idle thoughts

Romney at Bain Capital

2012-01-30T20:25:00.000-05:00

Dont Mind the Gap

2012-01-28T16:51:00.000-05:00

I do mind the gap.

In his op-ed piece, Andrew Kohut ignores the problems that both rich and poor have in countries and other jurisdictions with high inequality (Don't mind the Gap. New York Times, January 27, 2012: A21).

In their book, The Spirit Level, Richard Wilkinson and Kate Pickett enumerate the problems:

In developed countries, there is a strong negative relationship between inequality and life expectancy; though only a very weak relationship with average wealth. Similar results when we compare inequality and life expectancy across the states in the USA: a strong negative relationship. Again little relationship with the average wealth of the state.

A whole set of other indicators (trust, negative; infant mortality, positive; incarceration rates, positive; well-being, negative).

So inequality matters and it is important to note that it is both rich and poor who suffer from these negative effects. Undoubtedly the poor suffer more.

In the light of the 15% tax rates paid by some of the very rich, we need to thoroughly reform the income tax system to bring back an equitable distribution

Sent to New York Times relevant to Don't Mind the Gap

Kerry's black eyes

2012-01-27T16:50:00.000-05:00

It is a pity that John Kerry was not able to sport his black eyes and damaged nose when he ran for president (Charlie Baker get ready. Boston Globe, January 26, 2012).

That would surely have trumped President Bush's playing of the windsurfing card.

It might even have led to victory.

Sent to Boston Globe

Where were the Republicans?

2012-01-12T07:23:00.003-05:00

Comment in Cambridge Chronicle on lack of choice in this week's State Senate election.

Frank's Redistricting Complaint

2011-12-06T10:52:00.001-05:00

MetroWest Daily News op-ed

Nationalize the Ratings Agencies

2011-10-30T21:13:00.002-05:00

MetroWest Op-Ed on Ratings Agencies

Manifesto for the Occupiers

2011-10-23T19:14:00.002-05:00

Op-Ed in Cambridge Chronicle on Manifesto for the Occupiers

Re-evaluating Mitt Romney

2011-10-09T19:11:00.001-05:00

OpEd on Mitt Romney in MetroWest Daily News

Jeff Jacoby, Elizabeth Warren, and the Big Dig

2011-10-05T14:59:00.000-05:00

LTE in Boston Globe

What's wrong with a Balanced Budget Amendment

2011-09-06T05:26:00.001-05:00

Op-Ed on the Balanced Budget Amendment in the MetroWest Daily News

The I-word

2011-09-05T05:38:00.001-05:00

Professor Rogoff does not make a persuasive case that all of us will be better off in the long run if inflation is allowed to rise to 6% per year (The I-Word, Ideas: Boston Globe, August 28, 2011: K1, K3.

It seems to me that two groups will be experience significant collateral damage. Poor people who have had stagnant real wages for over a decade will probably experience stagnant money wages for the next few years so will have to buy more expensive (due to inflation) necessities.

At an inflation rate of 6%, seniors see their assets depreciate by about 30% over the next six years. Many of these are the people whom Professor Rogoff hopes will engage in accelerated discretionary spending to help the economy out of its slump.

I would suggest that, after being battered by the Stock Market, these people will be more likely to increase savings to maintain their assets in real terms. Thus the foundation upon which Professor Rogoff builds the engine of recovery is flawed.

Sent to Boston Globe

Fairies, Witches, and Supply and Demand

2011-09-03T05:58:00.001-05:00

Another way for Motoko Rich to frame the analysis of children's stories would be in terms of inculcating motivational tendencies in young readers (Fairies, Witches And Supply And Demand, New York Times Week in Review. August 21, 2011: 5).

David McClelland and his associates looked at themes in children's stories over a long period of time and showed that economic growth in a country followed several decades after that country's children were socialized using stories with themes reflecting high need for achievement.

My favorite achievement theme story is "The Little Engine that Could" by Watty Piper.

Sent to New York Times

Analyzing the Monteiro case

2011-09-01T06:15:00.001-05:00

Op-Ed in Cambridge Chronicle

Politics and the Contingencies of Life

2011-08-20T06:01:00.000-05:00

Op-Ed in MetroWest Daily News

The Supercommittee: Jockeying

2011-08-10T06:07:00.005-05:00

So there is jockeying around who is to be appointed to the deficit reduction committee (Republicans and Democrats begin Jockeying Anew in Next Phase of Budget Fight. New York Times, August 4, 2011: A1, A14).

We know that many Republican legislators have taken Grover Norquist's No Tax Increase pledge. This should automatically disqualify them from serving on the supercommittee.

For the sake of the Nation, I would hope that all members of the Committee would sign a pledge that between now and the end of November they will not meet with, talk with, read e-mails and text messages from, or receive legislative suggestions from lobbyists.

Sent to New York Times

The Debt Deal

2011-08-06T06:14:00.002-05:00

The time has come for the business owners and managers of America to stand up and prove that the "confidence fairy" skeptics like Paul Krugman are wrong. In his latest column, Professor Krugman says "Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record." The President Surrenders. New York Times, August 1, 2011).

We all know that at present we are still on a continuing downward spiral. As the economy fails to improve -- microscopic increases in GNP and employment -- there is little consumer demand therefore firms are unwilling to hire new employees or take back those that have been laid off.

The economic cycle is however under our joint control. If, despite the lack of current demand, the businesses of America took a risk and started hiring, the income earned by these employees would trickle into the market and would result in increased demand. That would halt the downward spiral and soon result in the cycle reversing into an upward spiral of increased demand, increased employment, and rising GDP.

I can think of no better cause for the right to embrace than to "prove" the Keynesians wrong and that their model of improving confidence would result in improved economic performance.

How about it American business? It is time to hire.

Sent to New York Times

Leaders' Wives in NH.

2011-08-01T06:18:00.000-05:00

I read with interest your piece about the Presidential and Vice-Presidential spouses visiting the homecoming of NH National Guard troops in Concord NH (Leaders’ wives urge support for military families, Boston Globe, July 25, 2011).

Then I wondered why one of them was not at the MA National Guard homecoming yesterday at the armory on Concord Avenue in Cambridge.

Then I remembered: NH is politically competitive, MA is not.

Sent to Boston Globe

Amazon Takes On California

2011-07-25T12:07:00.001-05:00

Why do we have to deal with the internet sales tax problem in a piecemeal, state by state fashion (Amazon takes on California, New York Times, July 14, 2011: B1, B4)?

The Federal Government needs to invoke the inter-state commerce clause and require that retailers collect sales tax for all purchases that are incurred over the internet. Then brick and mortar retailers will not be disadvantaged relative to internet retailers.

And how does Amazon even think that failing to collect sales tax is a socially responsible act. They are just increasing the costs for the rest of us.

Sent to New York Times

Read My Lips: No New Taxes

2011-07-25T06:13:00.001-05:00

Mr. Norquist is eloquent in telling us that spending is out of control (Read My Lips: No New Taxes, New York Times, July 222, 20111: A19). However he does not tell us where to make those cuts. Even Tea Party members want to bring the pork home to their states (Cost Cutters, Except When the Spending Is Back Home. New York Times, July 19, 2011)..

He also loses credibility in his crusade when he argues against reducing tax loopholes because he defines them as "tax increases." I, for one, would define removing loopholes as "spending cuts." It has the same effect on the deficit whether a dollar is sent in the mail to a social security beneficiary or whether it is deducted from the taxable income of an oil company.

It is the big subsidies to agro-business (corn, sugar), to hedge-fund managers, and to the oil companies that we need to cut, not the welfare of the inhabitants of Main Stree.

Sent to New York Times

Stagnant wages = foregone income taxes

2011-07-14T11:14:00.002-05:00

This is no longer on their website. Here it is.
“Starving the Beast:” Let me Count the Ways.

Martin G. Evans

Since the 1980's Republican politicians have used every opportunity to cut tax rates in order to “starve the beast” and reduce government spending. There is, of course, strong evidence that, despite the Laffer curve, a low tax regime has resulted in lower revenues. However, tax rate reductions may not be the primary cause. At the same time that Republican politicians were cutting tax rates, corporate America disengaged the link between productivity and employee wages so that over the past twenty years, all the benefits of increased industrial productivity have gone to the top 5% of those receiving incomes with the income of the lowest 95% stagnating in real terms.

For the lowest quartile, income (in 2009 dollars) increased about 21%; for the top 5% it increased by 68%. If all income earners had experienced the same percentage increases as the top 5%, their incomes would have show dramatic increases: $11,000 for the lowest quartile, $22,000 for the second quartile, $32,000 for the third quartile, and almost $46,000 for the top quartile. Such increases in real terms would have enabled most families to avoid large debts while maintaining their previous lifestyle.

More importantly, the impact on tax revenues would have been dramatic. With such increases, some would have been promoted to a higher marginal tax rate and most would have increased taxable income. This would result in increased revenue for government As a result, the extra contribution to the Federal Government in 2009 from income taxes would have been over $100 billion dollars.

Enough to pay 2/3 of the costs of the wars in Iraq and Afghanistan in that year.. More than enough to pay for preschool for all 3 and 4 year olds. Enough to rebuild much of the road and rail infrastructure over ten years. Or enough to provide tax cuts for all.

Stagnation in wages as well as leaving individuals unable to continue a middle class lifestyle without going into debt has also starved government of the tax revenue needed for its vital expenses (war, education, or even tax cuts).

For a Couple, Strauss-Kahn Is a Case for Silence

2011-06-23T14:05:00.001-05:00

Re: For a Couple, Strauss-Kahn Is a Case for Silence, New York Times, June 20, 2011:A20.

I have one simple question: Why didn't the head of the law firm for which the husband works say to the client: I am sorry we cannot take your case, one of our partners is married to the lead prosecutor.

It seems to me that the couple should share recusals, otherwise defendants can play a game of choosing their law firm with the purpose of rendering highly competent and experienced prosecutors impotent.

States Want More in Pension Contributions

2011-06-23T14:00:00.002-05:00

It is unfortunate that Steven Greenhouse perpetuates the myth that employees are not responsible for paying 100% of their pension contributions (States want more in pension contributions, New York Times, June 16, 2011:B1, B8).

A pension is merely cash compensation that has been deferred. Instead of an employee taking all the compensation in cash and then saving some proportion and managing those savings, it is cheaper and more effective for the employer to make those savings and manage the assets -- financial services are cheaper wholesale than retail.

The proportion set aside for pensions is negotiated through collective bargaining -- but all of it comes from the employees' pockets. here is a negotiated trade-off between cash pay and benefits. The proportion of the pension contribution that is formally deducted from the paycheck versus the proportion that the employer holds back (and supposedly sets aside) is merely a book-keeping convention.

The reason that citizens are balking at the compensation enjoyed by public sector employees is that their wages have been stagnant over the past 25 years (except for the top 1 percent of wage earners); while corporations have failed to compensate employees in line with productivity increases, they have also fed them a story about the excesses of the public sector.

These attacks on public sector workers are appealing to the rest of us who have lost our good pensions and health benefits, but they miss the target of restoring fiscal balance.

Lower levels of government need additional support from the Federal government. This should be paid for by a new tax on financial transactions. That is where the money is, that is where a tiny tax on each transaction would result in a flow of funds to the treasury without crimping normal economic activity on main street.

It is only right that Wall Street should help out at this time.

Sent to New York Times

Time for American Business to Step Up To the Plate

2011-06-21T06:15:00.002-05:00

a bit naive op ed on Employment in Cambridge Chronicle

Right back at those Republicans, Sir

2011-06-11T09:47:00.003-05:00

Letter about Obama's Economic Appointees in the Boston Globe.

Article on how to negotiate with the recalcitrant which provides theoretical support for the views in the letter.

The Horror!

2011-06-10T16:06:00.001-05:00

Letter about Hockey in Toronto Globe and Mail [Scroll down to second Letter]

Tax Transactions, Not Corporate Income

2011-06-09T16:48:00.004-05:00

Op Ed in MetroWest Daily News on Corporate Income Tax versus Financial Transactions Tax

States Secrets Blocks Resolution of Contractors' Case

2011-06-03T14:04:00.001-05:00

The two recent decisions by the Supreme Court not to intervene in State Secrets cases means we have to seek a legislative solution (State Secrets Block Resolution of Contractors' Suit, Justices Say. New York Times, May 24, 2011: A17).

The States Secrets Protection Act was introduced by a bipartisan coalition into the last two Congresses following the 2007 report by the American Bar Association on the misuse of the States Secrets Privilege.

The bill should be re-introduced and passed in a timely fashion by both Houses of Congress. The bill will allow judicial review of whether or not the States Secrets defense is justified. Instead of having to rely on the word of the Government, there will be appropriate judicial review. Such review is essential when we remember that the initial acceptance of the States Secrets privilege was built on a lie in the original 1953 Reynolds decision.

Sent to New York Times

Let Shareholders Decide

2011-05-29T06:00:00.002-05:00

I strongly agree with John Bogle's view that shareholders should have the final say in how corporate funds are distributed for political purposes (The Supreme Court Had Its Say, Now Let Shareholders Decide, New York Times Week in Review, May 15, 2011: 9).

But shareholders are not the only stakeholders with an interest in this issue. As a consumer, I have a vested interest in whether the Corporation delivers its largess to causes of which I approve. It is therefore essential that there be complete transparency so that I can direct my purchases to companies whose political donations are only to approved politicians.

Each consumer contributes a tiny amount to the Corporation's cash flow. A small proportion of that cash flow gets diverted to politicians rather than contributing to profit. I should be able to direct whether that proportion goes to a politician, or to profit, or to a charity; and if to a politician, it should go to those of whom I approve.

Getting that enshrined in law will be a long and Quixotic quest.

States Loosen Insurance Rules

2011-05-29T05:57:00.000-05:00

I cannot believe that the states are encouraging irresponsible behavior by the Insurance Companies (Seeking Business, States Loosen Insurance Rules. New York Times, May 9, 2011: A1, A3).

After the catastrophic collapse of the mortgage and insurance markets of the late 2000's, I would have thought that states would ratchet up the rules rather than loosen them. It is highly risky to allow captive reinsurers to operate with high leverage. Any reverses will ricochet destructively through the economy.

I lived in Maryland when the state chartered Savings and Loan Companies failed and the State reneged on its underlying commitment to insure the deposits. Many ordinary people lost their savings.

The states should ensure that the firms they charter undertake their activities in a prudent and responsible manner.

Books: Selling and Writing

2011-05-29T05:52:00.002-05:00

RE: Don't I know you from the Dust Jacket? New York Times Book Review, May 8, 2011: 27.

But George Orwell hated every moment of the time he worked at a Hampstead bookstore.

Business Focus

2011-05-29T05:51:00.001-05:00

Two stories in today's New York Times discouraged me. First was the continuing and long standing complaint that the Nuclear Regulatory Commisision was a captive of that industry and that important safety precautions were not made and those failures were not punished by the NRC (Nuclear Agency Is Criticized as Too Close to Its Industry. New York Times, May 8, 2011: A1). Second was the failure of major data archives to protect the identity of the data stored therein (There's No Data Sheriff on the Wild Web. New York Times Week in Review, May 8, 2011: 2).

In both cases, essential security features were not put in place because they were "too expensive."

When was it that American Industry turned from an emphasis on technical rigor and pride in doing an excellent job to the present focus on parsimony? Parsimony, that is, when it comes to providing adequate products and services but generosity in rewarding the top echelon of the managerial team.

We have to return to that focus on a job well done despite the cost or we will suffer unimaginable problems in the years ahead. Let's start with really tightening up the safety levels of our aging Nuclear Reactors. Apropos Vermont, lying about the existence of underground pipes should be a clear basis for not issuing an operating permit for another twenty years.

Preventing the Next Flash Crash

2011-05-29T05:46:00.001-05:00

The op-ed by Ed Kaufman and Carl Levin (Preventing the Next Flash Crash, New York Times, May 6, 2011) calls for increased regulation of the financial markets to reduce the chances of a catastrophic fall in the stock, bond, and derivative markets.

Another way of slowing the amount of speculation in those markets is to institute a financial transactions tax. Doing this with a corresponding reduction in corporate income taxes would be a boost for Main Street at a cost to Wall Street.

That would be a winning trade off.

Furloughs, but Paydays for the Brass

2011-05-29T05:35:00.000-05:00

Your story about the management excesses at Gannett at a time when the firm was laying off staff and insisting that the survivors take furloughs shows the disconnect between the executive suite and the ordinary worker in America today (Furloughs, but Paydays for the Brass, New York Times, April 11th., 2011: B1, B3).

But it is a disconnect that will come at a price. All the research on downsizing, except that following a merger, shows that the economic benefits of downsizing are unlikely to occur unless a firm's top management share the pain -- something that Gannett claimed would happen but then failed to implement (with top team bonuses totaling $3 million). We can therefore expect that Gannett will continue its inexorable financial decline.

There is one simple way to change the situation. Let differential responsibility be reflected in basic compensation. But let every employee share the same percentage bonus (based on overall firm performance) as that of top management.

My Life in the Recording Studio

2011-05-26T12:03:00.001-05:00

OpEd in Cambridge Chronicle on Recording for the Blind

Collective Bargaining isn't the Problem

2011-05-17T15:50:00.002-05:00

Op-Ed on Public Sector Collective Bargaining in MetroWest Daily News

Legality 1, Reality 0

2011-05-06T06:05:00.002-05:00

What kind of mindset inhabits the brains of the senior officials of the Justice Departments (Detainees' Lawyers Can't Click on Leaked Files. New York Times, April 27, 2011: A1, A10).

We have moved from the Orwellian world of George W. Bush where torture was given the euphemism, "enhanced interrogation" to the Kafkaesque world of Barrack Obama where unindicted suspects live in legal limbo at Guantanamo and Leavenworth.

President Obama, that is not the kind of change I voted for.

Sent to New York Times

De Leo's Plan

2011-05-06T06:00:00.001-05:00

The only vision that Speaker DeLeo's plan will instantiate is a world enjoying a downward spiral of inferior jobs, and inferior pay, and inferior benefits (Editorial, Boston Globe, April 21, 2011).

State and local government employees are not overcompensated compared with private sector employees. The perceived differences are due to comparing public sector employees who are mainly in professional jobs with private sector employees who are in entry level jobs.

Compensation is not simply pay, it is also pensions and health-care benefits. In previous contract negotiations, public sector workers gave up larger pay increases in order to purchase health-care and pension benefits. Let us be clear. They (the employees, not the cities, towns, and states) are paying for those benefits with deferred or redirected compensation.

The reason that the citizens of the Commonwealth are balking at the increased costs is that, over the past 25 years, private sector compensation has stagnated (except for the top 1% of the earning population).

Corporations have starved most of us; the motto starve the beast was directed at government but impacted us all. Now they want the public sector to join in the race to the bottom and are using ordinary people, who are struggling to pay their bills, to achieve their goals.

Sent to Boston Globe

Op-ED on Union problems at WGBH

2011-03-22T10:13:00.000-05:00

OP-ED In Cambridge Chronicle

The Prison that Won't Go Away

2011-03-19T12:47:00.000-05:00

President Obama has decided to keep open the military prison at Guantanamo and will continue trial by Military Commission (The Prison That Won't Go Away, New York Times, March 8, 2011).

After President Nixon ordered his Attorney General to fire Special Prosecutor Archibald Cox, Attorney General Elliott Richardson and his deputy William Ruckelhouse resigned in protest.

Where are resignations from the Justice Department in protest against this misguided policy?

Why has no one raised a voice against a policy that will continue to damage the US in terms of its standing abroad, especially in the Arab world.

Because it is President Obama, from whom so much was expected, who has endorsed the Bush policy, it may be that the world's reaction will be even more severe than it was to the intial imposition of the policy.

It is a sad day for America.

Sent to New York Times

Obama's new Gitmo policy

2011-03-12T10:18:00.004-05:00

If there is one thing that George Bush did that destroyed America's image in the world, it was the sequestering of terrorist suspects in the prison at Guantanamo bay – America's Devil's Island. For a time, it seemed that with the Obama Administration in power, there was a chance that America's reputation might be restored (Obama's new Gitmo policy is a lot like Bush's old policy, Washington Post, March 8, 2011).

Alas, President Obama has accepted the George W. Bush mindset and has decided that laws and natural justice are irrelevant and that we will continue to hold suspects at Guantanamo Bay; and that we will continue to deny them trials in American courts, courts that have shown a remarkable capacity for providing fair trials to terror suspects; and that we will continue to hold some suspects indefinitely without trial.

The country and the world expected better of Obama, so the damage to our reputation caused by his “acceptance of the political reality” and abandonment of American values will be all the more severe.

Sent to Washington Post

Broke Town USA

2011-03-12T09:53:00.000-05:00

There is of course a simple solution for the financial crises facing
states, cities, and towns (Broke Town, USA, New York Times Magazine,
March 6, 2011: 26-29). They desperately need Federal aid.

When New Orleans was devastated by Katrina, we had no difficulty with
pouring federal aid into Louisiana to restore and improve that city.
Today the States are facing the financial tsunami unleashed by Wall
Street. Most of them are facing budget deficits. Part of their
response is to cut aid to counties, towns and cities which put their
precarious finances in jeopardy - would that Watson could come up with
a costless solution!

What is needed is federal funding equivalent to about 25% of each
jurisdiction's 2007 budget. That money would remove the dangers of
drastic cuts to public services, to unemployment payments, to
medicare, and to the alleviation of poverty in a world in which 18% of
the working population is unemployed or underemployed.

Sadly, there is no political will to pour such necessary federal aid
into the states. A century from now, we will look back with regret on
that missed opportunity to stoke the recovery; just as today we regret
Roosevelt's attempts at budget balancing in 1937.

Thanks to MoJo for breaking the rules

2011-02-26T10:09:00.003-05:00

Here is my letter in the Boston Globe.

Here is the article I was responding to:

A fine weave of family, work

The fact is, Abortion is dangerous to women

2011-02-26T10:03:00.001-05:00

Ms. Fraga is wrong (Letters, February 8, 2011).

She is implicitly comparing the current situation with an ideal world where there is no abortion. But that is not the world that existed before Rowe v. Wade. In those years, abortions were illegal and had much higher maternal death rates than occur today.

We should all agree on the necessity for good education about birth control and about the responsibilities of both parties to a sexual encounter so that abortion is rare.

Sent to Boston Globe

Schott Op-Chart: Vive la difference

2011-02-26T09:57:00.000-05:00

I am sorry that Mr Schott (January 19, 2011:A 19) omitted the characterization of Canada that I learned when I first moved there 38 years ago.

Canada had the good fortune to be exposed to British political wisdom, French culture, and American know-how. It had the misfortune to adopt British know-how, French political wisdom, and American culture.

Sent to New York Times

We Need Experimentation at the TSA

2011-02-02T13:55:00.001-05:00

Op-Ed in the Cambridge Chronicle

A response to the Citizens United ruling

2011-01-11T08:15:00.002-05:00

Citizens United; OpEd in the Providence Journal

This has vanished from their website, so here it is

A Citizen's response to the Citizens United Ruling

Martin G. Evans

The Supreme Court has, in its Citizens United decision, unleashed a flood of corporate and union money into the election process. In so doing, it has overturned a hundred years of precedent. It would appear that this has changed the face of elections for the future. We now have anonymous donations going to pay for advertisements supporting corporate and union agendas.

What can we do about it?

These are the issues on which citizens should focus their attention.

First we need to bring into alignment the tax treatment of individuals and corporations when it comes to political expenditures. If I give $500.00 dollars to my favorite candidate, this sum comes from my after tax income. The same should be true of corporations. Any money from their treasury expended on political activity should not be treated as a business expense so should come from their after tax income. Making this non -deductible will also enhance transparency as it will have to appear as a separate line in the Corporation's income statement. I would like to see similar treatment for their lobbying activity on Capitol Hill and in the Statehouses around the nation. The difficulty there is that some lobbying is likely to be a legitimate expense while other lobbying is purely political in nature; we may have to impose an arbitrary fraction of those expenses (say 30% as tax deductible while the rest comes out of after-tax income.

If allowing no deductions seems too harsh, we might adopt the system used in Canada. There, to encourage small donations to political parties, the first $400 of contribution receives a tax credit of 75%; that is one's tax bill is reduced by $300 if one gives $400.00. The next $350 receives a credit of 50%; the next $525 receives a credit of 33.33%. Donations over $1275 receive no tax benefit. These diminishing credits could be granted to both individuals and corporations to encourage broader participation in the financial support of politicians.

Second we need to bring the treatment of corporations and unions into alignment. Since the Supreme Court's decision in Beck v. Communication Workers of America (1988), Unions have had to rely on “voluntary” contribution from members to fund their political activities. In that case, the Supreme Court ruled that Unions could only legally collect fees to cover their administrative and collective bargaining expenses; thus members could opt out of paying any additional dues that were used for political activities. As opting out was a fairly difficult process, it is not clear how many union members took advantage of the reduced union dues available under the Beck ruling. Nevertheless, this does place a potential constraint on unions' political expenditures: if too much is spent in this way, more members may opt out thus reducing the unions’ ability to play in the political arena.

The equivalent constraint for a corporation would be for shareholders to have the right to control corporate political activity. Such constraints might be imposed in two ways. First the shareholders as a body might be required to vote on the next year’s political activity budget and on broad lines on the issues on which it is to be expended. Given the lethargic shareholder governance that currently exists, this would leave the decisions on political expenditure where it is today: in the hands of top management. The second approach would be to give each shareholder the right to “opt out” of making a contribution to political activity. He or she could request that her/his proportion of the political budget be redirected to charity instead of being used for political activity. Alternatively, the individual shareholder could direct to which politician(s) his or her share of the political budget was to be directed. Equitable treatment of Unions and Corporations requires that one or other of these systems to constrain corporate spending be incorporated as quickly as possible.

On the legislative front, we need to pass the DISCLOSE bill that would insist that corporations and unions be open and above board in acknowledging their corporate expenditures. In the Citizens United decision, the Supreme Court called for but did not mandate full disclosure. Just as individual contributions have to be fully disclosed, then as persons, corporate disclosure should also be mandated. One alternative route for disclosure might be for the SEC to issue a regulation that all corporations listed on US stock exchanges had to show in the quarterly and annual reports to the SEC a line item showing the corporation's political expenditures in the previous period. Another alternative might be for states (including Delaware) to insist that providing such a line item would be a condition of incorporation in the state.

Finally, transparency would permit consumer pressure to be brought on corporations. Just as, in the recent campaign (2010), Target was excoriated by many consumers and progressive groups for its support of a gubernatorial candidate in Minnesota who opposed same-sex marriage. It might also be feasible to start a campaign whereby consumers asked that their portion of cash-flow contributions that went to political activity be redirected to charity. Such consumer control is a long way off.

We need to work at both the state and federal levels to pass legislation that will expand shareholder and consumer rights in the domain of corporate political expenditures. Then democracy will be returned to the people.

He is Professor Emeritus of Organizational Behavior at the Rotman School of Management at the University of Toronto.

Rating Agencies Struggle

2011-01-09T17:33:00.001-05:00

Your discussion of the continuing failure of the rating agencies fails to mention the one real reform that would provide incentives to the agencies to provide accurate assessments (The Trade: Post Crisis, A Return To Old Habits, New York Times, January 6, 2011: B1, B11).

The agencies should be paid by the consumers of their information, not by the institutions whose products they are rating. There is no other market wherein the producer pays for a product's ratings.

What is needed is a small tax on every financial transaction. This tax would be used to pay the rating agencies. Pay would be based on performance. If a product received a higher rating than it deserved, the rating agency would forfeit its compensation.

This would remove the current conflict of interest in the market for ratings.

Sent to New York Times

Retreat on End of Life Counseling

2011-01-09T17:29:00.001-05:00

It is a great pity that the Administration has rescinded the regulation allowing doctors to be compensated by Medicare for end-of-life discussions with their patients.

As you stated on December 26th:
"The final version of the health care legislation, signed into law by President Obama in March, authorized Medicare coverage of yearly physical examinations, or wellness visits. The new rule says Medicare will cover “voluntary advance care planning," to discuss end-of-life treatment, as part of the annual visit.

Under the rule, doctors can provide information to patients on how to prepare an “advance directive," stating how aggressively they wish to be treated if they are so sick that they cannot make health care decisions for themselves."

This retreat says much about the political incompetence of the administration (yes, I voted enthusiastically for Obama). Throughout 2009 and 2010 the Republicans vociferously denounced the proposal as the creation of "death panels" which would reduce a person's right to a long life. It appears that this outcry was insufficient to alert the Administration that there might be objections to its new regulation.

It is clear that the Administration did not prepare the public and the Congress for the introduction of the rule so that it, in turn, was unprepared to resist the objections to the policy that has occurred since it was announced.

It is incomprehensible to me that the Administration did not do the political and educational work required to explain this policy which in the past, as you note, has garnered bipartisan support.

This is not a good omen for the future political initiatives by the Obama Administration.

Sent to Boston Globe

So that's where the money went.

2010-12-12T20:23:00.001-05:00

So, in secret, the Fed subsidizes big banks to the tune of over $250 million dollars (So That's Where the Money Went, Sunday Business, December 5, 2010:1,5). What did Main Street get? Nothing!

A much better way to stem the panic induced by failing mortgages would have been to do one of two things:
1. Force the lenders, as a condition of the subsidized loan, to enter into Shared Appreciation Mortgages (SAMs) with the distressed homeowners, or
2. Have the government itself enter into such arrangements (SAMs) with the distressed homeowners.

This would have removed virtually all risk of default. The rickety pyramid of derivatives would have been underpinned. The housing market would have been stabilized. People would be able to stay in their homes and schools. Neighborhoods would have been stabilized.

What a failure of imagination; what a failure to institute a pollicy with multiple winners.

I have one request of the Big Bankers. The Federal Government is willing to accept gifts to reduce the debt. We bailed you out in your hour of need with these subsidies. Now that banks are profitable, give back that money to the Treasury rather than paying it out in bonuses to executives; really the Treasury by providing those subsidies earned those bonuses.

Sent to New York Times

A Leadership Failure

2010-12-09T15:47:00.001-05:00

My Cambridge Chronicle Op-Ed

Why not Reconciliation for Extending Tax Cuts

2010-12-08T07:21:00.000-05:00

In all the talk about the repeal of the Bush tax cuts for the rich, there has been no discussion of the giant elephant in the Senate Chamber. No I don't mean Mitch McConnell and his fellow Republican obstructionists, there has been plenty said about them. I mean no one is talking about the possibility of passing the tax changes through the reconciliation process (No hits on the Washington Post website this month).

The original Bush cuts were passed under the reconciliation rules, why can't the Obama extensions of the poor and middle class be passed under these rules too? While we are at it, under reconciliation we could also extend unemployment benefits. Perhaps we could also provide additional funds to States, towns, and cities who have moved back into budget cutting and layoff modes.

Is it that forcing reconciliation would violate Obama's post partisan hopes? Forget it, these hopes have long been shattered. Or is it that the vote counters know that under reconciliation they would not be able to get a simple majority? If that is the case, let's force a vote and get all those Senators to show their colors.

Sent to Washington Post

Memo to Albany: It's Your Job

2010-12-01T20:14:00.000-05:00

You applaud the Governor's proposal of a 2% across the board budget cut, saying, "That is the fairest way to go." (Memo to Albany: It's Your Job, New York Times, November 27, 2010: A14)

There are two problems with the across the board approach.

First, it is the lazy man's way of budgeting. It prevents one from taking a hard look at all the expenditures and making tough choices about which are justified and which can be cut.

Second, it is manifestly unfair. A Department that is running a tight ship with little slack will be badly impacted in its ability to deliver services. A Department that is fat and flabby will be able to maintain its critical activities by divesting less productive endeavors.

What Albany needs is precision and focus in its budgetary activities.

Sent to New York Times

Justice DeLayed

2010-12-01T20:11:00.001-05:00

Justice DeLayed is Justice Denied.

Mr Delay was finally convicted of money laundering (DeLay Convicted in Donation Case by a Texas Jury, New York Times, November 25, 2010 A1

However there is no restitution for the voters of Texas. Indirectly, the money provided by Delay was used to support Republican candidates in the state office elections. They won control of the legislature and then, in an unprecidented between census redistricting, redrew federal House district boundaries to benefit their fellow Republicans.

In the subsequent election, the Texas delegation which had a small Democratic majority (17-15) swung decisively to the Republicans (21-11).

Are the Texas House victories won by Republicans to be declared invalid because of the tainted funding? Are the House district boundaries to be redrawn?

How can Texas be made whole again?

The GOP's lame duck Hardball

2010-12-01T20:08:00.001-05:00

The GOP is mindlessly opposing the START Treaty (The GOP's lame duck Hardball, Washington Post, November 21, 2010)

The GOP has struck a blow in the war on terror; on the side of the terrorists.

A side benefit of the inspection regime of the Russian nuclear sites is the pressure on the Russians to keep these sites secure. Continued absence of American inspectors will result in a slackening of security and a greater ability for unscrupulous criminals to steal nuclear material from the sites and sell them to well funded terrorist groups.

What is it about nuclear security that the GOP leaders, with the honorable exception of Senator Lugar, do not understand?

Sent to Washington Post

Dual Pay Structures

2010-12-01T20:02:00.002-05:00

Dual Pay structures are a bad idea (Unions Yield on Two-Tier Wage Scales to Preserve Jobs, New York Times, November 20, 2010: A1, B2).

They create major inequities between employees hired at different times. In our modern economy, we are told that collaboration between workers and between management and workers is essential for the development and manufacture of new products. The management of these companies will regret their coercive actions as these two-tiers pay scales will inhibit the development of a cooperative climate.

These lower pay scales for new hires will also contribute to the large income inequities in the country. It is the Tragedy of the Commons all over again. It may make sense for one company to improve its profitability (and the managers' bonuses) by cutting wages, but the enlarging of a large pool of people lacking purchasing power will do little to improve demand in the long run.

Sent to New York Times

Justices' Opinions

2010-11-22T14:48:00.001-05:00

I have never seen such misleading graphs as those accompanying the article Justices' Opinions Often Long on Words but Short on Guidelines (New York Times, November 18, 2010: A1, A22).

The graph on number of cases taken seems to shrink to zilch in 1090 because the graph does not have a zero point; the bottom edge is at some unspecified point between 50 and 100 cases. This is unacceptable.

The second graph on the number of words has the opposite problem. It seems as though reports in the 1950s were very brief and that they increased exponentially in the 1970's and have since leveled off. Again this graph has no zero point; the bottom edge is somewhere about 1900 words. If the graph had begun at zero words, the change would not have appeared so dramatic.

Readers really do expect better of the Times' graphic artists. Their watchword should be: always include the zero.

Sent to New York Times [& to the Public Editor]

The Two Cultures

2010-11-22T14:44:00.001-05:00

Let me apply some psychological analysis to one of the phenomena described by David Brooks (The Two Cultures, New York Times, November 15, 2010).

He takes at face value that business leaders are accurately reflecting the causes of their behavior when they say that "she is holding off on investing because she is scared about the future..."

But we are not very good at identifying and reporting on causal attribution. When things are going well for us, we tend to identify the causes internally: we developed new products, we designed them well, our manufacturing was of high quality, and we marketed the products well. When things are not going well, we make attributions to the environment: the market collapsed, there is too much uncertainty, and so on.

This pattern of attributions has been well documented in the Management Letters of many firms as they confront the ups and downs of the business cycle.

The fact is that firms can enact their environments. If the 300,000 members of the Chamber of Commerce were each to hire one new employee next week that might well start a virtuous cycle of increased demand (hopefully for goods and services made in the US) leading to increased hiring and so on.

Sent to the New York Times

Massport: Director's pay hike doesn't fly

2010-11-22T14:43:00.001-05:00

I have only lived in Massachusetts for eight years so I am puzzled by the way in which employment contracts seem to be written in, at least part, of the Public sector.

You report that when he retires, Mr Thomas Kinton (Massport) will be entitled to draw on $400,000 in "sick pay" (Massport: Director's pay hike doesn't fly, Boston Globe, November 16, 2010: A22).

Sick pay should be just that, payment for days when you are prevented from working because you are sick. Properly administered, sick pay does two things. It allows the individuals to recuperate more quickly than they might if they came to work, this would enhance the organization's productivity; it also protects the organization by not having coughing and sneezing individuals in the workplace who might infect their colleagues, this too enhances productivity.

If, however, you can claim payment for unused sick days at retirement, these incentives are reversed. To get a big terminal bonus, the individual is encouraged to come to work, to work at a torpid pace because of sickness, and possibly infect colleagues with the illness.

How did such contracts come to be written?

Sent to the Boston Globe

Get a Pencil: You're Tacking the Deficit

2010-11-22T14:40:00.002-05:00

I regret that your budget options (Week in Review, November 14, 2010) did not in clude a financial transactions tax.

Just look at the Wall Street volumes and prices. That is where the money is. That is what we should be taxing.

At least tell us what a small financial transaction tax would raise.

Thank you.

Sent to the New York Times

Time for Obama and the Democrats to Play Hardball.

2010-11-17T13:42:00.001-05:00

Paper: Transforming Management, Manchester Business School

Earmarks: Bay State’s loss of funding would be country’s gain

2010-11-17T13:40:00.002-05:00

Letter in Boston Globe

Panel Seeks Social Security Cuts and Higher Taxes

2010-11-17T13:36:00.001-05:00

For many years, Canadians have not shared the mortgage interest deduction from their
income taxes, yet their rate of home ownership is identical to that of the US (about 68%)
[Panel Seeks Social Security Cuts and Higher Taxes, New York Times, November 11, 2010].

We probably will not harm the housing market if that benefit is withdrawn gradually.

Sent to New York Times

Aftermath of the Election

2010-11-14T19:22:00.000-05:00

How long do you think it will be before the Republicans cry "For how much longer are we going to let those filibustering Democrats to thwart the will of the people?"

Sent to Boston Globe

Panel Seeks Social Security Cuts and Higher Taxes

2010-11-14T13:23:00.002-05:00

For many years, Canadians have not shared the mortgage interest deduction from their income taxes, yet their rate of home ownership is identical to that of the US (about 68%) [Panel Seeks Social Security Cuts and Higher Taxes, New York Times, November 11, 2010].

We probably will not harm the housing market if that benefit is withdrawn gradually.

Sent to New York Times

A time to Spend and A Time to Save

2010-11-14T12:32:00.002-05:00

OpEd in Cambridge chronicle

McConnell Eases Talk of A Thaw

2010-11-14T12:29:00.002-05:00

Mitch McConnell spoke eloquently yesterday about his unwillingness to compromise Republican principles (McConnell Eases Talk of Thaw, New York Times, November 5, 2010).

What are these principles?

I had always thought that Budget balancing was a major principle for the party. Why didn't they stand up for those principles during the Bush years when the deficit soared.

As Republicans caused at least half the deficit, shouldn't they be willing to put many of their favorite programs (spending and tax expenditures -- such as not extending the Bush tax cuts to the wealthy)) to the axe in order to bring the budget into balance.

Their pet programs should be reduced to cover at least half the savings.

Sent to New York Times

Cede Political Turf? Never! Well, Maybe

2010-11-14T12:24:00.002-05:00

One factor is omitted in the discussion about collaboration between political opponents (Cede Political Turf? Never! Well, Maybe. Science Times, November 2, 2010).

If the opponents during their negotiations are interrupted with messages from their constituents telling them to remember their principles and their goals, it will be very difficult for them to explore the issues being discussed in sufficient detail to arrive at the possibility of agreement. There will be no win-win and probably not even compromise.

Sent to the New York Times

The Election

2010-11-14T12:21:00.001-05:00

The financial backers of the Republican Party have, with their financial support, just made a down-payment on the kind of government they want.

For that government to succeed they will have to invest ten times that amount in hiring 400,000 new employees in the US. This will begin a virtuous cycle of new employment leading to more consumption and then to even more employment in the US.

That is how their stimulus will have to work and if it works they will reap the country's gratitude.

Sent to the New York Times

The 'big dog' in campaign spending

2010-11-14T12:17:00.003-05:00

Mr. Jacoby paints an incomplete picture in his comparison between Union and Corporate spending on elections (The 'big dog' in campaign spending, Boston Globe, October 31, 2010).

First, he cannot know that Unions outspent Corporations. Without any disclosure information about corporate contributions to the Chamber and the Rove inspired organizations. It is perfectly possible for corporations to donate to multiple organizations and thus outspend unions.

Spending by unions has to be from funds earmarked by each member. The same constraint does not apply to corporations who do not need permission from either shareholders or customers. As a customer, I do not expect that my purchases would provide funds for corporate lobbying. When I contacted three service providers asking that the proportion of my tiny contributions to their cash flow allocated to political activity be diverted to charity they ignored my request.

Finally, the fact that public setcor hourly wages exceed those of private sector workers is not due to the irresponsible generosity of public sector employers; rather it is due to the fact that private sector wages have stagnated due to top management of private sector employers (and especially the very top managers) having reaped in their pay and benefit packages all the gains in productivity that have been achieved in America over the past decade.

Sent to Boston Globe

Patrick opens narrow lead, poll suggests

2010-11-14T12:10:00.001-05:00

I am appalled that the graph appearing alongside Frank Phillips' report on the gubernatorial race did not include data for Jill Stein (Patrick opens Narrow Lead, Poll Suggests, Boston Globe, October 222nd., 2010: A1).

She is a candidate and she has some some good ideas. By your failure to acknowledge her presence in the race you are unfairly handicapping her.

That is shameful.

I hope you will print a corrected graph.

Sent to Boston Globe

Special Report on Austerity

2010-11-14T12:02:00.001-05:00

Your special report fails to emphasize where the money really is (Recovery, Not Austerity, American Prospect, November 2010: A1).

The money is not in Social Security it is in the financial sector.

The real need in this Century is for a Tobin tax levied on every financial transaction.

This would give us the resources to bring alive the American dream for us all.

Sent to American Prospect

The Foreclosure Mess

2010-11-14T11:52:00.002-05:00

There is much to agree with in Professor Peiser's Op-Ed (The foreclosure mess, Boston Globe, October 20, 2010: A13).

However his suggestion that those people have suffered from improper foreclosure forego litigation against their mortgage servers is absurd. People need to be able to redress the wrongs committed against them.

One suggestion for cleaning up the mess is for Institutions (banks, state government, federal government) enter into Shared Appreciation mortgages with the distressed homeowner. The homeowners pay what they can, the institution picks up the rest. Both share in any appreciation of the home when it is finally sold.

This has multiple benefits. Only the institution and the homeowner have to agree on a contract. The multiple, often unknown, holders of the mortgage do not need to agree as their cash flow will be unchanged. Homeowners stay in the houses; property taxes continue to be paid; neighborhoods will be stabilized; and school classes will not be disrupted as pupils move as a result of foreclosure.

There are not many solutions with so many beneficiaries.

Sent to Boston Globe

Two forms of Stimulus

2010-10-21T10:22:00.002-05:00

Cambridge Chronicle Op-Ed

Paternalism and Soda (scroll down for Rosser's letter)

2010-10-15T14:29:00.001-05:00

Ezra Rosser is wrong (Letters, October 12, 2010: A24).

Through its massive agricultural subsidies of almost $4 billion per year for corn, the US government keeps the price of soda, laced with corn syrup, low for all of us.

The Paralysis of the State

2010-10-15T14:27:00.001-05:00

I agree with David Brooks that unfunded public (and private) sector pensions are a major problem that must be faced sooner rather than later (The Paralysis of the State, New York Times, October 12, 2010: A25).

There are however two points with which I must take issue. First is his statement that public sector workers average $14.00 more than private sector workers; traditionally the gap has been in the other direction with private sector workers earning a premium over public sector workers. This reversal is not due to the irresponsible generosity of public sector employers; rather it is due to the fact that private sector wages have stagnated due to top management of private sector employers (and especially the very top managers) having reaped in their pay an benefit packages all the gains in productivity that have been achieved in America over the past decade.

Secondly, under the traditional model, the lower public sector wage was balanced by enhanced job security and good pensions. Security is gone especially at the state and local level. These pensions are not undeserved, they compensate for years when the wage gap was in the opposite direction.

As citizens we need to do two things: We must ensure that pension funds for state and local governments be merged so as to minimize administrative costs and increase the actuarial benefits that come from a larger pool of pensioners; we must also make sure that, once there is an economic recovery, we raise taxes to properly fund these benefits.

Mankiw's Motivation

2010-10-15T14:25:00.000-05:00

I do not think that Mr. Mankiw writes for money (I Can Afford Higher Taxes, But They'll Make Me Work Less. New York Times Sunday Business, October 10, 2010: page 3).

I believe that he writes to share his ideas with the rest of us. He accepts speaking engagements so that he can influence senior corporate executives and government officials. He speaks and writes so that, ever so slightly, he can influence the economic policy of our country. He writes so as to leave a name for posterity.

Money is merely a by-product of of his activity. His motivation is intrinsic. If the group making the invitation was influential enough, I am sure he would speak to them for free.

Cahill Baker Plot

2010-10-15T14:22:00.002-05:00

The revelations of the Baker Campaign's interactions with Cahill's top aides will hurt Charlie Baker's candidacy (Cahill accuses ex-aides of plot to help Baker, Boston Globe, October 8th. 2010: A1).

He positioned himself as an ethical outsider who would go up to Beacon Hill and eliminate all the unsavory deals that lurk in the halls of the State House.

He is now implicated in one of the least savory deals of the past decade. To whom will his adherents turn?

Sent to Boston Globe

What are we fighting about? The impact of the Bush tax increases on the small business owner

2010-10-01T13:27:00.001-05:00

What are we fighting about? The impact of the Bush tax increases on the small business owner.

The Republicans are claiming that allowing the Bush tax cuts to elapse will have an adverse impact on small business owners who do not incorporate; so they enters their business income on their personal 1040 Tax Form. The critics of the Administration's plan claim that it will reduce the small business owner's propensity to hire new employees and reduce their propensity to invest in new equipment.

These claims are false.

What is taxed is income. A firm's income is calculated after wages have have been paid to employees and after deductions have been taken for investments in equipment, land, and buildings. So taxes come after these deductions, so an increased tax (on net income) can have absolutely no direct impact on an owner's propensity to hire or to plow money back into the firm.

There is however a modest indirect impact. According to the National Association of Manufacturers, the average small business makes a profit of $600,000.

Under the present tax regime with 33% and 35% as the top two rates, if the owner filed jointly with a spouse and there was no other income, the tax owed would be $180,293.81. Under the new tax regime with a 36% rate for income over $250,000 and a top rate of 39.6%, the owner would pay $194,415.33, an increase of about $14,000.

If the owner wanted to maintain his or her current level of after-tax income, he or she would have to increase the firms profit to about $620,000. In a firm that generates these levels of profit, $20,000 dollars is not going to have much impact on hiring and investment decisions.

For firm's below the average, the impact would be even smaller. It is only when firms get to make profits above $2,000,000 that we get into serious money: to maintain that lifestyle, the owner would need to increase profits by $100,000.0 so this might impact hiring or investment decisions.

So the truth is, allowing the tax cuts on incomes over $250,000 to expire will have little impact on most small businesses only on highly profitable firms and very rich owners will the impact be even noticeable!

Letter in Cambridge Chronicle, Sept 30, 2010.

SAM's and the Foreclosure crisis

2010-09-20T19:41:00.003-05:00

My op-ed in the Cambridge Chronicle.

In the print version on September 30, 2010.

Grow Jobs ... Shrink Government

2010-08-24T17:19:00.002-05:00

In his op-ed "Grow Jobs, Shrink Government" (Boston Globe, August 18, 2010) Mitt Romney claims that the Republicans have other ideas apart from the "cut taxes" mantra.

A careful examination of the nine items in the brief agenda laid out by Mitt Romney show that three were revenue neutral (negotiate trade agreements, those these might result in tariff reductions; adopting an energy policy that reduces dependence on middle east oil, though Romney gives no indication of what such a policy might be and whether it would be acceptable to other Republicans; preserve our balanced labor and management rules and regulators), one would increase taxes (eliminate lobbyist inspired loopholes), one is ambiguous on the effect on taxes (align corporate taxes with other developed economies, but I assume he expects a reduction), while four unequivically involve reductions in taxes (preserve the Bush tax cuts, that will be a cut from the anticipated 20011 rates; accelerated write-offs for corporate investments; eliminate tax on dividends; eliminate tax on capital gains and interest).

It is clear that the more specific parts of Romney's program involve tax cuts. He never makes clear which government programs should be curtailed to avoid an increase in the National Debt.

Saddest of course is Romney's failure to note that policies similar to these were what the Republicans followed during eight of the last ten years that Romney deplores.

Sent to Boston Globe

Take Back Government from Corporations

2010-08-24T17:16:00.000-05:00

Cambridge Chronicle Op-Ed

Foreclosure Crisis

2010-08-17T19:31:00.002-05:00

A recent news story (US Plans more aid for jobless homeowners, August 11, 2010) and John Carney's Op-Ed on Fannie Mae and Freddie Mac (Too big not to fail, August 11, 2010) contain the seeds of a good idea for the solution to the foreclosure crisis. Mr. Carney notes that overlooked suggestions for reform include encouraging banks to partner with homeowners in shared appreciation mortgages. Included in the additional aid are funds to enable "local aid groups to provide [interest free] bridge loans of up to $50,000 to eligible borrowers to help them pay mortgage principal, interest, insurance, and taxes for up to 24 months.

Let us combine these two ideas into a government financed and administered program. Our experience going through middle men for the government guaranteed student loan program was an expensive mistake.

Let the government absorb Fannie Mae and Freddie MAc and give them a new role. Entering into shared appreciation mortgages with distressed homeowners. With this version of a shared appreciation mortgage, the homeowner would pay what he or she could, the government would pay the rest.

With such a scheme there would be multiple winners:
* mortgage holders would get their promised stream of payments,
*government would finally get some traction in reducing the rate of foreclosures -- nothing has worked so far because getting multiple mortgage holders to agree on modifying the terms of a mortgage is virtually impossible; over time government might even build up some positive equity in the houses it co-owned,
* homeowners would continue to live in their homes,
*towns and cities would continue to enjoy vibrant neighborhoods.

All around it seems a sensible way to go.

Bureaucratic Failure in the case of Shirley Sherrod

2010-08-17T19:23:00.001-05:00

The indecent haste with which the Department of Agriculture engineered Ms. Sherrod's
resignation suggests a major failure in the bureaucratic protections that the Federal
Government has in place for its employees.

To be fired without any attempt to hear her side of the story, without a full
consideration of all the facts suggests gross incompetence in senior management of the
agency.

They should be disciplined.
--

Supreme Court and Maher Arar

2010-07-02T06:16:00.001-05:00

I share your outrage that the Supreme Court has refused to take on the case of Mr Maher Arar (New York Times, June 15, 2010), a Canadian who was wrongly accused of terrorist links, and who was arrested in New York, rendered to Syria where he was tortured, before returned to Canada.

This refusal was, in part, based on arguments by the Justice Department that "the court should not investigate the communications between the United States and other countries because it might damage diplomatic relations and affect national security."

It is difficult to see what further harm could be done. The case was extensively studied by a Canadian Royal Commission and Mr. Arar was cleared of wrongdoing and given a large financial settlement. The trouble is that the refusal to open this case is based upon the docrine of "the States Secrets Privilege." This allows the State to be its own judge in deciding what is or is not a State Secret. The privilege was born of a lie in the 1950's and should not be allowed to continue in its present form.

The Justice Department in this case and others is continuing to follow the policies of the Bush Administration. It should not. Rather it should give strong support to The States Secret Protection Act of 2009[H.R. 984/ S417] which will allow for checks and balances in the use of the privilege. This law still languishes somewhere on the Congressional Calendar.

We should note that in this case, the Supreme Court has followed the doctrine of stare decisis; quite a contrast to its overturning one hundred years of precedent for campaign financing.

Sent to New York Times

Rating Agencies

2010-07-02T06:11:00.001-05:00

Andrew Ross Sorkin fails to explicitly offer the simple answer to how to avoid conflict of interest by the rating agencies (Answers On Ratings Are Overdue, New York Times (Business Day), June 1, 2010: B1, B2).

Let the agencies' paymasters be the investors. Each financial transaction should have a small fee attached to it, like a Tobin tax. These fees would be used to pay the rating agencies; to keep them honest, a portion of the pay would be tied to achievement, that is the medium and long term accuracy of their ratings.

Such a system would eliminate the current conflict of interest faced by the rating agencies who are paid by the very firms/issuers they rate.

It is a great shame that Congress does not yet seem to be moving in a direction to correct this situation.

Sent to New York Times

More on the Euro

2010-07-02T06:06:00.001-05:00

The constraints that the Euro places on European policy described and decried by your editorial writer yesterday (Greece's troubles reveal fatal flaws in the Euro, Boston Globe, May 6, 2010)are exactly the same as the constraints placed upon the regions and states of the United States by our acceptance of the US dollar as a common currency.

Without the dollar, Massachusetts could try to solve it's budget problems by devaluing its currency thereby reducing imports from other states and increasing exports to those states.

Alas, other states would probably reciprocate or add tariff barriers thereby making both Massachusetts and the rest of the country less well off. This is what would happen in Europe absent the Euro's constraints.

We should be glad that the Euro provides those constraints and hope that the unified currency will survive the current stresses and strains and survive, like the dollar, for many centuries.

Sent to the Boston Globe

Greek Wealth Is Everywhere But Tax Forms

2010-07-02T05:57:00.001-05:00

Before we sneer too much at those Greeks who, to avoid taxes, failed to report that their homes had swimming pools, we should look at our own behavior (New York Times, May 2, 2010: A1).

I do not volunteer to pay the Massachusetts Tax at the 5.85% instead of 5.3%. Many companies have moved their headquarters as well as their production facilities offshore in order to reduce their taxes.

I almost wrote "tax burden" because that is the way we see taxes rather than, what they really are, the cost of civilization.

Sent to New York Times

The Data Driven Life

2010-07-02T05:54:00.001-05:00

In his piece on "The Data Driven Life," Gary Wolf claims (pp. 40-41) to have written a long article (New York Times Magazine, May 2, 2010: 38-45).

How long?

Sent to New York Times Magazine

The Euro Trap

2010-07-02T05:49:00.002-05:00

The constraints that the Euro places on European policy described and decried by Paul Krugman (The Euro Trap, New York Times, April 30, 2010) are exactly the same as the constraints placed upon the regions and states of the United States by our acceptance of the US dollar as a common currency.

Without the dollar, Massachusetts could solve it's budget problems by devaluing its currency thereby reducing imports from other states and increasing exports to those states.

Alas other states would probably reciprocate or add tariff barriers thereby making both Massachusetts and the rest of the country less well off.

We should be glad that the Euro provides those constraints and hope that the unified currency will survive the current stresses and strains and survive, like the dollar, for many centuries.

Sent to New York Times

The coming catastrophe

2010-07-02T05:47:00.002-05:00

Neither Scot Lehigh, nor Penner and Reischauer whose work he reports, seem aware of the most sensible form for future taxation: a Tobin tax on financial transactions (The coming catastrophe, Boston Globe, April 30, 2010: A9).

This has many advantages:

It can be harmonized with similar taxes at the international level, to avoid firms' jurisdiction shopping.

It taxes activities that represent the bulk of the US economy: 61% at the latest count.

By increasing transaction costs it will reduce the kind of speculative activity that brought our economy to its knees, but if set at a low rate will not inhibit normal business transactions.

Part of the proceeds from the tax can be used to pay the Credit Rating Agencies and thus remove the horrendous conflicts of interest they currently experience.

Multiple wins, I'd have thought.

Sent to Boston Globe

Paedophile Crisis

2010-04-25T05:50:00.000-05:00

A deeply dysfunctional organization is one that does not learn from its mistakes.

In 1993, Cardinal Bernard Law of Boston, breaking the 7th commandment, called down the wrath of God on the Boston media for outing a paedophile priest in Fall River, MA.

Today, the Vatican excoriates the New York Imes for its coverage of stories that bring the shame of near involvement in a new coverup to the Pope.

The Vatican is simply and sadly repeating a losing course of action.

Sent to New York Times

Not a race for the top

2010-04-25T05:45:00.001-05:00

It is unconscionable that the Department of Education is rating states' 'race to the top' plans on whether or not states encourage schools to pay teachers on the basis of student performance (Not a race to the top for Massachusetts, Boston Globe April 6, 2010).

As an organizational psychologist I am well aware that the nature of the effect of extrinsic motivation (pay on the basis of childrens' performance) on intrinsic motivation (the joy of teaching) is controversial. In some studies there is an undermining effect, in others there is not. As far as I know the large scale study of the effectiveness of pay for performance in the New York City School System has not yet reported any long term results.

For an administration dedicated to using the best science available, the decision favoring pay for performance for teachers seems premature.

Sent to Boston Globe

Deficits

2010-04-25T05:41:00.001-05:00

Where was Senator Tom Coburn when we used (and are using) deficits to pay for the Iraq war (9200 in Bay State lose access to jobless benefits, Boston Globe, April 6, 2010: A2).

Surely, deficits for the reducing the trauma of unemployment is as justifiable as deficits to pay for war.

\perhaps if we drafted the unemployed, Senator Coburn would approve of those payments -- but then of course there would be no work for the contractors who make such generous contributions to political campaign funding.

Sent to Boston Globe

Who Needs Wall Street?

2010-04-25T05:34:00.001-05:00

Your correspondent, Roger Lowenstein, speaks favorably about the imposition of a Tobin Tax on financial transactions (New York Times Magazine, March 21st., 2010: 15-16).

This has two advantages. Government should tax where the money is. There is lots of it sloshing around.

Second, a first call on the funds raised should be to pay the rating agencies for their work. Right now, the rating agencies are paid by the very firms/issuers they rate. This is a major conflict of interest as the rating agencies are pressured by their paymasters to give high ratings.

In such a system, part of the fee could be tied to achievement: that is the medium and long term accuracy of their ratings. This would encourage the agencies to give accurate ratings.

It is a great shame that Congress has not yet moved to impose such a tax which would help reduce the deficit and help keep markets honest.

Sent to New York Times Magazine

Rating Agencies

2010-04-25T05:31:00.002-05:00

We need action, not studies (As Lawmakers Grapple With Financial Oversight, They Call For More Studies, New York Times, March 17, 2010: B3).

It is clear that we must remove the conflicts of interest currently existing in the way that Rating Agencies are compensated.

Let the agencies' paymasters be the investors. Each financial transaction would have a small fee attached to it, like a Tobin tax. These fees would be used to pay the rating agencies; to keep them honest, a portion of the pay would be tied to achievement, that is the medium and long term accuracy of their ratings.

Such a system would eliminate the current conflict of interest faced by the rating agencies who are paid by the very firms/issuers they rate.

It is a great shame that Congress has not yet moved to correct this situation.

Sent to New York Times

Federal Positions Unfilled

2010-04-23T06:12:00.002-05:00

Article in Transforming Management. Manchester Business School, April 19th., 2010

Decisions, Decisions

2010-04-23T06:09:00.003-05:00

Article in Transforming Management. Manchester Business School. March 9, 2010

Try not to do this when YOU volunteer.

2010-03-04T11:09:00.003-05:00

Piece on the travails of volunteering in Cambridge Chronicle.

How the GOP Can Fix Health Care

2010-03-04T11:04:00.000-05:00

The GOP must be truly bereft of ideas on health care if the commentary on your op-ed page is the best they can do (How the GOP Can Fix Health Care, New York Times, February 22, 2010: A17).

Former senator Bill Frist starts out strongly advocating that we pay for quality care. However he fails on the crucial tests: How is quality to be assessed; How much do we pay for it? Instead he segues into a non-sequitur advocating decentralization of payment decisions. As far as I can tell he means that "he who wields the scalpel should control the purse," which may be OK for the surgeon but may not be for the other 55 members of the team.

Mr. McClellan has some sensible ideas around Medicare; but why didn't he implement them when he was in charge of Medicare?

Mr. Pinkerton has little to offer; after all most medical research is already funded through the research councils using Federal Government funding.

One of Mr. Kolb's suggestions (health exchanges and ending tax exemptions) has already been rejected by the GOP.

Mr. Gingrich is focused on tort reform; but states that already engage in malpractice damage limitation do not have lower health costs than those who do not.

I do hope that better ideas emerge at next week's conference on health care.

Sent to New York Times

Report Faults 2 Who Wrote Terror Memos

2010-03-04T11:01:00.002-05:00

Shame on your headline writer (Report Faults 2 Who Wrote Terror Memos, New York Times, February 20, 2010: A1, A9). They were Torture Memos not Terror Memos.

Shame on the Justice Department for arguing that the context of the times justified sloppy legal arguments. It is when we are under attack that we should hew most strongly to our ideals.

Sent to New York Times