A shoe says it all...

I remember watching news reports of the invasion in Iraq and seeing the people of Baghdad strike a statue of Saddam Hussein with their shoes.  The commentator noted  that throwing shoes at someone was a "grave insult in the Arab world".

Today, as President Bush made his last visit to Iraq, an Iraqi journalist threw, not one, but both shoes at the President and called him a "dog" as he was escorted by the secret service out the door.

Say what you want about President Bush - and I will in an upcoming blog post - but I find the contrast amusing.  The people of Iraq could only criticize and insult Saddam when he was presumed dead and without power over their lives.  To have thrown a shoe at Saddam would have meant death at best and, more probably, torture. 

Interestingly, after being tackled - shown at left - and escorted out of the press conference, nothing further was done to the enraged journalist.

Somewhat ironically, in protesting a US war and security action he at the same time showed its benefit to Iraq and the Arab world as a whole.

Do not misunderstand what I am saying. I am - with the benefit of hindsight - saying that Iraq was a good idea, was done well, was done anywhere near well, or that it will ever be what the American public was told it could be.

What I am saying is that, but for President George W. Bush, had that journalist done the same to Saddam, he would be dead.

Pictured Below: The identified journalist, Muntadar al-Zeidi, utilizing his newly found right of free-speech. (And, if Iraq is anything like the United States, talking to an attorney about a civil-suit for Assault).

UPDATE: The video has become available.

Happiness?

A few news sources (The New York Times, Washington Post, Boston Globe, among others) are reporting the recent publication of a British Medical Journal article which suggests that happiness is caused by participation in social networks and is therefore contagious.  Purportedly, the study suggests that if you merely associate yourself with enough people who are happy, you too will be happy!

Seeing as how I only associate myself with law students this could explain why I have been called a "Corporate Monster" and "Scrooge" over the past 24 hours.  It's not my fault, I blame my associates!

However, this post on the freakonomics blog - a pretty fascinating blog by the way - shows that the while the article's research necessarily supports the correlation between increased happiness and social networking, the notion that happiness is caused by social networking is a bit more shaky.  The research methods the study used would also suggest that if you want to be taller or have more headaches you should also participate in social networking.  Clearly, the better proposition is that similar people who participate in life together are subjected to similar environments and therefore share in similar emotional responses.

Sadly, I suppose I can no longer depend on my Facebook addiction for true happiness.

Then again, I particularly enjoyed Colbert's analysis of the study: Threat Down!

(You have to wait to the end, but the whole clip is funny.)

The Auto Bailout

The Republicans in Congress successfully thwarted the auto industry bailout package the other night, as there were not enough votes for cloture (sixty votes are required to end debate on a bill in the Senate).  Now, the UAW is calling upon the White House to use the funds alloted to aid the financial industry (TARP funds) to bankroll the failing auto industry and blaming Republicans for the failed measure.

Republicans, in turn are shifting blame to the UAW for not agreeing to mandatory wage cuts. This proposed provision was intended to bring the cost of doing business for domestic manufactures in line with the cost of doing business for foreign transplants in the American 

labor market (Honda, BMW, Nissan, etc.).

The UAW president stated:

“This arbitrary requirement was not imposed on any other stakeholder groups. Thus, the U.A.W. believed this was a blatant attempt to make workers shoulder the lion’s share of the costs of any restructuring plan.”

My response: yes, this is a blatant attempt to make workers shoulder the lion's share of the costs of restructuring, and it should be.

First and foremost, I do not think that Republicans should have to "shift the blame" at all.  In fact, I would take full accountability for this bill failing to pass if I were in leadership.  Someone said the other day that in order for Republicans to "win" on this issue they must pass better legislation.  The majority of the American public thinks this bailout is a bad idea.  The majority of informed informed commentators think that restructuring these corporations through bankruptcy is the best way to get them on their feet.  Sometimes, doing nothing and letting the economy take its natural course is the best thing to do.  To my mind, the Republicans should be proud of NOT passing legislation in this instance.

Additionally, while I can be sympathetic to the plight of workers of Republic Windows because an ineffective union didn't go to bat for them until it was too late, the same cannot be said of the UAW workers.  Indeed, it could be argued that if the UAW didn't demand an average salary equaling $70 per an hour for a line worker, GM, Chrysler and Ford would not be in the present situation. (This is especially convincing when one considers that foreign automakers producing in the United States pay on average around $40 per an hour for a line worker). To support this reasoning, comments from the Volokh Conspiracy show how higher wage costs on the Big Three helped create an inferior product and have led to their demise.  Essentially, if you have to sell a car at the same price as competitors who have a lower cost of labor, your product will be necessarily inferior.

While it is debatable whether or not the proposed bailout will even save jobs or retain more quality jobs than would otherwise be destroyed but for the bailout, this is not the point.  The point is that the UAW helped put The Big Three in this hole - in my opinion because the UAW is a monopoly auto workers union - so, their workers who have reaped the benefits of these detrimental practices should now have to pay. Short of the UAW agreeing to mandatory wage reduction and other concessions, no bailout bill should see the light of day.

Rarely do I agree with Speaker Pelosi on anything, but she said it best:

"[A]utomakers and their unions need to stop acting like little socialist countries, and start behaving like businesses again."

Happily, Republicans in the Senate have helped prevent the UAW from escaping the consequences of its ill advised actions.  If the White House were to skirt this by twisting TARP funding in an unintended direction, and coddle the "socialist countries" of Big Business and monopolistic unions, not only would it circumvent the market but it would be an unforgivable breach of conservative trust.

Ebay Auction...

I found this eBay auction to be hilarious political commentary.

I really don't have much to say about the scandal regarding the Illinois Senate seat.  The Governor was a crook and he got nabbed.  Kudos to those, reportedly individuals within the Obama transition team, who reported this to the FBI.

I do wish Fox news and other conservatives would stay off President-elect Obama on this issue. If the man makes a mistake, we should rightfully point that out (ahem! Auto Bailout), but if he does a good job by confronting corruption, we should applaud that.  

Not to mention, it just makes Republicans appear more "zealotish" than usual.

Some might suggest that this is a sign that we live in a nation still subject to corruption. I don't doubt that this is true.  Corruption certainly happens on various levels, all the time.  As long as people are people they will attempt to achieve power through less-than-scrupulous practices. 

However, though scandals are reported with dismay by all (how could such a thing ever happen?), I think they reflect the better side of our governance. Given the certain nature of corruption, in a sense, the occasional corruption centered scandal is better than no scandal at all.

A fundamental question then should be, how can we ensure that ALL - as opposed to some - scandals are reported? Transparency is an obvious solution.  The more information that is available the harder it will be to hide practices that are abhorrent to the majority of Americans.  The difficulty is that transparency has its costs. Like it or not, the majority of us are not perfect and that creates possibilities for real embarrassment, which people try to generally avoid.  Too much transparency and you may deter the best of the best from entering public service. People who desire privacy and are skilled enough to find work elsewhere, will do so. Too little transparency and the only people you will have in office will be named "Vinnie" with close ties to Sicily and a great appreciation for fine Italian food.

Obviously these are the extremes, but a balance needs to be struck.  Are there really all that many talented individuals who would frown upon a window into their working lives? (In short, how elastic is the demand?)  If not, ideas like transparent finances, schedules and communications for public officials don't seem like a bad ideas. 

Additionally, would such transparency unreasonably burden the work of individuals in government?  If everyone is watching what you say, you may not be free to say what you're really thinking.  Working under high pressure in a fish-bowl can have terrible consequences. Are we really willing to trade an effective government for an honest one?

These are simply some of the questions at the fringe of the issue.  Anybody have thoughts? 

Republic Windows: Alternative Solutions

On my post regarding Republic Window, a visitor left the following query:

"Just curious: what would your solution be?

The Federal law (silly, ridiculous, however it may be perceived) was put in place to protect workers. I'm glad it's there. But agree with it or not, it's the law.

You're not arguing that Republic should be able to break the law, are you?
What would your solution be to guarantee the workers what they're owed? Or are you suggesting that these particular workers in this particular company should not be paid?"

It's bad practice to simply complain without offering solutions, so I will oblige by answering each of these questions.

1) I am not arguing that Republic should break the law. Indeed, if you owe workers money, you owe workers money. However, whether or not there is any way they could obey the law is a matter very much up for debate. (This would involve investigating the books of Republic... something I cannot do, though BoA apparently did).  To put it simply, you cannot pay what you do not have.  Now, that is not to say that Republic cannot sell off assets to fulfill its obligations, but, in this economy, that is not presently a realistic possibility. So, whether you see Republic as an abhorrent corporation or merely a bankrupt one, the bottom line is that under normal circumstances (that is, without government intervention) they likely cannot obey the WARN act.

**UPDATE:  I am not ignoring the purchase of another firm by the owners (investors) in Republic Window.  It is simply not pertinent to the issue at hand.  Republic Window is a distinct corporation from other investments.  Thus, the owners of Republic Window are not responsible to the workers, rather the Corporation as an entity is.  While the actions of the ownership may not smell of Corporate responsibility, and do not make the owners very sympathetic people to argue for, they simply highlight the point made below:  the law needs to emphasize individual accountability and power rather than rigid and inflexible mandates.

2) The fact that the law is the law does not usually prevent most self-described "proud old lefties" from supporting illegal actions.  In fact, the sit-down strike, used by the Union in this circumstance, is illegal. Interestingly, this means that certain politicians were supporting an illegal union action). Just as some would argue that the Union had no 

choice in their illegal action, I would argue that the corporation had little choice is disregarding the WARN act.

3)  While not supporting the company jilting their workers of hard earned dollars, or supporting their violation of the WARN act, I will call the WARN act a silly piece of legislation.  

Why?  Because it makes no sense whatsoever.  

The WARN act requires that firms who employee that are verging on bankruptcy (for instance, Republic) give their employees sixty days notice before lay-offs are effective.  While the spirit of this law is effective, it has severe consequences.  Almost all businesses run their operations on credit.  Credit being granted to the business is generally contingent on the business being able to pay that money back.  However, if you publicly notify your employees that lay-offs will commence, this generally does not give the bank confidence in your ability to pay back future loans.  Thus, the WARN act places business in a conundrum: how to let your employees know the company is a sinking ship without ruining your line of credit with the banks?

4)  The worst consequence is that the WARN act takes the power out of the Union's hands and places it within the hands of the government. Because of the sixty-day provisions, companies are less likely to negotiate lay-off benefits with the Union.  Thus, the only remedy left to the Union lies with petitioning the government for intervention. So, to finally get around to the point, here is my solution:  Let Union's be responsible for securing lay-off notice on their own.

This seems to me to be a fairly easy task. Let's say that you have 100 workers and each would be paid $7,000 over the period of notice.  You simply require the company to issue some sort of guarantee (perhaps a letter of credit or standby), payable to the Union in the event of a lay-off.  When the company announces a layoff, the Union presents on the guarantee and is paid the $700,000 to stipend their workers throughout the period of notice on the line of credit previously secured.  

I am sure there are better solutions that more brilliant minds can think up, but there certainly are alternatives.  Most of my alternatives would be putting power into the hands of the Union and actually letting Unions do what they are supposed to do. The bottom line: there are better solutions than inflexible laws that require corporations to do the impossible. 

However, none of this was the point of my original post on the Republic Window sit-in strike. The point is that our public policy should not be to force banks to make bad business decisions to save those who are making bad business decisions.  This type of thinking is what got us into this financial mess and its continuation will undermine the purported purpose of the "financial bailout".

I should be studying...

Final exams are upon us and I am currently in the middle of "mastering" the intricacies of Partnership law.  The last thing I should be doing is blogging. (Particularly as I promised to blog on other topics first.)  However, this article regarding a strike in Chicago caught my eye.

Apparently, a company called Republic Windows and Doors is in dire straits. They laid off their workforce with only three days notice when they found out that Bank of America was cutting off their financing and they would no longer be able to make payroll.

In response the workers union staged a sit-in and the (allegedly corrupt) Governor of Illinois, Rod Blagojevich, ordered the state to suspend doing business with the banks until they extended the credit to this bankrupt company.  In response, Bank of America extended the credit, allowing Republic Windows and Doors to pay their now laid-off workers the Federally mandated 60-days in continued wages (while these workers essentially do nothing).

To put it bluntly, this seems silly.

Are we not in the current credit crunch because banks bankrolled operations (that is, lent gobs of  money without security) when they shouldn't have?  When the system toppled, we blamed the banks for being "greedy" and "short-sighted".  Now, when the remaining banks make a seemingly wise decision to refuse unsecured loans to a bankrupt corporation, public officials cut off their business.

[sarcasm] This, of course, makes total sense.  Let's reward sensible banking practices by punishing them.  That will encourage these essential institutions that we have deemed "too big to fail" to act reasonably. [/sarcasm]

I understand the position of the labor union here.  No one wants to lose their job.  I cannot in good conscious accuse hard working men and women of anything other than trying to protect their livelihood. (Though, I might suggest that if they were willing to work for a little less and negotiate with management and layoff might not occur).

I cannot, however, comprehend the actions of the Illinois state government here.  Nor can I make sense of a Federal law that requires industries that are already bankrupt to further bankrupt themselves by supporting their workers for two-months while they produce nothing.

Some may argue that Wall Street greed caused the banking crisis.  More and more I am convinced that it was equally the fault of interventionist public policy.  The market is trying to fix itself but, for all their good intentions, the government just cannot leave well enough alone.