Category: Law and Inequality

“Please Tase Me, Boss”

Recently Arianna Huffington and Rob Johnson proposed that individuals angered by bank bailouts move their money from “too-big-to-fail banks” to community banks. As Zephyr Teachout and Paul Volcker have noted, economic power can inexorably lead to outsized political influence. Huffington and Johnson worry that “The government policy of protecting the Too Big and Politically Connected to Fail is badly hurting the small banks, which are having a much harder time competing in the financial marketplace. As a result, a system which was already dangerously concentrated at the top has only become more so.” As I work my way through Karen Ho’s excellent ethnography Liquidated, I thought I might mention a few stories about a noted hedge funder that give a human face to Huffington/Johnson’s worries about Wall Street.*

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Inequality & Media Decline

There have recently been a number of conferences on the future of journalism. I think a whole panel could focus on the following factoid, observed by Michael Massing:

Katie Couric’s annual salary is more than the entire annual budgets of NPR’s Morning Edition and All Things Considered combined. Couric’s salary comes to an estimated $15 million a year; NPR spends $6 million a year on its morning show and $5 million on its afternoon one. NPR has seventeen foreign bureaus (which costs it another $9.4 million a year); CBS has twelve. Few figures, I think, better capture the absurd financial structure of the network news.

In a winner takes all economy, rewards to those at the top often have little to do with the value of what they create. That’s one reason Massing thinks it’s important for some of the big winners of the digital economy to help those they displace.

Google Books and the Limits of Courts

GoogleBooksThe Google Books litigation has inspired a lot of commentary on the web. As an early October fairness hearing approaches, a consensus appears to be building: the proposed settlement is too important and complex for a court to approve in its current form. Agent Lynn Chu has complained that “No one elected the[] ‘class representatives’ to represent America’s tens of thousands of authors and publishers to convey their digital rights to Google.” Pamela Samuelson, by all accounts one of the leading academics in American intellectual property law, has this to say:

The Google Book Search settlement will be, if approved, the most significant book industry development in the modern era [emphasis added]. . . . The Authors Guild has about 8000 members. OCLC has estimated that there are 22 million authors of books published in the U.S. since 1923 (the year before which books can be presumed to be in the public domain). Jan Constantine, a lawyer for the Authors Guild, is optimistic that authors and publishers of out-of-print books will sign up with the Registry, but there are many reasons to question this.

For one thing, the proposed settlement agreement implicitly estimates that only about 750,000 copyright owners will sign up with the Registry, at least in the near term. Second, many books are “orphans,” that is, books whose rights holders cannot be located by a reasonably diligent search. Third, many easily findable rights holders, particularly academic authors, would much rather make their works available on an open access basis than to sign up with the Registry. Fourth, signing up with the Registry will not be a simple matter, since the Registry won’t just take your word for it that you are the rights holder. You are going to have to prove your ownership claim.

The non-representativeness of the class is one ground on which it is possible to object to the proposed Book Search settlement. Other reasons to object or express concerns will be explored in subsequent articles. Objections must be filed with the court by September 4, 2009.

A suitable platform for hosting public discussions of the deal only launched a few weeks ago, thanks to the diligent efforts of James Grimmelmann (who is also organizing an academic conference on the issue in October). The proposed settlement raises a number of issues, which may only be addressed by extensive regulation of the project — or a public alternative dedicated to serving those marginalized by the current proposal.
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Modern Day McCarthyism

I was recently listening to a program on the rise of “red-baiting” in some Vietnamese-American communities. It’s apparently becoming a common rhetorical strategy:

On April 16, 2009, the Thurston County Court ruled in favor of a Vietnamese man who sued for defamation. This case was the first of its kind in the state of Washington. . . . The court found the five defendants . . . guilty for wrongly accusing the plaintiff . . . of having communist sympathies.

[I]n this case, both the defendants and plaintiffs fought against communism during the Second Indochina War. All those interviewed invoked a word commonly used within the Vietnamese émigré community to describe the act of wrongly accusing someone of communist sympathies: chụp mũ. As this trial brought to light, chụp mũ is a widespread practice among Vietnamese community leaders. However, it is very rare for a person who has been chụp mũ to sue his/her accusers.

This might be an interesting precedent for those accused by shock jocks of being socialist, Marxist, Bolshevik, or in favor of concentration camps.
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Compensation Caps and Relative Deprivation

Former Fed Vice Chair Alan S. Blinder’s column “Crazy Compensation and the Crisis” offers a sensible perspective on some origins of the current economic crisis:

Take a typical trader at a bank, investment bank, hedge fund or whatever. . . .[W]hen they place financial bets [they face the following odds]: Heads, you become richer than Croesus; tails, you get no bonus, receive instead about four times the national average salary, and may (or may not) have to look for a new job. These bright young people are no dummies. Faced with such skewed incentives, they place lots of big bets. If tails come up, OPM [other people’s money] will absorb almost all of the losses anyway.

[Now] let’s consider the incentives facing the CEO and other top executives of a large bank or investment bank (but, as I’ll explain, not a hedge fund). For them, it’s often: Heads, you become richer than Croesus ever imagined; tails, you receive a golden parachute that still leaves you richer than Croesus. So they want to flip those big coins, too.

After this flash of insight, Blinder retreats into quietism, counseling that “fixing compensation should be the responsibility of corporate boards of directors and, in particular, of their compensation committees.” I don’t know why he doesn’t consider the power of an income tax system that’s much more progressive at the very top income levels. As David Leonhardt observes,

Today . . . the very well off and the superwealthy are lumped together. The top bracket last year started at $357,700. Any income above that — whether it was the 400,000th dollar earned by a surgeon or the 40 millionth earned by a Wall Street titan — was taxed the same, at 35 percent. This change [from the past] is especially striking, because there is so much more income at the top of the distribution now than there was in the past.

Of course, we may need to be sensitive to the rising costs of living for the wealthy.
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Online Symposium: Citron’s Cyber Civil Rights

From tomorrow through Thursday, Concurring Opinions will be hosting a number of scholars invited to discuss Danielle Citron’s work Cyber Civil Rights. Responding to controversies over online attacks, Citron argues the following:

Social networking sites and blogs have increasingly become breeding grounds for anonymous online groups that attack women, people of color, and members of other traditionally disadvantaged groups. These destructive groups target individuals with defamation, threats of violence, and technology-based attacks that silence victims and concomitantly destroy their privacy. Victims go offline or assume pseudonyms to prevent future attacks, impoverishing online dialogue and depriving victims of the social and economic opportunities associated with a vibrant online presence. Attackers manipulate search engines to reproduce their lies and threats for employers and clients to see, creating digital “scarlet letters” that ruin reputations. . . .

Web 2.0 technologies accelerate mob behavior. With little reason to expect self-correction of this intimidation of vulnerable individuals, the law must respond. General criminal statutes and tort law proscribe much of the mobs’ destructive behavior, but the harm they inflict also ought to be understood and addressed as civil rights violations. Civil rights suits reach the societal harm that would otherwise go unaddressed and would play a crucial expressive role. Acting against these attacks does not offend First Amendment principles when they consist of defamation, true threats, intentional infliction of emotional distress, technological sabotage, and bias-motivated abuse aimed to interfere with a victim’s employment opportunities. To the contrary, it helps preserve vibrant online dialogue and promote a culture of political, social, and economic equality.

As I’ve noted before, I think this piece breaks new ground in applying venerable laws to the online environment. In this cyber-symposium, we propose to discuss the following issues:

What can the law do to respond to these threats?

How we deter harassment while promoting legitimate speech?

How do we balance the privacy rights of speakers and those they speak about in the new communicative landscape created by sites like AutoAdmit, Juicy Campus, Facebook, and anonymous message boards?

A list of scholars invited to discuss these issues appears below:

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Healing the Damage: Truth & Repudiation in the Agencies

I have tried to keep track of executive failures over the past eight years in financial, health, and safety regulation. But I have been overwhelmed. As James Galbraith argues in The Predator State, the past administration appointed the most extreme anti-regulatory voices it could find, across the board. Now the Center for Public Integrity has released a report on the results: the “eight-year tenure of the Bush administration was marked by more than 125 systematic failures across the breadth of the federal government.” As they note,

[T}he failures are rooted in recurring themes: agency appointees selected primarily for ideology and loyalty, rather than competence; agency heads who overruled staff experts and suppressed reports that did not coincide with administration philosophy; agency-industry collusion; a bedrock belief in the wisdom of deregulation; extensive private outsourcing of public functions; a general failure to exercise government’s oversight responsibilities; and severely slashed budgets at understaffed agencies that often left them unable to execute basic administrative functions.

The question now is, what to do about it? Responding to the administration’s torture policies and other human rights violations, Jack Balkin and Bruce Ackerman have suggested two approaches. Both of them are worth looking into with respect to some Bush-era holdovers who will be on independent agency boards for years to come.

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Individualizing v. Generalizing

Thanks to Dan for inviting me to blog this month. I’m looking forward to it.

I’ll start with two pieces in the NY Times Sunday Magazine this week that raise interesting questions about individualization versus generalization and the struggle for equality for women and people with disabilities.

In Creature Comforts, Rebecca Skloot reports on the difficulty faced by people with disabilities seeking to use a variety of animals to assist them in day-to-day public life. In doing so, she identifies the inevitable tension between the individualized inquiry required by the ADA and the urge (and sometimes need) to generalize. The people maintaining public spaces, including those who use those spaces, want bright lines about which animals are permissible service animals, while the ADA requires that they accommodate individuals with disabilities and their individualized needs.

Similarly, in The Senator Track, Lisa Belkin comments on the difficulty that women (including Caroline Kennedy) face when they seek jobs after taking what she calls a “mom sabbatical.” Belkin claims that we need to redefine “experience” so that “what you do, and think, and produce, and change all count—even if none of your activities take place in an office, where you enjoy a title and a salary.” This call for individualized inquiry, however, butts up against the simplicity and utility of generalization; in short, working in an office with a particular title serves as a general proxy for a group of skills that Belkin would have employers examining on an individual basis (e.g., ability to run meetings, to arrive on time, to manage accounts, etc.).

The fight for individualization over generalization is a worthy one. In setting up the equality struggle in this way, however, both pieces miss an important component of the battle: longstanding and entrenched biases. In the disability context, our perceptions and judgments about the suitability of certain animals for public accommodation are undoubtedly intertwined with our biases regarding difference (and our definitions of “normalcy”). It will be much easier, I expect, to get people to accept, for example, horses as service animals for the blind than it will be to get people to accept a parrot as a service animal for a man prone to psychotic episodes. Similarly, the difficulty faced by women who take time out of the traditional work force to provide care for family members is as much one of stereotypes as it is of a more neutral inclination to generalize. I’m reminded here of research by sociologist Shelley Correll and colleagues at Cornell on the motherhood penalty (for a recent review of the research the work in this area, see Stephen Benard et al., Cognitive Bias and the Motherhood Penalty, 59 Hastings Law Journal 1359 (2008)). This research suggests that a woman seeking to reenter the traditional work market will have to overcome stereotypes that her male counterpart will not. Imagine a mother and a father who each picks up a child from your neighborhood school, Monday through Friday at 1:30 pm. You bump into each one and engage in conversation; which one do you expect will have an easier time convincing you (through subtle signals or otherwise) that he/she is engaged in workforce-related activities between 9:00 and 1:00?

IBG: Foundation of American Finance Capitalism?

Thomas Friedman delivers today with a column that makes me proud he’s a fellow Marshall Scholar. My favorite paragraphs:

I have no sympathy for Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is?

[T]his legal Ponzi scheme was built on the mortgage brokers, bond bundlers, rating agencies, bond sellers and homeowners all working on the I.B.G. principle: “I’ll be gone” when the payments come due or the mortgage has to be renegotiated. . . . The Madoff affair is the cherry on top of a national breakdown in financial propriety, regulations and common sense.

Thank you, Mr. Friedman. Finally, respectable opinion is coming around to a view that the “man on the street” has intuited for some time: the recklessness of contemporary finance capitalism is systemic, not merely the product of a few bad apples. A passion for deregulation and budget cuts left an administration unable to detect even the grossest frauds. In that culture, virtually anything went. And as the Bush years come to a close, I expect many inspector generals across the administrative state will be detecting ever more wrongdoing.

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Who Hid All the Poor People?

Former Reagan speechwriter Peggy Noonan recently commented on a strange incongruity in the current economic downturn–everyone she sees seems to be doing all right:

One of the weirdest, most perceptually jarring things about the economic crisis is that everything looks the same. We are told every day and in every news venue that we are in Great Depression II, that we are in a crisis, a cataclysm, a meltdown, the credit crunch from hell, that we will lose millions of jobs, and that the great abundance is over and may never return. . . . And yet when you free yourself from media and go outside for a walk, everything looks . . . the same. . . . [For example,] [e]veryone’s still overweight.

Charlie Gibson of ABC may have the same problem. Perhaps we are just a “nation of whiners,” as Phil Gramm claimed. But Wonkette dissents:

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