Friday, October 12, 2007

Hillary Clinton Shines Shoes

In 2005 President Bush proposed the establishment of 401-k type stock investment accounts for Social Security. The idea came under attack from the Democrats and was stopped. At the time, the stock market was coming off its 2002 lows. Now, the stock market is reaching new highs. It is therefore curious that the Democrats, notably Hillary Clinton, would choose to propose the very same idea during this presidential primary season. I wonder if there is some kind of financial manipulation lurking behind Clinton's proposal.

In an October 11 editorial, the New York Sun points out that Hillary Clinton opposed establishing Social Security investment accounts two years ago but now she is proposing "private accounts" (separate from Social Security) for all Americans. The Sun editorializes

"Given, this isn't giving workers back the money the government is taking in Social Security taxes as President Bush (and most of the Republican candidates for president) would do, but the accounts — even as add-ons to Social Security — are a huge victory in principle for the Bush view."

I find the Clinton proposal odd for several reasons. First, since 1982 I have been putting previously $2,000, now $5,000 (I believe $4,500 if you're under 50) into Individual Retirement Accounts. The idea was created in 1974 as part of the Employee Retirement Income Security Act of 1974. Paul J. Yakoboski of the Employee Benefit Research Institute notes that:

"The Economic Recovery Tax Act of 1981 (ERTA) extended the availability of IRAs to all workers, including those with pension coverage. The Tax Reform Act of 1986 (TRA '86) retained tax-deductible IRAs for those who did not participate in an employment-based retirement plan (and if married, whose spouse did not participate in such a plan), but restricted the tax deduction among those with a retirement plan to individuals with incomes below specified levels. In addition, TRA '86 added two new categories of IRA contributions: nondeductible contributions, which accumulate tax free until distributed, and partially deductible contributions, which are deductible up to a maximum amount less than the $2,000 maximum otherwise allowable."

Hence, there is absolutely nothing new about retirement accounts for anyone. They are currently available to anyone and everyone, and if you don't have a 401(k) or pension plan, they are tax deductible. It is true that the $4,500 limit is a low percentage of income for anyone earning over $65,000. But there also is such a thing as a SERP, self-employed retirement plan, which serves high earners. As the financially savvy know, Roth IRAs also are available to those who earn less than $150,000. It's not clear to me that the Clinton proposal is more than vacuous, which makes me suspicious. Hillary has to know that IRAs exist, so why would she make this proposal now?

Perhaps Hillary aims to improve benefits for those earning over $65,000 (this is not clear from the Sun article) and doesn't want to say so, but any extensions of the IRA concept will probably have next to no effect on private savings, so this idea would also be vacuous. USA Weekend Magazine pointed out in 2004 when the IRA limits were raised:

>"Even though retirement planning tops the list of Americans' money concerns, astonishingly few people contribute to individual retirement accounts -- a mere 6% of eligible Americans, according to a recent study by the Congressional Budget Office."

Given the small interest in IRAs, what help would extending the IRA concept be? High earners likely save anyway and, more so, typically have access to either a 401(k) (with limits that might bother those earning over $100,000) or a SERP. SERPs have high limits.

An intriguing question that comes to mind is why Hillary would make a proposal which may be a first step toward permitting private accounts in social security at this point in time. attributes the following quote to Bernard Baruch, the Wall Street tycoon, in 1929:

"When beggars and shoeshine boys, barbers and beauticians can tell you how to get rich it is time to remind yourself that there is no more dangerous illusion than the belief that one can get something for nothing"

Incidentally, Quoteland also attributes Baruch with the statement "Bears don't live on Park Avenue" (which may explain why I live in West Shokan).

In 2005 the stock market was coming off its 2002 lows. In 2007 the market is at or nearing all-time highs, especially if you have been investing in gold stocks as I have (Randgold (GOLD) courtesy of Howard S. Katz has had a tremendous run and I am breaking out my cigars and champagne.)

The question to ponder is why Hillary would begin to speak about expanding stock market accounts just when the market is reaching all time highs; the dollar is reaching all time lows; inflation is going from very warm to hot; the Chinese are beginning to sell dollars, portending increased inflation; and public awareness of monetary expansion, which has been going on since the 1980s, will result in political pressure to limit monetary expansion aka Fed counterfeiting aka raising the Fed Funds interest rate. That is, inflation will stimulate a declining stock market (the stock market goes up and down because of Fed interest rate policy, i.e., whether the Fed is counterfeiting many new dollars or just a few) because inflation causes public pressure to stop the Fed's counterfeiting; the Fed will then raise interest rates; and the stock market will then decline. Since 1981 the Fed has been counterfeiting many new dollars, which it calls "lowering the Federal Funds rate", and which Howard S. Katz calls "counterfeiting". With increasing inflation, now that the Chinese are tiring of giving billionaire hedge fund managers in the U.S. large welfare subsidies, the risk of a stock market collapse is increasing.

All this makes me wonder why Hillary would begin to think about encouraging small investor interest in the stock market at this point in time.

Several bloggers such as Captain's Quarter's , Cao's blog as well as talk radio have been discussing a nexus between Hillary and speculator George Soros. Whether Soros or others on Wall Street have an interest in seeing an exogenous shock to stimulate stock prices just as the fundamentals are working toward a weakening stock market is a question that deserves some scrutiny.

Another question is what will be the effects, both in terms of actual economic redistribution and in terms of psychology, of the Bush/Clinton proposals to expand stock ownership. The Fed does one thing, increase the money supply. This in turn has two effects: (1)make the rich richer by boosting the stock market because of lower interest rates and (2) make the poor poorer by causing inflation. There is probably some tipping point at which effect (1) becomes outweighed by effect (2) in fact. There is also probably a different tipping point at which effect (1) becomes outweighed by effect (2) in peoples' minds. The two are likely different. If someone has a $100,000 stock account they may be worse off from the net effect of lower interest rates and the higher price of grapefruit, but the higher stock account may be more salient or apparent to them, and they may see themselves as better off. It would not be a far stretch to imagine that Hillary's proposal is linked to the idea of encouraging this kind of wealth illusion, which would have the effect of moderating but not fundamentally changing the effects of Fed policy.

Thursday, October 11, 2007

Proposed NOTA Bill for New York State

I will propose the following amendment to add article 18 to Chapter 17 of the Consolidated Laws (Election Law) I base this on Bill White's proposal in Massachusetts:


Introduced by




Whereas government should secure the consent of the governed;
Whereas all legitimate consent requires the ability to withhold consent;
Whereas voters are sometimes presented with such choices on the ballot that none of the listed candidates for an office is acceptable, but voters are unable to withhold their consent to such elections to office;
Whereas voter turnout has been in decline and it is in the public interest to stimulate voter turnout;
Whereas the people alone have an incontestable, unalienable, and indefeasible right to institute government; and to reform, alter, or totally change the same when their protection, safety, prosperity and happiness require it and to do so requires the public's ability to withhold consent;
Therefore, to insure the legitimate consent of voters by enabling them to withhold their consent to elections to office;
Be it enacted by the New York State Assembly and New York State Senate as follows:
The Consolidated Laws are hereby amended by adding the following the following Article 18 to Chapter Seventeen of the New York State Consolidated Laws (Election Law)

Section 1. (a) None of the Above ("NOTA") on the ballot.
On all ballots electing a candidate to office there shall appear, after the list of candidates for each office, a votable line identified with the words “None of the Above; For a New Election”.
(b) A voter may choose to vote for “None of the Above; For a New Election” instead of voting for a candidate. If a voter may vote for multiple candidates for an office, a vote for “None of the Above; For a New Election” counts as one vote. Votes cast for “None of the Above; For a New Election” shall be counted and reported as are votes for listed candidates.
(c) When a candidate receives fewer votes than NOTA. Any candidate for office who receives fewer votes than the votes cast for “None of the Above; For a New Election” for that office shall not be elected.
(d) NOTA election
In any election where no candidate is elected to an office because of votes cast for “None of the Above; For a New Election”, a None of the Above election ("NOTA election") shall be held to fill that office not less than sixty (60) days and not more than eighty (80) days after the prior election.
(e) Election of the President of the United States
In elections to the offices of President and Vice President of the United States and their electors, “Prefer None of the Above” shall appear after the list of candidates. Voters may choose to vote both for NOTA as well as for a candidate. Votes cast for “Prefer None of the Above” shall be counted and reported in the same manner as are votes for listed candidates, but shall not otherwise affect the election outcome.

Section 2. (a) Statement about NOTA options.
The New York State Board of Elections shall prepare a statement titled “Your Voter Consent Ballot Options:”, to be displayed, along with any other materials determined by the New York State Board of Elections, so it is legible to voters at the polling place prior to voting as well as within each voting enclosure, indicating the options available to the voter. For example, such a statement might contain the following:

"Your Voter Consent Ballot Options: YOU MAY VOTE FOR A CANDIDATE OR “None of the Above; For a New Election”.

O Candidate A
O Candidate B
O None of the Above; For a New Election"

Section 3-1. Temporary appointment to offices and assignment of duties. Temporary appointment to offices, pending NOTA elections and an elected candidate taking office, required to execute the duties of an office, may be made by the Governor; or by majority vote of the town council for town-wide elections; city or common council for city-wide elections; or county legislature for county-wide elections ("appropriate authority") provided the person so appointed is either the office’s current incumbent or if there is no incumbent would be otherwise eligible for election to that office. Temporary appointment to the office of Governor shall be by majority vote of the Court of Appeals. No temporary appointment under this provision shall be made to the offices of County Legislator, City Council, State Assembly, State Senator, United States Representative, or United States

3-2. If no appointment is made by the day before expiration of an office’s current term, the office’s incumbent is appointed by default.

Section 4. Campaign finance reporting.
(a) Candidates in a NOTA election must conform to the same, or equivalent, campaign financing and reporting requirements as a candidate for that office in a general election.
(b) Campaign financing and reporting for activities related to the issue of voters voting for “None of the Above; For a New Election”, or for “Prefer None of the Above”, shall have the same, or equivalent, requirements as equivalent elections. All such requirements shall be subject to those changes necessary, as determined by the New York State Board of Elections, to adjust for the varying election dates and campaign durations of NOTA elections, provided such changes adhere to the original intent of those requirements and avoid unreasonable burden to election participants.

Section 5. Nomination of candidates

(a) Any person who is eligible for nomination as a candidate in the general election for an office shall be eligible for nomination as a candidate in a NOTA election for that office, provided the person did not receive, as a listed candidate in a prior election for the same office and term, fewer votes than those cast for “None of the Above; For a New Election” the office.

(b) All candidates for office in NOTA elections shall be nominated to be listed on the ballot either by nominating petition, or by receiving a requisite number of write-in votes in the prior election for that office.

Section 6. (a) Nomination by petition; eligibility to sign petitions; collecting signatures at polling places. The nomination period for a NOTA election shall commence on the day of the prior election. The nomination period shall continue for fourteen (14) days after the results of the prior election for that office are announced.

(b) Voters eligible to vote in the NOTA election for an office are eligible to sign, once for each nomination, one or more nominating petitions for one or more candidates for that office during the nomination period. Signatures for nominating petitions may be gathered at polling places on election day, provided they are gathered in one, or two if required, Petition Areas that shall be reserved at each polling place for such purpose, and in such a manner as to provide easy access for voters wishing to sign such petitions or not, and in such a manner that voters shall pass by those collecting nominating signatures before and after voting.

(c) Any person collecting nominating signatures at a polling place for one or more petitions, hereinafter referred to as Collector, must be registered to vote at that polling place. A Collector may assist in the gathering of signatures for any Nominating Petition. No signed petition may be removed from a Petition Area, except, after the polls close, by the New York State Board of Elections.

(d) The Collector shall be seated in a chair behind a table, provided at no cost to the Collector, upon which such petitions shall be placed and kept while collecting signatures. The Collector shall not speak to, or otherwise communicate with, any voter, and shall display no sign except, optionally, one reading “Nominating Petition: ”, where shall be the name of the office for which the petition is being gathered, using letters no greater than three inches in height and affixed to the table in such a manner as to be visible to passing voters. The number of Collectors in each Petition Area shall be no more than two (2) per one (1) or more petition sheets with the same Candidate and Party designation. A petition may be brought into and left unattended in the Petition Area by any person.

(e) The Petition Area shall be part to the polling place, and any person failing to conform to its requirements shall be considered a disorderly person.

Section 7. Nomination by write-in

(a) An unlisted write-in candidate in the prior election may be nominated to be listed as a candidate for an office in the following NOTA election by receiving write-in votes equal to at least ten percent of the total votes cast for the office in the current election. Such candidates shall submit to the New York State Board of Elections or the appropriate authority by the last day of the nomination period, a completed nominating petition, containing no filled in signature lines, with an attached affirmation by the candidate, stating the candidate received the requisite write-in votes for that office in the prior election. Unlisted write-in candidates who do not receive the number of write-in votes needed for nomination may seek nomination by petition.

(b) Signature verification; number of signatures required; submitting petitions
The authority responsible for signature verification for nominations for a office in the election shall be responsible for verifying the signatures on the nominating petitions for a NOTA election are valid and of the requisite number within fourteen (14) days after the end of the nomination period.

(c) The number of valid signatures under the same party designation required for nomination by petition shall be the same for all candidates for the same office and shall be: either equal to the number of the most signatures required for a general election nomination for the office, divided by number of days in the general election nomination period, and then multiplied by number of days in the current nomination period, and then divided by three (3); or, equal to twenty (20), whichever is greater.

(d) Each original nominating petition sheet shall be submitted to the offices of the same verifying authority as for general elections, within three (3) days after the end of the nomination period.

Section 8. Multiple nominations of a candidate

(a) In NOTA elections, if a candidate has been separately nominated with different political party designations, the candidate shall appear on the ballot separately for each such nomination. The same political party designation may not appear with more candidates for an office than the number of positions to be elected to that office. The party designation of either “No Party” or “Write-In” shall be allowed once each for a candidate so nominated.

Section 9. Nomination notification and acceptance

(a) The New York State Board of Elections or the appropriate authority shall have delivered to each nominee, within three (3) days of the nominee qualifying for the nomination, a Nomination Notification, notifying the nominee of the nomination, along with other materials determined by the New York State Board of Elections. The nominee shall respond to the Nomination Notification within five (5) days by returning the Nomination Acceptance, as determined by the New York State Board of Elections or other notifying authority, to the offices of the notifying authority. Failure to respond shall be deemed an acceptance of the nomination.

Section 10. Candidate Statement; requirements and limitations; qualifying for distribution
(a) To assist the voters in assessing candidates for office in NOTA elections, the New York State Board of Elections or appropriate authority shall distribute candidate statements by mail to the electorate at least seven (7) days before the election at no cost to the candidates.

(b) When a candidate submits a Nomination Acceptance for an office, the candidate may also submit a Candidate Statement for distribution, which shall be subject to the following requirements and limitations: required to be a black and white statement, consisting only of spaces, letters, punctuation marks, and numeric or other textual notation, contained within both sides of a single 8.5 x 11 inch white paper sheet, and, optionally, one photograph of the candidate from the neck up no greater than 3 x 3 inches, for the purpose of allowing the candidate to communicate with the voters; and, shall be limited to identifying the candidate, and, optionally, describing the candidate’s qualifications for office, party affiliations, proposed policies, and contact information; limited to one per candidate, even if the candidate receives multiple nominations for an office; and, shall contain no solicitation for funds nor refer to other candidates. The requirements and limitations of the Candidate Statement must be met, in the opinion of the New York State Board of Elections, in order to qualify for distribution as a Candidate Statement

(c) Across the top inch of the first page of every Candidate Statement shall be the Statement Header. The Statement Header shall be blank except for the state seal and the words, in large font, “Candidate Statement of for ”, where shall be the name of the candidate as it shall appear on the ballot and shall be the name of the office as it shall appear on the ballot; and then, in a smaller font, “Prepared by the candidate and distributed to voters without cost to the candidate by the Office of the New York State Board of Elections.”; and then, a line at the lower boundary of the Statement Header; and, anywhere within the Statement Header, any other content determined by the New York State Board of Elections. At Nomination Notification, the candidate shall receive sample Candidate Statements and an assigned Statement Header from the New York State Board of Elections that the candidate is required to use as the Statement Header for any Candidate Statement the candidate submits.

(c) The area of the Candidate Statement apart from the Statement Header is the Candidate Content determined by the candidate. The New York State Board of Elections or the appropriate authority shall take care to distribute Candidate Content as submitted, except as follows: The appropriate authority shall review Candidate Statements submitted to them to insure they qualify for distribution as a Candidate Statement. The appropriate authority shall have delivered to the New York State Board of Elections all Candidate Statements, along with their Candidate Instructions, if any, for final review, within three (3) days of receipt, along with a an opinion by the appropriate authority, defined by the New York State Board of Elections, indicating whether the Candidate Statement meets the requirements and limits of a Candidate Statement.

(d) If, in the opinion of the Town Clerk, a Candidate Statement does not meet the requirements and limits of a Candidate Statement, the Town Clerk Opinion shall include an explanation of the nonconformance, along with a proposed Deletion Notification to make the Candidate Statement conformant, and any other relevant document. Before submitting the Town Clerk Opinion to the New York State Board of Elections, the Town Clerk may contact the candidate directly to verbally suggest changes to the Candidate Statement to make it conformant. If the candidate then submits one or more revised drafts, the Town Clerk shall submit the last such draft as the Candidate Statement, retaining prior drafts as part of the Candidate Statement’s record.

(e) Should the New York State Board of Elections determine a Candidate Statement does not qualify for distribution because it does not meet the requirements and limits of a Candidate Statement, then the New York State Board of Elections shall have delivered to the candidate, within ten (10) days of the submission of the Candidate Statement by the candidate, a Deletion Notification, defined by the New York State Board of Elections, which shall include a copy of the Candidate Statement to show the deletions needed to bring the statement into compliance and a letter stating the reasons for those deletions. The New York State Board of Elections, or representative, shall meet with the candidate at the offices of the New York State Board of Elections, upon the candidate’s request, within two (2) days of receipt of a request for such a meeting, to review the Candidate Statement with the candidate’s representatives. The candidate shall have delivered to the New York State Board of Elections within five (5) days of the receipt of the Deletion Notification or within two (2) days after such meeting, whichever is later: the candidate’s response to the Deletion Notification; and/or a corrected Candidate Statement; and/or a Candidate Instruction, to be defined by the New York State Board of Elections, in the event of a non qualifying Candidate Statement, instructing the New York State Board of Elections either to withdraw the Candidate Statement completely or to distribute the original Candidate Statement with the deletions indicated by the Deletion Notification.

(f) Changes to the Candidate Content by the New York State Board of Elections shall be by deletion only, using methods to be established in advance of the election by the New York State Board of Elections so as to be obvious to voters which parts of the Candidate Content were deleted. Should the candidate fail to provide an acceptable, corrected Candidate Statement and fail to provide Candidate Instructions for such an event, the New York State Board of Elections shall distribute the original Candidate Statement with the deletions specified in the Deletion Notification. The New York State Board of Elections shall make available at its offices to any person, within one day of a written request, copies of any original Candidate Statement as well as associated Town Clerk Opinion, corrected Candidate Statement, Deletion Notification, and Candidate Instruction, and other related documents during the election campaign and for ten (10) years after the election.
Whenever possible, all Candidate Statements for the same office shall be assembled into a single ballot pamphlet for distribution. Reference copies of the Candidate Statements shall be made available at polling places for voter use.

Section 11. Confirming nominations

(a) The New York State Board of Elections or appropriate authority shall confirm by Party Confirmation, as defined by the New York State Board of Elections, with the governing body of the designated political party, that the party accepts the party designation on the ballot for a candidate. If the party designation
of the nomination is not accepted by the governing body of the party within ten (10) days of notification, or if the authority of the governing body is determined by the New York State Board of Elections to be in dispute, then the candidate shall be listed with a “No Party” party designation. Write-in nominations shall be designated as “Write-In”, or with any other political party designation acceptable to both the candidate and the governing body of the political party.

Section 12. Ballot determination; election date determination
(a) The New York State Board of Elections or appropriate authority shall determine the date, offices, and candidate lists for NOTA elections, and shall announce such determinations, whenever possible, at least thirty days in advance of the date set for the NOTA election.

(b) The New York State Board of Elections shall insure, whenever possible, various NOTA Elections take place throughout the state on the same day.

Section 13. Counting votes; recounts

(a) In cases of multiple listings of a candidate for an office, the number of votes cast for each such listing of a candidate shall be counted and reported separately; however, the sum of all votes for a candidate for an office shall be used in determining the candidate’s vote for election to the office.

(b) A qualified write-in candidate who receives more votes than any listed candidate, and more votes than any other write-in candidate, and more votes than “None of the Above; For a New Election” for that office shall be elected.

(c) The New York State Board of Elections or appropriate authority shall conduct a recount of any election where the number votes cast for “None of the Above; For a New Election” would require, or would allow a candidate to request, a recount if that number of votes had been cast for a candidate, and otherwise act on behalf of voters who cast votes for “None of the Above; For a New Election.” Delegation of this duty to the New York State Board of Elections shall in no way limit voters, who affirm they voted for “None of the Above; For a New Election” in an election, from also acting on behalf of themselves and other such voters.

Section 14. Failure to nominate

(a) Should no candidate qualify for nomination for an office in a NOTA Election, the office shall appear on the ballot with no listed candidate with only the “None of the Above; For a New Election” line.

Section 15. Nominating Petition Description

(a) The nominating petitions shall consist of 8.5 x 11 inch white paper with the first printed title line reading “NOTA Election Nominating Petition”;
The next printed line shall state: “To be signed only by voters eligible to vote for the office.”;

(b) The next printed line of the petition shall state: “For the office of: ”, followed immediately by the title the office, as it appears on the ballot, for which the candidate is to be nominated; and, followed immediately by the text “ for ”; and, followed by the jurisdiction of the office;

(c) The next printed line of the petition shall state: “Nominating: ”, followed immediately by the candidate’s legal name and, optionally, in quotes, an informal name, as it is intended to appear on the ballot;

(d) The next printed line of the petition shall state: “Whose legal address is: ”, followed immediately by the candidate’s legal address, as it is intended to appear on the ballot;

(e) The next printed line of the petition shall state: “Political Party: ”, followed immediately by the name of the political party, as it is intended to appear on the ballot. “No Party” is permitted. “Write-In” is permitted for candidates nominated by write-in votes; and, “For the Town or City:”, followed immediately by the name of the election district where the signers below must be registered to vote.

The next printed line shall identify the appropriate columns for voters to fill out with the words “Voter’s Name (print)”; “Street Address”; “Signature”; “Date”;
There shall follow sixteen (16) thin, straight lines, indicating the space for the voter to make a nomination.

Section 17. Conflicting provisions
The provisions of this act shall prevail over any conflicting provisions of any other law.

Section 18. Severability
The provisions of this act are severable, and if any of its provisions shall be held unconstitutional by any court of competent jurisdiction, the decision of such court shall not affect or impair any of the remaining provisions.

Section 19. Effective date
The provisions of this act shall take effect two (2) years after enactment

It Is Time To Tax College Endowments

Goldie Blumenstyck reports in the Chronicle of Higher Education (paid access) that several economists have proposed requiring higher education institutions to use five percent of their endowment each year for educational purposes. Arguably, the requirement might be extended over a longer period. For instance, there could be a requirement that colleges use 5% of their endowment over a twenty year moving average. However, colleges should be required to use their endowments for educational purposes.

In reply, higher ed associations argue that they should not have to use their endowments and that the endowments are not like bank accounts. The Chronicle notes:

"Lynne Munson, an adjunct fellow at the Center for College Affordability and Productivity, and Jane G. Gravelle, an economist at the Congressional Research Service—each recommended at the hearing that Congress enact legislation to require colleges with endowments worth $1-billion or more to spend at least 5 percent of that money each year, as private foundations are required to do, or be subject to federal taxes (The Chronicle, September 27)."

I would cut the minimum to ten million dollars. Colleges are not investment funds. The money should be used for educational purposes, not to protect institutional privileges.

Yet, the Chronicle reports that "the American Council on Education, the Association of American Universities, and the National Association of Independent Colleges and Universities, said that the proposal does not take "complexities into account", such as legal restrictions on the use of endowments.

I would argue that Congressional oversight of the use of endowments is a good idea. Part of section 501(c)(3), the federal law that regulates the tax exemption of universities, requires that assets be used for tax exempt purposes, not for the benefit of the administrators and faculty of institutions. As well, this might be a first step toward increased congressional scrutiny of the politicization of universities, which is not permitted under section 501(c)(3). That is, violations of the tax exemption requirements for university trust funds are an open secret about which universities are inclined to lie. Increased congressional scrutiny might include beginning to require that universities divulge actual student outcomes; improvements in knowledge based on objective knowledge and general skills tests; job placement; graduate school admission; faculty research output; and student engagement on campus.

Wednesday, October 10, 2007

Academic Freedom or Anti-Semitism?

Daniel Klimek and Victor Lang of the left-wing DePaul Academic Freedom Committee have forwarded a press release concerning their academic freedom conference to be held on October 12 at the University of Chicago. The conference will be open to the public. Apparently, it is not enough that the academic left has squelched conservatives' speech; banned conservatives from the academy; and thrown conservative students out of college. In addition, Klimek and Lang demand that any and every failed left wing anti-Semite deserves tenure.

Klimek and Lang are leading the charge to insist that Norman Finkelstein be given tenure. Competent conservatives are routinely ejected from the academy but Klimek, Lang and their fellow neo-German romantics take no notice and do not see any "academic freedom" issue. But when Finkelstein, who is worse than incompetent as a scholar, is deservedly denied tenure Klimek, Lang and the usual list of neo-German romantics complain that there has been a grievous violation of academic freedom.

Previously, Brooklyn College alum and eminent legal scholar Alan Dershowitz has written about Norman Finkelstein in Frontpagemag. Dershowitz's article begins:

"The level of “academic” discourse on the Middle-East reached a new low—quite a feat considering some of the old lows—when the notorious Jewish anti-Semite and Holocaust-justice denier Norman Finkelstein wrote a screed suggesting that I be targeted “for assassination” because of my views on Israel. The obscene article was accompanied by an obscene cartoon drawn by “Latuff”, a frequent accomplice of Finkelstein. The cartoon portrayed me as masturbating in rapturous joy while viewing images of dead Lebanese civilians on a TV set labeled “Israel peep show,” with a Jewish Star of David prominently featured."

The DePaul Academic Freedom Committee's press release follows:

12 October 2007 - 2:00pm - 7:00 pm
Rockefeller Chapel, University of Chicago

October 12 2007 lecture featuring: Tariq Ali, Akeel Bilgrami, Noam Chomsky, Neve Gordon, Tony Judt and John Mearsheimer

CHICAGO, IL – In light of the controversial tenure denials of eminent Middle East scholar Dr. Norman G. Finkelstein and Dr. Mehrene Larudee earlier this year at DePaul University, the most prominent scholars from across the world will come together this Friday, October 12, 2007, at a conference at the University of Chicago to speak lecturing about the threats to academic freedom at universities.

Professors Finkelstein and Larudee were both denied tenure at DePaul last June for political purposes. After not being allowed to teach his terminal year at DePaul, Finkelstein and the university settled on an agreement in September, when Finkelstein resigned and DePaul acknowledged him to be “a prolific scholar and an outstanding teacher.” Professor Larudee, who was a strong supporter of both Finkelstein and Palestinian rights, is currently appealing her case at DePaul. Both scholars will also appear as panelists at the October 12 conference.

The event is to be held at the Rockefeller Chapel, 5850 S. Woodlawn Ave. Chicago, IL 60637. Scheduled speakers include:

- Dr. Akeel Bilgrami, Johnsonian Professor of Philosophy and Director of The Heyman Center, Columbia University
- Dr. Noam Chomsky, Institute Professor & Professor of Linguistics (Emeritus), Massachusetts Institute of Technology
- Dr. Norman Finkelstein, (formerly) Department of Political Science, DePaul University
- Dr. John Mearsheimer, R. Wendell Harrison Distinguished Service Professor of Political Science, University of Chicago
- Dr. Neve Gordon, Professor, Department of Politics and Government, Ben-Gurion University
- Dr. Tony Judt, University Professor and Director of the Remarque Institute, New York University
- Dr. Mehrene Larudee, International Studies Program, DePaul University
• Hosted by Tariq Ali, Editor of the New Left Review and Verso Books

The Event is Sponsored By:

Primary Sponsors

Diskord Magazine (University of Chicago, RSO), Verso Books (London), and Academic Freedom Committee (DePaul)

University of Chicago: Center for Middle Eastern Studies, Center for International Studies, and International House Global Voices Program*
DePaul University: International Studies Program, Islamic World Studies Program, and Department of Philosophy*
Community Sponsors
Jewish Voice for Peace - Chicago, American Friends Service Committee – Chicago, and Committee for a Just Peace in Israel and Palestine (CJPIP)
*The University of Chicago and DePaul University are not sponsoring the event, only the listed departments and centers at these Universities.

Monday, October 8, 2007

Regulated Versus Free Labor Markets

I teach a web-based class in human resource management. The class covers most of the traditional personnel material such as job analysis, compensation and employment discrimination. In the section on employment discrimination, I asked the students to participate in several discussion boards about (1) "employment at will, pro or con?"; (2) "affirmative action, pro or con?" and (3) "the regulated workplace versus free labor markets". The last question was taken from the course text by Randall Schuler and Sue Jackson and read:

"Some people feel there are simply too many laws and regulations governing how companies may manage their employees. These people believe that everyone would be better off if we let the free market system work without so much government interference. Other people believe that employees are not sufficiently protected against unfair treatment. They believe that employers would treat employees unfairly if our laws didn't forbid it. Which position do you most agree with? Why?"

The majority of students supported affirmative action; a larger majority opposed employment at will and 100% favored regulated as opposed to free labor markets. To quote three students' comments (they were almost all along these lines):

>"I wholeheartedly do not believe employers would treat employees fairly if our laws did not forbid it. Industry in our country is a business. The bottom line is the more profit you make the more successful the business."

>"I think government intervention, as far as the employee-employer relationship is concerned, is a positive thing. I wouldn’t go so far as to say that, 'employees are not sufficiently protected against unfair treatment', but I would say that if laws didn’t forbid it employers would treat employees unfairly. Government intervention, I believe has proven to be most helpful to employees, in form of regulations/laws/policies."

>"I am glad there is government intervention, if the government rules and regulations did not exist it would be a catastrophe. The EEOC, OSHA and ADEA were created to protect our employees because of unfair treatment to employees. I do believe without the governments laws that employers would treat employees unfairly. We have come a long way but there is still room for improvement because there are still a lot of employers that still break the rules and get way with unfair treatment towards their employees. I do not believe Free Labor Market would help improve the work environment it would just do the opposite. Government intervention is a positive thing definitely not a negative thing."

My response to the class was as follows. Note that unlike the majority of left wing professors, I do not try to suppress the students or give them low grades because I disagree with their views. Rather, I engage in civil debate.

"I enjoyed reading the class's comments and I urge you all to look at what your classmates had to say in the three excellent discussions on affirmative action, employment at will and workplace regulation. However, I must say that I disagree with the majority of students on all three topics, particularly with respect to the regulated workplace. Thus, I do not agree with affirmative action; I do agree with employment at will; and I do not think that employment regulations are helpful to workers. Instead I would argue that workplace regulation is harmful to workers and does not make workplaces more ethical.

While I agree with the argument that affirmative action need not involve quotas and is primarily a means to encourage consideration of previously excluded groups through non-intrusive methods such as advertising in newspapers in neighborhoods where "under-utilized" groups are predominant (this is the traditional description of it), I do not believe that it works that way in reality or that its proponents really believe that it works that way. As Thomas Sowell has ably pointed out in a long list of books, such as his recent "Affirmative Action Around the World", affirmative action, defined as hiring preferences based on race, have repeatedly led to anger, conflict and violence.

In "Affirmative Action Around the World" Sowell traces the implications of affirmative action in five countries, to include India, Malaysia, Nigeria, Sri Lanka and the United States. He notes that affirmative action has often led to extreme resentment and even violence. In Nigeria, the genocide of the Ibo people in the 1960s was largely the result of resentment of affirmative action policies. Likewise, affirmative action policies favoring "Untouchables" in India has done nothing to improve their economic position but instead has tended to help a small, privileged segment within the Untouchable group who would have had access to the best schools and jobs anyway. In turn, resentment against the privileged group has lead to violence against the bitterly impoverished Untouchables not in the privileged category who cannot benefit from the affirmative action laws in part because they live in rural areas where there are no schools or transportation to schools.

Sowell argues that this is characteristic of affirmative action: that it leads to increased resentment and discrimination against the least privileged members of the group that affirmative action claims to help, while it is the most favored members who benefit. But the most favored members of the group whom affirmative action claims to help often have greater advantages in the first place than the majority in society, including the less privileged members of the dominant group (e.g, the white working class in the U.S.) as well as the less privileged members of the group whom affirmative action claims to help. For instance, there are probably no groups in America more downtrodden than the WASPs who live in Appalachia. Yet, they are not helped by affirmative action and in fact are potentially excluded from jobs because of it.

Similarly, in Malaysia laws favoring the "sons of the soil" that amount to apartheid-like discrimination against the ethnic Chinese minority have resulted in the impoverishment of Malaysia. In other words, by excluding highly productive Chinese entrepreneurs, who are a self-made minority in Malaysia, the Malaysian economy has suffered. The Malaysians, who live as a minority in Signapore but a majority in Malaysia, have a higher per capita income in Singapore than in Malaysia. (Malaysia cut off Singapore from the rest of Malaysia because it was primarily Chinese and Singapore is now much more successful than Malaysia.) In other words, the affirmative action policies in Malaysia against the Chinese (in favor of the so-called "sons of the soil", i.e., the native Malaysians) have made the average Malaysian poorer, not richer.

The pattern of unforeseen effects stymies all regulatory systems. Employment at will is another example. In Europe, employees are protected by extensive legal requirements, the so-called social contract. The effect of the "social contract" is to reduce employment and increase unemployment. Britain, which has the weakest "social contract" among the major European nations (excluding the newly free nations of eastern Europe) has seen a massive influx of young French men and women, who cannot find jobs because of the "humane" regulation of the workplace in France. Likewise, the Muslims who dominate the low-income suburbs or banlieue have been excluded from jobs precisely because there are so few jobs. They lead lives of desperation, excluded from the workplace, because of the benign "social contract". The French majority feels very good about how generous it is, but France is a society rife with ethnic hatred and anti-Semitism. The "social contract" is anything but benign.

There are so few jobs in Europe (unemployment is much higher than here) because there is so much beneficent regulation. The riots in the banlieue have gone on for several years, and recently have broken out again. There is so much "ethical" and "humane" regulation in France that it is not unusual for French college grads to fail to find jobs for ten or even twenty years after graduation. Not very humane in my book.

The tradeoff between Europe and America is clear. Where there is heavier workplace regulation, as in Europe, unemployment and the exclusion of unfavored and unlucky workers goes up. In America, where there is employment at will, unemployment goes down and employment goes up. The jobs may not be as good, and perhaps the employees aren't as treated well, but you don't have the social exclusion of large segments of the population in America that you have in "ethical" Europe, a continent whose history is blighted with mass murder as well as the "benign" social legislation of Bismarck.

I wold argue that if most regulation were repealed in the US, then demand for employees would skyrocket. Contrary to what several student claimed, regulation hugely reduces wages. It doesn't increase them.

Wages are determined by the interaction of supply and demand. Wages are an economic phenomenon that are enhanced by a more competitive economy. Deregulation means more demand, which means higher wages.

The best security for all is a competitive economy that is generating considerable innovation and lots of jobs. That can be done in a deregulated, laissez faire economy. The more regulation in America, the more Brooklyn will look like the French banlieue, economically depressed and full of people who cannot find jobs.

Nor do I believe for a second that government is more ethical than business. I do not believe that at all. In fact, the worst crimes against humanity have been perpetrated by government, not by business. The Nazis, the communists, the fascists, the Castros, the Hugo Chavezes have all advocated workplace regulation in the name of beneficence.

If you look, for instance at Hitler's 25 point program in the 1920s, the Nazi Party advocated workplace regulation similar to what American liberals advocate:

"14. We demand profit-sharing in large industries.

"15. We demand a generous increase in old-age pensions.

"16. We demand the creation and maintenance of a sound middle-class, the immediate communalization of large stores which will be rented cheaply to small tradespeople, and the strongest consideration must be given to ensure that small traders shall deliver the supplies needed by the State, the provinces and municipalities.

"21. The State has the duty to help raise the standard of national health by providing maternity welfare centers, by prohibiting juvenile labor, by increasing physical fitness through the introduction of compulsory games and gymnastics, and by the greatest possible encouragement of associations concerned with the physical education of the young."

Thus spake Hitler.

Rather than relying on government, the approach that made America successful was allowing individual initiative as much free rein as possible. No system is perfect. But in the 19th century, the average worker improved their standard of living tremendously even as 100s of thousands of Europeans, Italians, Irish, Jews, Poles, etc. flocked here. No other nation in history has seen such a large influx of immigration, yet the economy was able to create better jobs for these people BECAUSE OF FREE ENTERPRISE. The economy didn't start slowing down until government intervention began in the 1900s.