Saturday, November 5, 2011

Justice Ginsburg


California Lawyer (November 2011) has an excellent interview with Justice Ruth Ginsburg.  Below is my favorite part: 

Q. I'd like you to talk a little bit about the cases that I've spent my life studying, the key gender cases that began in the 1970s, which you litigated and wrote amici briefs for. The 14th Amendment, which guarantees equal protection under the law, had been settled interpretation for, I think, 104 years. What made you think that you could get the courts to overrule more than a century of precedent?

A: The times. The Court is a reactive institution. It's never in the forefront of social change. When you think of Brown v. Board of Education, it was not only that Thurgood Marshall was a brilliant lawyer. It was the tenor of the times. We had just fought a war against an odious form of racism, and yet our troops through most of World War II were separated by race. Apartheid in America really had to go. Similarly, by 1970 the women's movement was revived, not just in the United States but all over the world. As a great legal scholar once said, the Court should never react to the weather of the day, but inevitably it will react to the climate of the era, and the climate was right for that change.

Perhaps, at least in a peaceful society, all good things come to those who wait?  I've sometimes wondered whether the Supreme Court's decision upholding Muhammad Ali's conscientious objector status would be the same if the case had arrived at the Court a few years earlier. In one article I read--it was from Men's Journal (Nov 2011)--the author wrote that the Supreme Court was set against Ali until a law clerk gave them a copy of Haley's Autobiography of Malcolm X. After reading the book, the Court allegedly had a change of heart. True or not, the anecdote demonstrates that the law, so long as it relies on interpretation by men and women, necessarily intersects with their bias.

In any case, regarding the efficacy of the Constitution against government tyranny--whether slavery, Jim Crow, Japanese internment camps, Abu Ghraib, etc.--I'll leave you with this Lysander Spooner quote: "But whether the Constitution really be one thing, or another, this much is certain--that it has either authorized such a government as we have had, or has been powerless to prevent it." [Updated on 3/25/12]

Bonus: see also "When Mass Murder and Theft of All Human Rights Were 'Legal': The Nazi Judiciary and Judges," by Hon. Richard D. Fybel, California Litigation, Vol. 25, No. 2, 2012, page 15-21.  He discusses Nazi Germany and the judicial branch's politically-convenient prostration before Hitler.

Update on 6/7/14: The Trials of Muhammad Ali (2013) includes an interview with a Supreme Court law clerk who worked on Ali's conscientious objector case. The Supreme Court almost dismissed the case but sent it back for review because a new wiretap issue arose (the government admitted to spying on conversations between MLK and Ali). Then, when the case returned to the Supreme Court after three and a half years, the preliminary vote was against Ali 5 to 3 until Thomas G. Krattenmaker, Justice Harlan's law clerk, argued--many times to Harlan--that the Nation of Islam should be treated the same as Jehovah's Witnesses who believed that only God may compel the followers to war and no one else. After reading the Autobiography of Malcolm X (1965) and Message to the Blackman in America (1965), he convinced Justice Harlan, who switched his vote, making it 4 to 4.  However, a deadlocked 4-4 vote would have put Ali in jail for 5 years and generated no substantive written opinion explaining the Court's rationale.  Then Justice Potter found precedent to rule in a narrow way that applied only to Ali based on denial of due process, which permitted the government to continue with its draft while allowing only Ali to file for C.O. status (rather than every single Nation of Islam member or prospective member). The revised opinion resulted in a unanimous 8 to 0 decision (Justice Thurgood Marshall recused himself because the NAACP Legal Fund was involved). The Court ruled Ali was denied due process because the government argued that he was insincere in his religious beliefs at the Draft Board yet later told the Supreme Court it believed Ali was sincere. And just like that, history was made. Without Krattenmaker, Harlan, and Potter, Ali goes to jail, never reclaims the title, and never raises the torch at the '96 Olympics.

BonusInterview with California Supreme Court Justice Stanley Mosk (1998):

LaBerge: [H]ow do you think both you and just the court in general can influence social policy, or vice versa, does social policy influence the decisions?

Mosk: Well, theoretically, we should be governed solely by the law and not by individual concepts of rights and duties.  But inevitably, individual rights do enter into opinions that may be written.  Whether that's good or bad, effective or ineffective, is always debatable.  [pp. 84]

Mosk: I have a certain sympathy for individuals in our society.  Our society has grown so large and impersonal that I think we sometimes have the tendency to overlook an individual's rights and obligations. [pp. 85]  

Saturday, October 22, 2011

Movie Quotes

Adam's Rib (1949): "Lawyers should never marry other lawyers. This is called inbreeding, from which comes idiot children and more lawyers."

"What is marriage? Tell me that. It's a contract. It's the law. Are you going to outsmart that, the way you've outsmarted other laws?" (Spencer Tracy to Katherine Hepburn)

"Assault lies dormant within us all. It requires only circumstance to set it in violent motion." (Hepburn's closing argument)

All About My Mother (1999): "Success has got no taste or smell.  And when you get used to it, it’s like it didn’t exist." 

The Art of the Steal (2009): "One man's conspiracy is another man's political consensus."

Cape Fear (1962): "You can't arrest a man for what he might do. And thank heaven for that."

[Bonus: "There is no such crime as a crime of thought; there are only crimes of action." -- Clarence Darrow]

Citizen Kane: (1941): Woman: "I don't know many people." Kane: "I know too many people. I guess we're both lonely."

Dial M for Murder (1954): "[P]eople don't commit murder on credit."

Eat Man Drink Woman (1994): "Eat, drink, man, woman. Basic human desires. Can't avoid them. All my life, every day, that's all I've ever done. It pisses me off. Is that all there is to life?"

Equinox Flower (1958) (not a good movie, but I liked these lines): "Then everyone's inconsistent. Everyone but God. Life is absurd. We're not all perfect. As a scholar said, 'The sum total of inconsistencies is life.'"

The Field (1990):
McCabe: "There's a law stronger than the common law."
Priest: "What's that?"
McCabe: "The law of the land."

Gilmore Girls (2001): Luke, on marriage: "It's a bureaucratic civil ceremony and a pretty pointless one...It's not biologically natural for people to mate for life. Animals don't mate for life. Well, ducks do, but who the hell cares what ducks do? I mean, people grow and evolve their whole lives. The chances that you'll grow and evolve at the same rate as someone else are too slim to take. The minute you say, 'I do,' you're sticking yourself in a tiny little box for the rest of your life. But hey, at least you had a party first, right?" (Season 2, "Red Light on Wedding Night")

Gloomy Sunday (1999):
Schnefke: "But we must be careful not to stray too far outside the law."
Hans: "Of course.  But the beauty and vibrancy of the law lies in its flexible boundaries."
[Two Nazis in Hungary around 1939 discussing their future, indirectly demonstrating that the law, regardless of its substance or intent, usually favors those in power.]

Henry Fool (1997): "An honest man is always in trouble, Simon.  Remember that."

The Jane Austen Book Club (2007): "He looks at me like he's the spoon, and I'm the dish of ice cream."

Juno (2007), from the protagonist, a pregnant high school student: "Oh, I'm a legend. The tale of the cautionary whale, you know?"

Kind Hearts and Coronets (1949) (a very fun dark comedy): "I must admit, he exhibits the most extraordinary capacity I've ever encountered for middle age in a young man of 24."

The Last Kiss (2006) (overall, not a great movie, except for these lines): "Stop talking about love. Every a**hole in the world says he loves somebody. It means nothing. What you feel only matters to you. It's what you do to the people you say you love--that's what matters. [Indeed] It's the only thing that counts."

Lilies of the Field (1963): "To me, it [the chapel] is insurance. To me, life is here on this Earth. I cannot see further, so I cannot believe further. But if they are right about the hereafter, I have my insurance, señor."

The Lion in Winter (1968) (a must-see film): "He came from the North to Paris with a mind like Aristotle's and a form like mortal sin. We shattered the Commandments on the spot."

A Man for All Seasons (1966):
Roper: So, now you give the Devil the benefit of law!
Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
Roper: Yes, I'd cut down every law in England to do that!
Thomas More: Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down, and you're just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I'd give the Devil benefit of law, for my own safety's sake!

Mario's Story (2007): "[E]ventually good triumphs, but before it triumphs, a lot of people have to suffer."

Miller's Crossing (1990): "All in all, not a bad guy...if looks, brains, and personality don't count."

My Favorite Year (1982): ‎"Comedy? You can't write comedy in California. It's not depressing enough!"

Nashville (1975): "Congress is run by lawyers. A lawyer is trained for two things, and two things only: to clarify and to confuse. He does whichever is to his client's advantage."

Night of the Hunter (1955): "Open the door, you spawn of the devil's own strumpet!"

One Day (2011): "She lit up with you...She made you decent. And then in return, you made her so happy."

The Opposite of Sex (1998): "What if sex isn’t about procreation...what if it’s about concentration?  I only ask for one thing: when you’re in a crowded room, look for me first."

Public Enemy (1931): "You're a spoiled boy, Tommy.  You want things, and you're not content until you get them.  Well, maybe I'm spoiled, too."

Quai des Orfevres (1947): "Maurice is my flame. He may not burn bright, but he lights my way."

Revolutionary Road (2008): "No one forgets the truth, Frank. They just get better at lying."

Sabrina (1954):
Linus Larrabee: What’s money got to do with it? If making money were all there were to business, it'd hardly be worthwhile going to the office. Money is a by-product.
David: What’s the main objective? Power?
Linus: Agh! That’s become a dirty word.
Davis: Well then, what’s the urge? You’re going into plastics now. What will that prove?
Linus: Prove? Nothing much. A new product has been found, something of use to the world. So, a new industry moves into an undeveloped area. Factories go up, machines are brought in, a harbor is dug and you’re in business. It’s purely coincidental of course that people who've never seen a dime before suddenly have a dollar. And barefooted kids wear shoes and have their teeth fixed and their faces washed. What’s wrong with a kind of an urge that gives people libraries, hospitals, baseball diamonds and movies on a Saturday night?

The Shop Around the Corner (1940):
Pirovitch: I'm sure she'll be beautiful.
Alfred Kralik: Well, not too beautiful.  What chance does a fellow like me--
Pirovitch: What do you want?  A homely girl?
Alfred Kralik: No, no.  You knock on wood for me.  Just a lovely, average girl.  That's--that's all I want.

Slumdog Millionaire (2008): "Money and women: the reasons to make most mistakes in life."

Starting Out in the Evening (2007): "I find very few men of my age interesting. They're like chewing gum--ten minutes of flavor followed by bland repetition."

10,000 Black Men Named George (2002): "Nobody got anything in this country unless they took it.  Hell, I admire the white man.  He wanted Manhattan Island, gave the Indians a bottle of whiskey, and he took it.  White folks died, suffered, sacrificed.  Took a country and built it up.  Yeah, they brought us here in chains, we know that.  We're still in chains--they're a tad lighter, but they're still chains. And the only way those chains are gonna get broke is if we break 'em.  Ain't nobody else gonna do it for us...We're the same, you and me...I just like money and p*ssy more than you do." -- Milton P. Webster, black Republican (1887-1965), to union organizer and Democratic civil rights leader A. Philip Randolph

To Catch a Thief (1955):
Francie: Money handles most people.
John: Do you honestly believe that?
Francie: I've proved it.
John: You're a singular girl.
Francie: Is that good or bad?
John: Oh, it's good, it's quite good. You know what you want. You go out after it and nothing stops you from getting it.
Francie: You make it sound corny.
John:
Oh no, you're a jackpot of admirable character traits.
Francie: I already knew that.
John: Yes, I will say you do things with dispatch. No wasted preliminaries. Not only did I enjoy that kiss last night, I was awed by the efficiency behind it.
Francie: Well, I'm a great believer of getting down to essentials.


Venus (2006):
"For most men, a woman's body is the most beautiful thing they will ever see."
"What about for women?"
"Her first child."

Wall Street (2010): "Most people, they lose, they whine and quit. Don't run when you lose, don't whine when it hurts. It's like the first grade...Nobody likes a crybaby."

X-Men 2 (2003): 
Storm: Sometimes anger can help you survive.
Nightcrawler: So can faith.

You Can't Take It With You (1938): Lincoln said, "With malice towards none; with charity to all." Nowadays they say, "Think the way I do, or I'll bomb the daylights out of you."

Tuesday, June 28, 2011

Marvell Technology's Annual Shareholder Meeting (2011)

Last year, I attended Marvell Technology Group Ltd.'s (MRVL) annual shareholder meeting and praised President/CEO/Chairman Dr. Sehat Sutardja. Dr. Sutardja is Chinese-Indonesian, one of the most successful entrepreneurs in the world, and seems both calm and dapper at the same time. One doesn't see very many Asian CEOs, even here in Silicon Valley, and I view his success as proof that the American Dream is alive and well. Since last year's shareholder meeting, however, Marvell stock decreased about 14%, even as the NASDAQ increased about 26%. This year, I was looking forward to hearing why the company stumbled. I wasn't expecting epiphanies, but I could not have predicted a lack of direct answers to my questions; the company's VP of Worldwide Legal Affairs essentially cutting me off; and Investor Relations telling me after the meeting that if I published something "incorrect," I would be "liable."

It all began when I walked into the Hyatt Regency Hotel in Santa Clara, California. Like last year, the food was good--granola, yogurt, berries, water, and other healthy options. I appeared to be one of about six people present who were not working for Marvell. Dr. Sutardja handled most of the formal portion of the meeting and sat at a table in the front of the room with the VP of Worldwide Legal Affairs Thomas Savage and CFO Clyde Hosein. There were six shareholder proposals. At no point in time were shareholders given an explicit opportunity to ask questions or make comments about any of them. The polls opened, then closed shortly thereafter, and we were told that all of the proposals passed. (If North Korean government officials were in charge of shareholder elections, I imagine they wouldn't need to deviate much from Marvell's script.)

The lack of comment on the proposals was particularly interesting because several proposals seemed downright Orwellian. Proposal 5 reduces from three years to just one year the time period for a Director's stock/RSUs to fully vest. See pages 63-64, 10K: "[R]emove the requirement that awards of restricted stock, RSUs, and/or performance units/shares granted...shall not be fully vested until a minimum period of 3 years from the date of grant...Section 11(c)(ii) will be amended so that each Annual RSU Award will vest and become exercisable as to one hundred percent (100%) of the shares...on the earlier of the next general annual meeting or the one-year anniversary of the Annual RSU Award grant date." Basically, company Directors get an opportunity to make more money in one year or less, instead of gradually over three years.

Generally speaking, longer vesting periods incentivize longer term outlooks. For example, if you are supervising a company's officers, and you know your shares will fully vest in one year rather than three, you have an incentive to think in terms of one year performance (short term), not three year performance (longer term). The CFO later appeared to defend the shorter vesting period by arguing that the proposal applied only to Marvell's Directors. Presumably, he meant that officers, not Directors, run the day-to-day operations of the company and continued to be incentivized over the longer term. Yet, this change in vesting periods means the Directors are now incentivized differently than the officers of the same company.

Why is any of this Orwellian? Proposal 2 in the same 10K states, "Our primary business objective is to create long-term value for our shareholders." On the same page, Marvell highlights the company's long term focus: "Long-Term Focused: Promote a long-term focus for our named executive officers through incentive compensation." (page 58, 10K) In short, welcome to Newspeak--even as Marvell is changing its compensation policy to incentivize shorter-term performance by its Directors, it claims it cares most about long-term performance.

When the formal portion of the meeting was over, the company CFO, CEO, and attorney in front of the room failed to ask if anyone had questions. They simply got up and started walking off. I piped up--as I am wont to do when I see something unusual--and said I had some questions. I questioned the company's proposal to shorten the vesting period. The CFO said that viewed together with the other shareholder proposals, it was "logical" to shorten the vesting period. I responded that the proposal incentivized the short term over the long term. That's when I got the answer about the proposal only affecting directors, not officers. The CFO also added that stock compensation was not the primary motivator when deciding a company strategy, and stock prices move based on numerous factors--all of which is true, but why incentivize short term performance at all? Why not make directors hold onto options/RSUs/shares as long as possible before being able to cash out? I pointed out that Marvell's stock price had been abysmal compared to both the S&P 500 and the PHLX Semiconductor Index. Page 38 of Marvell's own 10K shows that while the S&P and SOX showed gains, Marvell's stock price declined by almost 50% during the time period shown. (Later, the Investor Relations contact told me I was "cherry-picking" dates--even after I pointed out I was just citing the company's own materials.)

Given the stock's relatively poor performance, I asked about specific plans for the future. I never got an answer that was satisfactory to me. Someone pointed out all the different markets Marvell was involved in. Good for you, I thought, before saying that mere involvement in different markets is different than being able to actually compete in those markets. I again asked for specific plans to turn around the stock price and asked how the company planned to compete. Dr. Sutardja said that Marvell had started out as a small company and had always managed to compete against larger companies and entities. I still hadn't received an answer that was satisfactory to me about specific plans, but Mr. Thomas Savage then told me I had used up my questions and asked if there were other questions from anyone else. No one else raised their hand, so I politely pointed out that no one had answered my question about the company's specific plans to improve the stock price. At this point, Mr. Savage essentially prevented me from asking further questions in the open format and closed the meeting.

Despite Mr. Savage's actions, Dr. Sutardja was kind enough to talk to me after the meeting. The CFO also chimed in, saying that answering my questions could take three hours, i.e., I was not asking questions that could easily be answered in a short period of time. Dr. Sutardja again reminded me that Marvell started out as a small company and was competing against large companies like Qualcomm (QCOM) and would continue to use "efficient implementation" to differentiate itself. Mr. Savage hovered close by while I was listening to Dr. Sutardja and exited the room with him before I could ask him what he meant by "efficient implementation." As I left the meeting, the VP of Investor Relations made a beeline for me and asked me pointed questions, trying to get an idea of who I was and where I was from ("Who do you work for? Are you with the press?"). I said the company's vague responses to my questions about specific plans did not inspire confidence, and I would be writing about my experience. He told me if I published anything "incorrect," I would be "liable." I asked him if he was threatening me, and he said he wasn't threatening me. I then left the meeting.

Marvell's directors, officers, and employees should realize their failure to provide information about specific turnaround plans is unacceptable when their stock price has drastically underperformed the relevant indices. Telling shareholders that the company has little control over its own stock price is no way to win over anyone. I doubt Marvell wants to hear any of this--but I will defer to George Orwell, especially in light of the company's comment that I may be "liable" for incorrect information: "If liberty means anything at all, it means the right to tell people what they do not want to hear."

Disclosure: I own an insignificant number of Marvell (MRVL) shares, and I do not plan on initiating any new positions within the next 72 hours.

Friday, June 17, 2011

Justice Hugo Black on State Secrets

Justice Hugo Black, concurring opinion, joined by Justice William Douglas, New York Times Co. v. United States (1971) 403 U.S. 713, 717:

The guarding of military and diplomatic secrets at the expense of informed representative government provides no real security for our Republic... [P]aramount among the responsibilities of a free press is the duty to prevent any part of the government from deceiving the people and sending them off to distant lands to die...

More here.

Saturday, April 9, 2011

Steinbeck on the Measure of Man

At the end of some of my letters, I sometimes include the following passage from Steinbeck:

“Where does discontent start? You are warm enough, but you shiver. You are fed, yet hunger gnaws you. You have been loved, but your yearning wanders in new fields. And to prod all these there’s time, the bastard Time. The end of life is now not so terribly far away--you can see it the way you see the finish line when you come into the stretch--and your mind says, “Have I worked enough? Have I eaten enough? Have I loved enough?” All of these, of course, are the foundation for man’s greatest curse, and perhaps his greatest glory. “What has my life meant so far, and what can it mean in the time left to me?” And now we’re coming to the wicked, poisoned dart: “What have I contributed to the great ledger? What am I worth?” And this isn’t vanity or ambition. Men seem to be born with a debt they can never pay no matter how hard they try. It piles up ahead of them. Man owes something to man. If he ignores the debt it poisons him, and if he tries to make payments the debt only increases, and the quality of his gift is the measure of the man. -- John Steinbeck from Sweet Thursday

The last two sentences are pure poetry, aren't they?

Monday, April 4, 2011

Funny Stuff My Mom Sez

On voting:

Her: "I don't want my taxes to be raised. Who do I vote for? (showing me Democratic absentee ballot form)

Me: "Then you have to vote Republican."

Her: "No! I won't vote Republican! They take our money and destroy their families. They don't have values or morals. Who was that man who went to Argentina to cheat on his wife?"

Me: "I can't believe Gov. Sanford just raised my taxes."

[P.S. My mom loves Bill Clinton. That man is pure teflon, I tell ya.]

Voting 2010: my mom and I, discussing propositions on the ballot.

Me: Your taxes will go up...

Mom: No!

Me: ...but children's health services will receive more money.

Mom: Wait! This is tricky...

Scolding Me: (English is my mom's second language.)

"You are getting out of the line."

On Pancakes: Saturday morning, 8:00AM.

Me: "Okay, Mom, let's go get some pancakes."

Mom: [excited] "Are we going to IHOP?"

Me: "No, someplace better, called Stacks."

Mom: [incredulously] "Better than IHOP???!!"

Me: [shaking head] "I can't believe you think IHOP is the pinnacle for pancakes."

[Update: she liked Stacks, but didn't think it was significantly better than IHOP.]

On Style:

Me: [On my way out the door, wearing shorts and a t-shirt for my doctor's appointment.]

Mom: "Why don't you wear something nice? People will not respect you dressed like that. Why don't you dress like the Spanish people?"

Me: "Mom, you've never even been to Spain. Sigh."

On Cleanliness:

Mom, checking out my bathroom and unhappy with its uncleanliness:

"How are you going to live with other people? I bet [when it happens] people will complain and the police will come and arrest you."

On X-Mas cards:

Mom: [showing me a proposed holiday card she's written] "Have a blast, happy and wonderful holiday" [sic]

Mom: "So, is it 'holiday' or 'holidays'?"

Me: I can't believe you've written a sentence that is impossible to fix. I bet I can submit this to a record book of some kind.

Dad: It's "holidays."

On X-Mas presents (2010):

Mom: [gives me a mug with the phrase, "Christmas Calories Don't Count."]

Me: I know I collect mugs, so thank you, but this one is for women.

Mom: that's okay, you are getting fat.

On Super Bowl (2011):

Mom: every touchdown is 7 points?
Me: it's 6 points, and if you make a free kick, it's 7.
Mom: you mean if it goes through that thing?
Me: [sigh] Yes. If it goes through the thing, it's an extra point.
Mom: what if it doesn't go through the thing?
Me: Then it's 6 points.
Mom: When is the halftime?
Me: At the half.
Mom: What do you mean the half? The time, or the score?

Bonus:
Mom, on Usher: he stole all his moves from Michael Jackson.

Payback Time, from Mom:

Me, on telephone, leaving someone a message: "I would rather have this [referring to someone who is blunt but passionate] than someone apathetic."

Mom, over-hearing me: "That's not right. It should be 'her,' not 'this.'"

Me: "Unbelievable. You're actually right for once."

Mom, later, texting me: "U should say in face book that I corrected your English. U make fun of my English. now is d pay back time. Let's see what your friends say. I bet they all love me more."

On Nutrition:

Me: "You know how to identify good orange juice, right?"
Mom: "Yes, 'from concentration.'"

On Overeating:

Me: "You're eating too much."
Mom: "Me? What about you? All you do is eat. You're a potato."
Me: "What? A potato?"
Mom: "A potato couch."
Me: [confused] "What's a potato couch?"
Mom: "Someone who sits down and eats all the time."
Me: "You mean 'couch potato'?"
Mom: "Yes, that's what I meant."

On Overeating, Part II:

Mom, unhappy at seeing me eat an entire pint of ice cream: "If there is shortage of food, you will die quickly."

On Idioms:

Repairman [installing kitchen microwave]: "This microwave just needs some elbow grease."

Mom: "Where do I buy that?"

Grandma Edition, shopping together:

Grandma (in Farsi): "Is this blouse good?"

Me (in Farsi): "No. It's terrible. Are you able to see well?"

Grandma: "Yes, I can see very well. I can see all the way over there." (pointing to end of store)

Me: (joking) "Then why can't you see the dress in front of you?"

Grandma: "I am going to hit you."

Bonus: why my dad is voting Democrat in 2010: "Bush destroyed America, and now China is going to lead, and most of us will need welfare."

Saturday, April 2, 2011

California Lawyer Magazine on Public Pensions

From California Lawyer, "A Thousand Cuts" by Thomas Brum:

In February 2010 the Pew Center on the States reported that, in the next 30 years, state governments would be on the hook for $3.35 trillion for pensions. Two months later the Stanford Institute for Economic Policy Research reported that California's three main public pension funds had unfunded liabilities of $425 billion. And last October the Milken Institute reported that, by 2013, the combined liabilities of these three funds will be more than 5.5 times larger than total state general fund revenue...

In California, the state constitution protects public pension benefits, like other contracts, from impairment. (Cal. Const., Art. I, § 9.) Described succinctly by the state Supreme Court, "A public employee's pension constitutes an element of compensation, and a vested contractual right to pension benefits accrues upon acceptance of employment." (Betts v. Bd. of Admin., 21 Cal. 3d 859, 863 (1978) (citing Kern v. City of Long Beach, 29 Cal. 2d 848 (1947)).)...

[T]he court noted, "Imprudence...is not unconstitutional." (County of Orange v. Ass'n. of Orange County Deputy Sheriffs, 2011 WL 227711 at *8.)

More here. Unfortunately, the article doesn't discuss how these government benefits were negotiated. Many people don't know that government workers received their compensation packages behind closed doors--away from the average voter's oversight--due to an exception in the Brown Act for labor negotiations. Thus, government union compensation contracts are not the same as ordinary arms-length contracts. Instead, such contracts are the product of union organizing and using superior organization to get better compensation for themselves. But when compensation is negotiated behind closed doors and in a system where residents/voters must pay whatever is negotiated, it is clear that government unions have an advantage that is not necessarily compatible with the interests of the general public.

Private unions are different. If a GM worker is paid a million dollars a year, it does not necessarily concern me, because I do not have to buy a GM product. I have a choice, and if a private union gives themselves overly generous pay packages, they destroy the company and their own work prospects. No such check and balance exists when government unions negotiate overly generous compensation packages. Taxpayers must pay whatever is negotiated behind their backs, no matter how outrageous. If you say the problem is negligent oversight by politicians, I agree, but when the system is designed to favor politicians who cozy up to government unions, it's hard not to blame government unions as well as the voters.
Just my two cents.

Sunday, March 27, 2011

Mark Twain on Patriotism

What is patriotism? To me, it's utilizing the freedom to think for yourself and to comment on matters involving your government without fear of reprisal from government employees. Mark Twain seems to agree:

I said that no party held the privilege of dictating to me how I should vote. That if party loyalty was a form of patriotism, I was no patriot, and that I didn’t think I was much of a patriot anyway, for oftener than otherwise what the general body of Americans regarded as the patriotic course was not in accordance with my views; that if there was any valuable difference between being an American and a monarchist it lay in the theory that the American could decide for himself what is patriotic and what isn’t; whereas the king could dictate the monarchist’s patriotism for him–-a decision which was final and must be accepted by the victim; that in my belief I was the only person in the sixty millions–-with Congress and the Administration back of the sixty million–-who was privileged to construct my patriotism for me.

They said “Suppose the country is entering upon a war–-where do you stand then? Do you arrogate yourself the privilege of going your own way in the matter, in the face of the nation?"

“Yes,” I said, “that is my position. If I thought it an unrighteous war I would say so. If I were invited to shoulder a musket in that cause and march under that flag, I would decline. I would not voluntarily march under this country’s flag, nor any other, when it was my private judgment that the country was in the wrong. If the country obliged me to shoulder the musket I could not help myself, but I would never volunteer. To volunteer would be the act of a traitor to myself, and consequently traitor to my country. If I refused to volunteer, I should be called a traitor, I am well aware of that–-but that would not make me at traitor. The unanimous vote of the sixty millions could not make me at traitor. I should still be a patriot, and, in my opinion, the only one in the whole country.

Stirring words. [As seen in Harper's Magazine, April 11, 2011, pp. 35, "Democracy 101," quoting from The Autobiography of Mark Twain, Vol. 1.]

Bonus: below is Mark Twain's response to a letter regarding a library's removal of Tom Sawyer and Huckleberry Finn from the children's section:

"I am greatly troubled by what you say. I wrote Tom Sawyer and Huck Finn for adults exclusively, and it always distresses me when I find that boys and girls have been allowed access to them.  The mind that becomes soiled in youth can never again be washed clean; I know this by my own experience, and to this day I cherish an unappeasable bitterness against the unfaithful guardians of my young life, who not only permitted but compelled me to read an unexpurgated Bible through before I was 15 years old. None can do that and ever draw a clean sweet breath again this side of the grave."

More here. (November 21, 1905, letter to Asa Don Dickinson)

Bonus II (added September 2016): "If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein." -- Justice Robert H. Jackson, West Virginia State Board of Education v. Barnette, 319 U.S. 624, 642 (1943).  

Monday, March 21, 2011

President Eisenhower on American Pride

President Eisenhower, speech, November 23, 1953:

Why are we proud? We are proud, first of all, because from the beginning of this Nation, a man can walk upright, no matter who he is, or who she is. He can walk upright and meet his friend--or his enemy; and he does not fear that because that enemy may be in a position of great power that he can be suddenly thrown in jail to rot there without charges and with no recourse to justice. We have the habeas corpus act, and we respect it...

It was: meet anyone face to face with whom you disagree. You could not sneak up on him from behind, or do any damage to him, without suffering the penalty of an outraged citizenry. If you met him face to face and took the same risks he did, you could get away with almost anything, as long as the bullet was in the front...In this country, if someone dislikes you, or accuses you, he must come up in front. He cannot hide behind the shadow. He cannot assassinate you or your character from behind, without suffering the penalties an outraged citizenry will impose.

Ladies and gentlemen, the things that make us proud to be Americans are of the soul and of the spirit. They are not the jewels we wear, or the furs we buy, the houses we live in, the standard of living, even, that we have. All these things are wonderful to the esthetic and to the physical senses.

But let us never forget that the deep things that are American are the soul and the spirit.

Full speech here.  Bonus: http://www.eisenhowermemorial.org/  

Saturday, March 19, 2011

CA Chief Justice George on our Justice System

Chief Justice George, as quoted in California Litigation, Vol. 20, No 1 (Kenneth Babcock, 2007):

The availability of affordable legal assistance even for the middle class is often an illusion, and access to legal assistance for those at the bottom of the economic ladder too frequently is viewed as a luxury totally out of reach. As a result, individuals facing crises that may affect everything from their ability to earn a livelihood to their right to care for their children find themselves required to navigate a legal system that largely is designed for and by specialists in the field--lawyers and judges--or even worse, to stand outside the system, ignorant of or intimidated by the first steps they need to take to avail themselves of its services.

In my humble opinion, more laws do not generally help poor people, because poor people need more money, and more rights do not always or necessarily translate into more money.

[Note on June 22, 2012: to keep things fresh on the home page, I've manually changed the date of this blog post.] 

Friday, March 18, 2011

Judge Wilkinson on America

One of the best articles ever written on any subject is by J. Harvie Wilkinson III, "Toward One America: a Vision in Law." (The Green Bag Almanac and Reader, published 2009; see also 83 NYU Law Review 323)

A 4th Circuit judge laments America's growing divisiveness and presents seven solutions. I'm not going to go into all seven recommendations, but here are some of my favorite parts of the article:

On perspective:

We judges are as a class bereft of acquaintance with the variegated and pluralistic country that we serve.


On the much maligned overreach of the commerce clause:

The silent commerce clause is an indispensable ingredient of national unity.

On community:

Let's restore a constitutional respect for community. It is futile to expect a healthy nation in the absence of a healthy community. Community instills within us the sense that we live for something larger and more meaningful than just ourselves...Communities are built around shared purposes and values, one of which is surely a respect and appreciation for individual rights. But there must likewise be the sense that individuals contribute to, as well as take from, this larger whole of which we as single persons are but parts.
To enshrine a sanctity of self in our founding charter without textual or historical warrant may be just as pernicious as the attempt to enshrine the discrimination against those whose personal choices may for good and legitimate reason fail to conform to the majority's own. On many of the great questions of the day, our Constitution is consciously agnostic. Its enumeration of rights is significant, but finite. Its grant of powers to representative government is formidable, but it does not prescribe what substantive ends the exercise of those powers must embody. To bend our Constitution in the direction of autonomy or collectivity is detrimental to our national health.

On polarization:

The search for One America requires less polarization, but not necessarily less partisanship. The two must be distinguished... Partisanship is more of a mixed bag. It can easily proceed too far, but it can also promote vigorous debate and frame electoral choices.


If you get a chance, do look up the full article. Required reading for every American.

Abraham Lincoln on Honest Lawyers

"Let no young man choosing the law for a calling for a moment yield to the vague popular belief that lawyers are necessarily dishonest. Resolve to be honest in all events; and if, in your own judgment, you cannot be an honest lawyer, resolve to be honest without being a lawyer. Choose some other occupation." -- Abraham Lincoln

Bonus: from Edward Murrow: "He was one of those civilized individuals who did not insist upon agreement with his political principles as a pre-condition for conversation or friendship."

Thursday, March 17, 2011

Robert Frost's Epitaph

Found an old book of Robert Frost poems: "And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world."

Wednesday, March 16, 2011

A Poem in San Jose

The poem below--one of the most beautiful I've ever read--is inscribed in a piece of art in downtown San Jose. If you are ever in downtown San Jose and want to see the poem, go to the Fairmont Hotel on South First Street. It is inscribed on a medium-sized, industrial-looking tableau between the Fairmont Hotel and Bijan's Bakery.

Could be

I only sang because the lonely road was long;

and now the road and I are gone

but not the song.

I only spoke the verse to pay for borrowed time:

and now the clock and I are broken

but not the rhyme.

Possibly,

the self not being fundamental,

eternity

breathes only on the incidental.

—Ernesto Galarza, 1905-1984

Tuesday, March 15, 2011

Will Government Pensions Need Bailouts?

According to PLI's news capsules,

State pensions are recovering as the stock market improves, but they still have a long road to financial health, says a recent report. State pension systems had a funding ratio of about 69% for fiscal 2010, an increase from the previous year's ratio of 65%, reports Wilshire Associates. Still, that's not near 2007's estimated average funding ratio of 95%. "The trajectory is up, albeit it's up off a pretty low base," said Steven Foresti, managing director at Wilshire. (From WSJ, March 7, 2011, by Jeannette Neumann)

Here's what really interesting: "Over the next decade, Wilshire projects public pension plans will have a median annual return on their assets of 6.5%." If major pension/hedge funds are predicting just 6.5%, it will be interesting to see the average return for non-institutional investors. Remember: to the extent these government pension funds fail to fully fund themselves, the taxpayer is on the hook for all payouts.

Monday, March 14, 2011

Yahoo's Shareholder Meeting (2012)

[Editor's note: this post was originally published on July 12, 2012.]

Yahoo’s shareholder meeting was bland.  No slides, no video, no new trinkets—just the basic CEO pep talk plus business jargon.  Apparently, Yahoo’s new catchphrase is “technology-powered media company,” which is short for, “Please stop asking us if we’re a tech company or a media company.”  At this point, the only job with more turnover than Yahoo’s CEO might be your local fast food joint, but interim CEO Ross Levinsohn seems nice enough, so that’s a plus.  Of course, he spewed the same pablum as every other CEO from Yahoo, but what do you expect?  It must be difficult getting respect from the troops when the company won’t remove the "interim" label before the annual meeting.  Still, it’s not about the CEO or whether Yahoo wants to become a media or tech company—it’s about execution.  As another person wrote, “[I]t’s increasingly hard to see what Yahoo uniquely offers to its audience.”  Combine a failure to execute with a failure to produce unique content or services, and you have a recipe for extinction. 

Levinsohn’s short speech highlighted Yahoo’s many partners, including NBC, ABC, and Spotify.  I may have misheard him, but Levinsohn said that more than half of the videos viewed online came from Yahoo, which prompted a surprised look from one employee.  Yahoo believes its election and Olympics coverage will attract traffic.  Levinsohn also mentioned the consumer several times, stating, “Consumers want interesting and informative online experiences,” and “It [all] has to start with the consumer experience.”  In other words, he said nothing new or unique.  Of course a public company that seeks consumers and viewers has to satisfy them.  Which is why Yahoo’s conduct over the last five years has been so comically tragic: Yahoo bungled its transition to a new email format (also botching its calendar feature); entered and promptly left the social media space via Yahoo Pulse; couldn’t provide a consistent selection of online media content, ceding that audience to Hulu and YouTube; couldn’t properly manage copyright infringement claims to prevent viewers from clicking on unplayable videos; and made the term “quality assurance” MIA.  In addition, Yahoo’s videos lack captions, whereas both YouTube and Hulu have some form of online captioning.  It could be worse—just two years ago, Yahoo’s homepage seemed to resemble the National Enquirer or TMZ, prompting some viewers to wonder whether Yahoo’s latest strategy relied on Kim Kardashian, Octomom, Justin Bieber, and hordes of lobotomized or low-IQ viewers.  Thankfully, Yahoo has reversed its descent into becoming the world’s largest online tabloid.  However, it now seems to be aiming for the “World’s Largest Linkfest of Content Already Seen by Everyone under 40 on YouTube and Facebook,” but as I said, things could be worse.   

Today, the CEO focused on Yahoo’s various partnerships with other media companies as well as its access to “700 million viewers,” but Yahoo doesn’t seem to understand that a) it doesn’t matter how many viewers you have if none of them are particularly loyal; and b) relying on content and partnerships from other companies with their own websites isn't a viable long-term strategy.  As I told the CEO during the meeting, “Think about it.”  If Company A--which has a vested interest in promoting its own websites and content--decides to partner with Company B, which is a mere portal for Company A’s content, what will happen?  Company A won’t license its best content to Company B and will use its leverage as a content provider to take as many users from Company B as possible and make them loyal to their own website(s).  It’s as if CNBC decided to partner with Bloomberg by linking to Bloomberg articles, thinking, “Well, if I got Bloomberg, Fox Business and a bunch of other business content, then people are sure to come here instead of going to those websites instead.” But of course, CNBC focuses on creating its own unique content and attracting its own viewers.  To the extent CNBC thinks Bloomberg, Fox Business, or the Motley Fool has an interesting idea, they do a story themselves instead of just linking or deferring to their competitors’ websites or channels.  In essence, Yahoo’s business strategy seems to be “As many eyeballs as possible, regardless of user time spent on the page or the quality of content displayed” (see Kardashian/Octomom reference above).  It’s a sad state to be in for a company that was once a top Silicon Valley innovator  (Speaking of which, am I the only one who remembers Yahoo’s funny commercials for its personal ad service?)  

Yahoo’s latest mis-step?  Hackers from “d33ds” disclosed about 400,000 user passwords, including many from Yahoo.  I downloaded the file to see if my emails were hacked, too.  They weren’t.  It looks like almost all the passwords taken are from deactivated accounts, so Yahoo got lucky this time.  And it wasn’t just Yahoo emails on the list—I saw hotmail and even gmail accounts apparently compromised. Besides, few of the exposed passwords had any capitalized letters, which violates Online User Security 101.  The hackers are definitely cheeky, though—they ended their email/password list with the following quote: “Growth begins when we begin to accept our own weakness.” -- Jean Vanier 

The Q&A session was short.  One shareholder asked about Yahoo’s role: was it a TV station, TV studio, or ad agency?  The CEO said Yahoo wanted to create a good overall consumer experience.  A CalPERS representative said the state’s pension fund supported the Board but not the way Yahoo was awarding compensation to its executives.  Another shareholder rightfully criticized former Yahoo CEO Terry Semel’s compensation of $ 600 million, which seems grossly high given Yahoo’s current stock price.  

Some final notes: Julia Boorstin from CNBC was there.  I didn’t like her, but her cameraman was nice.  Cory Johnson from Bloomberg was also there and looked like his usual professional self (did you know he founded the hip hop basketball magazine SLAM?).  I prefer Bloomberg, which has a more serious outlook than CNBC.  Maybe the “eyeballs at any cost” strategy works on TV, which is more visual and less interactive.  It might explain the mismanagement of Yahoo all these years by big-media executives. Boorstin asked me about the interim CEO issue (yawn) and the Facebook/Yahoo deal.  According to TechCrunch, the deal occurred “without money changing hands,” so I responded to her question with another question she should have been asking: “How much money is involved?”  She didn't seem to catch my point.  So much for television media as an enlightening Fourth Estate.  

Disclosure: I own shares of Yahoo, but my positions may change at any time.  My hunch is that a private equity fund will buy Yahoo at some point or the company will increase shareholder value by splitting up or selling off its various parts.  

Keith Ellison and Common Sense

"The best defense against extremist ideologies is social inclusion and civic engagement." Shameful that some people smeared Mohammed Salman Hamdani and recanted only when confronted with his dead, heroic body. More from Rep. Keith Ellison here: Ellison's transcript of prepared remarks for March 10, 2011 Congressional hearings.

Every generation has its Joseph McCarthy, and it appears ours will be Rep. Peter King. Kudos to Rep. Ellison for his common sense.

Saturday, March 12, 2011

Ralph Ellison on Finding Himself

The journey of self-realization is long, windy, but worthy:

"All my life I had been looking for something, and everywhere I turned someone tried to tell me what it was. I accepted their answers too, though they were often in contradiction and even self-contradictory. I was naïve. I was looking for myself and asking everyone except myself questions which I, and only I, could answer. It took me a long time and much painful boomeranging of my expectations to achieve a realization everyone else appears to have been born with: that I am nobody but myself." -- Ralph Ellison

Friday, March 11, 2011

Czesław Miłosz

From Czesław Miłosz's "Hymn": "The most beautiful bodies are like transparent glass."

I don't know why, but that line from his poem strikes me as indelibly beautiful.

Thursday, March 10, 2011

NBA 2012 Finals: OKC v. Miami

[Note: this post was written and published on June 27, 2012. It has been backdated.]

I saw the best players of my generation destroyed, yelling fans hysterical, dragging themselves through the wooden streets at night looking for an angry fix...

This was supposed to be the year. You know, the year K.D. excised the demons of the Lakers, kissed his mother’s cheek, and stood tall as the NBA’s golden child holding the golden trophy. Instead, the Big Three--Shane “Charges and Treys” Battier, Mario “Wannabe Thug” Chalmers, and the corpse of Mike Miller--took down K.D.’s dream. Making matters worse, Chalmers actually tried to incite K.D. into getting a technical, which wasn’t as bad as Bynum’s clothes-lining of Barea, but still stunningly audacious--and not in a good way.

I hate Miami. Not because they colluded. (Bill Simmons explained it best: “Isn't loyalty a two-way street? When a team does what's best for itself, we call it smart. When a player does the same, we call him selfish. We never think about what a double standard it is.”) Not because Erik Spoelstra and Pat Riley seem to have a Bush/Cheney thing going on. Not because the words “Eddy Curry” and “champion” can now be put in the same sentence without immediate peals of laughter. No, I hate the Heat because they don’t play basketball.

Basketball used to be beautiful.  All the players constantly moved, each team seemed capable of running the fast break, players passed the ball, and all of them--down to the bench players--were expected to hit the open jumper.  I'm not yet 35 years old, but I remember when players made more jump shots and swung the ball around several times to give someone a clean look.  And like most fans, I remember first seeing Jeff Hornacek and thinking, "Is that an accountant?" only to eat my words after seeing him play.  Some basketball fans may even remember when centers were expected to be good shooters and decent passers. (Woe to the fan who doesn't know the name Sabonis or Smits.)

Yes, the NBA has become more athletic, placing a premium on innate physical gifts, but Shawn Kemp's dunks didn't mean the end of the jump shot or actual strategy.  Of course, some athleticism and sleight of hand are always present when seeing world-class competitors, but the Heat seem to rely on it completely. Whether it’s Dwyane Wade’s extra-second dribble (which, like Chris Paul’s dribble, should be called for a carry), LeBron’s usual, “I’m gonna put my head down, run into the paint, throw something up, and then scream if I don’t get a foul call,” or Bosh’s continuation of the ritual of kicking Toronto basketball fans in the groin, the Heat can’t do what every decent youth basketball coach tries to instill in his team: shoot free throws consistently (though to be fair, LeBron improved his FTA in the last few games); use the pick and roll when you want a jump shot; set screens while standing straight up; keep moving even though you don’t have the ball; pass the ball to your open teammates; and take the open shot. And yet, somehow, the Heat have managed to win while ignoring fundamental basketball rules.

It wasn’t always this way. I used to love seeing Rony Seikaly and Glen Rice play, and ‘Zo seemed like a cool guy, notwithstanding his feud with Larry Johnson. But that’s back when games were decided by the players and not the wide discretion of the referees. So when LeBron charges into the paint and extends his elbow into Ibaka’s body to push away Ibaka’s inconveniently located hand, apparently that’s no longer considered a foul. Except when it is. When Westbrook does his usual DC Comics Flash impersonation and goes one against four, getting hit in the body all over, if just one person blocks his shot, apparently that’s not a foul. Except when it is. In a world where jump and hook shots have seemingly disappeared, how does an NBA referee keep up when calling contact on a drive would result in 50+ FTA per game? Correctly called, NBA games would be gruelingly slow, and LeBron alone would probably get 15+ FTAs a game as well as another 15+ offensive fouls--you know, if refs actually allowed star players to foul out more. It’s different when Blake Griffin uses his body--he’s actually elevating above other players, often from a stand-still position, and using his position to create an open dunk. I have no problem with that, because Blake doesn’t usually use his non-shooting arm to clear a path to the basket, and an opponent can try to counter by boxing him out. (By the way, would it kill modern NBA centers to study up on Kareem and Olajuwon? Did anyone think that an NBA Finals with Perkins, Ibaka, Collison, Joel Anthony, Turiaf, and Haslem in the middle had the potential to make basketball fans worldwide completely jaded?)

The problem with the 2012 Finals was calling fouls inconsistently. I still remember Harden getting called for all kinds of cheap fouls when he was just trying to maintain position against the larger LeBron. And it went both ways, too. Who can forget the insane foul call against Wade when an OKC player dove for a loose ball and fell on top of Wade? Apparently, getting squished by another player while prostrate qualifies as a foul against the player lying face down on the floor (though you have to admit, Wade deserves all the bad karma he can get with the ticky-tack foul calls he’s received over the years, especially against Dallas.) And what about the charges that weren’t called against Westbrook when he barged into Battier for the umpteenth time? Listen, I get that it goes both ways, and home court advantage isn’t just a myth. But in this series, OKC had no real bench outside of Harden, and the refs’ inconsistent calls, especially the bogus foul calls against Durant, may have given the series to Miami. Call enough ticky-tack or just plain incorrect fouls against Durant and Westbrook, and the team’s ability to score (and therefore win) disappears. Don’t ask me why Scott Brooks decided to bench both Westbrook and Durant for a prolonged period in one game, but when you don’t know how the refs are going to call the game, as a coach, you have to try to protect your players for the 4th quarter. What that really means is that coaches have to decide whether to play a game of chicken with the refs--do they keep their star players in the game after they pick up their third foul, daring the refs to foul them out of the game (hello, Paul Westhead and Bo Kimble)? Or do they avoid a situation where a player soon picks up a fourth foul and “Help Wanted” signs begin flashing before the coaches’ eyes?

I know we can’t have a perfect or perfectly called game, but would it be too much to ask that an NBA series gets decided on the best basketball players--the ones comfortable taking and making open jumpers, the ones who set proper screens, the ones follow their shot for the rebound (c’mon, Durant), the ones who don’t start trouble or flop, (yes, I’m looking at you, Mario Chalmers), and the ones who don’t carry the ball?  Must we be subjected to seeing football players masquerade as basketball players?  OKC lost this year because they were less physical and because the refs seemed to let Miami get away with more aggression.  In short, the team that relied less on basketball fundamentals and more on brute force won.  Maybe I don't know as much as David Stern about running a professional NBA league, but I do know this: there's got to be a better way.

© Matthew Rafat

Ken Does It Again

Over at Popehat, Ken has delivered yet another awe-inspiring post: A Day in the Life of a Defense Lawyer. Enjoy.

Bonus: http://militaryunderdog.com/

Wednesday, March 9, 2011

Kevin Poulsen on Credit Card Companies

This month's Metro quotes Kevin Poulsen, who discusses the most pressing credit card issue of our time:

"The financial institutions made a decision that the cost of fraud is acceptable. They decided against replacing the magnetic strip with a chip and a PIN because it would be too expensive."

If you go to Europe, most credit cards have the superior chip-based technology. If you're an American, you ought to be upset--your American credit card companies are treating Europeans better than you.

Tuesday, March 8, 2011

Social Network: Battle of the Sexes, Modern Version

Dating is so difficult. A man usually thinks about exactly how he will be able to support a family. He realizes big city society favors two income couples and wonders whether a woman will continue to work after she has children and/or if he will be able to provide as the sole breadwinner. Women tend to believe the aforementioned issues will resolve themselves.

Bonus I: Jack Gilbert, from "Tear It Down": "We find out the heart only by dismantling what the heart knows...By insisting on love we spoil it, get beyond affection and wade mouth-deep into love...We must unlearn the constellations to see the stars."

Bonus II, Random Stats Edition: according to National Geographic (March 2011),

1) Worldwide, 33% are Christian; 21% Muslim; and 13% Hindu; and

2) Worldwide, nationality-wise, 19% are Chinese; 17% are Indian; and 4% American.

My friend commented that the religious numbers would change significantly if we accounted for just practicing members. That's actually an interesting question--at what point is it irrational to call yourself a member of a religious group if your beliefs differ significantly from the majority's? And who decides the norm or the majority? If you're a Muslim in Indonesia, you will have a much different norm than a Muslim in Saudi Arabia. Same thing if you're an Orthodox Jew or a Reform Jew, or an Evangelical Southern Christian vs. an Italian Catholic. Perhaps that's the beauty of religion--it brings people together who would otherwise have no reason to mix or mingle.

Monday, March 7, 2011

President Eisenhower on Unions

Some people are quoting President Eisenhower to express their support of public sector unions. As I've said over and over again, there are major differences between public and private sector unions. To compare them together as a unified, single entity is foolish, and quoting President Eisenhower in support of public sector unions is beyond foolish. Why? It wasn't until John F. Kennedy was president that government workers were allowed to organize--which is after President Eisenhower's presidency.

In any case, here are some interesting excerpts from President Eisenhower's 1955 speech to the AFL/CIO:

The second principle of this American labor philosophy is this: the economic interest of employer and employee is a mutual prosperity. Their economic future is inseparable... The American worker strives for betterment not by destroying his employer and his employer's business, but by understanding his employer's problems of competition, prices, markets. And the American employer can never forget that, since mass production assumes a mass market, good wages and progressive employment practices for his employee are good business...

The Class Struggle Doctrine of Marx was the invention of a lonely refugee scribbling in a dark recess of the British Museum. He abhorred and detested the middle class...[L]abor relations will be managed best when worked out in honest negotiation between employers and unions, without Government's unwarranted interference.

More from President Eisenhower's December 5, 1955 speech here.

Saturday, March 5, 2011

Motto of an American

I am against unchecked, concentrated power in all forms and permutations. In other words, I am an American who understands the Constitution and Declaration of Independence.

Friday, March 4, 2011

California's Finances, a Retrospective

Below is a snippet from an old November 2009 LAO report--but boy, does it have amazing data. Here is one particularly juicy excerpt:

In General, the Legislature Retains Power Over the Budget. Some observers of the California budget process have asserted that—due to voter–approved propositions, federal law, and court decisions—the state’s budget is unmanageable and basically impossible to balance. In reality, however, the Legislature remains in control of the vast majority of state spending. This is particularly true over the longer term when there is enough time to allow major decisions by the Legislature to be fully implemented. Even in the shorter term, the Legislature generally holds a considerable degree of freedom to adjust state spending. Such decisions are often more restricted by the lack of political consensus as opposed to any structural budgetary constraint.

More here. Voters must realize that almost everything they read from CNN, Fox, or any major media outlet contains some element of bias. In contrast, all states have finance departments that will provide you with the (mostly) unvarnished truth. In California, we have the LAO. For the feds, we have the CBO. Turn off your television, and go forth and read.

Thursday, March 3, 2011

Emerson on Trade

Ralph Waldo Emerson, from his 1844 lecture, "The Young American":

Trade was the strong man that broke it [feudalism] down, and raised a new and unknown power in its place. It is a new agent in the world, and one of great function; it is a very intellectual force. This displaces physical strength, and installs computation, combination, information, science, in its room. It calls out all force of a certain kind that slumbered in the former dynasties...

Trade goes to make the governments insignificant, and to bring every kind of faculty of every individual that can in any manner serve any person, _on sale_. Instead of a huge Army and Navy, and Executive Departments, it converts Government into an Intelligence-Office, where every man may find what he wishes to buy, and expose what he has to sell, not only produce and manufactures, but art, skill, and intellectual and moral values. This is the good and this the evil of trade, that it would put everything into market, talent, beauty, virtue, and man himself...

The `opposition' papers, so called, are on the same side. They attack the great capitalist, but with the aim to make a capitalist of the poor man. The opposition is against those who have money, from those who wish to have money.


Isn't it fascinating to see the great transcendentalist speak so eloquently about trade?

Wednesday, March 2, 2011

Rumi, the Romantic Alchemist: Copper over Gold

Rumi: There's courage involved if you want to become truth. There is a broken / open place in a lover...What's the use of old and frozen thought? I want / a howling hurt. This is not a treasury where gold is stored; this is for copper. / We alchemists look for talent that can heat up and change. Lukewarm / won't do. Halfhearted holding back, well-enough getting by? Not here.

Fiscally Responsible? Follow These Resolutions

An oldie from 2010, but still a goodie:

Don’t vote for any ballot measure that creates an unfunded obligation on the state budget or “locks in” more of the budget.

Constitutional provisions that limit the use of certain tax revenues or impose spending requirements on the budget without providing the resources to fulfill those obligations exacerbate California’s fiscal problems. These provisions range from dedication of sales taxes collected on gasoline to transportation to the “Three Strikes” law establishing minimum sentencing requirements.


Why don't we teach these civics concepts to kids in high school? More here.

Tuesday, March 1, 2011

Law Quote of the Day

Dean Roscoe Pound: "The law must be stable and yet cannot stand still."

Monday, February 28, 2011

Netflix Finally Agrees to Caption 80% of Streaming Content!

Netflix has announced that 80% of its streaming content will be captioned by the end of 2011. It's about time. The issue of online captioning didn't appear to be on CEO Reed Hasting's radar at all in May 2009. That all changed with this May 2009 post.

Thank you so much to everyone who supported the online captioning campaign. We couldn't have done it without you!

Also, thank you to Netflix and CEO Reed Hastings for rising up to the challenge. We know it's not over yet--some people doubt that Netflix can meet its own goal of captioning 80% of its streaming content by the end of 2011--but at least the company finally appears to recognize captioning issue is an important issue.

Disclosure: I have either no shares or an insignificant number of shares in Netflix (NFLX). I continue to be a Netflix member, but have not watched more than a handful of movies online because of the captioning issue.

Update in January 2017: Reading Netflixed (2013), it appears Blockbuster's John Antioco had Netflix on the ropes when investor Carl Icahn disputed 5.6 million of Antioco's deserved bonus. The dispute led Antioco to leave Blockbuster, essentially bankrupting the company's online business (now Sling) and giving Netflix a clear path ahead.

Even more interesting is the "loss leader" strategy employed by Antioco to drive subscribers to switch from NFLX to Blockbuster Online. Having bricks-and-mortar stores once gave Blockbuster advantages--it could sell ancillary products to increase cash flow, and allow customers to return mailed DVDs to physical stores--while Netflix relied completely on online distribution. More importantly, the revenue from existing Blockbuster customers could allow it to create "loss leader" strategies to bankrupt the smaller Netflix--as long as franchisees were onboard. Such new strategies present fascinating anti-trust issues, because once a new competitor is vanquished, what prevents the sole winner of a complex, costly business model to drive up prices? 

Movie Recommendation: Gideon's Trumpet

It's actually a made-for-television film starring Henry Fonda, but it is beautifully done and a must-see. Gideon's Trumpet has everything--great acting and a look behind the scenes of the Supreme Court and our legal system. If you're a high school teacher, please show this film to your students.

Bonus: list of the best movies you've never heard of here.

Retired California Teachers Receive Lump Sums of $500,000

Oh, those poor, poor California teachers. They only get lump sums of $500,000 when they retire. Wait, what? Oh, you didn't know that? Keep reading.

"Of the 12,568 California educators who retired in fiscal year 2007-08, the median number of years on the job was 29 years. The average CalSTRS pension was $48,180 per year, which was about 62 percent of the average highest salary." See here.

Assuming a 6% rate of return and 29 years of retirement, you and I would have to save up almost $17,200 every single year for 29 years straight to get the same level of retirement income as an average California teacher. Why? Because most of us would have to buy an annuity on the open market to get something similar to a pension.

To give you an idea of just how expensive these pensions are, let's do the math: to get $48K a year for 17 years, we would have to save up a nest egg of about $500,000. Basically, California taxpayers provide the average California teacher with a nest egg of $500,000 upon retirement--which is the market cost of paying someone about $48K a year for 17 years of retirement (e.g., hypo assumes you start teaching at the age of 31, and work 29 years, which means you're 60 years old. You then retire and then expire at 77).

Will most Californians have at least $500,000 when they retire? If not, why are they responsible for guaranteeing the average teacher an annuity worth $500,000? Also, how many of us can afford to save $17,200 a year? Even if private sector employees maxed out their 401(k)s, they couldn't put $17,200 a year in the account. And people still think teachers, on average, are underpaid. Perhaps the newer and younger ones are--but that's not the taxpayers' fault. It's the union's fault for creating and enforcing a compensation system that shoves so many available taxpayer dollars in the back-end of a teacher's career rather than in the front.

P.S. Want to do the annuity calculations yourself? Here is one version of an annuity calculator.

Bonus: Actually it looks like I may have underestimated the value of the pension. More here
. The Money Blog calculates that as of 3/2011, a $300,000 lump sum would would get you just $1300/mo in annuity payments.

Also, see Margaret Collins, July 1, 2011, “Delay Taking Social Security, Add Annuity to Survive Retirement”: “For example, a contract [annuity] purchased for $95,500 by a 66-year-old couple in Florida may provide $4,262 a year until the death of the surviving spouse and include increases for inflation."

Bonus II:
from Joel Klein, The Atlantic, June 2011:

[C]onsider the financial burden that comes with providing lifetime benefits. Given the time between first putting aside the money to fund such a “long-tail exposure” and having to begin paying it, the amount “reserved” by the employer necessarily depends on a host of imprecise assumptions—about the rate of return that the money invested in the pension fund will earn, about how long employees will live, and even about how much overtime employees will work during their last few years, which is normally included in calculations of the amount of the pension. Each dollar set aside this year to cover the ultimate pension exposure must be taken from what would otherwise be current operating dollars.

Consequently, elected officials have had every incentive to make extraordinarily optimistic assumptions about the pension plan—or to simply underfund it—so they can put as little as possible into the reserve. Unfortunately, but predictably, that’s exactly what has happened: most states “assumed” they would get an average 8 percent return on their pension reserves, when in fact they were getting significantly less. Over the past 10 years, for example, New York City’s pension funds earned an average of just 2.5 percent. Now virtually every pension plan in America that covers teachers has huge unfunded liabilities. A recent study by the Manhattan Institute estimated the total current shortfall at close to $1 trillion. There’s only one way to pay for that: take the money from current and future operating budgets, robbing today’s children to pay tomorrow’s pensions.

Sunday, February 27, 2011

LeBron James: Justified in Leaving Cleveland?

Bill Simmons wrote an article unrelated to LeBron James, but it includes the best defense of "The Decision" I've seen so far:

Isn't loyalty a two-way street? When a team does what's best for itself, we call it smart. When a player does the same, we call him selfish. We never think about what a double standard it is.

I'd never thought of it that way before.

Friday, February 25, 2011

Government Unions: Hoodwinking the Public, One Voter at a Time

If you're a California voter, you've been the victim of a scam perpetuated by the state's public sector unions:

[Actual] CalPERS data shows the average career public employee, who put in at least 30 years of service and retired in the 2008-09 fiscal year, collected a starting pension of $67,000 a year, or 2.5 times the advertised figure [by CalPERS]...

The pension numbers are even higher for the separate local retirement systems that cover employees of the two East Bay county governments. The average was $85,500 for career workers who retired in 2009 from the Contra Costa system, and $83,000 from Alameda County. A majority of these workers also receive Social Security, which could add, very roughly, about another $19,000 to the annual pension.


More here. 1) think California doesn't spend enough on education? 55% of California's general fund will be spent on education (43% on K-12; and 12% on higher education); and 2) think we should tax people more? Think harder. If you're a company and want to expand, are you going to expand someplace where you and your workers have access to cheaper housing, reasonable wages, and lower taxes, or someplace with higher housing costs, higher salaries, and higher taxes?

What about taxing corporations instead of individuals, you ask? From David Walker's book, Comeback America (hardcover, page 121): "we must realize that corporations don't really pay taxes. Rather, they pass along any tax, in the form of higher prices to consumers, lower wages to workers, and/or lower returns to shareholders." It turns out trickle down economics exists--at least when it comes to taxes.

Bonus I: from Calvin Massey:

In the private sector a union bargains for a greater share of the entity’s revenue and profits. What it can provide in return is greater productivity, accomplished perhaps by work force stability, higher morale, and the belief that the common fate of employer and employee will be enhanced by productivity gains. If this happy event ensues, at the next round of collective bargaining, union workers can and should receive their fair share of the resulting gains.

In the public sector, by contrast, a union is not bargaining for a greater share of the revenue produced by economic activity; it is bargaining for a greater share of revenue that is obtained by force of law – taxation – or, if not a greater share, at least for a constant share of those revenues extracted from the citizens. What a public sector union can and does provide in return is political support for the faction that chooses to increase taxes or the union’s share of existing taxes. If public sector unions deliver on their support, they will be rewarded by ever more generous payments. There is no market that acts as an external monitor of worker compensation; there is only a steady repetition of a corrosive bargain – tax the public ever more in order to maintain political power. That is inimical to responsible government.

It appears Calvin Massey is a law professor at UC Hastings. Bravo!

Bonus II: Christopher Caldwell, FT, 2/25/11:

Public-sector unions have long posed a problem of what the economist Mancur Olson called the “logic of collective action”. Democracy tends to offer benefits to small, well-organised groups (who defend them vigilantly) while spreading the costs among the broader public (in doses that are too small to rally resistance around). The result is a hardening of privilege. What is new in Wisconsin is that those who do not belong to public-employee unions see this logic as clearly as those who do.

Thursday, February 24, 2011

Ralph Waldo Emerson on Despotism

Ralph Waldo Emerson, from his 1844 lecture, "The Young American":

Fathers wish to be the fathers of the minds of their children, and behold with impatience a new character and way of thinking presuming to show itself in their own son or daughter. This feeling, which all their love and pride in the powers of their children cannot subdue, becomes petulance and tyranny when the head of the clan, the emperor of an empire, deals with the same difference of opinion in his subjects. Difference of opinion is the one crime which kings never forgive. An empire is an immense egotism. "I am the State," said the French Louis. When a French ambassador mentioned to Paul of Russia, that a man of consequence in St. Petersburg was interesting himself in some matter, the Czar interrupted him, -- "There is no man of consequence in this empire, but he with whom I am actually speaking; and so long only as I am speaking to him, is he of any consequence." And Nicholas, the present emperor, is reported to have said to his council, "The age is embarrassed with new opinions; rely on me, gentlemen, I shall oppose an iron will to the progress of liberal opinions."

The last line is hilarious, isn't it?

Wednesday, February 23, 2011

Got Enemies?

He has no enemy, you say;
My friend, your boast is poor,
He who hath mingled in the fray
Of duty that the brave endure
Must have made foes. If he has none
Small is the work that he has done.
He has hit no traitor on the hip;
Has cast no cup from perjured lip;
Has never turned the wrong to right;
Has been a coward in the fight.

- Alexander Anton von Auersperg

Tuesday, February 22, 2011

Unintended Consquences: Meredith Menden on Teacher Pay

Meredith Menden wrote a sarcastic Facebook note titled, "Are you sick of highly paid teachers?" proposing to pay teachers directly like babysitters, i.e., $19.50 a day. $19.50 x 30 kids x 180 days a year = $105,300 a year. Let's take Ms. Menden's idea further and actually consider paying teachers directly. First, we have to figure out how much each of us are paying teachers now.

In 2009, Californians filed about 12.8 million tax returns. (http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/2009_Filing_Season_Statistics.shtml)

California's annual budget is about $89 billion. The annual budget number is different from the amount available in the general fund. The general fund is basically the state's operating budget and includes money that covers the day-to-day activities of various state programs.
The state's annual budget number includes expenses outside the general day-to-day activities of various state agencies and is therefore higher than the amount available for its general fund.

About 40% to 50% of the general fund usually goes to K-12 education. For 2011-2012, when including college funding, about 55% of the general fund will be spent on all education (DOF link here), with about 42.8% spent on K-12 education (see Governor's eBudget summary).

In 2011-2012, Jerry Brown is proposing that we spend $37.7 billion on K-12 education: http://www.ebudget.ca.gov/StateAgencyBudgets/6010/agency.html

So California plans on spending about $38 billion on K-12 education in 2011-2012--and that only includes the amount received from the state. (K-12 schools receive more funding from other sources, but we'll ignore those sources for now.) Each state tax filer is paying about 3K a year on K-12 education. Instead of giving that money to the government each year, why not return it to each taxpayer and add another 1K, even to people who do NOT generally file tax returns (i.e., poor people)?

Under this system, a poor parent would get an additional 4K a year to spend on his or her child's education. A married couple with two children would have 4K to spend on each child's tuition. A
married couple with only one child could receive up to 8K. If parents don't spend the full amount on schooling costs, they would be required to spend any excess money in the county where they live. All recipients with K-12 children must spend at least 2K of their 4K on K-12 tuition. Payments and purchases would be tracked using something similar to our current EBT card system.

Adults who have no desire to attend school or who have no children would receive 2K in tax credits but must spend the money within their county of residence.
Depending on the state's finances, this proposal could be extended to college students to help them pay for tuition. (Instead of increasing college tuition costs as we're doing now, we might be able to help college students reduce higher education costs).

Taxpayers who earn more than 125K a year in adjusted gross income would not be eligible for the 2K tax credit or 4K tuition credit. Once again, any tax credit not used on tuition or reducing a person's tax liability will be loaded on a card that must be spent on a business physically located in the taxpayer's county of residence.

More ideas: teachers would be hired based on one year contracts. A month before the end of the school year, a majority vote of the parents by secret ballot could remove the teacher. Requiring that all recipients with school-age children must spend at least 2K of their 4K on K-12 tuition gives teachers a *minimum* salary of 60K a year (assuming 30 kids--2 x 30). Parents who have only one child would have to pay 4K a year (2K each is required to be used for school), which would increase the teacher's salary beyond 60K in many cases. The money would go into a common pool and be divided among the different teachers in science, math, English, etc. In exchange for higher pay, teachers would be responsible for their own health care and retirement, just like many people in the private sector. With so many more people buying individual health and dental care plans, the overall cost of individual insurance plans would fall, creating an indirect benefit for poor people, the uninsured, and the self-employed.

If parents want to spend more on teachers, they can give them up to 120K (4 x 30) or more. If you're concerned about poor people in California, many poor people live in the Central Valley and way up north. 60K a year--the minimum salary--is good money in places like Fresno, Bakersfield, outskirts of Sacramento, etc. Of course, millions of poor people live outside of the Central Valley and in more expensive places like L.A., San Jose, etc.
Most likely, these parents would have to spend their entire 4K voucher on a local school (if we assume more affluent neighborhoods will vote in higher salaries for teachers). However, poor parents will still have more choices and more of a voice in their children's education because teachers would have to cater directly to them to get their votes at the end of the year. In any case, under this proposal, all poor adults, even those without children, would receive 2K more every single year.

One issue is factoring in the increase in expected tax returns. Obviously, there will be more than 13 million people filing taxes if they know they will get between 2K to 4K. Also, we would have to create a new agency to investigate fraud/kickbacks, supervise the annual secret ballot vote, verify residency,
prosecute parents who don't send their kids to school, etc. But if existing funding sources are inadequate, let's assume we could implement at least two measures to cover any expected shortfall: one, raise sales taxes (that's what we're doing now when we have a shortfall); and two, force all government employees making over 100K to take a 15% pay cut down to a minimum of 100K. We may not have to implement either of those measures if we handle additional sources of funding wisely. Lest we forget, we haven't even included federal money and local property taxes, which are around 11% and 21% of K-12 school funding (See here). Those are tens of billions of dollars of existing funding we have not yet discussed or included in our calculations.

Another note: we would have to cut P.E., which means we would teach five subjects instead of six subjects (e.g., English, math, science, social studies, and one elective, e.g., a foreign language, logic, music, etc.). The ambitious high school students could enroll at the local community college if they wanted more classes.

There are some important factors I haven't considered (e.g., what if parents have more than two kids? how do we best count the votes of divorced and/or single parents?), but we can see that existing funding is enough to improve the education system and also assist low-income parents. Whatever
we're doing now is not assisting the children of low-income parents, so we ought to be open to all ideas. Why not consider a plan that would help increase accountability, pay teachers more, and help poor people? Most studies show that academic success tends to be influenced most by levels of parental income, parental education, and parental involvement. The proposed idea addresses all three aforementioned factors.

Update:

1) Complaint: not all poor people live in the Central Valley, and private schools are expensive.

Response: the poor people in the larger cities would probably have to use the full amount of their 4K vouchers to attend public schools, but they would still have more choices. Remember that under our current system, poor people must currently enroll their children in a pre-determined school, regardless of whether it is failing or dangerous. Giving parents a voucher for 4K allows them to consider charter schools and to demand more accountability.

Some people have said that private schools cost more than 4K a year. Well, some do, and some don't. Right now, we don't have much competition in schooling, and rich people are the ones with options. However, once we establish a voucher system, it is likely that new charter and new private schools that cost between 2K and 4K annually would crop up and be available to everyone, not just rich people.

And remember: we're not eliminating public schools or forcing anyone to attend a charter school. All we're doing is demonstrating that we can double teacher pay using existing resources (and still have plenty of money left over). All public schools would be required to enroll students with 4K vouchers. The true debate centers around the process the parents would use to determine whether they would have to use 2K or the full 4K amount of their vouchers, i.e., is it a majority vote of the class, school, county, etc.?

2) Complaint: healthcare coverage would be difficult on the private market, because you are switching tens of thousands of teachers from group coverage to individual coverage.

Isn't it true that under Obamacare, insurers must cover all individuals regardless of pre-existing conditions? In any case, the health insurance issue is a separate topic that can be addressed via state or federal legislation.

3) Complaint: the proposed idea eliminates administrators and other non-teaching staff.

The proposed idea eliminates administrators and other non-teaching staff so we can pay most teachers more money. We can modify the plan to add more money for basic maintenance costs, which are not a large portion of California's existing education budget. About 80 to 85% of California's K-12 budget currently goes directly in the pockets of school employees. (
http://www.ed-data.k12.ca.us/articles/article.asp?title=teachers+in+california) If we can resolve the school employee funding issue, which is about 85% of the battle, we can easily deal with the remaining 15%.

To the extent we cannot replace the remaining funding needs by increasing sales taxes or decreasing the salaries of high earning government employees, remember that we have not included additional sources of funding. Only 61% of K-12 school funding comes from the state. As discussed above, the federal government provides an additional 11% and local property taxes provide another 21%. (See here.) In short, our calculations above have not included tens of billions of dollars of existing funding. Even without including the additional sources of funding, we have devised a system that could potentially double the average teacher salary in California.

4) Complaint: poor kids sometimes receive their only meal of the day at school. What about cafeteria staff?

An additional 2K a year gives parents over eleven dollars a day to replace any missed school lunches (assuming 180 school days). In schools that require the full 4K voucher, we can require the schools to feed children at least once a day. See response to number 3 above. Again, we have not considered other sources of funding from the state, local property taxes, lotto sales, etc.

5) Complaint: what about the existing pension and medical benefit obligations we owe to retired teachers?

The proposed plan eliminates unpredictable, unsustainable liabilities for incoming teachers in exchange for higher pay. Basically, teachers get paid more and taxpayers get more budget flexibility and predictability.

What about existing and retired teachers? The studies I've seen indicate that existing plans to cover such liabilities are underfunded by around $30 to $50 billion. We can apportion a set amount each year from federal or local property taxes to cover existing liabilities owed to retired teachers. If we spread out the funding over thirty years, we should be able to cover existing liabilities. We could also change the way benefits are calculated for existing teachers, such as increasing their contributions to pension and medical plans.

6) Complaint: what about making sure that all students, nationwide, are learning the same basic skills?

Remember: we haven't touched sources of federal money in the above calculations. The federal government usually provides about 11% of education funding in California.

In exchange for accepting federal money, the federal government can require schools to fail students who do not pass a basic competency test at the end of the year. Results would be released before parents vote on whether to retain their child's teacher. Under this method, parents would have a nationwide standard to measure both student and teacher performance while also giving teachers more flexibility in how to teach.

Bonus: Did you know the average California teacher receives the equivalent--at least as of 2011--of about $500,000 when s/he retires? Never heard that before, huh? Funny how the teachers' unions don't mention that. More here.