March 21, 2008

DC v Heller and the Future of Gun Control

The Supreme Court just hear arguments in a case that potentially has important implications for the Second Amendment and gun control. It's the first time the Court has taken on meaningful issues on this topic in almost 70 years and argument actually seemed to focus substantive issues rather than a technical resolution (relating to DC not being a state but under the oversight of the Federal Govt).

As this post details, the case has a variety of briefs with some surprises in terms of how positions fall out. My comment on this case will be limited to Vice President Cheney signing on to a brief opposing the ban.

Normally, interests of the federal govt are represented by the Solicitor General, who argued here that there is a personal right of gun ownership but that the DC regulations were overall rational  (because his job is to defend existing federal gun control laws...) Cheney signed on to a brief with members of Congress urging the Court to strike down DC's law, which includes a ban on handguns in the nation's capital.

So the Bush administration has scaled back many personal freedoms arguing that they need tools to fight their ill-conceived  war on terror. At every chance, they expand powers of the federal government - to wiretap, search, etc. But the one freedom Cheney defends is the right to have handguns in the nation's capital, even though it is well known that Al Qaida practices political assassinations in urban areas?

Let's be clear that this comment does not suggest that terrorists will obey the law, or that the law against handguns will prevent terrorists using them. Rather, the law against guns can be an important tool to disrupt terrorists and terrorist plots.  If law enforcement got wind of something, searched and found weapons, the current law would allow them to make arrests, detain and gather other information. If there's no gun law, then there may or may not be other grounds to hold suspects, but make no mistake that the law is a potentially important tool - or at least as useful as a very, very long list of "tools" the administration has wanted.

[As background, see mar Hamm's Terrorism as Crime, which argues that terrorists commit any number of more minor, everyday crimes in establishing themselves, their identities and further larger plots. These crimes can frequently provide the justification for arrests, just as mafia types get caught up on tax evasion - not the charge we'd really like to bring, but at least it gets them off the street. My StopViolence site has some chapter excerpts; there's an earlier version of this he did for the National Institute of Justice called Crimes by Terrorist Groups (abstract or document/pdf).]

For those interested in the case, here's the prview from Cornell Law School (link at end goes to the rest of the preview)

District of Columbia v. Heller (07-290)
SECOND AMENDMENT, RIGHT OF THE PEOPLE TO KEEP AND BEAR ARMS, MILITIA, DISTRICT OF COLUMBIA, GUN BAN, HANDGUNS
The District of Columbia bans possession of handguns, and bans anyone from carrying a handgun or other deadly or dangerous weapon without a license within its borders (the "Gun Ban"). It also requires that any firearms which may be kept within the District, such as rifles, be kept either disassembled or with a trigger lock. These are some of the most restrictive gun laws in the nation. Joseph Heller claims these laws violate his Second Amendment right to "keep and bear Arms." The Supreme Court has not taken a Second Amendment case since 1939, and it has never decided whether the Second Amendment confers a right to bear arms upon individuals or only upon the militias it refers to in its opening clause. In the intervening 69 years, the federal and state governments have passed many laws regulating and restricting the ownership and use of guns. Should the Supreme Court uphold the D.C. Circuit's invalidation of the Gun Ban, it could have a substantial impact on these gun laws and will almost certainly lead to more litigation as gun rights advocates challenge those laws as violating the Second Amendment. If the  Court finds that the Gun Ban is constitutional, it will strengthen the ability of government to regulate gun ownership, and may result in more restrictive gun laws across the country.  (Continue reading this preview via Cornell Law...) 

You can read the transcript of oral argument via the Supreme Court website or Oyez has an audio version (listen to it on the web or download an mp3) along with the transcript.

My favorite quotes include Mr Dellinger (arguming in support of DC's law):

this right of personal liberty, the Blackstonian right, is an unregulated right to whatever arm, wherever kept, however you want to store it, and for the purposes an individual decides, that is a libertarian ideal. It's not the text of the Second Amendment, which is expressly about the security of the State; it's about well-regulated militias, not unregulated individual license [emphasis added]

and 

If you're going to protect the kind of right that is -- that is being spoken of here, different from the militia right, the plain language to do it would be "Congress or the States shall pass no law abridging the right of any person to possess weapons for personal use." And that's not the right that is created here. 

As I noted above, Cheney split with the federal government in this case; public health professionals are on both sides; academics are on both sides; women are on both sides; former Justice Dept officials are on both sides; you get the idea:

 

District of Columbia v Heller - Overview of selected briefs

DC = Petitioner

Heller = Respondent

Brief for the United States of America as Amicus Curiae

Brief for Violence Policy Center and the Police Chiefs for the Cities of Los Angeles, Minneapolis, and Seattle

Brief of District Attorneys as Amici Curiae in Support of Petitioners

Brief for New York, Hawaii, Maryland, Massachusetts, New Jersey, and Puerto Rico in Support of Petitioner

Brief for 55 Members of the United States Senate, the President of the U.S. Senate [Cheney], and 250 Members of the U.S. House of Representatives in Support of Respondent

Brief for the States of Texas, Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Utah, Virginia, Washington, West Virginia, and Wyoming in Support of Respondent

Brief for Members of Congress in Support of Reversal

Brief for Former Department of Justice Officials in Support of Petitoner

Brief of the American Bar Association

Brief for Former Senior Officials of the Department of Justice in Support of Respondent

Brief for Professors of Criminal Justice in Support of Petitioner

Brief for Professors of Linguistics and English Dennis E. Baron, Ph. D, Richard W. Bailey, Ph. D, and Jeffrey P. Kaplan in Support of Petitioner [Don't laugh - a great deal of the case centers around understanding the relationship between "well regulated militia" and "the right of the people to keep and bear arms"]

Brief for Criminologists, Social Scientists, Other Distinguished Scholars, and the Claremont Institute in Support of Respondent

Brief for Organizations and Scholars Correcting Myths and Misrepresentations Commonly Deployed by Opponents of an Individual-Right-Based Interpretation of the Second Amendment in Support of Respondent

Brief for Academics in Support of Respondent

Brief for Academics for the Second Amendment in Support of Respondent

Brief for the American Academy of Pediatrics, the Society for Adolescent Medicine, the Childrens Defense Fund, Women Against Gun Violence, and Youth Alive! in Support of Petitioner

Brief for the Association of American Physicians and Surgeons in Support of Respondent ["AAPS has long defended the practice of ethical medicine, and firearms serve an essential role against misuse of medicine by tyrannical governments for unethical goals."]

Brief for the National Network to End Domestic Violence et al. in Support of Petitioner [Women are killed by intimate partners more often than by any other category of killer. It is the leading cause of death  for African-American women aged 15-45 and the seventh leading cause of premature death for U.S. women overall. Intimate partner homicides make up 40 to 50 percent of all murders of women in the United States, [and that number excludes exlovers, which account for as much as 11% of intimate partner homicides of women] When a gun [is] in the house, an abused woman [is] 6 times more likely than other abused women to be killed."]

Brief for 126 Women State Legislatures and Academics in Support of Respondent

Brief for the Pink Pistols and Gays and Lesbians for Individual Liberty in Support of Respondent ["More anti-gay hate crimes occur in the home than in any other location, and there are significant practical limitations on the ability of the police to protect individuals against such violence."]

Brief for the the American Jewish Committee et al. in Support of Petitioner

Brief for Jews for the Preservation of Firearms Ownership in Support of Respondent

Brief of Brady Center to Prevent Gun Violence, et al. as Amici Curiae Supporting Petitioner

Brief of Nat’l Rifle Assoc. et al. as Amici Curiae in Support of Respondent

Brief of Congress of Racial Equality as Amicus Curiae in Support of Respondent

Brief of NAACP Legal Defense & Educational Fund, Inc. as Amicus Curiae in Support of Petitioner

 

February 28, 2008

Sex Toys and Sexual Privacy: Texas Anti-Vibrator Law Struck Down

In 1979, Texas passed an obscenity law that a recent ruling by the Fifth Circuit Court of Appeals described as "prohibit[ing] the 'promotion' and 'wholesale promotion' of 'obscene devices,' which includes selling, giving, lending, distributing, or advertising for them" (Reliable Consultants v Earle # 06-51067). A 1985 decision by a Texas court upheld the law because they found there was no constitutional right to “stimulate . . . another’s genitals with an object designed or marketed as useful primarily for that purpose.” Lest you think that this is just a Texas problem, Mississippi, Alabama, Virginia, Louisiana, Kansas and Colorado have all dealt with this issue.

While that doesn't mean such a law is coming to your state, it is important to take a look at what's going on - esp since since our right to privacy includes sexual privacy. Michael Dorf, writing at Findlaw.com on the Alabama case noted "Patrick Henry never said "give me dildos or give me death," but he did speak of liberty, as does the Constitution. And not surprisingly, how the courts go about defining that "liberty" has ramifications far beyond the legality of vibrator sales in Mobile." As BoingBoing put it, One could stroll down Alabama's southern streets selling semiautomatic rifles and dildos, and be arrested for the dildos.

In the Alabama case, "the appeals court suggested that the case posed the question whether there is an absurdly narrow (and vulgar) fundamental right to use 'vibrators, dildos, anal beads, and artificial vaginas'." The majority there also rejected the idea of a generalized right of sexual privacy " because (among other reasons) it would encompass pederasty, prostitution and incest -- which the judges believed were clearly proscribable consistent with the Constitution."

What other rights of your do you think could be put in such a way as to make them sound absurd to conservatives who talk about freedom but are all in favor of government intruding on the parts of your life that offend them?

Back to the Texas case:

According to the Fifth Circuit, the district court upheld the law because "there is no constitutionally protected right to publicly promote obscene devices." Those challenging the law [the businesses selling sex toys] "claim that the right at stake is the individual’s substantive due process right to engage in private intimate conduct free from government intrusion." Texas itself proposes that the case is about “the right to stimulate one’s genitals for non-medical purposes unrelated to procreation or outside of an interpersonal relationship.” (See Dorf's Findlaw.com column which discusses the importance of the level of generality in phrasing rights.)

The Fifth Circuit uses Lawrence v Texas as its guide. Lawrence struck down a(nother) Texas law that made it a crime to engage in consensual homosexual intercourse and struck down Bowers v Hardwick (a 1986 case that upheld a similar law). The Fifth Circuit quotes Lawrence:

To say that the issue in Bowers was simply the right to engage in certain sexual conduct demeans the claim the individual put forward, just as it would demean a married couple were it to be said marriage is simply about the right to have sexual intercourse. The laws involved in Bowers and here are, to be sure, statutes that purport to do no more than prohibit a particular sexual act. Their penalties and purposes, though, have more far-reaching consequences, touching upon the most private human conduct, sexual behavior, and in the most private of places, the home.

They emphasize [conservative get-government-off-our-back types take note]: "The right the Court recognized was not simply a right to engage in the sexual act itself, but instead a right to be free from governmental intrusion regarding 'the most private human contact, sexual behavior'." The Fifth Circuit notes that in Lawrence, the Supreme Court "expressly held that 'individual decisions by married persons, concerning the intimacies of their physical relationship, even when not intended to produce offspring, are a form of ‘liberty’ protected by the Due Process Clause of the Fourteenth Amendment. Moreover, this protection extends to intimate choices by unmarried as well as married persons'.” (It took the law a while to recognize that privacy attached to individuals, not marriages, as the right to privacy grew out of a 1965 case Griswold v Conn. involving the right of married couples to use contraceptives.)

What's important Lawrence and this ruling is the precedence given to individual liberty over the state's interest in "public morality laws" (badly named because the act is done in private). Texas asserts an interest in "discouraging prurient interests in autonomous sex and the pursuit of sexual gratification unrelated to procreation and prohibiting
the commercial sale of sex." The Fifth Circuit notes:

In Lawrence, Texas’s only argument was that the anti-sodomy law reflected the moral judgment of the legislature. The Court expressly rejected the State’s rationale by adopting Justice Stevens’ view in Bowers as “controlling” and quoting Justice Stevens’ statement that “‘the fact that the governing majority in a State has traditionally viewed a particular practice as immoral is not a sufficient reason for upholding a law prohibiting the practice.’”

The Fifth Circuit also notes that the "commercial sale of sex" is a problematic formulation:

The sale of a device that an individual may choose to use during intimate conduct with a partner in the home is not the “sale of sex” (prostitution). Following the State’s logic, the sale of contraceptives would be equivalent to the sale of sex because contraceptives are intended to be used for the pursuit of sexual gratification unrelated to procreation. This argument cannot be accepted as a justification to limit the sale of contraceptives. The comparison highlights why the focus of our analysis is on the burden the statute puts on the individual’s right to make private decisions about consensual intimate conduct. Furthermore, there are justifications for criminalizing prostitution other than public morality, including promoting public safety and preventing injury and coercion.

Frankly, I'm skeptical that prostitution laws uphold public safety - prostitutes are harmed all the time partly because they cannot go to the police and report injuries. That's a different story, but see the decision by a New York court striking down the prostitution law and Stanford Encyclopedia of Philosophy entry on Feminist Perspectives on Sex Markets.

[Hat tip to Health Law Blog

 

Of Related Interest

 

The Technology of Orgasm: "Hysteria," the Vibrator, and Women's Sexual Satisfaction by Rachel Maines (Johns Hopkins University Press 2001)

Amazon ~ Ch 1 (via New York Times) 

Danielle J. Lindemann, Pathology Full Circle: A History of Anti-Vibrator Legislation in the United States, 15 COLUM. J.GENDER&L. 326, 327–30, 336–41 (2006).

 

February 10, 2008

Getting Tough on Corporate Crime? Paul's Talk on YouTube (plus some comments on subprime wrongdoing)

Back in 2004, I had the opportunity to write a piece with Jeffrey Reiman, A Tale of Two Criminals: We’re Tougher on Corporate Criminals, But They Still Don’t Get What They Deserve. It grew out of several invited lectures I gave, including a  Distinguished Visiting Faculty Lecture at Eastern Kentucky University. The folks there recorded the lecture and have just posted it on YouTube.

If the embedded player doesn't work, here's the link for the playlist (six parts of about 10 minutes each). And just to make sure it's accessible - Part 1, Part 2, Part 3, Part 4, Part 5 and Part 6.

Many thanks to Carole Garrison and EKU multimedia for making this happen.

 

SUBPRIME FINANCIAL SCANDAL 

Subprime Primer - very funny, direct, sometimes crude but helpful short explanation (stick figures in 45 powerpoint slides). Worth checking out.

On the first page of the Tale of Two Criminals article, I added a box, "Questions we should be asking" and included this:

Why, soon after the S & L crisis, did Congress go on a wave of “cavalier” financial deregulation, creating a “paradox of increasing financial deregulation coming on the heels of the most catastrophic experiment with deregulation in history” [Calivita, Pontell & Tillman, Big Money Crime: Fraud and Politics in the Savings and Loan Crisis]. This question is especially important in light of complaints - discussed in the final section - that the Sarbanes-Oxley reform legislation goes too far, it's unnecessarily rigorous and should be relaxed.

While Sar-Box "reform" is still an issue - it is such a hassle to make sure there's no fraud - what we have seen is massive problems with subprime lending and a host of financial products (CDOs, etc) related to them.  Forbes magazine asks: Credit Crisis: Where was the SEC? (via Financial Armaggedon). A few snippets:

Investment banks, mortgage brokers and ratings agencies are all being blamed for the subprime mortgage bubble and its sudden and stunning demise. But little has been said about the watchdogs at the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority, the regulators who oversee the activities of the banks. They have the power to stop fraud in the business of selling the complex credit derivatives, and they have jurisdiction over whether the complex securities sold by the banks met suitability requirements for the investors who bought them. Yet time and again, they've failed to do so...

Washington and Wall Street have been hesitant to clamp down on the over-the-counter market, the source of much profit-making. Last year, as the subprime market began its collapse, the President's Working Group, which includes the Treasury Department, the Federal Reserve, the SEC and the Commodities Futures Trading Commission, recommended against tighter oversight of the over-the-counter market, in the context of vetoing tighter regulation of hedge funds, saying the industry can self-police...

Leaving it up to Wall Street hasn't proven very effective, however. "The decision by the President's Working Group to recommend no detailed regulation of the over-the-counter market was wrong," says David Ruder, a former SEC chairman and now law professor at Northwestern University.

Thepriceofeverything blog comments on the ability to self-police: "After the dotcom research fiasco (where $10bn was paid in settlement, mysteriously without any acknowledgment of blame) and now subprime, with the apparent connivance of the ratings agencies, expecting Wall Street and the City to show moral leadership is like expecting brothel-keepers to advocate chastity."

Fortune Magazine cover - "What Were They Smoking" 

In an earlier piece I did with Jeff, Getting Tough on Corporate Crime, Enron and a year of Corporate Financial Scandals, we noted a huge conflict of interest with brokerage houses making millions in fees from companies and having supposedly independent analysts tout them to the public as stocks that should be bought:

brokerage firms came under fire because their high-profile analysts enthusiastically endorsed stocks publicly that they were disparaging privately (in emails), all because their firms derived underwriting fees or other business from the troubled companies. Salomon Smith Barney telecoms analyst Jack Grubman admitted that “The bank supported ‘pigs’ [i.e., stocks in poorly performing firms] in supposedly objective research notes to ensure that [those firms] granted Salomon investment banking business.”  And Merrill Lynch internet analyst Henry Blodgett described some stocks as a “piece of shit” while recommending them to small investors. 

Now, we see some different conflicts of interest with the ratings agencies like Moody's and S & P. They didn't catch all the problems with the bonds and financial products built off subprime loans, and gave the products the top AAA rating. (Imagine you paid Equifax for your credit score and they were dependent on your satisfaction for you to continue pay...)

Moody's and S & P are now being investigated by New York State Attorney General Andrew Cuomo (where is the SEC? Indeed, with Enron and earlier frauds, then NY Attorney general Spitzer did most of the work.) The ratings agencies are going to change the system they use and decide whether to put warning labels on their ratings. Barry Ritholtz, a NY hedge fund manager, suggests this:

WARNING: THESE BONDS HAVE BEEN RATED AAA BY A MAJOR RATING FIRM. THESE RATING FIRMS HAVE PROVEN THEMSELVES TO BE CLUELESS, MONEY-LOSING INCOMPETENTS IN EXCESS  OF A TRILLION DOLLARS IN LOSSES. THEY WERE PAID HANDSOMELY BY THE BOND UNDERWRITER, AND ARE HOPELESSLY COMPROMISED. PURCHASERS OF THESE BONDS ARE ADVISED TO  IMMEDIATELY  KILL THEMSELVES, THUS SPARING THEIR LOVED ONES EMBARRASSMENT IN THE FUTURE. ALSO, THESE BONDS MAY LOSE VALUE. I JUST WET MYSELF MERELY THINKING ABOUT THIS PAPER. WHILE PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RETURNS, YOU SHOULD BE AWARE THAT PAST PERFORMANCE ALSO SUCKED. DONT BLAME US IF YOU LOSE ANY MONEY, AS WE HAVE NO IDEA WHAT THE F$#@ WE ARE DOING ANYWAY. REALLY, YOU ARE ON YOUR OWN.

Ouch. While you're over at Barry's blog, check out his posting on "occupancy fraud" and the attempt to shift blame for the problems onto individuals: "Zero adult situation across the entire process, and now, wild ass covering and blame shifting."

Looks like we're in good shape - do nothing about this mess, undo Sar-Box soon and wait for the next massive fraud that will take everyone by surprise.  

 

January 31, 2008

Baze v Rees and the Future of Lethal Injection

The Supreme Court just heard a case challenging aspects of the way states administer lethal injection. There is only a slim chance the Court's decision will have far-reaching implications, but it is an opportunity to peek into the process that apparently would be illegal to use to euthanize an animal in Kentucky (where the case originated). So, if you put you dog or cat to sleep using the combination of drugs Kentucky uses on condemned men, that would be illegal in Kentucky.

On the other hand, Kentucky has only done 1 execution and there was not a problem. So the case involves potential problems with the execution protocol, focusing on concerns about administration of the drugs. For example, during oral argument, Justice Stevens forced the concession that if the protocol was followed, there would be no case. But he was also deeply disturbed that one of the drugs in the mix is given to paralyze the inmate but does nothing to bring about death; it prevents contortions and other signs that might be disturbing to witnesses and supposedly contributes to the 'dignity' of the execution. But if the first drug - a pain killer what quickly wears off - is not given in a high enough dose, then the inmate would experience severe pain from the second two drugs. 

As a quick review: The first drug is sodium thiopental, a "fast-acting barbiturate" that makes the inmate unconscious. The second drug is pancuronium bromide, which causes paralysis and stops muscular movement.  The third drug is potassium chloride, which causes cardiac arrest. The sodium thiopental is fast-acting and fast-wearing off, so if the dose is not high enough, the condemned will feel both burning from the other drugs being injected and a "chemical asphyxiation" (choking, etc). But because of the pancuronium bromide, the condemned is paralyzed and unable to show pain. For this reason, the veterinarians do not use it and argue they can more closely monitor the euthanasia of animals.

It seems like the problem should be easy to fix by drawing on doctors to come up with the right dosage and mix to do the job right. But the American Medical Association ethics prohibit doctors being involved in any way. Medical ethics call for doing no harm and require informed consent for medical procedures or specific directives for withdrawing care (and letting the underlying disease cause death). Having doctors participate in executions might also undermine public confidence in medicine, so the American Society of Anesthesiologists has a brief telling the Court that there are problems but they can't help - it is not a health issue or a medical problem.   

So, fixing the problems represents a problem. So does keeping the present system. And the case itself seems to have an inadequate basis for the Court to raise some issues it might want to hear (i.e. alternate drugs and combinations). Finally, the Court has stayed all lethal injections pending the decision here, which means that sending the case back for additional argument would effectively put a moratorium on executions for the near future. Declaring lethal injections unconstitutional until further study would mean going back to electrocutions, maybe even a hanging or firing squad. (Justice Scalia sees no problem with the current system, so there is part of the Court that wants to vote against the inmates and resolve the uncertainty solidly in favor of the present system.)

Welcome to the American death penalty, 2008.

For more information, the following current resources are available: 

Background brief from Cornell Law School; Berkeley Law School "resource kit" on the case; Supreme Court wiki materials.

Transcript of oral argument (note on p 29: the state has practiced and done the execution drill 100 times, but only executed 1 inmate. And people ask why the death penalty is more expensive than life in prison!) The Oyez project has an audio file for those who want to listen to oral argument plus the full transcript.

Links to all briefs in the case (Berkeley Law School/lethalinjection.org) While all the briefs are interesting in some way, I'd suggest the Brief of the American Society of Anesthesiologists (filed "in support of neither party") and the brief by the veterinarians (filed in support of the condemned). The Brief of Critical Care Providers and Clinical Ethicists is quite detailed about pancuronium bromide and filed on behalf of the condemned. [There's also a .pdf summary of all the briefs.]

Sentencing Law Blog (written by a law prof) has background on this case, other challenges to lethal injection and will do a better job keeping current than I will). Prof Berman also has an 8 minute podcast.

Observations Regarding Lethal Injection, by the President of the American Society of Anesthesiologists (30 June 2006). Good brief summary of ethical issues, and part of what I found interesting:

Even more troubling to me is the Missouri court’s move to require an environment more like an “operating room”. I am concerned because anesthesiologists actually have more of a reason not to be involved than other physicians. The more the execution looks like an anesthetic, the less comfortable patients are likely to be with anesthesia. Surgery is already a frightening time and one in which patients need to trust their anesthesiologist. The last thing patients need is to equate the O.R. with a death chamber, to equate anesthetic drugs with death drugs, or to have in their subconscious the specter of the anesthesiologist as an executioner.

Lethal Injection for Execution: Chemical Asphyxiation?  Article in the peer-reviewed Public Library of Medicine journal.

If that's not enough, the Supreme Court wiki has links to more news articles and blogs.  

Listening to

 

  Morphine

November 24, 2007

Former Prez Jimmy Carter

I was at the American Society of Criminology meeting in Atlanta last week, and the keynote talk was given by former President Jimmy Carter. I've always appreciated his human rights work, his involvement in Habitat for Humanity and his humble ethic of service.

Among the highlights:

When asked about Christianity and the many who call themselves Christian but do not share his values, Carter commented "I worship the Prince of Peace, not the Prince of Pre-emptive Strikes."

He articulated human rights as simple common sense - the right to have a job, the right to have shelter, the right to have food, the right to basic health care, the right to some human dignity and the right to hope for a better future. [Hallelujah!]

 former president jimmy carter

Yes, a silly picture of Jimmy Carter with a cell-phone camera from across a large ballroom.  

He did a great job during the question and answer, especially the final question about whether the reputation of the U.S. was irreparably injured in the global community. No, Carter said - the next president could take huge steps to fixing it in the first 10 minutes. State: The U.S. will not torture; we will abide by the Geneva Convention; we will respect nuclear non-proliferation agreements; we will abide by the Kyoto Protocol on global warming; ...

So, which one of the many presidential candidates in our great two party system will do that?

November 05, 2007

Black Swans, Banks and Bird Flu in the U.S.

In nature, swans are white, but black swans are a low probability event that is observed with regularity. In other contexts, a black swan is a low probability event with serious, even catastrophic consequences. Terrorism is a prime example of a black swan event, and I earlier blogged about the simulation of a 10 megaton nuclear weapon in a shipping container being sent to the port of Los Angeles. Now, we have another simulation of a black swan event - an examination to see how the U.S. financial system would hold up to a bird flu pandemic that could happen if the virus mutated so it could be spread human to human. 

The simulation imagines human to human transmission that starts in Asia but quickly spreads because of airline passengers.

One of the biggest challenges financial institutions will face is how to cope with absenteeism. In week one, the Treasury exercise directs the financial organizations to assume that 25 percent of their work force is not coming to work, either because of illness or because of fear of being infected or because they are staying home to take care of children who can't go to school because the schools have closed.

To decide who is absent, the Treasury directs the institutions to assume that everyone whose last name begins with certain letters, which could cover the bank president down to the local teller, cannot come to work. The 25 percent absentee rate will jump to 49 percent in week two.

[snip]

Absent employees won't be the only troubles facing the financial institutions. Under Treasury's scenario, they also will have to cope with shrinking Internet bandwidths as more and more people try to work from home. Cash withdrawals from ATM machines are expected to rise sharply and getting the machines refilled will present problems because of rising absentee rates at the armored car companies and the difficulty of getting fuel for the armored trucks as gasoline refineries curtail their production.

The simulation finished last month, although it will be a while before all the results are analyzed a report comes out. In the meantime, TheStreet.com recommends you prepare for the bird flu also. I'm not so sure, but I would look over the recommendations and see which ones reinforce other disaster preparedness ideas you might already be considering. If you take this seriously, then check out PlanForPandemic.com and PandemicFlu.gov.  

Many people like the idea of putting away gold or silver in case of an emergency, especially "junk silver" coins. [Before 1964 U.S. coins were made with silver, giving them a value because of the precious metal and would be easy to trade because it is a known amount of silver in smaller coins instead of a gold bar.] But note that the U.S. Treasury claims the power to seize not just precious metal but all other financial assets if necessary.  You can rub your eyes and blink again, but the sentence will read the same. And it is based on a letter from the Trasury, not the rantings of a paranoid here-comes-the-black-helecopters type.

Now, back to your regularly scheduled reality...

 

Listening to

annie lennox, songs of mass destruction 

Annie Lennox

Songs of Mass Destruction

October 23, 2007

Corrections Corporation of America Votes Down Transparency on Political Donations

As part of work for a new project (more details to come soon), I've been reviewing the Securities and Exchange Commission filings of the Corrections Corporation of America, which is the largest private prison company in the US. Each year, companies traded ont he stock exchange have annual meetings where shareholders get to vote on issues related to governance, which are reported in form 14A (definitive proxy). For 2007, the following proposal by a group of activist shareholder nuns caught my eye. What's in the box below is the exact writeup from CCA's 2007 14A (see p 29-31):

 

PROPOSAL 5 – PROVIDE SEMI-ANNUAL REPORTS TO STOCKHOLDERS REGARDING THE COMPANY’S POLITICAL CONTRIBUTIONS AND EXPENDITURES
Stockholder Proposal
     Sisters of Charity of the Blessed Virgin Mary, 205 W. Monroe, Suite 500, Chicago, Illinois 60606-5062, beneficial owner of at least 100 shares of our common stock, Mercy Investment Program, 205 Avenue C, #10E, New York, New York 10009, beneficial owner of 200 shares of our common stock, and The Province of St. Joseph of the Capuchin Order, 1015 North 9th Street, Milwaukee, Wisconsin 53233, beneficial owner of at least 100 shares of our common stock, have given the Company notice that they intend to present the following stockholder proposal at the Annual Meeting. In accordance with applicable proxy regulations, the proposal and supporting statement, for which the Company accepts no responsibility, are set forth below.
 
Corporate Political Contributions and Trade Association Dues
Corrections Corporation of America – 2007
Resolved: that the shareholders of Corrections Corporation of America hereby request that our Company provide a report, updated semi-annually, disclosing our Company’s:
  1.   Policies and procedures for political contributions and expenditures, both direct and indirect, made with corporate funds.
 
  2.   Monetary and non-monetary political contributions and expenditures, not deductible under section 162(e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162(e)(1)(B) of the Internal Revenue Code. The report shall include the following:
  a.   An accounting of our Company’s funds that are used for political contributions or expenditures as described above;
 
  b.   Identification of the person or persons in our Company who participated in making the decisions to make political contribution or expenditure; and
 
  c.   The internal guidelines or policies, if any, governing our Company’s political contributions and expenditures.
This report shall be presented to the Board of Directors’ audit committee or other relevant oversight committee and posted on our Company’s website to reduce costs to shareholders.
Supporting Statements
As long-term shareholders of Corrections Corporation, we support policies that apply transparency and accountability to corporate spending on political activities. Such disclosure is consistent with public policy and in the best interest of our Company’s shareholders.
Company executives exercise wide discretion over the use of corporate resources for political activities. These decisions involve political contributions called “soft money.” They also involve payments to trade associations and related groups used for political activities that media accounts call the “new soft money.” Most of these expenditures are not disclosed. In the 2006 election cycle, Corrections
Corporation contributed at least $403,000 in soft money. (PoliticalMoneyLine: http://www.fecinfo.com/cgi-win/irs_ef_inter.exe?DoFn=&sText=1910&sYR=2006). In the 2004 election cycle, Corrections Corporation contributed at least $401,435 in soft money. (PoliticalMoneyLine: http://www.fecinfo.com/cgi-win/irs_ef_inter.exe?DoFn=&sText=1910&sYR=2004). In the 2002 election cycle, Corrections Corporation contributed at least $135,500 in soft money. (PoliticalMoneyLine: http://www.fecinfo.com/cgi-win/irs_ef_inter.exe?DoFn=&sText=1910&sYR=2002)
However, its payments to trade associations used for political activities are undisclosed and unknown. This proposal asks our Company to disclose its political contributions and payments to tax exempt organizations including trade associations.
The Bi-Partisan Campaign Reform Act of 2002 allows companies to contribute to 527s and to give to tax-exempt organizations that make political expenditures and contributions.
Absent a system of accountability, corporate executives are free to use company assets for political objectives that are not shared by and may be inimical to the interests of a company and its shareholders. Relying on publicly available data does not provide a complete picture of the company’s political expenditures. Our Company’s Board and shareholders need complete disclosure to be able to fully evaluate the political use of corporate assets. Thus, we urge your support for this critical governance reform.
 
The Response of the Board of Directors to the Stockholder Proposal
     The Board of Directors has considered this proposal and believes that its adoption is unnecessary and would not be in the best interests of the Company or our stockholders.
     The Board believes that participating in the political process is an important means to enhance stockholder value and promote good corporate citizenship. From our perspective, it is important that federal, state and local governments have an understanding of how their actions impact the Company’s business, customers and employees as well as an understanding of the benefits of public-private partnerships and the Company’s ability to assist them in meeting their corrections needs. Consequently, we communicate with government organizations and officials about our business concerns and the services we provide. We also seek to be an effective participant in the political process by making prudent political contributions that are consistent with federal, state and local laws. We also contribute to tax-exempt organizations, some of which may make political expenditures, from time to time when we believe that doing so is in the best interests of the Company and its stockholders. When made, such contributions are not earmarked and thus may be used for non-political purposes such as research activities, charitable endeavors, education initiatives and public information campaigns.
     The Company’s ability to be active in the political process is already limited by numerous federal, state and local laws and regulations that restrict the organizations and entities that may receive corporate funding. In addition, political contributions are subject to extensive disclosure requirements by both the federal and state governments. The Company also has in place established budgeting, reporting and compliance procedures that are designed to ensure that all of the Company’s political activities are subject to the Company’s budgeting process, known and evaluated by management and in compliance with applicable laws and regulations, including laws requiring public disclosure. Such procedures and the contributions made by the Company are subject to oversight by the Board, through its Nominating and Governance Committee.
     Overall, the Board deems the Company’s political activities to be important efforts that should not be burdened by special disclosures in addition to those required by federal, state and local regulatory authorities. We also believe that the high level of disclosure that is already publicly available is sufficient to provide information to stockholders and others who are interested in the Company’s political activities, and that the Company’s current budgeting, reporting and compliance activities are sufficient to ensure accountability. Accordingly, we believe that the time and expense that would be required to implement the proposal would result in little, if any, corresponding benefit to the Company’s stockholders.
     For these reasons, the Board of Directors unanimously recommends a vote AGAINST this proposal.
     Approval of the proposal requires the affirmative vote of a majority of the votes cast on the matter.

 

Because most shares are owned by management and large institutions, shareholder votes go overwhelmingly in favor of what the Board recommends. The results are found in the 10Q form (p 40), filed after the annual meeting and we see:

On a stockholder proposal for the Company to provide a semi-annul report to stockholders disclosing certain information with respect to the Company’s political contributions and expenditures, 28,180,340 shares, or 25% of the shares present or represented at the Annual Meeting, voted in favor of the motion, 52,448,090 shares voted against the proposal and 33,524,778 shares abstained.

The 14A also contains new info on executive salaries, which I will soon use to update my existing page on why private prisons do not save money over public prisons (hint - the CEO's salary is $700,000).

This is disappointing but not surprising. It's no consolation, but CCA is in good company with Google. As a column on TheStreet.com explains, the by the New York City Comptroller proposal meant

Google management would have been required to take all legal steps possible to fight any demand for censorship. The company would never have been required to break the law anywhere. But if a government wanted Google to start doctoring search engine results to suppress politically inconvenient truths, that government, any government, would have had to take the company to court to impose its will.

Not much to ask, really. But it was too much for Brin, Page and Schmidt. And it was too much for your fund manager. (Brett Arends, Funds Cave to Google Blind Eye at Censorship 9/26/2007)

Who needs political freedoms and transparency when you have capitalism?