Wednesday, April 29, 2009


About Arlen Specter and other matters

The news that Senator Arlen Specter of Pennsylvania has switched parties, knowing that he can not be reelected as a Republican, has started me to ruminate (and rant a little) about the current ideologues who are running the Republican Party. What we have, both in Washington, DC, and here in California is a party dominated by the legacy of Howard Jarvis and Jerry Falwell. Howard Jarvis was a tax crusader who advocated small government. Jerry Falwell was a Conservative Christian minister who advocated a return to belief that the Bible is literally the will of God and placing his interpretation of the Bible ahead of the federal constitution as the supreme law of the land.

Jarvis, like such philosophers as Milton Friedman and Gottfried Wilhelm Leibnitz, advocated ideas that pleased his rich supporters. All three men were well paid by their patrons. Leibnitz convinced the rich of his day that, by arguments similar to those used in applying the calculus of variations to physical problems, the structure of society was stable and the only stable and proper structure, with a few rich men and a large class of poor people. The rich should therefore not feel ashamed about being rich. Friedman argued in favor of free, unregulated markets. By arguments similar to those of Leibnitz he convinced the corporate managerial class that unregulated free markets would produce a stable economic system in which every resource would be used and distributed for the greatest efficiency and good of the society. Jarvis's argument was that small government and low taxes would bring about the best society. Why, he asked, should government have to provide such things as free libraries or free education or free health care? Governments should be forced to abandon such unnecessary activities and the way to do it was to reduce taxes so that there would be no funds for them.

Jarvis was a clever rascal. He saw that there was no popular support for a general reduction of taxes. However, there was some popular hysteria over the rapid increase of property values and the concurrent increase in the property tax. Even that would have to be spun to achieve a populist swell to bring about his goal. He exploited the fear of aging homeowners that they would be taxed out of their homes unless something drastic was done, such as vote for Proposition 13 that froze property taxes at some arbitrary level.

Actually, he didn't care much one way or the other about the plight of the aging home owners. He was more interested in the welfare of his patrons, the landlords and the other business people who depended on using property to provide their incomes. Home owners could have simply not paid the tax. The State would wait until the property was finally sold or inherited to collect the back taxes. However, hysteria prevailed over common sense and the proposition passed with an overwhelming vote. (My wife and I were aging homeowners at the time and we voted against it.)

I won't write anything here about Falwell and other conservative clerics.

The Republican Party has traditionally been the party of the rich business class. I recall reading once about a poor American of latino descent. He hoped some day to be rich. The Republican Party was the party of the rich. Therefore, he became a Republican. Republicans have taken the philosophy of Jarvis to its logical extreme. In California, they refuse to consider any revenue enhancement to solve the budget shortage the State faces. Given their way, they would cut and eliminate enough State services to make the available tax revenue cover them. If that means very high tuition for the State Universities and Community Colleges, so be it. If it means school classes of 60 students, so be it. If it means closing of hospital emergency rooms, so be it. These are examples of services that government shouldn't be providing, anyway. Certainly the government of George Washington provided none of these services.

Unfortunately for the Republicans, the country is moving away from these ideas. Young people want to be able to attend university and they want to be able to afford it. Nearly everyone wants emergency rooms to be available and funded and staffed so that one doesn't have a four-hour wait at an emergency room in case of a serious injury or stroke or heart attack. Nearly everyone enjoys and wants to keep free public libraries. The party that would deny them these things is not going to do well in coming elections.

Senator Specter knows that many more moderate Republicans of Pennsylvania have moved from the Republican Party to the Democrats and Independents. To achieve survival in the Senate, he has done likewise.

Labels: , , , , , ,

Monday, April 27, 2009



Two news items appeared today in the newspaper. One item tells about the reduction in health care to be provided for undocumented immigrants. The other tells about the threat of an epidemic of swine flu. Mexico City is virtually shut down to prevent the disease there from spreading. There have been cases already reported here in California as well as in Texas and Kansas.

One very likely means of spreading the disease is immigration from Mexico, particularly uncontrolled (or illegal) immigration. Yet we are going to cut back or cut out completely any health care for the immigrants. They can bring the disease here and we will do nothings to protect ourselves! Sounds like a great policy.

The only sense I can make of is that the denial of health services to illegal immigrants is a form of revenge. Those dark-skinned bastards have invaded our country and we are going to punish them. We can't stop them from coming and we can't find them to deport them after they're here, but by golly we're going to get even with them somehow. We'll let them get sick and we won't do anything for them. We will ignore the danger that they will infect us, and that what goes around comes around.

Speaking of revenge, I can think of no better explanation of our harsh treatment of prisoners in our "war" against terror. Those rag-head bastards have killed 3,000 of us and by gosh and by golly we're going to get even. Any that we catch will be treated as harshly as possible. We will think up new ways to make them suffer. If pressed, we can claim that we obtained valuable information from them after they were made to suffer enough.

My rant for the day.


Sunday, April 26, 2009


Comment on a Letter to the Editor

The following letter was printed on the editorial page of the Los Angeles Times for Saturday, April 25, 2009:

The voters have recently "combined to straitjacket the state's budgetary process"? How ludicrous!

Both Proposition 10 and Proposition 63 mandated not only spending but taxes to pay for them -- and them only. These two initiatives took nothing from the general fund. That is hardly spending like a drunken sailor, nor is it irresponsible.

If legislators on both sides of the aisle were as responsible as the electorate, we'd probably be in far better fiscal shape than we are.

The electorate did nothing to straitjacket the Legislature. Lawmakers are just jealous and envious of funds they cannot access. We'd be fools to let them strip the funds out of these programs to fund other programs.

My first reaction to this letter was that the writer was either misinformed or uninformed. The voters placed a straitjacket around the Legislature years ago when they imposed a 2/3 vote requirement for passage of the budget and for increasing taxes. It is this requirement, the hard economic times we now experience, and the stubbornness of a certain faction among the Legislators that has forced the Legislature to agree on a funding plan with the various take-aways that the writer decries. Agreement requires 2/3, not a majority. Other more reasonable budget and funding plans were not acceptable to the stubborn ideological minority, a group that contains more than 1/3 of the legislators in each chamber.

My next reaction was that the writer was concerned only about the diversion of funds from the programs established by Propositions 10 and 63. The writer lives in an affluent region. He has the education, the spare time, and the means to write a letter to the editor. He does not depend on any of the state programs for the poor, the disabled, the homeless, etc. He no longer depends on state support for education or he would be less critical of some of the decisions of the Legislature.

Rather than simply condemn the members of the Legislature as jealous and envious, I'd rather that the writer take up the cause of getting rid of the 2/3 vote requirement to allow the Legislature to adopt a reasonable, non-ideological budget that does not take funds away from mandated, self-funding programs.

Labels: , , , ,

Saturday, April 25, 2009


Irreconcilable Differences

The reactions to the recent disclosure of the "torture memos" by the Obama Administration has led to two quite different reactions. Liberals, like myself, want to go further than merely releasing memos and establish a capable, non-partisan commission to investigate and publicize as much as can be made public about the previous administration's use of torture, or "harsh interrogation techniques" to extract information from terror suspects in custody. Conservatives, like Dick Cheney, decry the whole business of making anything public. They argue that simply by publicizing the techniques the Administration is giving Al Qaeda invaluable information that can then be used to train their foot-soldiers on how to resist these techniques.

Added to all this commotion is a news account that the FBI had obtained valuable information from one suspect before he was turned over to the CIA. The FBI did not use torture or harsh interrogation techniques at all. The FBI agent simply showed the suspect a picture of a high-ranking Al Qaeda person. The suspect asked, "how did you know that he was the one who planned the 9/11 attacks?" The FBI man said nothing. He had not known until that moment that the person in question had actually planned anything.

I don't know how to find common ground between the extreme liberal and conservative reactions to the release of the memos. I try to recreate some of the attitudes that existed immediately after September 11, 2001. I remember corresponding with a woman who lived in Westchester County and commuted daily into New York to work. She wrote that she was fearful and dreaded going into the city. There were a lot of fearful, terrified people. There were a lot of them in the Administration. The President was fearful of another attack and was willing to do whatever it took to prevent it. Many people believed that torturing captured Al Qaeda suspects would induce them eventually to give up some information that might be useful. Who could blame them for trying? The United States had spent fifty years preparing defenses and responses to a Russion ICBM attack, but was utterly defenseless against a small, disciplined band of criminals who were willing to commit suicide by flying planes into large buildings.

Our federal constitution specifically forbids our government from imposing harsh or unusual punishment on convicted or suspected criminals. What the Bush administration did was clearly against the constitution. Merely re-defining "torture" did not get around the constitutional prohibition. However, conservatives and others argue that, aside from the constitutionality of it, did the techniques used produce useful information? Did they really save us from another attack? This may be a question that noone can answer, either because the answer is unknown or because the information is of such a nature that it must remain classified for many years. Mr. Cheney and others have said that the techniques did, in fact, elicit invaluable information that allowed us to forestall a second attack. Mr. Cheney may be correct, or he may simply be covering his ass. Leaving aside his relationship with the truth, I can see that a dangerous precedent has been set. A future President can claim, as did Mr. Bush, that the country is in grave danger and he, the President, must use extraordinary powers to foil an attack. He will claim the right to ignore the constitutional prohibition against "cruel and unusual punishment" in the treatment of persons that he has decreed to be "enemy combatants." This future President may simply be using these extra-legal powers to coerce and intimidate his political opponents. Presidents are only human and have more than their share of belief in the goodness of their cause. Mr. Nixon believed that he was not a crook, and that he was incapable of committing a crime. His political enemies were simply out to get him and he was obligated to defend himself and defeat them by whatever means was available, such as examining their income tax returns, looking at their FBI dossiers, and putting them on his enemies list.

Constitutional prohibitions against torture came about to prevent just such things. Our President is not a king, but many Presidents think that they have the powers of a king, specifically King Henry VIII. Henry was not above having his political opponents imprisoned in the Tower, tortured, and executed. Henry believed that the King had a divine right to rule. That was a common belief among kings until recent times. We want safeguards in place to prevent any future President from assuming a divine right to imprison even American citizens in a struggle against either a real or imaginary foe. The imperial Presidency has to go.

My position is that there should be a "truth and reconciliation commission" to examine and air the business of torturing captives in the "war" against terror. Let everything become known. Did torture in fact reveal new information that could not have been obtained in other ways? Was such information as critical to our defense as Mr. Cheney says? Can we afford to give our government officials the power to do the things that were done? What were they thinking?

Setting up such a commission will be difficult. If it is merely a congressional committee, it will immediately be bogged down in partisan bickering and name-calling. Perhaps it should not be established by government at all. Perhaps a group of churches can cooperatively set up such a commission and obtain persons to operate the commission who are beyond partisan reproach. I have a few candidates: The Dalai Lama, Bishop Desmond Tutu, Nelson Mandela, Pope Benedict.

Labels: , , , , , , , ,

Wednesday, April 15, 2009


Tea Parties

April 15 of this year was designated the "tea party" day by a gaggle of conservative commentators, bloggers, and news/entertainment outlets. I didn't attend one. In fact, I never came close to one. I was busy taking my morning walk, mailing in my state tax return, and mailing in my estimated tax payments for the current year. I went to lunch with some friends. I went shopping at CostCo. Afterward I took a two-hour nap. Then I had dinner. The News Hour with Jim Lehrer had a segment about tea parties in the Nation's capital and in a few other places. I don't know how big a deal it was.

Perhaps it was a big deal. The impression I have is that the people who organized it don't know as much as they should about American history. They seem to believe that the original Boston Tea Party was a tax revolt, that people were objecting to the high tax on tea. Later propagandists for the American Revolution may have put the tax spin on the affair. Actually, it was a demonstration against the monopoly the British government of George III had granted to some English firm to ship tea from China to the American Colonies. Before the monopoly was granted, American firms using American ships had been making a nice profit from the tea importing business. Now the evil and greedy King George had taken away their livelihood by granting the monopoly.

Our history books don't present the monopoly aspect of the BTP. They emphasize the rallying cries of the American Revolutionaries: no taxation without representation. There was also the resistance to the Stamp Act, which required that any official document should have a stamp affixed to it. When I visited England in 1955 I discovered that the Stamp Act was still alive and well there. An official document had to have a government stamp attached, such as a half-penny postage stamp. A very onerous tax, indeed!


Thursday, April 09, 2009


The Concept of Ownership

In my previous post I wrote a little essay about corporations. I own stock in three corporations now. In the past, my wife and I owned shares in several corporations. My present shares are in public utilities. In the past we held shares in two aerospace firms, both of which I worked for, in several electric utilities, and in a mining company. Some of these investments turned out well, others turned out badly. We learned to be suspicious of stock brokers. We quarreled about some of the investments. We were a normal, average married couple. We were not as sophisticated as we would have liked about investing in stocks.

In theory, I own a portion of each of the three public utilities in which I now own stock. In practice, this ownership is a fiction. It’s really an investment. I have no more, or very little more, control over the way these utilities are run than I have over the way the bank is run in which I have two accounts, one for checking and one for collecting revenue from other investments. President Bush tried to persuade us that if we owned shares of stock in some company we were part of the “ownership” society. We owned something. We would vote for candidates and ballot propositions that would tend to increase the value of the things we owned.

That argument never impressed me or my wife. We voted for candidates that we thought would do good things for the society as a whole, not just our investments. You can argue that we were misguided, and perhaps we were. However, our voting decisions were our own, influenced more by our ideals and our prejudices than by our pocketbooks.

I have never agreed with the rationale for the decision to eliminate or reduce the income tax on dividends from shares in corporations. The rationale is that, since the corporation already pays taxes on its income, taxing the dividends amounts to double taxation. To me that argument made as much sense as arguing that the gardener who mows my lawn and trims my bushes every week should not have to pay any tax on the money I pay him because I have already paid income tax on the same money. The argument doesn’t appeal to me because I don’t accept the notion that I actually “own” part of the corporation.

I suppose if I were a really large shareholder, if I owned twenty percent or more of the outstanding stock in a corporation I would be more willing to believe that I actually owned and controlled part of the firm. With twenty percent of the shares I would be a logical candidate for a position on the Board of Directors. I would have an important vote in decisions about the business practices of the corporation. I would consider myself a part owner. I might look with favor on a proposal to reduce the income tax on dividends.

Life is more complicated than logic. Logically, if I own shares in a corporation, I either own part of the corporation or I don’t. It shouldn’t matter how many shares I own.

Labels: , ,

Tuesday, April 07, 2009


My Slight Knowledge about Corporations

I must start this rambling essay with a disclaimer. I know very little about corporation law. My opinions about corporations, as well as my opinions about most other things, are not unique or original. The world is full of opinions about almost everything, and I choose certain of those opinions and call them mine.

I believe that corporations were started as a means of raising money to build something big and useful, like a bridge, barge canal, or railroad. In a socialistic society these projects would be undertaken by the state, or by the entire population collectively. In our society, these projects were undertaken by a group or a subset of the population whose members had excess money to invest. I don't know how old the corporation is. I do know that much of the infrastructure in our society was built by corporations.

I was told once that there were two ways in which a group of wealthy individuals can pool their money to build something: the partnership and the corporation. In a partnership each individual is responsible for any wrong-doing or costly accident that resulted from the enterprise. In a corporation, each investor is responsible only to the extent of his or her investment. Naturally, cautious investors prefer to buy shares in a corporation rather than members of a partnership.

Today corporations are organized for many purposes other than building railroads, toll roads, bridges, and canals. Medical doctors for corporations to reduce their taxes. Corporations are created to provide entertainment. In fact, most of the things we buy and many of the services we buy are provided by corporations. Grocery chains, restaurant chains, gymnasium chains, etc., are all run by corporations.

The legal responsibilities of corporations and partnerships require that they can be sued in civil court. In the case of a partnership, the problem is simple. A person with a grievance can sue the partners collectively. If he or she wins the suit, at least one of the partners is likely to have funds to pay the claim. Remember that in a partnership, each partner is liable for the full extent of the judgment. In the case of the corporation, the courts had to do some creative engineering. The managers, as shareholders, couldn't be sued for damages. They could, of course, be accused and tried for criminal activity. However, such suits could be brought only by the state or other government. The individuals could be fined or put in prison. However, an individual with a grievance, whether associated with a criminal act or not, could not collect damages.

The creative engineering or judicial activism was to define the corporation as a person so that it could be sued. One judge at the time mused that the corporation was a strange person, lacking a "soul to be damned or an ass to be kicked." The corporation could be forced to pay damages to a successful plaintiff.

In the United States, corporations are chartered under state law. Different states have different chartering requirements. Most corporations prefer to be chartered in the state of Delaware, because it has, or used to have, the least onerous chartering requirements. Corporations do business in many states and do not have to have charters in each state in which they do business. A corporation can be sued in any state in which it does business. Some corporations are trying to get the law changed so that they can be sued only in federal court.

This page is powered by Blogger. Isn't yours?