ProfessorBainbridge.com

The social impact of liberal media bias

From the Volokh Conspiracy, UCLA Professor Timothy Groseclose blogs about:

... my book Left Turn: How Liberal Media Bias Distorts the American Mind. I am extremely honored and grateful for the opportunity.

Later in the week, I plan to discuss some specific aspects of my book, including: (i) why I believe journalists should be more open about their political views, (ii) why the “corporate media theory,” a favorite notion among the far left, is more like religion than science, (iii) how my very public resignation from a UCLA faculty committee on admissions would never have happened if I hadn’t been writing Left Turn at the time, and (iv) what the mirror image of a newsroom would look like—that is, what a newsroom would look like if journalists views became as conservative as they currently are liberal.

But today I will focus mainly on a summary of the book. (But briefly say something about the notion of a “political quotient.”)

Earlier today, Eugene V. provided an excellent summary. Just in case you don’t want to search for that, here’s maybe the best two-sentence summary of the book. 1) It attempts to measure media bias quantitatively and scientifically, and it shows that, yes, basically the entire mainstream media have a liberal bias. 2) The bias has shifted the average American’s views about 20–25 points on the “political quotient scale”—about the difference between the average voter in a purple state (such as Iowa or Nevada) and the average voter in a solid red state (such as Texas or Kentucky).

A review in the Weekly Standard gives a longer summary. And if you’d like to see me summarizing the book on video, then click (i) here for a short interview (on the O’Reilly Factor), (ii) here for a medium-length interview (on CBN), and (iii) here for a long interview (on Uncommon Knowledge).

In the book I compute the “slant quotient” of several media outlets. These are related to “political quotients” of politicians and citizens. Click here if you’d like to compute your own political quotient. Click here to see the political quotients of some famous politicians. Click here to see Senator Fred Thompson (R-Tenn.) gently chide me for misestimating his political quotient. Specifically, he suggests it should be 0, not the 11.2 that I estimate. (He had interviewed John Kasich immediately before me—hence the references to Kasich.) Click here to see the slant quotients of several news outlets.

Fraking anti-fracking investors

Fracking has the potential to massively alter the USA's energy sources, almost certainly making us far less dependent on unreliable and potentially hostile suppliers like Venezuela and the Middle East. So when I see reports--like this one from Broc Romanek--I get a little cranky:

Last week, the WSJ ran this article about how Corp Fin is peppering oil & gas companies with comments about fracking. Members were quick to ask: "Is Corp Fin pulling the '34 act reports for all oil & gas companies as part of a special targeted review project?"

Personally, I don't think that these is a "special" review project and that these comments are being delivered in the normal-course review process. Clearly, this has been a big topic for the oil and gas industry for some time. For example, the Interfaith Center on Corporate Responsibility ran this press release on Friday noting the WSJ article and that an investor coalition has been pressing 2 dozen companies on this issue through shareholder proposals since '09. So it's become a high profile issue and perhaps Corp Fin's actions will help head off any Congressional action in this area.

The IRRC press release informs us that:

According to ICCR member Sr. Nora Nash of the Sisters of St. Francis of Philadelphia, “Resource extraction is changing our lives and our landscapes and nobody knows for certain what the long-term cumulative effects might be.  Companies that are voluntarily disclosing are showing leadership. The SEC’s intervention to establish improved reporting parameters for the industry as a whole is necessary to protect investors.”

As I read that, I can't help but wonder whether Sr Nash is really worried about the value of her investments or whether she's really using it as cover for opposition to fracking. In other words, are her efforts at financial disclosure intended to lead, for example, to some sort of naming and shaming attack on companies trying to use fracking to free us from our dependence on foreign oil and gas sources? I must confess to having my doubts about these folks' motives....and the SEC's.

Manchester United Dual Class IPO

The WSJ reports on a controversy over Manchester United's plans to go public with a dual class stock structure via a Singapore-based IPO:

U.K. soccer giant Manchester United Ltd. chose Singapore as the destination for its US$1 billion IPO so it could have a dual-share structure—one with voting rights and one without—that enables its owners to effectively retain control of the team, according to people familiar with the matter. ...

Until June, Hong Kong was the favored listing destination for Manchester United's initial public offering, according to these people, but its bourse banned dual-share listings in 1991 and refused to give Man U a waiver. ...

"Two-tier shares result in disproportionate power relative to the risk that the holder is taking," said David Webb, shareholder activist and former director at Hong Kong Exchanges & Clearing Ltd. "This exacerbates the risk of controlling shareholders placing their own interests ahead of other shareholders when running a company."

The dual-share listing structure has raised concerns about corporate governance at Man U, which is owned by the Glazer family, headed by patriarch Malcolm Glazer, also owner of the NFL's Tampa Bay Buccaneers.

I don't have much sympathy for Mr Webb's complaints. I wrote about dual class stock in my article The Short Life and Resurrection of SEC Rule 19c-4, in which I explained that dual class stock structures established in an IPO (as is the case here) pose few concerns:

Public investors who do not want lesser voting rights stock simply will not buy it. Those who are willing to purchase it presumably will be compensated by a lower per share price than full voting rights stock would command and/or by a higher dividend rate. In any event, assuming full disclosure, they become shareholders knowing that they will have lower voting rights than the insiders and having accepted as adequate whatever trade-off the firm offered in recompense.

Man U public investors will buy their shares knowing that the Glazers are in charge and will remain so by virtue of the dual class stock structure. They will know or should know that dual class stock presents a serious agency cost problem because incumbents who cannot be voted out of office are almost impossible to discipline. Public Man U investors thus implicitly will have accepted whatever trade-offs the deal entailed as appropriate compensation for that risk.

Put another way, the market will price the risk posed by dual class stock, providing investors who buy the lesser voting rights stock with a discount from the price they would have had to pay if they had had full voting rights. Those who buy the stock thus are paying the right price and are fully protected.

Rehabilitating the 10th Amendment

An interesting take on the prospects for restoring the federal government to its proper position as a government with limited and enumerated powers.

Buffet's BofA buy explains a lot about his tax proposals

Jonathan Macey explains the logic of Warren Buffet's investment in Bank of America:

The lead news story across America on Friday was Warren Buffett’s $5-billion investment in Bank of America.... Buffett’s investment surprised many market watchers because Bank of America — like many other giant U.S. banks — is in no better shape now than during the financial crisis of 2007 and 2008....

Certainly the Obama administration wants to assert that Buffett’s investment means that giant financial institutions — like Bank of America and Citigroup — have finally turned the corner. This interpretation would bode well for the economy....

Unfortunately, while Buffett’s $5 billion likely was a savvy investment from the billionaire’s point of view, it doesn’t tell us much, if anything, about the financial health of the nation’s biggest banks. In fact, on closer analysis, what little it does tell us is discouraging.

Buffett’s investment likely signals not that he is confident that Bank of America is a good bet, but rather that he is confident that the government will again step in and bailout the bank if his bet turns out to be a bad one.

To understand why, it’s important to know that Berkshire Hathaway is not buying the regular, so-called “common” stock available to ordinary investors. Instead Bank of America is to issue Buffett 50,000 preferred shares, for which Berkshire Hathaway is paying $100,000 each.

Unlike the paltry returns available to most other investors these days, Bank of America is promising to pay Buffett’s investment a whopping annual dividend of 6 percent to be paid out quarterly. ...

This translates into Bank of American making cash dividend payments to Berkshire Hathaway of $300 million a year. And, of course, these payments come out of the pocket of the company’s lowly common stockholders.

Many of whose taxes Buffet recently called for raising, by the way. But back to Macey:

In addition, Bank of America has sweetened the pot by giving Berkshire Hathaway securities, called warrants, that give him the right to buy an additional 700 million shares of BofA over the next 10 years, for around $7.14 per share. When Buffett made this deal Bank of America’s shares were trading at around $8.15. This valuation translates into an immediate profit to Berkshire Hathaway of approximately $1 billion profit — assuming that Buffett exercised his warrants immediately....

His warrants give him a huge upside – because, if things go well for Bank of America, his right to buy stock at this low price will be worth many more billions than it already is.

Yet if things continue to go poorly, Buffett is sure that the U.S. taxpayer will again come to Bank of America’s rescue — providing a nice cushion for the billionaire on the downside.

And so we once again learn some valuable lessons about Saint Warren. The supposedly savvy stock picker these days often makes most of his money by cutting sweetheart deals that no other investor could get. He's also investing in firms that are too big to fail--like Goldman Sachs and GE, and now BofA--fully confident that "the government will do whatever it takes to prevent mega-firms like Bank of America from failing," which means he faces no downside.

From this perspective, it's not really surprising that Buffet favors higher taxes on the rich. He wants to make sure that the government has plenty of money available to bail him out if his big investments go south. Of course, as Tim Carney pointed out, that's not Buffet's only reason:

Buffett regularly lobbies for higher estate taxes. He also has repeatedly bought up family businesses forced to sell because the heirs’ death-tax bill exceeded the business’s liquid assets. He owns life insurance companies that rely on the death tax in order to sell their estate-planning businesses.

So the next time you hear Buffet complaining about how his taxes are too low, remember that (a) he's lying, at least in part, and (b) he's got personal financial interests in a high tax system.

 

Meet the Cowboys Drool

Participated in my second fantasy football draft of the year today. It's an 8 team H2H league. Snake draft with me drafting 6th in odd rounds and 3rd in even rounds. Odd touchdown-heavy scoring system with 1 point per 50 passing yards and 20 rushing and receiving yards. Six points per TD. Half point per reception. You start 1 QB, 2 RBs, 2 WRs, a flex RB/WR/TE, a TE, a DST, and a K.

My team:

1.	(6)	Michael Vick (Phi - QB)
2.	(11)	Calvin Johnson (Det - WR)
3.	(22)	Frank Gore (SF - RB)
4.	(27)	Vincent Jackson (SD - WR)
5.	(38)	Jermichael Finley (GB - TE)
6.	(43)	Mike Williams (TB - WR)
7.	(54)	Peyton Manning (Ind - QB)
8.	(59)	Tim Hightower (Was - RB)
9.	(70)	New York (NYJ - DEF)
10.	(75)	Knowshon Moreno (Den - RB)
11.	(86)	Joseph Addai (Ind - RB)
12.	(91)	Danny Amendola (StL - WR)
13.	(102)	Mike Thomas (Jac - WR)
14.	(107)	Rob Gronkowski (NE - TE)
15.	(118)	David Buehler (Dal - K)

In an 8 team league, everybody ends up with studs at every position. My weakness pretty clearly is at RB. I like Vick in this scoring format, plus Peyton will either make a great backup in case Vick gets hurt or trade bait if somebody else's QB1 goes down. I really like my WR and TE corps.

Comments?

Meet The Drones Club

My first fantasy draft of the year was held today in the ProfessorBainbridge.com rotisserie league. Eleven teams. Snake draft with me drafting in 7th spot in odd numbered rounds and 5th in even rounds. You start 1 QB, 2 RBs, 2 WRs, a flex RB/WR, a TE, a DST, and a K. PPR. Four points per passing TD, 6 per rushing or receiving TD, plus yardage points for 25 yards passing and 10 rushing or receiving.

My team:

1.	(7)	Andre Johnson (Hou - WR)
2.	(16)	Maurice Jones-Drew (Jac - RB)
3.	(29)	Reggie Wayne (Ind - WR)
4.	(38)	Jahvid Best (Det - RB)
5.	(51)	Dez Bryant (Dal - WR)
6.	(60)	Matt Ryan (Atl - QB)
7.	(73)	Mike Sims-Walker (StL - WR)
8.	(82)	Marshawn Lynch (Sea - RB)
9.	(95)	New York (NYJ - DEF)
10.	(104)	Lance Kendricks (StL - TE)
11.	(117)	James Starks (GB - RB)
12.	(126)	Sebastian Janikowski (Oak - K)
13.	(139)	Jordy Nelson (GB - WR)
14.	(148)	Rob Gronkowski (NE - TE)
15.	(161)	Cam Newton (Car - QB)

I'm pretty pleased with the results. The strength here is clearly at WR. But if MJD and Best stay healthy, I should be in good shape at RB too, especially in a PPR format. On top of which, I think James Starks could end up being a steal.

I need Kendricks to come through as a sleeper TE and, most of all, Matt Ryan to stay healthy.

Compared to their ADP, I got good value with MJD (ADP of 8 according to Rotowire), Marshawn Lynch (ADP of 66), Starks (91), Jordy Nelson (110), and Rob Gronkowski (92).

Cam Newton was a flippant last minute flyer. The QB cupboard in this league was bare. If Ryan goes down, I'm sunk.

Today's quiz

No Googling: Captain Hook, Bertie Wooster, James Bond and David Cameron. What do they have in common?

It's almost fantasy football season, so here's 10 things I think I think

It's that time of year again. School started. Days are getting shorter. And an old man's thoughts turn to things like average draft positions and mock drafts.

I'm currently in 4 fantasy football leagues this year. All more or less PPRs. Smaller leagues this year than I'm used to. One 8, two 10, and one 11 team leagues. I'm looking for an auction draft league. First draft this weekend.

I stand prepared to be corrected on any of the following (and it's just possible that I'm putting out disinformation to confuse the opposition), but here's 10 things I think I think (as always, apologies to the great Peter King):

1. The Chris Johnson holdout scares me. Not only could he miss time, but holdouts always seem vulnerable to injuries. Having said that, if he's available when I draft at # 7 in my 11 team league, I'd probably have to gamble.
2. The Peyton Manning situation seems to have everybody spooked. I saw him go in the sixth round of a mock draft the other night. In all my years of fantasy football, I've never seen him go lower than the third round. Frankly, however, I'm more worried about what his health might mean for Reggie Wayne and Dallas Clark. I'm bumping them down a bit.
3. How do you win an 8 team league when everybody's going to have studs at every position?
4. Antonio Gates' continuing feet and toe problems scare me.
5. I love the Washington Redskins, even though I expect them to finish last in their division ... yet again, but there's only one or two players on that team I might even consider drafting. And, no, John Beck isn't one of them. Oddly enough, however, the same thing's true of the Patriots, even though I like them to win their division and maybe the AFC.
6. I'm a big Josh Freeman fan, but he's got a much tougher schedule this year than last. It'll be interesting to see how he does. I'm inclined to let somebody else find out, however.
7. Which individual better epitomizes the red state--blue state divide in the US today? Barack Obama or Tim Tebow?
8. In one of my leagues, the scoring system is such that I'm going to wait to take a QB until pretty late. In another, however, I might go QB in the first round.
9. Every time I get excited about a possible sleeper, he gets dinged up.
10. I'm going to let somebody else find out if Peyton Hillis and Steve Johnson are one hit wonders. Given the chance, however, I'd be happy to find out whether ________ will be a one hit wonder.

I know the Dean and various other UCLA bigwigs read my blog sometimes, so I want to assure them that I only work on fantasy football at home, in the middle of the night, and after doing tons and tons of teaching, research, and service. I never tweak my pre-draft rankings during a faculty meeting, for example, or check the waiver wire before class. Honest.

I'm the third most useful elective professor

Actually, the course I teach came in third:

A George Washington Law School survey that asked alumni which elective courses had proven the most useful to them ....  Here are the top 3 ranked courses on the usefulness scale:

1. evidence
2. administrative law
3. corporations

I wonder if having a heavy DC alumni base skewed admin law high? Even so, it's good news for the 135 students I'm teaching this semester in Business Associations.

We're being overrun by PhDs

Orin Kerr:

Joni Hersch and Kip Viscusi have posted an interesting paper counting the number of law professors at the “top” schools that have Ph.D. degrees. Of course, “top” is in the eye of the beholder: Hersch and Viscusi divide schools into the “Top 13″ and then the “Top 26.” A few of the findings:

• At the “Top 13″ schools, 32.3% of faculty members have Ph.D.s. The most prevalent subject area for the Ph.D. was economics, with 9.2% of faculty members having an economics Ph.D. (see page 23)
• At the next tier of schools, those ranked 14 to 26, the proportion of Ph.Ds dropped: 20.4% have a Ph.D. of some kind, with 4.1% having a Ph.D. in economics (see page 23)
• Of the faculty at the Top 26 schools taken together, 979 have only a J.D. degree; 294 have a J.D. and a Ph.D; and 65 have only a Ph.D. and no J.D. (see page 21)

The paper does not indicate how many of these doctoral whizzes have traditional indicia of excellence like top grades, Order of the Coif, law review membership, prestigious clerkships, or practice experience at top law firms. You know, credentials that actually have something to do with ... I don't know ... the practice of law!

It seems like these days all you need is a doctorate and a database, not any actual legal knowledge.

Misleading class rhetoric on the payroll tax

Harold Meyerson is worked up about GOP reluctance to extend the payroll tax cut that was passed as a temporary stimulus measure last year, opining:

America’s presumably anti-tax party wants to raise your taxes. Come January, the Republicans plan to raise the taxes of anyone who earns $50,000 a year by $1,000, and anyone who makes $100,000 by $2,000.

Their tax hike doesn’t apply to income from investments. It doesn’t apply to any wage income in excess of $106,800 a year. It’s the payroll tax that they want to raise — to 6.2 percent from 4.2 percent of your paycheck, a level established for one year in December’s budget deal at Democrats’ insistence. Unlike the capital gains tax, or the low tax rates for the rich included in the Bush tax cuts, or the carried interest tax for hedge fund operators (which is just 15 percent), the payroll tax chiefly hits the middle class and the working poor.

What Meyerson would like you to think is that the payroll tax only hits people who earn less than about $100K per year. In fact, even a Hollywood limousine liberal studio executive who makes a million dollars a year pays the payroll tax. It applies to up to the first $106,800 of wage income for all taxpayers. So everybody takes a hit.

As for the merits of extending the payroll tax cut, at a time of massive deficits in which the tax base is steadily shrinking to encompass fewer and fewer citizens, everybody needs to help pull the wagon. Plus, look around, we aren't getting very much stimulus out of the cut are we? Maybe it's time to put all this stimulus crap on the shelf.

Why don't the laws apply to Congress the way they do to everybody else?

Jonathan Adler sent me a link to a story about rogue/socialist Senator Bernie Sanders releasing confidential information about oil traders:

Oil trading data that exposed the extensive positions speculators held in the run-up to record high prices in 2008 were intentionally leaked by a U.S. senator, sparking broader concern about industry confidentiality as Congress moves on Wall Street reform.

Senator Bernie Sanders, a staunch critic of oil speculators, leaked the information to a major newspaper in a move that has unsettled both regulators and Wall Street alike. ...

The leaked information has sparked concern at the Commodity Futures Trading Commission, which is legally prohibited from releasing confidential information that identifies trader positions and identities.

The leak also raises broader questions as U.S. regulators gear up to collect massive new amounts of private data from market players on everything from swaps and hedge funds to blueprints for how large financial firms can be liquidated. The breach of data could make Wall Street less reluctant to hand over sensitive information if they fear it is not appropriately safeguarded. ...

Although the CFTC is barred from releasing confidential data, the law does require the CFTC to hand over such information if a Congressional committee acting within its proper authority requests it. Once it is in the hands of Congress, there is nothing to prevent lawmakers from releasing it publicly.

The individual case is pretty appalling. Sanders' rogue action likely will have ripple effects on more legitimate Congressional activity.

But I think there's a bigger problem here; namely, the way Congress continues to exempt itself from laws that everybody else has to live with.

Congress routinely imposes rules on the public and the executive branch that it does not impose upon itself.[1] Until recently, “one of the most notorious of these congressional exemptions” arose out of Congress exempting ‘itself from federal anti-discrimination and other workforce protection laws.”[2] In arguing in favor of the Congressional Accountability Act of 1995,[3] which ended that practice, Senator Grassley contended that;

I hold a strong belief that we, in Congress, are merely representatives of the people. We are not better than the people we represent and we are not, by definition and determination, different from the people we represent. We are, as representative government intends, the people themselves.

It is simply not fair, or good governance, for the Congress of the United States to enact laws for the American people, while exempting itself from compliance…. This is a democracy, and therefore, we make laws for the people, and we, too, must follow these laws.[4]

Grassley began this line of argument by quoting Madison in Federalist No. 57:

[Members of Congress] can make no law which will not have its full operation on themselves and their friends, as well as on the great mass of society. This has always been deemed one of the strongest bonds by which human policy can connect the rulers and the people together. It creates between them that communion of interests and sympathy of sentiments of which few governments have furnished examples, but without which every government degenerates into tyranny. … If this spirit shall ever be so far debased as to tolerate a law not obligatory on the legislature as well as on the people, the people will be prepared to tolerate anything but liberty.[5]

As the Supreme Court has noted, Thomas Jefferson likewise believed that “legislators ought not to stand above the law they create but ought generally to the bound by it as are ordinary persons.”[6]

Yet, as the case of Red Bernie confirms, our rulers in Washington remain exempt from many of the laws the rest of us must obey.

The nanny state might be a lot smaller if that weren't the case.

---

[1] Cheryl D. Block, Congress and Accounting Scandals: Is the Pot Calling the Kettle Black?, 82 Neb. L. Rev. 365, 374 (2003).

[2] Id.

[3] Pub. L. No. 104-1, 109 Stat. 3 (1995) (codified as amended, at 2 U.S.C. §§ 1301-1438).

[4] Senator Charles Grassley & Jennifer Shaw Schmidt, Practicing What We Preach: A Legislative History of Congressional Accountability, 35 Harv. J. on Legis. 33, 34-35 (1998), quoted in Block, supra note 135, at 375.

[5] The Federalist No. 57 (James Madison).

[6] Gravel v. U.S., 408 U.S. 606, 615 (1972).

Blog Roll Addition

I am now following Keith Bishop's California Corporate and Securities Law blawg. Extremely useful resource on all things California business law-related.

Harvey Silvergate defends Milken gift

Harvey Silverglate is the author of the wonderful book Three Felonies a Day: How the Feds Target the Innocent, which exposed the threat to liberty caused by the way federal criminal laws have exploded in number but also become impossibly broad and vague. He also formerly was one of Michael Milken's lawyers. He weighs in on the dispute at UCLA law school over Lowell Milken's $10 million gift by reviewing the history of the SEC's attack on the Milkens and Drexel Burnham Lambert. He concludes:

The Milken brothers should be honored by UCLA Law School as victims of a federal prosecutorial system run amok. Instead, the younger brother – a mere bargaining chip in a Department of Justice racket – is being attacked for his willingness to confer a ten million-dollar gift to fund the “Lowell Milken Institute for Business Law and Policy.”  UCLA should accept the gift with deep humility and thanks that someone with the last name Milken should have combatted cynicism and made a rather large bet that law and policy – exemplified by the white collar prosecutorial activities of the Department of Justice – might be rescued from their current sorry state.