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.

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.

Today's quiz

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

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.

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).

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.

NY Times on the Milken gift to UCLAW

The NY Times reports that:

When the U.C.L.A. School of Law announced a $10 million gift from Lowell Milken to establish a business law institute in his name earlier this month, the university described him as a “pioneer in education reform” and a “leading philanthropist.”

Behind the scenes, Mr. Milken’s big donation has set off an internal debate at the school. ...

Wrong. There is no debate. Only one active member of the faculty is complaining:

“The creation of a Lowell Milken Institute for Business Law and Policy will damage my personal and professional reputation, as I have devoted my career to arguing for investor protection and honest and ethical behavior in business,” Lynn A. Stout wrote in a letter last month to the president of the University of California and U.C.L.A.’s chancellor.

Despite the Times' implication that there's some sort of debate roiling the halls, the truth is that everybody else is supportive of and appreciative of the gift:

“Save for one dissident professor, the entire business law faculty is grateful for this gift,” Kenneth N. Klee, a bankruptcy law scholar, said. ...

Lauri Gavel, a law school spokeswoman, also issued a written statement: “Only one member of the business law faculty has expressed anything less than gratitude — and that concern was surprising, given that this professor was involved early in the process, has been a beneficiary of the donor’s philanthropy, and did not raise objections until quite recently.”

Oddly, the Times reporters decided to also drag another gift to the law school--one wholly unrelated to the Milken gift--into the alleged debate:

The capital drive also led to the creation of the Stewart and Lynda Resnick Endowed Fund in Support of Public Interest Law. The Resnicks are the Beverly Hills beverage industry entrepreneurs who own Fiji Water and Pom Wonderful.

Last fall, the Federal Trade Commission filed a civil lawsuit against the Resnicks, accusing them and their company, Pom Wonderful, of making “false and unsubstantiated claims” that their pomegranate juice product helped reduce the risk of heart disease and erectile dysfunction.

Jill Gottesman, a spokeswoman for Pom Wonderful and the Resnicks, which are fighting the charges, has called the government’s allegations “completely unwarranted.”

Is the implication that unproven charges are supposed to have the law school blacklist a donor? I don't think so, but maybe the Times thinks (a) the donor is guilty until proven innocent and therefore (b) the law school is guilty by association.

The Times story points to several occasions on which universities have given back gifts:

In the 1980s, Princeton returned money from Ivan Boesky to build a Jewish Center after the government charged the Wall Street financier with insider trading crimes. Seton Hall removed the name of L. Dennis Kozlowski from an academic building in 2005, after the conviction of the former Tyco chief executive for looting his company.

But those cases aren't on point. Boesky and Kozlowski were convicted of crimes. Lowell Milken was never charged with a crime. To be sure, the Times tries to spin that as a problem:

Michael Milken and his younger brother, Lowell, were central figures in creating the booming junk-bond market of the 1980s and the subsequent collapse of the investment bank where they worked, Drexel Burnham Lambert.

In a controversial deal with the government, Michael pleaded guilty to securities law violations after the government agreed to drop criminal charges against Lowell. Michael served a 22-month prison term and paid $600 million in fines and restitution.

Some of us who were active in the field at the time--as I was--remember the story a bit differently. In our view, the government used threats to go after Lowell as one of the ways on which they coerced Michael into taking a plea deal.

As for the Milkens and their time at Drexel, Daniel Fischel's book Payback: The Conspiracy to Destroy Michael Milken and His Financial Revolution is sadly out of print but can be acquired as a used book and provides a useful contrarian account of the period. As Christopher Faille summarized Fischel's argument in a review (42-DEC FEDRLAW 45):

In the 1980s, the government frequently prosecuted individuals for insider trading even though they had come by market-useful information through no such underhanded means, but rather by inference from publicly accessible sources, diligently studied. On dubious statutory authority, the government began to contend that the simple possession of information, not generally available to those members of the investing public without an opportunity for diligent study, can render a trader a tainted “insider.” This taint, in turn, renders any exchange in the stock of a takeover-targeted firm a crime. It was against criminals of that alleged stripe that Rudolph Guiliani -- then U.S. Attorney for the Southern District of New York, now the mayor of New York City -- waged his high-profile holy war, which Fischel calls a “Reign of Terror.” It was pursuant to that, that he “got” Michael Milken. ...

t is not any sympathy for [Michael] Milken that should motivate a reaction against Giuliani's terror. Milken, after all, seems to have survived his imprisonment rather well, and (in a development too recent for inclusion in Fischel's book) has received a large consulting fee from Ted Turner for his part in negotiations between that communications magnate and the executives at Time-Warner. What ought to motivate a reaction is that the government of the United States has thrown the sporadic and unpredictable exercise of its coercive powers into the thick of boardroom conflicts, and has done so precisely in order to protect the grave inefficiencies that exist at the heart of our system of production. It has done so by criminalizing precisely the sort of trading that most threatens such inefficiency: trading by or in support of suitors in a takeover bid.

This is not to fully endorse Fischel's account. As Tom Smith has observed (22 Law & Soc. Inquiry 1041):

Fischel fails to persuade me of [Michael] Milken's innocence. ...

I complain above about Fischel's lack of objectivity in Payback, yet I must concede that what this takes away in the power to persuade, it makes up for in the power to fascinate. Fischel is especially passionate and effective in responding to the ridiculously overheated claims of journalists that Milken was some kind of Nazi (Barron's) or one of the greatest criminals of all time (Wall Street Journal reporter James Stewart).

Fischel is so angry in Payback, in fact, that he discusses things one normally omits for propriety, yet that probably need saying. For example, Fischel, more than any other writer I know of, accurately captures the class and ethnic (mostly anti-Semitic) animosity that underlay some of the bitterness of the political fight over the corporate control market. Milken, T. Boone Pickens, Carl Ichan, and the other control-market pioneers also came largely from modest, or at least not wealthy, backgrounds. They were not likely to fit in at Chase Manhattan or Dillon Read. ...

Payback is a strange book. The book strives at times for academic objectivity and respectability, but then gives in entirely to passionate advocacy for Milken and what Fischel thinks he stands for. He excoriates the unfair treatment Milken got from the press and prosecutors, but freely attacks the personal integrity of prosecutors and judges, often with less than convincing support. Fischel introduces the book with broad themes of economics, but leaves them quickly behind to give us the blow by blow of the prosecution and defense of Milken, Keating, and the other defendants.

Yet, for all these contradictions, the book is a tour de force. It is not really a scholarly effort, though only a brilliant scholar could have written it. Payback is really an indictment of Giuliani and the judges, politicians, and journalists who helped him bring Milken down.

At the very least, however, one can say that the history of the 1980s takeover market simply doesn't lend itself to nice, tidy ethical stories that have obvious implications for the standing today of those who were players in that era.

As for me, where do I stand on the supposed debate? I stand by what I told the NY Times reporters:

“We’re staring down the barrel of another round of cuts in California and relying on alumni giving is essential for us to be able to provide a quality education,” said Stephen Bainbridge, a U.C.L.A. corporate law professor. “If it wasn’t for these sorts of gifts we’d have even tighter budgetary constraints.” ...

Mr. Bainbridge, the corporate law professor, said that though he considered Ms. Stout a friend, he disagreed with her position.

“I believe that Lynn genuinely thinks that this hurts the school by giving Milken the U.C.L.A. imprimatur of being a good guy and an ethical person,” said Mr. Bainbridge.

“I think it’s unfortunate that we’re dragging up stuff that happened a quarter of a century ago — and for which any debt to society has long been paid — to taint something that is going to help our students tremendously.”

More moronic social disclosure

Broc Romanek reports that:

On Friday, I blogged a member's negative reaction to the obscure provision in Dodd-Frank that requires the SEC to adopt rules eliciting disclosure regarding "conflict minerals" in the Congo. Many corporate lawyers and others in the corporate community (which includes many shareholders) share that member's reaction. Now, Rep. Carolyn Maloney (D-NY) has introduced a House bill entitled the "Business Transparency on Trafficking and Slavery Act" (H.R. 2759) that would require companies to disclose efforts to identify and address the risks of human trafficking, forced labor, slavery and child labor in their supply chains.

Although these bills are well-meaning, attempting to solve the world's problems through SEC filings simply is the wrong - and very expensive - way to go. How in the world did Congress start thinking they should influence foreign policy, as well as domestic social and environmental issues, through SEC filings to the determent of shareholders? Well, before Dodd-Frank, Rep. Frank Wolf (R-Va.) used an omnibus appropriations bill in early '04 to require companies to disclose business activities in countries designated by the State Department as sponsoring international terrorism (Wolf particularly was targeting Iran). Corp Fin's "Office of Global Security Risk" was born.

Social disclosure is inconsistent with the purposes of the securities laws, costly to shareholders, contributes to information overload on shareholders, and doesn't add information that most investors find useful. It should be cast into the outer darkness.

LawProf question of the day

Over at William Jacobson's corner of the blogosphere, I came across a damned fine question:

Why did [LawProf a.k.a. ScamProf Paul] Campos feel no need for anonymity when he expressed himself on political and legal topics in highly critical terms against the “right-wing” [in the op-eds and blog posts he wrote instead of doing legal scholarship], but felt the need for anonymity when criticizing his mostly left-wing profession as to its job performance?

Obviously, it's a rhetorical question. {Bracketed material my inserts}

Leiter on LawProf Paul Campos

Now that LawProf has outed himself as Colorado law professor Paul Campos in a post that included a sharp attack on Brian Leiter, the latter replies:

Paul Campos is, of course, most notorious in the legal academy for going on the O'Reilly Factor--yes,the O'Reilly Factor--to call for Ward Churchill to be fired for his offensive political opinions (long before any allegations of academic misconduct arose).  And this wasn't an anomaly:  he also called for Glenn Reynolds (Tennessee) to be sanctioned by his university for his offensive political opinions.   Fortunately for Professor Campos, his contempt for the First Amendment rights of state university professors do not constitute binding precedents on the courts, and I am confident his university won't sanction him for his irresponsible speech.  They should, however, launch an investigation into whether he is performing his duties, since his blog is tantamount to an admission of dereliction of duties and his 'scholarly' record is prima facie evidence of failure to do his job as a professor at a major research university.

But back to the fact-free smear.  Among the gems:  (1) denying that he's met me, when we've met more than once; (2) attacking me for running law and philosophy blogs and rankings (despite my cyber-hobbies, I've produced more scholarship in the last five years than he's produced in twenty); (3) stating, falsely, that "law school costs have increased exponentially, even as the job prospects of law school graduates have declined" (law school tuition, like all higher education tuition, has increased exponentially for thirty years, and during most of that time the legal job market was strong; tuition increases have slowed considerably since the downturn in the job market that began with the Great Recession in 2008); (4) stating, falsely, that I've never held a job for which a law degree is required; and so on.  And then, of course, there's the pitiful anti-intellectualism, worthy of Rick Perry's approach to higher education, but there's no need to belabor that for this audience.  Given that Professor Campos's "scholarship" would not survive his Rick Perry approach to scholarship, perhaps it's time for him to resign? ...

It is unfortunate that some victims of the recession think, falsely, that ScamProf Campos is doing something courageous on their behalf.  He's not, he's just doing what he always does, trying to surf the wave of the latest fad and attract attention to himself.  For years, I've pressed for better job placementdata and cautioned students about the reality of the recent job market and relying on the data in US News.   There's no dispute about the importance of that.  There's no dispute that some law schools have misled prospective students; some are now being sued, and we will see what facts come to light.  There's no dispute that some faculty, in all disciplines, abuse the privilege of tenure--Campos is a prime example.   None of this warrants the absurdly offensive description of American legal education as a "scam."  The American legal system is one of the best in the world--did that happen despite American legal education?  The leading law firms continue to recruit at the leading law schools, the ones that produce all the scholarship ScamProf Campos derides.   Are they simply benighted?   Law professors, at least the good ones (like most of Campos's colleagues at Colorado that I know), teach substantive doctrine in many areas of law as well as analytical and dialectical skills that lawyers need.  (My teaching evaluations, by the way, are a matter of public record, will ScamProf Campos share his?)   There's been debates for years about the relative balance of doctrinal, theoretical, and clinical teaching in legal education, and those will no doubt continue, independent of ScamProf Campos.

Economics and the Catholic Vision of the Good Life

A debate between left-liberal John C. Médaille and conservative Robert T. Miller. Predictably, I prefer the latter's take, in part because his take is so modest:

The editors of Dappled Things have asked me to opine on the question of which of two economic systems, capitalism or distributism, is more compatible with a Catholic understanding of the good life. This is hardly the kind of the question that lends itself to a succinct response, but if a short answer is required, it is this: capitalism and distributism are equally compatible with the Catholic understanding of the good life, if by that we mean that neither system violates the moral doctrines taught by the magisterium of the Catholic Church. This answer should surprise no one, for the magisterial doctrines of the Catholic Church entail very little about economics or even politics. They do not, for example, make any particular form of government morally obligatory, and thus the autocracy of the Roman Empire, the constitutional monarchy of Elizabethan England, and the democratic republicanism of the United States are all morally permissible. Similarly, Catholic doctrine does not make any form of economic organization morally obligatory; rather, a wide range of systems, including both capitalism and distributism, are morally permissible.

Now, I suppose the editors asked my opinion on this question because they expected me to argue that capitalism has some special moral standing in Catholic doctrine. Although I will not go that far, I will defend a more modest proposition, namely, that, for people like us in a society like ours, capitalism is the most reasonable choice among the various economic systems we might adopt.

FWIW, I touched on some of the same themes in my essay Catholic Social Thought and the Corporation (October 22, 2003).

Smith on Shareholders

Gordon Smith has posted to SSRN an essay entitled The Role of Shareholders in the Modern American Corporation (August 13, 2011):

This chapter from the forthcoming Research Handbook on the Economics of Corporate Law (Claire Hill & Brett McDonnell, eds.) examines the role of shareholders in the modern American public corporation. The chapter starts with the Berle and Means (1932) problem of the separation of ownership and control, but notes that the rise of institutional investors has changed the situation. Shareholders have three main sets of rights through which they can protect themselves: the right to vote, to sell, and to sue. Each of these rights has evolved significantly in recent years. The chapter describes some of the changes and debates, and also briefly addresses the question of the proper beneficiaries of corporate decisions.

An excellent critical review of the key literature. A recommended read.

Anderson on the rating agencies

Long post but a good read.