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Behrens & Hitchcock Alder Springs Vineyard Merlot (Mendocino) 2002

Plums and prunes plus plenty of cocoa. Drink now. Grade: B

Ridge Three Valleys (Sonoma County) 2003

Over the hill. Plus possible cork taint. Undrinkable.

The Economist's Endorsement of David Cameron

The Economist has endorsed the Tories and their leader David Cameron in the upcoming UK edition. But it was this passage that caught my eye:

The Economist has no ancestral fealty to any party, but an enduring prejudice in favour of liberalism. Our bias towards greater political and economic freedom has often been tempered by other considerations: we plumped for Barack Obama over John McCain, Tony Blair over Michael Howard and a succession of Italian socialists over Silvio Berlusconi because we thought they were more inspiring, competent or honest than their opponents, even though the latter favoured a smaller state. But in this British election the overwhelming necessity of reforming the public sector stands out. It is not just that the budget deficit is a terrifying 11.6% of GDP, a figure that makes tax rises and spending cuts inevitable. Government now accounts for over half the economy, rising to 70% in Northern Ireland. For Britain to thrive, this liberty-destroying Leviathan has to be tackled. The Conservatives, for all their shortcomings, are keenest to do that; and that is the main reason why we would cast our vote for them.

It's a bit rich that they now complain about the growth of Leviathan, when it was their guy Tony Blair who did so much to put Great Britain on the path to its present situation.

The Economist's justification for plumping for Obama over McCain calls to mind similarly specious claims by erstwhile US conservatives like Bruce Bartlett, Doug Kmiec, and Andrew Sullivan who similarly swapped their political birthright for the Obama kool-aid.

Charm, good looks, and inspiring rhetoric are no justification for abandoning one's base principles. If you're serious about liberty and smaller government, they must be trumps.

A National ID Card?

From The Hill:

Democratic leaders have proposed requiring every worker in the nation to carry a national identification card with biometric information, such as a fingerprint, within the next six years, according to a draft of the measure. ...

“The cardholder’s identity will be verified by matching the biometric identifier stored within the microprocessing chip on the card to the identifier provided by the cardholder that shall be read by the scanner used by the employer,” states the Democratic legislative proposal.

The American Civil Liberties Union, a civil liberties defender often aligned with the Democratic Party, wasted no time in blasting the plan.

“Creating a biometric national ID will not only be astronomically expensive, it will usher government into the very center of our lives. Every worker in America will need a government permission slip in order to work. And all of this will come with a new federal bureaucracy — one that combines the worst elements of the DMV and the TSA,” said Christopher Calabrese, ACLU legislative counsel.

My initial reaction to this article was "so what?" After all, at the moment I'm carrying the following photo ID cards:

• Driver's license
• UCLA Bruincard
• Bicycle Casino points card
• Library card

Not to mention 4 or 5 non-photo ID cards, like my Ralph's and Von's club cards, etcetera. What's one more? Especially if it helps control illegal immigration?

But then I read this statement:

Senate Democratic Whip Dick Durbin (Ill.), who has worked on the proposal and helped unveil it at a press conference Thursday, predicted the public has become more comfortable with the idea of a national identification card.

“The biometric identification card is a critical element here,” Durbin said. “For a long time it was resisted by many groups, but now we live in a world where we take off our shoes at the airport and pull out our identification."

And I hate that world. The ever-increasing invasions of our liberty and privacy in the name of order and security. The story about how to boil a frog is becoming an over-used metaphor, but maybe it's relevant here. If we keep accepting little chips at our freedom, when does it stop?

I'll tell you where: In a state where people in uniforms are forever saying "papers, please." Do we really all want to become like Arizona?

So maybe the solution is for me to figure out how to ditch some of the ID cards I already carry instead of quietly rolling over for yet one more.

John Eastman for Attorney General

My friend and UCLAW colleague Eugene Volokh has just endorsed our mutual friend John Eastman in the California Republican Attorney general primary:

I just contributed to Prof. John Eastman’s campaign for California Attorney General, and I urge others to do the same. John is extremely smart and accomplished — he has a Ph.D. in government, he clerked for Justice Clarence Thomas, he has written or cowritten over 20 law review articles, and he’s a law professor and law school dean. And he’s a solid and thoughtful conservative, who I think would make an excellent Attorney General. There are things I disagree with him on, of course, but that’s inevitable with any candidate; on balance, I’m sure he would do a first-rate job.

I've also given to the Eastman campaign and likewise encourage others to do the same. (Go here.) I've known John for a number of years. He's wicked smart. A person of high integrity. Best man for the job, IMHO.

An Overview of the Dodd Bill

The Federalist Society presents an analysis of the "Restoring American Financial Stability Act of 2010," better known as the Dodd financial services reform bill. With debate about to begin in the Senate, it's a very handy crib sheet.

GOP Caves on Dodd Bill

The GOP caved, allowing debate to begin on the Dodd financial reform bill. The pernicious corporate governance provisions in the bill, about which we've been blogging extensively (see archive), remain intact. Maybe the Delaware delegation can get their old leader Joe Biden to help stave off these provisions. If not, corporate governance is going to take a major turn for the worse.

How much is too much?

President Obama let the veil slip a bit in his speech at Quincy when he went off script and opined that he thinks "at a certain point you’ve made enough money." Inquiring minds want to where that point is.

One thing's for sure, however. The Obama administration and the Congressional Democrats are going to make sure that a lot of us aren't going to keep as much of our money as we used to:

As the big tax increase day of January 1, 2011 approaches, the Democrats running Congress are beginning to lay out their priorities. Get ready for bigger rate increases than previously advertised.

Last week the Senate Budget Committee passed a fiscal 2011 budget resolution that includes an increase in the top tax rate on dividends to 39.6% from the current 15%—a 164% increase. This blows past the 20% rate that President Obama proposed in his 2011 budget and which his economic advisers promised on these pages in 2008.

(See "The Obama Tax Plan," August 14, 2008, by Jason Furman and Austan Goolsbee: "The tax rate on dividends would also be 20% for families making more than $250,000, rather than returning to the ordinary income rate.")

And that's only for starters. The recent health-care bill includes a 3.8% surcharge on all investment income, including dividends, beginning in 2013. This would nearly triple the top dividend rate to 43.4% in Mr. Obama's four years as President. We suppose the White House would call this another great victory for income equality.

Accounting for Health Care Could Hurt You ... and Obama

From The Daily Caller:

Immediately after President Obama signed his health-care bill into law, several large companies disclosed to investors just how big the tax hit from it would be. AT&T, for instance, said that the law’s tax increases alone would cost the company $1 billion.

Key committee chairman Rep. Henry Waxman, California Democrat — whose energetic investigations are loathed by many in Washington — demanded reams of documents to investigate whether the companies were making a political show out of the cost disclosures.

And then … nothing. Waxman at the last minute canceled a hearing to grill executives about the issue.

Publicly, Waxman said the investigation showed the companies’ disclosures were properly filed. But a new report from committee Republicans reveals the documents Waxman obtained included embarrassing evidence that the health-care law could drive up insurance premiums and force employers to dump employees from their health plans.

“Turns out Obamacare means if you like your health plan you can lose it. The president didn’t have to actually strong-arm companies into dumping their employee health insurance because his bill carried financial incentives to virtually guarantee that result,” Energy and Commerce Committee ranking member Rep. Joe Barton, Texas Republican, said.

Most significantly, documents unearthed by the investigation highlight companies that are considering dumping employees from their current health-care plans in the face of new costs from the health-care law. President Obama repeatedly promised his health-care law would let Americans keep their current insurance if they’re happy with it.

As a constituent and commentator, I've followed Henry Waxman for a long time. One of the most dangerous places in DC is standing between Henry Waxman and a TV camera. He would not have given up the chance for a televised inquisition unless he was positive it would backfire on him. So I'm predisposed to give this report credence.

The Utterly Feckless Mess that is TSA

Tom Kirkendall reviews some recent expert critiques of TSA and concludes:

The wasteful airport security process that we have allowed the Transportation Security Administration to impose on us continues unabated at a substantial direct cost and an even greater indirect one.

It's bad enough that the TSA's procedures do virtually nothing to discourage serious terrorist threats. What's worse is that the inspection process is really just "security theater" that makes only a few naive travelers feel safer about airline travel.

And if all that weren't bad enough, the worst news is that once a governmental "safeguard" such as the TSA procedures are adopted, Congress has no interest in dismantling it even when it's clear that process is ineffective, expensive and obtrusive to citizens. Stated simply, the TSA has become a jobs program for thousands of registered voters.

Precisely right.

Hodak on Compensation Myths

Marc Hodak:

 My newest article, published in Directorship, online version here.  The comment they chose to highlight in their printed version:

The explosive growth in CEO pay over the last 20 years coincides with a huge shift of power from management to boards.

Which, I believe, pretty much guts the managerial power thesis of rising CEO pay.

Mind Mapping Corporate Law

If you haven't seen the infamous PowerPoint slide some Pentagon numbnut drew to explain the war in Afghanistan, you have to check it out. After all:

'When we understand that slide, we'll have won the war,' General Stanley McChrystal, the US and NATO force commander, remarked wryly when confronted by the sprawling spaghetti diagram in a briefing.

Law professor Dave Hoffman has been using PowerPoint to teach his corporations law class this semester. He's of mixed minds:

On the one hand, I think I digressed less and covered the material in more depth. On the other, I’m not sure that I succeeded in using slides to provoke discussion.

Those are the tradeoffs. It's hard to do the Socratic Method well with PowerPoint (raising the question of whether one ought to use the Socratic Method at all, of course).

In any case, some of Dave's students presented him with a version of the Afghanistan War PowerPoint slide adapted so as to recap corporate law in a single slide. Setting aside the dubious spelling (and who am I to complain of bad spelling), it's kind of amusing.

Gazing upon both the original and the derivative works, it occurred to me that what we really have here are efforts to use PowerPoint as a mind mapping tool. Although I'm long been an avid PowerPoint user in class and other public speaking settings, I've been very impressed with what my UCLAW colleague Jerry Kang has done with mind mapping in both class and public speaking.

So I've decided to use my upcoming sabbatical year, in part, to experiment with mind mapping as a teaching, research, and drafting tool. I had my IT people install Mindjet MindManager 8 for Mac on my new Wall o' Macs (me still so happy).

In connection with a statutory drafting project I've undertaken, I've started creating a mind map of the corporation's key attributes (using Larry Ribstein's book The Rise of the Uncorporation as a starting point):

Constructive criticism and suggestions would be most welcome.

Poking Fun at the SEC and Legal Scholarship

With tongue planted firmly in cheek (I hope), Tom Smith hits two birds with one stone: the SEC's porn viewers and the pretentious blather of so much legal scholarship:

In this paper I consider whether lax enforcement of rules against viewing pornography by SEC employees may be in fact a form of executive compensation that allows the SEC to pay employees less than they otherwise would for a similar level of expertise and diligence.

It continues in that vein at some length.

The Dodd Bill: Football Analogies

Jennifer Taub invokes a football analogy in describing her hope that the filibuster of the Dodd Wall Street reform bill will be defeated:

September 1979. Home game Michigan vs. Indiana. Fourth quarter, five seconds on the clock, score tied 21-21. Michigan has the ball near mid-field. No overtime available in College Football then. The stadium at capacity held over 100,000 fans but the crowd had thinned. Not my family. We were Winston Churchill-type fans. Never give in. Never give in, never, never, never. The play began. Michigan’s quarterback dropped back and threw a gorgeous pass down the field. It was the longest pass I’d ever seen. The ball soared through the air and then landed in the ready arms of wide receiver, Anthony Carter who then dodged the defense and ran it to the end zone. ... It was electrifying. ... 

 So what’s my point? The game is tied between Main Street and Wall Street and the clock is running out. My point is that the ball is in the air. That long, beautifully thrown pass is a piece of legislation that contains many promising provisions. We are that crowd, that energized crowd. I’m hoping for the decisive Senators to catch that ball. I’m hoping that the defensive line does not block. And, I’m dreaming that 30 years from now that I will look back having forgotten all of the details, but the name or names of those critical Senators who led us to victory.

Okay. I can play that game too. Imagine that Kevin Dyson represents Obama, Dodd, and Frank. Logically, Mike Jones becomes the filibuster's supporters. I'm hoping that the outcome will be the same as it was in Super Bowl XXXIV:

 

Ribstein et al on Broker's Fiduciary Duties

Larry:

Erik Gerding is right when he notes the importance of yesterday's hints by Senator Collins about imposing fiduciary duties on brokers. As Erik notes, "applying investment adviser-style fiduciary duties to broker dealers would be a sea change." Barbara Black discusses and criticizes recent Congressional moves in this direction.

Not only a sea change but, in my view, a misuse of the concept of fiduciary duties. As I've written, fiduciary duties properly apply only to situations involving the open-ended delegation of discretion and control over property. In this situation it is appropriate to depart from standards for arm's length dealings and impose a duty of unselfishness, as Justice Cardozo colorfully described it in Meinhard v. Salmon. In other contexts attempts to apply fiduciary duties result in mischief and confusion. Some broker-dealer relationships may be fiduciary in nature, but clearly not all of them, and even more clearly not the relationship between Goldman, IKB and ACA in the SEC's recent case.

He elaborates, with application to the recent Jones v. Harris mutual fund fee case.