand America’s investment in basic research, so we can support our nation’s most creative minds as they explore new frontiers in nano-technology or supercomputing or alternative energy sources. I asked Congress to strengthen math and science education, so our children have the skills they need to compete for the jobs of the future. I asked Congress to make permanent the research and development tax credit, so we can encourage bolder private-sector initiatives in technology. Today I’m going to sign into law a bill that supports many of the key elements of the American Competitiveness Initiative. This legislation supports our efforts to double funding for basic research in physical sciences. This legislation authorizes most of the education programs I called for in the initiative I laid out at the State of the Union. These programs include Math Now proposals to improve instruction in mathematics, and the advanced placement program my administration proposed, to increase the number of teachers and students in AP and international baccalaureate classes.
All well and good, but what about the barriers to competitiveness the government has created during Bush’s tenure in office? It was Bush who not only signed the “Public Company Accounting Reform and Investor Protection Act” of 2002—popularly known as the Sarbanes-Oxley Act—but even praised it for making “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” Odd praise, indeed, coming from a conservative President. Such praise was especially odd coming from a former state governor with a track record of stated respect for basic federalism principles. In fact, as the Paulson Committee and the Schumer-Bloomberg report have documented, "New York financial markets, stifled by stringent regulations, and high litigation risks, are in danger of losing businesses and high-skilled workers to overseas competitors, relegating New York to regional market status and adversely impacting the U.S. economy."
I addressed these issues in a mongraph, Sarbanes-Oxley: Legislating in Haste, Repenting in Leisure, which you can download free from SSRN.com. Here’s the paper’s abstract:
I focus on three areas in which the Public Company Accounting Reform and Investor Protection Act, popularly known as the Sarbanes-Oxley Act (SOX), has proven especially problematic. First, the legal ethics rules added to the Act at the last minute have proven incapable of dealing with the incentives that condition lawyers to turn a blind eye to client misconduct. Second, the structure Congress chose for the Public Company Accounting Oversight Board (PCAOB), the accounting oversight board created by SOX, turns out to have serious constitutional defects. Finally, and most importantly, corporate compliance costs have gone up far more than anyone anticipated and are staying up far longer than even Cassandra might have predicted. Worse yet, these costs disproportionately impact smaller public corporations, which are an important engine of economic growth. Taken together, these three areas of concern highlight why Congress should think twice before trying instant legislation in the future.
If this sort of stuff is of interest, you may also want to check out my paper The Creeping Federalization of Corporate Law. Here’s that paper’s abstract:
The collapse of Enron and WorldCom, along with only slightly less high profile scandals at numerous other U.S. corporations, has reinvigorated the debate over state regulation of corporate governance. Post-Enron, politicians and pundits called for federal regulation not just of the securities markets but also of internal corporate governance. As Congress and market regulators began implementing some of those ideas, there has been a creeping – but steady – federalization of corporate governance law. The NYSE’S new listing standards regulating director independence is one example of that phenomenon. Other examples appeared to little public debate in the sweeping Sarbanes-Oxley legislation. Taken individually, each of Sarbanes-Oxley’s provisions constitutes a significant preemption of state corporate law. Taken together, they constitute the most dramatic expansion of federal regulatory power over corporate governance since the New Deal.
No one seriously doubts that Congress has the power under the Commerce Clause to create a federal law of corporations if it chooses. The question of who gets to regulate public corporations thus is not one of constitutional law but rather of prudence and federalism. In this essay, I advance both economic and non-economic arguments against federal preemption of state corporation law. Competitive federalism promotes liberty as well as shareholder wealth. When firms may freely select among multiple competing regulators, oppressive regulation becomes impractical. If one regulator overreaches, firms will exit its jurisdiction and move to one that is more laissez-faire. In contrast, when there is but a single regulator, exit is no longer an option and an essential check on excessive regulation is lost.
And, of course, don’t forget to consider my book The Complete Guide to Sarbanes-Oxley.
In an earlier post, I noted that John Edwards is once again relying heavily on his fellow trial lawyers to support his Presidential campaign. Assuming Elizabeth "we can’t make John black, we can’t make him a woman" Edwards didn’t just sink his campaign, let’s spend a minute thinking about why the source of Edwards funding matters. I wrote on my blog back in the 2004 election cycle that:
John Edwards has been emphaszing jobs a lot lately, which sounds like a smart move. Skeptics, however, might ask what Edwards’ profession – trial lawyer – has done for US jobs. The Manhattan Institute studied the effect of tort litigation on jobs in the asbestos industry and came up with some startling conclusions:
Companies bankrupted by asbestos have slashed an estimated 60,000 jobs, failed to create 128,000 new jobs, and forgone an estimated $10 billion in investment …. The damage will escalate—if current estimates of the eventual payout prove accurate—to $33 billion in forgone investment and 423,000 jobs not created.
Bruce Bartlett cites similar findings:
Increasingly, the only way companies can cope with rising asbestos liabilities is by declaring bankruptcy. Some 80 companies have already done so. These bankruptcies have cost at least 60,000 jobs, according to a new study by economists Joseph Stiglitz, Jonathan Orszag, and Peter Orszag. Each worker lost $25,000 to $50,000 in wages as the result of these asbestos-related job losses, plus another $8,300 in losses in their 401(k) plans.
Bartlett also cites a study by Tillinghast-Towers Perrin finding that: "At current levels, U.S. tort costs are equivalent to a 5% tax on wages." In contrast, Texas Governor Perry claims tort reform creates jobs: "Texas economist Ray Perryman estimated that our sweeping lawsuit reforms will create more than 240,000 permanent jobs and add $36 billion to the Texas economy."
If John Edwards wants to get serious about job creation, maybe he should get serious about tort reform. But don’t hold your breath. As both EdwardsWatch and Overlawyered.com have documented, Edwards’ record on tort reform is weak, at best, and he is raking in huge amounts of cash from his fellow trial lawyers.
Over at PB.com, I provide fairly regular coverage of litigation reform issues.
Peter Lattman reports:
During the 2004 election, the erstwhile trial lawyer John Edwards had a lock on the legal community, particularly the plaintiffs’ bar, which poured money into his campaign. This time around, lawyers are spreading the love. The NYT reports this morning that Clinton, Obama and Biden — lawyers all — are gaining in lawyers-dollars market share. … Through the first two quarters of this year, Edwards had received $6.5 million from lawyers, compared with $6.3 million for Clinton and $5.5 million for Obama. A potential problem for Edwards is that he heavily relies on JDs for dough, while the others have a more diverse fundraising base.
The same pattern of reliance on the plaintiff bar was true back in 2004, as Walter Olson observed:
What scares the daylights out of his business adversaries isn’t just that Mr. Edwards is a seasoned trial lawyer who decided to switch careers, in the manner of Orrin Hatch, Ernest Hollings and others. It’s that from day one he’s been at pains to construct a tightly organized fund-raising and electoral machine whose dominant figures, with scarcely a known exception, are wealthy plaintiff’s lawyers like himself. In fact, most of his key backers are drawn from the tiny handful of tort lawyers even more successful than he, sometimes by orders of magnitude.
One hopes the Edwards ’08 campaign is being a bit more careful about who it takes money from. You may recall that back in 2003 the ACU charged that the Edwards ’04 campaign had taken a number of questionable donations, alleging that:
Published reports from the Center for Individual Freedom’s website state that twenty (20) persons identified as paralegals and nine (9) listed as legal assistants employed by Turner & Associates PA in Little Rock, Arkansas, contributed $2,000 each to the Edwards campaign after receiving assurances that their contributions would be reimbursed. From this law firm alone, more than $58,000 in suspicious contributions to the Edwards campaign were received, yet only $10,000 was reported by the Edwards campaign as being returned to the donors from that firm. See http://www.cfif.org, John Edwards: An Oops for the Trial Lawyers’ Presidential Candidate¸ posted April 24, 2003. See also "What John Edwards Money Said" by John Samples, http://www.cato.org, posted on the website of the Cato Institute on May 9, 2003. …
The Hill newspaper reported on May 7, 2003 that Edwards for President campaign documents filed of record with the FEC reveal a pattern of illegal contributions by low-level employees of law firms whose principals are engaged in contributing to and fundraising for the Edwards for President committee.
According to The Hill, "Donations to Edwards Questioned", by Sam Dealy, the contributions from low-level employees contributing at the maximum $2,000 level arrived on the same day along with contributions from the partners and attorneys of the firms employing the individual donors. Further, the FEC records reflect that contributions from spouses and other family members were also made on the same dates as those from the low-level employees of the law firms. No conduit reports were filed by the law firms which employ the donor-employees.
In 2006, CNN reported that:
Former North Carolina Sen. John Edwards’ 2004 presidential campaign and a donor were fined Thursday for soliciting and accepting illegal contributions. The Federal Election Commission also cited other violations of the Federal Election Campaign Act. Fines totaled $59,500.
Laura and Jenna Bush are co-writing a children’s book. It’s the tale of a young boy who does not like to read, but learns in the course of the story just how fun and beneficial it can really be.
Now there are some family values for you: mother and daughter working together to help out dad.
"Time to die." Blade Runner.
A reader:
As a liberal Bay State Democrat who despises Mitt, I hate to admit that I can see how he would get the counties-in-Massachusetts question wrong. For one thing, counties are far less important in New England than the rest of the country, most of their duties and responsibilities belonging to their constituent towns (ruled by town meeting, usually — go democracy!). In addition, a number of counties — Berkshire, for instance — have been abolished for all but symbolic purposes as of the late 1990s.
Still, Mitt is an enormous fraud, and everyone here hates him.
There’s an article in this morning’s New York Times about the growing popularity of cable series such as "The Closer." Despite the fact that such programs don’t have nearly as much availability as major network programs, they are growing both in quality and ratings.
One of these cable-only programs that I enjoy is one called "Mad Men" on the AMC channel. A new episode will appear tonight. It’s about some Madison Avenue advertising executives in 1960. So far, there’s not much of a plot. But as a sociological study, the show is absolutely fascinating. It’s about an era when everyone smoked, the women always wore dresses and heels even when vacuuming the carpet, when alcohol was the drug of choice, before feminism and Vietnam, before the assassinations of JFK, RFK, MLK and so on.
What intrigues me about the program is the incredible attention to detail. The producers have really done an amazing job of capturing every aspect of life in those times precisely accurately. I was only a child during that era, but it all looks right to me. For example, in one scene the lead actor opens a can of beer and it is the old fashioned flat-top can that one needed a can opener to open. It made me wonder where they found those old cans, which haven’t been manufactured since at least the 1970s.
I can see where the plot is going. The men are in total control and appear to have it all. In their own way, so do the women. But none of them are happy. Their lives are empty and meaningless even though they have achieved the "American Dream."
We’ll see where it goes. Undoubtedly some awful tragedy is lurking right around the corner for one of the major characters. However it goes, it remains the most accurate portrayal of that period of time that I have ever seen–even in movies and programs produced contemporaneously. In some ways "Mad Men" is a caricature, but one that emphasizes the important details.
The Dish 