Carte Blanche

Seinfeld moment: Michigan Can Scam

2007-09-28T15:05:00.000+02:00

Re: my earlier post about Seinfeld moments, I feel compelled to post this article about a very Seinfeld-esque can refund scam, busted in Michigan.

"DETROIT -- Authorities said they arrested 10 people and seized more than $500,000 in cash after breaking up a smuggling ring that collected millions of beverage containers in other states and cashed them in for 10 cents apiece in Michigan.
The 10 people were arraigned on charges ranging from false pretense, a possible 5-year felony to running a criminal enterprise, a possible 20-year sentence.
A total of 15 people were named in a 67-count warrant issued as part of Operation Can Scam, Attorney General Mike Cox said Wednesday. Some suspects were members of two smuggling rings based in Ohio and others were Michigan merchants who took part in the scheme, he said."

This all seemed so funny on tv, but a possible 20 year sentence kills the gag....

"Each year, this type of activity defrauds the state approximately $13 million," said Col. Peter Munoz, Michigan State Police director...."A half-million in cash is not 'Seinfeld' humor," Cox spokesman Matt Frendewey said.

The Center Holds: Netroots overstated

2007-09-28T00:03:00.000+02:00

To get into the spirit of the '08, and brush up on the Clintons, I have just been reading Bob Woodward's The Agenda (1994) which covered the early days of the Clinton White House. One of my initial reactions was to be struck by the apparent shift in current Democratic politics away from the centrist rhetoric of the early 90s, the "New Democrats" . In fact, if we were to believe everything in the media (mainstream or blog) we would assume those days were over. My interpretation was that it appeared the Democrats had been enthusiastically adopted their party's opposition to the Iraq war to the point where they would take a stand of opposing most Republican policies, in a pronounced shift leftward (or at least towards populism - e.g. John Edwards), and the centrist was an endangered species.

Not so, according to David Brooks, here in the NY Times. Brooks suggests that:

Now it’s evident that if you want to understand the future of the Democratic Party you can learn almost nothing from the bloggers, billionaires and activists on the left who make up the “netroots.”

You can learn most of what you need to know by paying attention to two different groups — high school educated women in the Midwest, and the old Clinton establishment in Washington...In the first place, the netroots candidates are losing. In the various polls on the Daily Kos Web site, John Edwards, Barack Obama and even Al Gore crush Hillary Clinton, who limps in with 2 percent to 10 percent of the vote...Moguls like David Geffen have fled for Obama. But the party as a whole is going the other way. Hillary Clinton has established a commanding lead.

This does feel a little like a "emperor has no clothes" moment. The lead Hillary enjoys is now so blindingly clear, that it's almost hard to believe the amount of power that had been credited to the so-called "netroots" blogs and organizations who seemed destined to topple centrist Hillary along with any conservatives. Anyone remember August 2006, and the netroots hysteria surrounding the Lieberman-Lamont primary?

Could it be that the netroots movement may have been, to quote a Democrat of a previous generation, "all hat and no cattle"?

Law firms recruit through YouTube

2007-09-27T22:23:00.000+02:00

Following on from the theme of my previous post on law firms and Facebook, here is the requisite nod to the other big internet phenomenon. In this tightly competitive market for legal employment, firms are turning to the video-sharing site YouTube as part of their recruitment strategy. From an article in the Herald Tribune, we learn that:

Several firms are trying to parlay that discovery into a hiring tool, creating recruiting videos and Web sites with the look and feel of YouTube. They hope to persuade students that their lawyers and, by extension, the firms, are young-thinking and hip.

(What is it about using the word 'hip' that automatically proves that you are, in fact, not...)

Brian Dalton, from Vault.com, is quoted saying that "A lot of them come off seeming like hostage videos,", which is actually pretty accurate from the videos I've seen. The exception being the Choate Hall & Stewart videos, which take of the Mac v PC ads by taking a swipe at the ominous "Megafirm".

Sure, it's not likely that "Megafirm" will come up with a snappy response to these adds, but that's also the point illustrated here. They don't need to turn to these marketing exercises because, for now, they don't have to 'recruit' anybody...

See. 'Old-line law firms join the YouTube generation to recruit students' [IHT]

Lawyers love Facebook

2007-09-26T21:11:00.001+02:00

David Lat, in this NY Observer piece, has picked up on something I've noticed recently, namely that lawyers have a heightened appreciation for facebook. Given that Facebook is such a phenomenon, however, it might not seem to be that much of a revelation. But on reflection, I can confidently say that between the my banker and lawyers friends, it is the lawyers make who up the larger quota of "users".

This reminded me of the news that the London firm Allen & Overy tried to ban facebook, but a staff revolt forced them to relent!

"Big Law associates love using the status update feature, especially to complain to other lawyers about their miserable lot. It may also be that these lawyers, whose days are divided into six-minute increments which must be accounted for, yearn to give any status update that is more alluring than, say, “reviewing lease agreements.”"

Too true? But one can only hope that it remains a "partner free space"...

Belgium's division: European (dis)Union a trend?

2007-09-26T12:46:00.000+02:00

Another Belgium break up op-ed piece, this time from Greenway of the Boston Globe via International Herald Tribune.

Greenway hits the right note, nailing foreign discomfort and confusion with the issue:

"Americans are used to the map of Europe being redrawn, but most thought that was just for the former Communist countries of the East. Therefore headlines such as "Political Impasse May Break Up Belgium" come as a shock. We thought Western Europe, especially the little cluster of a half-dozen or so monarchies in the northwest corner, were immune to such turmoil. After all, isn't this the age of European integration? And isn't Brussels the capital of the new Europe?"

Even more interestingly, Greenway nods to the broader theme of nationalist movements in established countries, particularly Scotland, Wales and Quebec.

Since having spent more time living in Europe it has struck me how many separatist movements actually exist. In Scotland, the Scottish Nationalist Party are installed as head of the executive. In Wales, Labour was forced to form a coalition with Plaid Cymru (who aim for Welsh independence). Recently, in this London Times piece, it is even suggested that Northern Ireland may be harboring similar sentiments, given that Sinn Fein is part of the Northern Ireland administration. And of course at the other (extreme) end of the specturm, in Spain there are Basque nationalists, a movement pursued by the terrorist group ETA.

These movements are not always just hypotheticals and political curiosities.
The troubled Balkans, face the prospect of Kosovo's independence from Serbia, a movement the US and EU have agreed to recognize. Unlike the previous examples, this is not mere speculation. President Sarkozy of France has stated that "Kosovo's independence is unavoidable in the long term".

Is this just a series of coincidences, as I suspect, or could it be part of a larger trend of unwinding Nationalism? Are these genuine cultural and historic disputes which cannot be resolved, or are they merely transient reflections of a declining confidence in their national government's ability to recognize their individual identity and local needs?

Regardless, what will be the consequences of a series of international separatist movements in these 'established' Western countries? Would support of local separatists, such as the UK allowing referendums for Scottish independence, create complications in relations with countries fighting their own separatist movements: think Russia and Chechnya, Iraq and the Kurds, even Israel and Palestine.

As always, comments appreciated.

Ahmadinejad @ Columbia: Free Speech or Free Publicity?

2007-09-25T13:01:00.000+02:00

Obviously one of the big stories at the moment is the speech of Iran's president at Columbia.
This is being framed as a freedom of speech issue - to censor or revoke the invitation to speak at Columbia would be limiting the freedom to hear all viewpoints, no matter how controversial.

Columbia is being hailed as a champion of free speech. This is missing the point, I feel, because Columbia in fact made two decisions by sponsoring this speech.

The first was to extend the invitation in the first place. The second was to keep the invitation open in the face of criticism and controversy. While the second should be respected. The first must be questioned.

The freedom of speech issue certainly was not the motive for inviting Ahmadinejad - it is the justification for the invitation. What I doubt is the real motive for extending the invitation in the first place. I can only see deliberate provocation in the spirit of self-promotion through public controversy.

I felt my suspicions confirmed when the first headline to emerge from the speech was that the Columbia President, Lee Bollinger, 'slammed' Ahmadinejad (so much for civil debate) in his speaker's introduction - is that more in the spirit of free speech or free publicity?

Free speech would be the issue only if Ahmadinejad had actively sought out Columbia, and the college had stood firm for his right to be heard. Instead, the college appears to have been looking to stoke the flames of controversy. The invitation originally came from the dean of Columbia's school of international and public affairs, and was originally to speak at the World Leaders Forum.

This is my question: why seek out this man to grant him a platform to spread his obviously absurd and hate-filled views? Yes, Columbia has been able to justify its decision to maintain the open invitation on the basis of free speech, but as the Dean of Columbia Law School states:

"Although we believe in free and open debate at Columbia and should never suppress points of view, we are also committed to academic standards. A high-quality academic discussion depends on intellectual honesty but, unfortunately, Mr. Ahmadinejad has proven himself, time and again, to be uninterested in whether his words are true."

Columbia should not be commended for its original decision to extend the invitation, which caused this whole saga in the first place. But its decision, whether for principled motives or not, to keep the invitation extended needs to be acknowledged as the right one.

See: Debate between Columbia President and Law Dean [WSJ Law Blog]

Follow up: WSJ covers law grads, Loyola 2L

2007-09-24T13:40:00.000+02:00

On Saturday I posted about Loyola 2L and the more serious underlying theme of the job market for law grads.

Demonstrating that I have my finger right on the pulse, I see that Monday's WSJ has a full Page 1 story on the issue - including, funnily enough, a mention of Loyola 2L.

Some thank "L2L" for articulating their plight; others claim L2L should complain less and work more. Loyola's Dean Burcham says he wishes he knew who the student was so he could help the person.

You can't help but feel sympathy for the Dean having to fend off the implicit criticism of the L2L gag...

Belgium = Bizzaro World

2007-09-24T12:51:00.002+02:00

The Belgians are well known for their surrealists (such as Magritte, see (my altered) image to the right). But today I experienced a strong moment of Belgian surreality myself.

I'm fine with most forms of culture shock. I can cope with foreign currencies and exchange rates. I've eaten any food offered to me (raw fish, offal, chicken feet). I've been understanding about political differences. I've dealt with differing national standards for personal hygiene. But today in Brussels I was floored by a common cultural reference.

In life, there are frequently "Seinfeld Moments". Moments that reflect, for better or worse, episodes in this classic TV sitcom. (I am not making this up. See here and here...)

As a result, one form of communication within my age bracket is the "Seinfeld Reference". Often, one may use a Seinfeld reference to communicate a whole bundle of sentiments relating to the (often ridiculous) situation you are in.

My Example
So, the other day I purchased a business shirt and the salesman convinced me that it would look fine. Of course, it was too blousy and large, and it made me look ridiculous. At work I commented that it was like the "Puffy shirt" from Seinfeld (a classic episode, a similar situation) only to be met by blank faces.

I thought they may have forgotten the episode, so I reminded the Belgians of the episode where Jerry was forced to wear the puffy shirt after failing to hear Kramer's "low-talking" girlfriend. He nodded politely, and only later learned that he agreed to wear the shirt on national TV.

To my horror, the response was "What is Seinfeld?"

Please, someone tell me this was just an unlucky statistical sample - surely Europeans did not miss the entire contribution to the human experience that was Seinfeld?

Even the Washington Post, a mainstream journal of record, understands my reference:

The Puffy Shirt made him all puffed out, made him look like a buccaneer, like someone who should, as Elaine put it, "swing in on a chandelier." It made Jerry wail: "But I don't want to be a pirate!"

So, is Europe a bizzaro world deceptively similar to our own, the same in most respects except that it lacks the concept of "Seinfeld"?

Sarkozy on NATO and war with Iran

2007-09-24T12:19:00.000+02:00

A good interview with Sarkozy here, in the International Herald Tribune this morning. I still enjoy the energy that Sarko seems to be exuding, though this interview seems to be peeling away at the glossy media veneer to suggest that things may not be so smooth in reality.

In terms of content, Sarkozy brings up, and directly contradicts, the comments of Bernard Kouchner (the French foreign minister) with regard to war with Iran:

France's position, he explained, is clear: "No nuclear weapon for Iran, an arsenal of sanctions to convince them, negotiations, discussions, firmness. And I don't want to hear anything else that would not contribute usefully to the discussion today."

This seems to be a recurring tendency with Sarkozy - he seems intent on maintaining his control over his ministers, even to the point of stepping in to correct them, or to steal their thunder (as with the culture minister).

Also, on NATO:

In the interview, Sarkozy announced for the first time two conditions that would have to be met beforehand: American acceptance of an independent European military capability and a leading French role in NATO's command structures "at the highest level."

The article seems to have a vaguely derisive tone, focusing on his restlessness and apparent physical discomfort:

Visibly restless, at times brusque, he greeted his guests with stiff handshakes and unadorned "Bonjours." Perpetually in motion, he rocked uncomfortably in a green brocade armchair and gripped the backs of the gilt chairs on either side of him. His jaw muscles twitched. His gait was awkward. He cut off his interviewers in mid-sentence.

and perhaps ridiculing his appreciation of media attention:

The brusque demeanor and nonstop movement during the interview vanished during a brief photo session afterward in his office. At one point, he posed for a photograph with his two female interviewers, gripping his arms around their shoulders. "I have a good job," he said.

and his strong affection for the US:

Accused of being too enamored of all things American, he put France and the United States on an equal footing and as somehow better than many others, because they believe that their values are universal and therefore destined to "radiate" throughout the world. The Germans, the Spaniards, the Italians, the Chinese, by contrast, do not think that way, he said.

NY Times profiles Justice John Paul Stevens

2007-09-23T22:57:00.000+02:00

A fantastic piece covering Justice Stevens in the Sunday Magazine. He's presented as a much more balanced character than some right/left pundits may have you think. The internal politics of the Supreme Court are always interesting. The article highlights, his important role as senior associate justice in assigning opinions (when not agreeing with the Chief).

The author notes the shift in mentality of liberal judges these days:

"Judicial liberalism... has largely become a conservative project: an effort to preserve the legal status quo in the face of efforts by a younger generation of conservatives to uproot the precedents of the past 40 years."

Interestingly, the article mentions the role of his own father's conviction for embezzlement, his own World War II experience, and his experiences clerking in forming his more expansive protections of individual liberty from government interference.

Also includes discussion of Roe v Wade, affirmative action, his role in Bill Clinton's impeachment saga, and finally a mention of his reasoning in Bush v Gore.

For fans of constitutional interpretation, here's his view:
Stevens’s final judicial theme is that the court has an obligation to protect ideals of equality and liberty in light of the nation’s entire history, rather than legalistically parsing the original understanding of the Constitution. As the court moved right during the past 20 years, Stevens increasingly saw it as his role to interpret the Constitution with fidelity to all of American history, rejecting the claim of Justices Antonin Scalia and Clarence Thomas and Judge Robert Bork that the original understanding of the 18th-century framers is all that matters...“Originalism is perfectly sensible. I always try to figure out what the original intent was, but to say that’s the Bible and nothing else counts seems to me quite wrong.”

Finally, I like this quote:

Though no one has succeeded in reducing his vision to a simple label — “I like to have people think I’m a good lawyer, to tell you the truth,” Stevens said. “I’m not big on labels” — his legal thinking has returned repeatedly over the years to a set of identifiable ideas and themes.

The first is that the government has a duty to behave impartially, rather than favoring one group over another for partisan or sectarian reasons. “It seems to me that one of the overriding principles in running the country is the government ought to be neutral,” Stevens told me. “It has a very strong obligation to be impartial, and not use its power to advance political agendas or personal agendas.”

Electoral college changes: reforms yes, but not this way.

2007-09-23T15:55:00.001+02:00

I'm all in favor of a review of the way that the Electoral college operates. It's an opaque system, one that most voters don't understand and doesn't match a lot of democratic ideals. It appears to some to be a hang over from a less democratic age where the voters couldn't be trusted to vote 'correctly' and had to be watched over (mind you, it also acts as part of a system of checks and balances). Just witness the confusion and frustration felt when President Bush won the election in 2000 based on a majority of the 538 electoral college votes, even though Gore won the popular vote - assuming the underlying count was correct (the actual point of contention), this outcome was never at question. Wikipedia does a good run-down, including pros and cons, here.

But what about this Republican led proposal [CNN] to change the system - for one state! This smacks of bad faith...

Essentially, whover wins the majority in that state gets the entire block of electroal college votes. California represents such a large block of votes that this can easily mean the difference between winning or losing an election. The proposal here is to 'free' California from the system

This is what upsets me about lawyers getting too involved in the political process.

If there is one thing that you learn in practice, it is the importance of advising your client - especially in the larger cases - that even though you can do something, often you should not. The point is to show some restraint and think of the future repercussions.

Quite often effective efforts to lobby and argue to overturn a law will benefit your client immediately, but in the long run will be tremendously damaging. Whether this is by way of reaction - either legal, legislative (political) or consumer based - or whether this is because your client finds the loophole used directly against them in future.

Regardless of the pros and cons of this reform, this should have been handled better...

US military dominance to give way to the 'Asian Century'?

2007-09-23T14:49:00.000+02:00

Robert D. Kaplan, in this opinion piece with the New York Times brings to light the declining military influence of the United States in the Pacific - once considered "an American lake". Kaplan notes that "Asian dynamism is now military as well as economic".

I feel that this is presented as a bad thing for America, and a bad thing globally. Kaplan certainly hints at the growing danger of Asian nationalism, in contrast with 'post-national West' (e.g. my earlier post on Belgium). "Asia is marked by rivalries that encourage traditional arms races", Kaplan notes "...the Indians, Pakistanis and Chinese have great pride in possessing nuclear weapons." On the other hand, Europe has moved away from military power (see Robert Kagan's slogan "America is from Mars, Europe is from Venus"). Japan's navy is now apaprently greater than the United Kingdom's.

Kaplan writes that:

"People in countries like Germany, Italy and Spain see their own militaries not so much as soldiers but as civil servants in uniform: there for soft peacekeeping and humanitarian missions."

The above is a fair point. I am always a little dismayed by the shock people express when their soldiers are called into actual combat. War is always a terrible business. To go to war is to kill, and be killed. We aren't doing ourselves any favors by closing our eyes to these truths - it turns war into a game and will only cloud our decision to commit to war, one way or another.

There are two questions that I feel come from this article.

The first, is there a point at which this disavowal of military power becomes more than peacefully idealistic, and becomes instead dangerously irresponsibile?

The second, are we witnessing an era of permanant decline in American influence?

On a personal level, I think that the answer to the first question must be that yes, there is a point of irresponsible disengagement. I think that, despite the disaster of Iraq, there must be scope for, at the very least, humanitarian military intervention - look to Bosnia, and look at Sudan.

The answer to the second question, US influence, is more difficult. Looking at military and economic influence, it would be a stretch to characterize either as in a weak position. By any measure the US is the world leader in both. However, the weakening of the US dollar, the decline in the underlying economic stability and growth could present major problems. I feel the greatest problem will be a lack in confidence - a lack of international confidence in the US economy will become a self-fulfilling prophecy.

I would submit that this decline does not have to be permanent, and both measures of power can be reclaimed (if the US wants it). The percentage of GDP used for military spending is at record lows - this can easily be raised. The US economy can be strengthened with better domestic policy.

It comes down to a question of political will.

AIDS vaccine failed to prevent test subjects from becoming infected with HIV, in a major setback.

2007-09-22T19:56:00.000+02:00

Does anyone else worry about how, exactly, they tested this? [WSJ]

Who is Loyola 2L? The true value of a law degree

2007-09-22T18:52:00.000+02:00

Just an observation of something quirky in the law blogosphere. After having spent a bit of time wading through the blawgs out there, I've started to notice that the poster "Loyola 2L" seems to be omnipresent. While I'm not certain about it's origin, it seems to be a running gag. The gist of it is that they are law students who are not from a top tier college who can't find work.

They complain that they feel deceived by the perception that there are plenty of well paying opportunities available for lawyers.

"University of Iowa sociologist Michael Sauder, who has interviewed more than 120 law professors and administrators for his rankings research, heard examples of alumni taxi drivers who are “employed” for the purposes of U.S. News rankings." American Lawyer (June 1, 07)

Basically, these guys are ticked off about the huge investment of time and money in a legal education that they don't think will pay off, and the way that they feel the law school misled them with false hope.

A little sad. But some posts are funny, and they do raise a legitimate question: are the rewards of a legal degree overstated by grad schools?

In this great post on Empirical Legal Studies, we see a chart showing the distribution of legal salaries.

It is described as a classic example of a 'bimodal distribution'. You see two peaks, representing the fact that, of the full-time salaries for all members of the Class of 2006:

" Over a quarter (27.5%) make between $40k-$55k per year, and another quarter (27.8%) have an annual salary of $100K plus. "

ELS note that making $40-55k won't be enough to pay down the $85 in student debt, making getting a JD "a very risky financial proposition".

But, "[o]n the other hand, if you are Georgetown, NYU, Northwestern, Harvard, Columbia, et al., [this] current model works just fine."

You can't help but feel a little sympathy for those who have made it through law school, bar exams etc. and are still unsure whether the investment will pay off... perhaps there needs to be greater 'consumer protection' or at least more transparent accountability when it comes to student recruitment at these law schools?

To see more examples of Loyola 2L posts, check the comments section of WSJ Law Blog posts or the comments in this example from the NY Observer.

Also, on a similar theme http://temporaryattorney.blogspot.com/

News Roundup

2007-09-21T23:27:00.000+02:00

Here are some further stories worth mentioning:

Greenspan's excerpt from 'The Age of Turbulence' [MSNBC]

Mankiw's proposal for a Climate Change Tax [NYT]

Sarkozy and Merkel clash over ECB independence [FT]

Gold Surging - up $79/oz in 30 days, up $34/oz in 7 days, up $9/oz in 1 day [Bullion Blog]

Greg Mankiw's Blog: Jon Stewart is a Genius

2007-09-21T23:16:00.000+02:00

Greg Mankiw's Blog: Jon Stewart is a Genius

Greenspan on Daily Show

2007-09-21T23:01:00.001+02:00

Greenspan comments intelligently on the Federal Reserve dropping rate by 1/2 point, and the impact on the market. Stewart holds back on too many gags, and asks some good questions

Stewart: "So why do we have a Fed?"
Greenspan: "That is a very fundamental question..."

I liked this question, as it touches on the apparent conflict between Greenspan's publicly declared libertarian views, and his position as the Governments most senior financial regulator.

Stewart: "So, we're not a free market then?"
Greenspan: "You are quite correct. To the extent that there is a central bank governing the amount of money in the system. That is not a free market, and most people call it regulation."

Good stuff.

EDIT: Evidently good enough for no less than Greg Mankiw to comment.

Income Inequality II: Keeping up with the Jones's

2007-09-21T22:04:00.000+02:00

I was reminded to write the previous post when I came across this blog entry by Paul Krugman, on his NY Times blog earlier this afternoon.

It has taken up the theme of rising income inequality, and advanced it by charting its historical development over the past 100 years.

In the chart above, Krugman takes us through the progression from the "gilded age", the "great compression", "middle class america", and "the great divergence" (post 1970s).

Krugman attributes the reduction in income inequality in the "great compression" (late 1930s to middle 1940s) to FDR and the New Deal.

If this is correct, this is the first time the true impact of the New Deal to broader society has really sunk in with me. On the other hand, you can't help but note that the "great compression" corresponds with the WW2 years...

Krugman states that:

"We’re no longer a middle-class society, in which the benefits of economic growth are widely shared: between 1979 and 2005 the real income of the median household rose only 13 percent, but the income of the richest 0.1% of Americans rose 296 percent."

I haven't got the tools to assess the validity of the statistics Krugman cites (lies, damned lies etc...) but prima facie it is a powerful argument.

The conclusion is not 100% clear though. Does this signal a bad thing?

If the standard of living - which is normally what matters to the man on the street, isn't it? - has continued to rise as it has during the same period, then does it really matter if the richest among us are getting richer?

Are we more concerned in broader societal outcomes (average standard of living) or keeping up with the Jones's?

P.S. there are some interesting comments to be read after Krugman's post.

Income Inequality: the economic issue of the coming decade?

2007-09-21T21:20:00.000+02:00

One political and economic trend that I've been meaning to talk about for quite a while has been the increase in public discussion on the issue of income inequality. The simple argument is that the gap between the wealthy and the middleclass has become increasingly divergent.
I recall that in June 2007 the NY Times Sunday Magazine had an interview with Lawrence Summers, which really struck me over the head and started me thinking.

The interview mentioned the debate between Summers and Robert Reich in the early Clinton administration.

"[Reich] argued for something that he called “industrial policy.” Since the government couldn’t avoid having a big influence on the economy, he said, it should at least do so in a way that promoted fast-growing industries and invested in worthy public projects."

Summers responded, asking:

"How could bureaucrats know which industries and projects to support with tax credits? The better solution, Summers responded, was to get the economy growing fast enough that the problems of the middle class would begin to solve themselves. And the way to do this was to slow government spending and raise taxes on the wealthy, which would bring down the Reagan-era budget deficits and, eventually, interest rates. Once that happened, the American economy would be unleashed."

So, the plan becomes raise the economy, raise up the middle class. But did it turn out that way?

Summers recently noted that that the benefits of our last stretch of economic expansion have not benefitted everyone equally. The question is now how to make globalization work for the majority of the population.

From the article,
"“I think the defining issue of our time is: Does the economic, social and political system work for the middle class?” he told me. “Because the system’s viability, its staying power and its health depend on how well it works for the middle class.”"

So how to fix things? Summers suggests a new 'social contract'.
"... I think now the challenge is, again, to protect a basic market system based on open trade and globalization, to make it one that works for everyone or for almost everyone, at a time when market forces are often producing outcomes that seem increasingly problematic to middle-class families."

And the part that worries me somewhat:

"Despite good growth over the last four years, the pay of most American workers has barely kept pace with inflation. Technology and global trade are conspiring to let highly skilled workers do more — to be more productive and to play on a bigger stage — while at the same time making millions of other workers replaceable."

So, what about the social contract? It is clear that the 10% who are most wealthy in our economy (which for better or worse includes my colleagues in finance and law) are doing very well for ourselves at the moment. But what about the other 90% of the nation. It would be naive (read: stupid) to deny the importance of the other 90% to our good fortune.

Our economy runs on all of us working - properly incentivized of course (you cannot deny the proper role of liberal markets). But what if these incentives are out of whack?

It sounds great, in theory, to leave things to the operation of pure unhindered markets. But perhaps things like a higher tax burden on the wealthiest few, a comprehensive state-managed healthcare system, subsidzed education are not prima facie excessively socialist. Perhaps this things need to be done, not for pure economic policy but in harmony with social policy.

As an amateur in these policy areas, I'd welcome any thoughts on the subject...

Sarkozy Part II: the first strike

2007-09-21T21:14:00.000+02:00

As an update to today's earlier post, I mentioned that the real test of Sarkozy's rhetoric would come with a showdown with the unions. And of course, here is the first strike announcment, from the IHT.

"President Nicolas Sarkozy will face his first strike after five of the eight railroad unions in France called for a day of protests on Oct. 18, vowing to defend their members' right to retire at age 50."

Interestingly enough, the article notes that

"[t]he unions, however, seem to have been shaken by Sarkozy's determination. Unlike the situation in 1995 and 2003, public opinion is firmly opposed to public sector pension privileges."

October will be interesting.

Sarko's New French Revolution - Can He Deliver?

2007-09-21T12:03:00.000+02:00

Roger Cohen from the NY times published this op-ed piece detailing the comprehensive list of French 'taboos' that the new French president, Nicolas Sarkozy, has been smashing.
From talk of France rejoining NATO to embracing Anglo-Saxon economics and 'working to get rich', it all seems to be bursting at the seams with potential for truly sweeping reforms.
Sure. It's all very nice, but what chance does Sarkozy actually have when the wave of reform comes crashing against the very firm walls of establishment France - the unions for example. I'd love to have more faith in this - I'll believe the talk when its converted into results...

US Dollar falls to new low against Euro

2007-09-21T07:22:00.000+02:00

I'm trying to understand the reasons behind the falling US dollar. One of the reasons that often comes up is US spending outstripping savings. This has lead to unsustainable growth, which is now 'correcting' itself. I suppose this is just another manifestation of that brilliant SNL skit "Don't Buy What You Can't Afford":

Why not let a bank collapse?

2007-09-21T01:43:00.001+02:00

When I heard that the Bank of England had decided to bail out Northern Rock, I can't say I was all that impressed. From the column of the FT's Martin Wolf we have this interpretation($):

"Since the Bank is concerned about the health of the economy, while the banks are concerned only about their survival, the former is at a huge disadvantage .... the banks are winning, not only because they are a formidable lobby, but because they can inflict such damage"

Yes, I'll agree with that, but surely as the banks have acted irresponsibly this kind of intervention will do nothing to prevent them from continuing to do so in future?

Why not let a bank collapse? Isn't this the point of risk v. reward? You make big money by taking big risks. Remove the risk, and you wonder what these bankers were being paid to do.
Isn't the Bank of England letting Northern Rock have its cake and eat it too?

King's behavior illustrates the classic moral hazard argument - with the knowledge that their reckless behaviour will go protected by the central bank, there is no incentive to reduce their exposure to risk. The risk has, to a degree, been transferred away from the bank and back to the government - and ultimately to the man on the street.

But what about the bank's customers? The government protects the first 30,000 odd pounds worth of deposits by law. The mortgages and debt would be purchased by another bank - the loans are still good, and if bought at a discount would probably turn out to earn a tidy profit.

Waiting for the punchline...

2007-09-20T09:04:00.000+02:00

I know you're thinking it... "would anyone really miss it"?
Even for a country accustomed to being the butt of jokes, you can sense that Belgians are becoming increasingly self-conscious and uncomfortable with its current state of affairs. For the last 100+ days, I've been watching and waiting as Belgium has failed to form a government in the wake of the (recent?) elections.

With the seat of European Union government based in the Belgian capital of Brussels, one can only wonder how this disunity is playing abroad. If Brussels can't hold it's own country together, what does this say for the expanding union of European nations!

The story has started to pick up international coverage, with the Herald Tribune recently chiming in:

"...the back story of this flat country of 10.4 million is of a bad marriage writ large - two nationalities living together that cannot stand each other. Now, more than three months after a general election, Belgium has failed to create a government, producing a crisis so profound that it has led to a flood of warnings, predictions, even promises that the country is about to disappear."

The Economist even cheekily suggested that it might be "time to call it a day".

The split could be descibed as cultural, as it exists between the Flemish speaking north (Flanders) and the French speaking southern region (Walloonia). As with most political schisms, history and economics play their role as well. Walloonia has seen its fortunes decline as its mining industry gradually closed shop, a jarring contrast with the strong economy of Flanders.

Up until the past week, I had been willing to dismiss this as another game of regional political brinksmanship which would resolve itself after the requisite posturing and speech making.

100 days without a national government, however, and what was once a joke no longer seems quite so amusing...

NYtimes kills TimesSelect.

2007-09-19T00:35:00.000+02:00

For those who missed the announcment, the subscription based barrier to content, TimesSelect, is dead. Finally.