Commentary

Death by Rigidity The FTC is attempting to curb a sales pitch for Rice Krispies. And the effort involves an interesting syndrome. One of the more insidious methods of attacking capitalism is to take a theoretical model of how it “should” work and then force actual capitalists to operate “by the book.” The most egregious instance of this is the absurdity known as “perfect competition,” which declares how capitalist competition “should” work and then serves as a Procrustean ideal that allows bureaucratic regulators to torture actual competition. Nearly as absurd is the apparent model of “perfect advertising” that the enemeies of capitalism have tried to foist on the system. In a capitalist exchange, they say, the seller informs the buyer of what he has for sale and the buyer then determines if he values that product more than the money it would cost. Thus, an example of “perfect advertising” would be one of those unreadable sheets of miniscule print that comes with a prescription medicine.

Jun 22, 2010

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Attorney-Client Privilege under Attack in Manhattan The new Manhattan DA, Cyrus Vance Jr., via his assistant Daniel Alonso, has just issued guidelines for charging businesses and other organizations with crimes because of the behavior of individuals who work for those organization. (Hanging over the guideliness, of course, is the memory of Judge Lewis Kaplain’s rebuke to the U.S. Attorney’s Office for the Southern District of New York, in the KPMG case.) At “White Collar Crime Prof Blog,” Ellen Podgor notes that Vance keeps open the door to demanding a company waive the attorney-client privilege if it wants credit for cooperationg. By contrast, footnote 7 in the DA’s document observes: “A particularly sensitive issue was whether an organization’s willingness to waive the attorney client privilege and work product protection should be considered under the rubric of cooperation. In 2006, through what is known as the McNulty Memorandum, DOJ modified, but did not eliminate, a federal prosecutor’s authority to demand or seek such privilege waivers as a factor of cooperation. DOJ’s latest word on the subject, issued in August 2008 by Deputy Attorney General Mark Filip, barred federal prosecutors from seeking privilege waivers from organizations (emphasis added).

Jun 22, 2010

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Here is an article from the Spring 2004 issue of the journal Independent Review, offering some libertarian perspective on oil spills. I almost never agree with Murray Rothbard or his acolytes. But I do find them interesting to read. That Anti–Industrial Revolution Lawsuit: Behind the Scenes Carter Wood (senior communications advisor with the National Association of Manufacturers) writes at Point of Law about speculation that a Leftist judge may have chosen to blow up the Fifth Circuit quorum that was set to hear Comer v. Murphy (For background on the suit, see BRC News, June 1, 2010). And here, from Russell Jackson, is an excellent summary of where things now stand in the suit.

Jun 22, 2010

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According to this June 1 NYT article : “The Obama administration said [today] that it had begun civil and criminal investigations into the massive oil spill in the Gulf of Mexico. . . . Attorney General Eric H. Holder Jr. said in New Orleans that he planned to ‘prosecute to the fullest extent of the law’ any person or entity that the Justice Department determines has broken the law in connection with the oil spill. . . . Mr. Holder’s comments, which echoed those of Mr. Obama earlier in the day in the Rose Garden, reflected deepening frustration within the administration at the inability to stop the spill. . .”

Jun 22, 2010

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John McDonnell, running to succeed Gordon Brown as head of the British Labour Party, said in a speech at the GMB Union Congress that he wished he could “go back to the 1980s and assassinate [Prime Minister Margaret] Thatcher." (The GMB Union was formerly the General, Municipal, Boilermakers and Allied Trade Union.)

Jun 22, 2010

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The case of Comer v. Murphy began bizarre and went downhill from there. Several landowners in Gulfport, Mississippi, sued a huge number of energy and chemical companies for damages resulting from Hurricane Katrina. Their argument , if you can call it that, was that the companies’ emission of greenhouse gases contributed to global warming, thereby causing sea levels to rise, thereby intensifying Katrina, thereby exacerbating the damage from it. The companies responded, naturally enough, that one might try to indict the Industrial Revolution for global warming but the connection to their operations was tenuous. In 2007, U.S. District Judge Louis Guirola Jr. dismissed the suit.

Jun 22, 2010

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According to a story at Bloomberg.com:“ Lehman Brothers Holdings Inc.’s ex- Chief Executive Officer Richard Fuld asked a judge to dismiss a lawsuit accusing him and his colleagues of failing to disclose Repo 105, a financing method allegedly used to conceal billions of dollars of debt, according to court records.” While the BRC does claim this case represents an anti-business animus, it clearly bears watching: Lehman’s auditor, Ernst & Young LLP, claims that its work was sound and has also asked the judge to dismiss the lawsuit, which was filed April 23 on behalf of several goverenment retirement funds.

Jun 22, 2010

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The Washington Post reports that “corporate CEOs and trade groups are asking their lawyers the same question: How can we get our companies involved in this political election season without leaving tracks?” Well, if that is how CEOs feel about the fight for political freedom, I hope they do not get involved, much less “leave tracks” on the battlefield of liberty. They would only sully holy ground. How are we to understand the socio-economic generalization that ‘capital is a coward”? The generalization is true: When threatened capital simply flees. Such pragmatism has its economic advantages, no doubt. But it cannot be the basis for a restoration of economic liberty in the United States.

Jun 22, 2010

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Ayn Rand said that the theme of The Fountainhead is "individualism versus collectivism, not in politics, but in man's soul." I want to comment on three specific aspects of this theme, as it is embodied in Roark's character and his interactions with the other figures in the novel... Roark is a man of independence, he is an egoist, and he is a creator, a paragon of productive achievement. These three concepts—independence, egoism, and achievement—are the key to understanding the moral sense of The Fountainhead and the ways in which it differs from the conventional ethos. ...Rand makes it clear from the outset that independence does not consist in nonconformity. Henry Cameron says to Roark, "I wouldn't care, if you were an exhibitionist who's being different as a stunt, as a lark, just to attract attention to himself. It's a smart racket, to oppose the crowd and amuse it and collect admission to the sideshow." Later on, we meet a number of artists, protégés of Toohey, who are engaged in precisely that kind of racket; the writer who did not use capital letters, the painter who "used no canvas, but did something with bird cages and metronomes," and the like. When Toohey's friends ask him how he can support such rabid individualists, he smiles blandly. He knows that these "iconoclasts" are merely playing off conventions, for the sake of shock value; they are just as dependent on others as the most abject conformist. And most of them, like the writer Lois Cook, have a smirking kind of awareness that they are getting away with something, foisting trash on a credulous public. (I sometimes think that Andy Warhol got his ideas from these passages of The Fountainhead .)

Jun 14, 2010

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Question: I am not a socialist, but I have a question on the nature of socialism. How does nationalization take place in non-communist European countries? I heard it was through purchasing the company. How is this a violation of property rights if your company is being purchased? Answer: The right of property is a right of action: the right to pursue the material benefits one needs to live and flourish, and the absolute right of possession once these have been secured. So, property rights include the freedom to use or voluntarily trade away one’s possessions as one sees fit, including the right not to give up or sell one’s property at any price. It is a violation of this right to conduct a transaction on the basis of force—as opposed to voluntary trade—even if some monetary compensation is paid in an attempt to excuse what is, at root, an act of robbery.

Jun 11, 2010

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Question: What is the Objective position on www.fairtax.org? Answer: The Atlas Society does not focus primarily on political policy, and we do not have any position on the organization you mention. In politics, we favor a radical downsizing and simplification of the functions of government at all levels. We advocate a government strictly limited to its functions in providing and enforcing law and providing national defense, and hope for a government that is restricted to upholding individual rights.

Jun 11, 2010

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Many Leftist commentators are getting riled up about a report that BP’s damages in the Deepwater Horizon oil spill are limited to $75 million. Here is Matthew L. Wald, writing yesterday at “Green,” the NYT’s Energy and Environment blog: "A 1990 law, the Oil Pollution Act [OPA], limits claims by fishermen, hotel owners and others against the operator of an offshore platform causing such pollution to $75 million." That is so misleading as to be false. BP is in Deep Something, and it isn’t Deep Water. Since the explosion occurred on April 20, the company’s stock has lost a quarter of its value, and no wonder. Analyst Greg Smith told Bloomberg that the ultimate cost to the company may be $10 billion.

May 29, 2010

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Imagine a person so utterly lacking in ordinary human feelings that he would pay one million dollar’s to man’s wife for handing over corporate information found on the fellow’s home computer. Would that not be the lowest act of insider trading imaginable? Would that not be the ultimate in despicable greed? Well, no, actually. That would be your high-minded, greed-fighting SEC at work .

May 28, 2010

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Former Google executive Brian Reid is suing the company for age discrimination, claiming that he was let go because he was not considered a “cultural fit” with the youthful corporate outlook. A district court found in the company’s favor, but an appeals court threw out that ruling. Now the suit is before the California Supreme Court. At issue, apparently, is the so-called “stray remarks” doctrine invented in 1989 by U.S. Supreme Court Justice Sandra Day O’Connor. Adding injury to insult, Reid was let go shortly before Google went public, which cost him a potential payday well into the millions of dollars.

May 27, 2010

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BOOK REVIEW: Randall Smith, The Prince of Silicon Valley (New York: St. Martin's Press, 2009), 368 pp. $30.00. Why was this biography published? True, the career of Frank Quattrone must be of interest to anyone concerned with American business history: He was the premier investment banker of the 1990s. But Quattrone today is only 54, and he has (as of March 2008) launched a new firm: Qatalyst Partners, self-described as “a technology-focused merchant banking boutique.” So, one could understand the publication of a lengthy magazine profile of Quattrone’s past, present, and future. But a book-length biography? It seems oddly timed. The explanation, I suspect, is that The Prince of Silicon Valley was never intended to be a biography of Quattrone, only an invitation to his beheading. It was probably conceived as another installment in the Left’s endless saga of “corporate crime and punishment.”

May 11, 2010

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May 5, 2010 -- “Billionaire Warren Buffett said he has studied the civil fraud charges against investment bank Goldman Sachs and has no problem with the transaction involved. Buffett, who is Berkshire Hathaway’s chief executive [and a major investor in Goldman], said yesterday that he thinks he understands the allegations against Goldman better than most people, and he does not believe the Abacus deal at the center of the case constitutes fraud.” So says an Associated Press report published on May 3. Unfortunately, I do not believe that Goldman’s chances of prevailing in court are as good as Warren Buffett thinks they are.

May 6, 2010

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There are people whose jobs require some degree of worst-case thinking. I am one of them. Whole teams of threat assessment practitioners in my firm Gavin de Becker and Associates, spend their time developing contingency plans and responses to cover a variety of unfavorable outcomes. For example, making arrangements for a controversial public figure to give a speech at a rally about an emotionally charged political issue calls for contingency plans about many kinds of things that could happen, but we put more effort into those possibilities that are most likely. An assassin in the audience, at the vehicle arrival area, or along the foot-route from the car to the holding room, a sniper in the distance, a bomb that was placed a week before the event, someone trying to strike the public figure, even a pie attack—all these things and more are on our list during the days of planning leading up to such an appearance. I do not oppose contingency planning. I do oppose time-wasting, however, and in my firm, in my life, and in your life, everything we give energy to takes energy away from something else. Accordingly, we are wisest to put our resources where they’ll be most likely to return some benefit.

May 1, 2010

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What should become of “Dollar Thrifty Automotive Group”? Should it go to Hertz? Should it go to Avis? How will this affect competition with Enterprise? I have no idea. Neither does the FTC, of course. But that it will not prevent it from issuing a decree obviating the judgment of the market. (Incidentally, this report from Reuters was written by Bijoy Koyitty in Bangalore--remarkable testimony to the globalization of business and business commentary.) spiderID=515

Apr 24, 2010

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April 13, 2010 -- Little more than one hundred years ago, women did not have the right to vote anywhere on Earth. Over the course of the twentieth century, this measure of women’s second class status faded away, and women’s suffrage gradually became all but universal. Today, every frontier is open to women—including the final frontier, as at this very moment, a record four women are circling our planet aboard the International Space Station. Given the advancement of women’s rights, it is hard to understand why any woman living in a free country would voluntarily cover her face in public. Yet some tiny minority of Muslim women living in the West do choose to wear the niqab, a full face veil. A Quebec law proposed late last month, Bill 94, would interfere with that choice. It would entrust top government administrators with the power to forbid public sector employees, as well as those using government services, from covering their faces if “reasons of security, communication or identification warrant it.” The controversial proposal has touched off a fierce debate within and without the Canadian province on what it means to be modern, tolerant, and free.

Apr 15, 2010

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December 20, 2002 -- "Drop the candy cane, step away from the punch bowl." Is that the order we’ll hear some day from armed food cops trying to prevent us from committing holiday health crimes against ourselves? Before you emit a "Ho ho ho" of derision, take a sip of your eggnog (360 calories per cup) and consider the ghost of Christmas future that might haunt us if we’re not careful. Here’s how the criminalization of Christmas goodies might come about. The first contributing element is the "war on fat." Some groups and agencies claim that 65 percent of Americans are overweight and 30 percent are obese. While many Americans do have serious weight problems, by the questionable standard used to generate these stats, athletes like Barry Bonds and Michael Jordan should go on diets. It’s also alleged that 300,000 die each year from weight-related problems. Never mind that the New England Journal of Medicine stated that "that figure is by no means well established. Not only is it derived from weak or incomplete data, but it is also called into question by the methodological difficulties."

Apr 4, 2010

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Edward Hudgins