Wednesday, March 12, 2008

Eliot Spitzer - Client Nine

"I think he would like to become President. Yes, it's in his nature."

Mr. Spitzer Senior on son, Eliot -  Harvard Law Student, anti-business crusader, Attorney General of New York, Governor of New York, FAP (Future American President) and err, Client Nine.

It is somewhat ironic that his downfall will be caused by something as trivial as visiting call girls (though obviously not trivial to poor Mrs. Spitzer) after the carnage he has caused to American business.

A fascinating examination of Spitzer's record can be found here. It's a long piece but well worth the read.

"What's truly stunning is [Spitzer's] ability to force reform—to root out institutionalized sleaziness with lightning speed. . . . Congress and federal regulatory agencies such as the SEC take years, if they're lucky, to shape an industry or reshape its basic practices. . . . Yet Spitzer, an elected official from a single state, has turned entire industries upside down."

Fortune magazine

Here's how

"In order to enforce his morality, Spitzer frequently uses an old law that allows him to criminalize behavior not obviously illegal and, by threatening business executives with prison and economic ruination, mandate such reforms as may spring from his moral sense. The law that Spitzer has employed for this purpose is New York's 1921 Martin Act. It empowers [New York's attorney general] to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for question during Martin Act investigations do not have a right to counsel or a right against self-incrimination. . . . Now for the scary part: To win a case, the AG doesn't have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded at Spitzer has employed for these purposes is New York's 1921 Martin Act."

By using this intrusive Act, Spitzer has been able to go after and beat the Wall Street Research industry (targetting Merrill in particular), the Insurance industry (targetting Marsh) and finally, the Mutual Fund industry. On the back of these mighty scalps and his 'champion of the people' approach, he was voted Governor of New York in January 2007.

This is how he and his team work, 

1. Denounce the realities of business, especially the pursuit of economic self-interest, as ethically sordid—in this case, denounce the reality that hustle and hype are the Brownian motion of commerce, from the rug merchants of the Middle East to the stockbrokers of Wall Street.

2. Universal Fiduciality. Ignore the rule of "caveat emptor" and the responsibility of market participants to look out for themselves. In the name of equality, insist that business leaders have a fiduciary responsibility to all their customers, investors, workers—indeed, to the public at large.

3. The Bloody Shirt. Find a handful of acts that cross the line into inexcusable (though not necessarily illegal) behavior. In this case, Spitzer found a few e-mails where hype had passed into lying.

4. Extra-legal Punishment.Use these examples of deplorable (though perhaps legal) behavior to publicly smear and threaten an entire company and its top executives, putting it and them under a cloud and driving down the company's market value.

5. Play the Good Cop. Offer a lenient penalty in exchange for the right to dictate corporate policy. 

6. Repeat as Needed. Use the above sequence of steps as often as necessary to restructure an entire industry in conformity with the morality of Eliot Spitzer.

7. A Virtue-cratic Takeover. Make it clear that Eliot Spitzer and his morally superior minions are now in charge. Executives may be allowed to pretend they are running their companies.

A wonderful conclusion to finish ;

"Spitzer's master premise is Jacobinism, the notion that the liberty of human beings must be curbed by government virtue-crats acting in the name of morality. Despite all we have learned from public-choice theory, Spitzer truly believes that power-seekers like himself will create more ethical arrangements than will people who are acting in their own self-interest and who are curbed only by laws against force and fraud. As he asserted last year, since market capitalism is not "perfection itself," government must "put the brakes" on free markets, in order to "maintain a just and equitable society." The historical record of those Robespierres who begin by complaining that the free actions of human beings are not perfect, and who go on to "perfect" them through the coercive instruments of government, is not an encouraging one."


Friday, March 07, 2008

Disproportionate Response

Yesterday a group of schoolchildren in West Jerusalem were in class making preparations to celebrate the new month on the Jewish calendar when a Palestinian gunmen walked in and opened fire, killing eight and wounding nine. None were older than sixteen.

The Hamas government described the killer as 'heroic'. Said Hamas spokesman, Sami Abu Zuhri, "this heroic attack in Jerusalem is a normal response to the crimes of the occupier and its murder of civilians.''

The usual suspects (the EU and the UN) will no doubt scream once again with rage at Israel's forthcoming 'disproportionate response' to this latest atrocity. But how does one even begin to negotiate with a government that calls the murder of 15 year-old school kids 'heroic'?

School kids.

Both the statement from the EU and the UN start with "although Israel has the right to self-defence under international law.." and end with "but Israel is also obliged to protect the civilian population of Gaza."  In case you don't speak Suprantionalese, i'll translate into English - 'Israel has no right to respond in any way whatsoever'.  

Also, what would a 'proportionate response' look like?    Does the EU and the UN therefore think it's acceptable for the Israelis to kill eight schoolchildren in retaliation? After all, that would be 'proportionate'. Of course not. We all know that the Israelis don't target civilians but terrorists.  Yes, it is a tragedy that innocent Palestinians get caught up in the cross fire, but this is because Hamas terrorists hide amongst their civilian population firing hundreds of Qasam rockets on a daily basis, deliberately putting their lives in danger. 

Israellycool has the details.



Thursday, February 21, 2008


Love the environment? check. 
Always recycle, place litter in bins, turn the lights off?  check
Wanna do your bit for Mother Earth? check
Thought that voting Green might be the answer?    check

Before you do so, you might want to read their policies first.  This is from the British Green Party's Policy page.  

It starts so promisingly. 
'We believe in people taking control of their own lives.'

Gotta love that. But here's the rest, 

'Stop Britain's public services from being forced open to international competition and privatisation.
Measure economic benefits in terms of quality of life, development of people and care for the environment, as well as money in the bank. (Ed - that must be the Happiness Index, where Happiness = Reality/Expectations)
Campaign for a binding legal framework for corporate social responsibility.
Raise the rate of Corporation Tax to 40% (from 30%)
Ban supermarkets from further store openings.
Place restrictions on global free trade

'The Greens believe in education being for the public good, and publicly-funded.'

'Re-nationalisation of Britain's railways and re-regulation of our buses.'

Peace and Justice
'Poverty and oppression still fuel conflict and nurture extremism. The people of Iraq, Afghanistan, Israel and Palestine still long for real peace.  (Ed - this is a real White Thing - claiming to speak on behalf of other cultures)
Progress is not the inequality that comes from half the world living on less than £1.70 a day.'  (Ed - but hasn't free trade and capitalism just dragged 600 million people out of this trap?)

Home & Community
'Stopping motorways and urban sprawl from disfiguring hills and forests that have inspired generations of musicians, writers, poets and painters.'

Food We Can Trust 
'We want a GM-free Britain.
Farm animals have a right not to suffer. (Ed - does this mean they are against halal meat?)
Banning food imports from poor African countries. 'Caroline Lucas won support from many farmers for highlighting the absurd trade where British food products are flown half way round the world to countries which sell exactly the same type of products back to us.'

Clean Green Energy
'Investing in sources of energy like offshore wind farms, wave and solar power that don't cause global warming.
We call for the return of the fuel-duty escalator, scrapped after the fuel protests, so that petrol and diesel become progressively more expensive year by year.
Real Progress means stopping the nuclear industry.'

Animal Rights
'We want an end to animal experimentation.'

By the People, for the People
'We believe in people taking control of their own lives. But that doesn't mean that the State has no role to play: what is the function of Government if not to regulate the economy in favour of the majority and of the long-term interests of the world we live in?'

What, indeed.

This political party looks a little like this one.


Tuesday, February 19, 2008

'Poor, Nasty, Brutish and Short'

19 year-old aboriginal, Ashley Brooks, broke into the house of a 75 year-old great-grandmother, stole $60 from her wallet and then proceeded to beat her so severely that she was in a coma for 12 days, writes Andrew Bolt.  Judge David Parsons described Ashley Wayne Brooks' attack on Barbara Durea as sickening. He sentenced him to a two-year youth justice order. Judge Parsons said Brooks was avoiding jail "because of his youth and slight build, he would not fare well in an adult prison." and because Brooks hasn't "had much of a chance to date."

Meanwhile, Queensland judge, Sarah Bradley, (the one who previously called a mentally disabled ten-year old victim of gang rape a 'willing participant') has allowed a white teacher, who sexually abused an 11 year-old Torres Strait boy, time to prepare evidence for his case that he was educating him in 'traditional Islander practices'.

I struggle to remain calm when reading of cases such as these. I have to assume that either

i) Judges Parsons and Bradley hate aboriginals

ii) they view indigenous people as sub-human and hence not responsible for their actions.

Their refusal to punish these appalling crimes will not affect me living in my nice, wealthy suburb of Sydney. But it will condemn women living in indigenous communities to a life of rape, violence and early death. 


Thursday, January 31, 2008

McCain; The Good, The Bad & The Ugly

With Guiliani out of the Presidential race, the choice now comes down to Obama, Hilary, Romney, Huckabee, Paul or McCain. For classical liberals, this is no easy decision. Ron Paul should be the obvious candidate but his history is too murky too ignore, his character questionable and his merry band of supporters too kooky to brush aside.

Michael Tanner at Cato has an interesting post about John McCain. Now that he is the clear front-runner for the GOP nomination, it is worth taking a closer look at the man.
Tanner makes the following points (my summary).

The Good:
1. He is a true fiscal conservative. He is well known as an opponent of earmarks and pork barrel spending and an advocate of entitlement reform. He was early an ardent support of personal accounts for Social Security, and has pushed for serious Medicare reform, including means-testing. Almost alone among Republicans, he opposed the disastrous Medicare prescription drug benefit.

2. He has offered the best health care reform plan of any of the candidates.

3. During his time in the Senate, he has never voted for a tax increase. While he has taken much heat for voting against the Bush tax cuts, he now calls for making those tax cuts permanent.

4. He is a strong and unapologetic free trader.

The Bad:
1. John McCain frequently makes Dr. Strangelove look like a peacenik. He’s a true believer in the neoconservative goal of remaking the world to fit our desires and beliefs. At best on foreign policy he would be a competent Bush. At worst, he appears a recipe for perpetual conflict.

2. On domestic policy, he has shown a disturbing predilection for elevating every personal pet peeve, from steroids in baseball to airplane service quality, to a federal issue. And, he has embraced heavily regulatory environmental policies and compulsory national service.

3. He tends to support federal power over federalism, executive authority over legislative, and generally leans toward the imperial presidency.

The Ugly:
1. John McCain appears to have little more than contempt for the First Amendment and free speech generally. He is the principal author of a campaign finance bill that severely restricts political speech. Not content with those restrictions on political speech, he has continually sought to expand regulation to other groups. He has said that he “would rather have a clean government than one where "First Amendment rights are being respected, that has become corrupt. If I had my choice, I’d rather have the clean government.”

2. Most worrisome of all appears to be McCain’s basic philosophy, which is unapologetically statist, as Matt Welch points out in his new book McCain: The Myth of a Maverick. McCain once said “each and every one of us has a duty to serve a cause greater than our own self-interest.” McCain believes that cause to be the good of the collective, often defined as the nation or the national community.

I feel Tanner is harsh on McCain. For instance, it is inconcsistent to call a man who has never voted for a tax increase, who is an avid free-trader, who believes in school vouchers and who has a dislike of government spending as statist.

The charge of his aggressive foreign policy is more accurate but many would argue that the libertarian movement's Achilles Heel is its refusal to defend liberty. His campaign finance bill may be misguided but he is attempting to address an area of US democracy that is broke. To say that he has contempt for free speech is ridiculous.

In addition, he is doesn't pander to the awful Christian Right. He voted in favour of amnesty towards illegals and is generally pro-immigration. I don't like his pro-life stance but he has gone on record as saying that he would not repeal Roe vs Wade, so you wander about the depth of his pro-life convictions.

But more than his policies alone, I cannot but help admiring this man. His conduct and bravery during the Vietnam War and his courage in supporting the surge in Iraq last year when at the time it looked like electoral suicide, points to a man of principle, of honour and of conviction. Though he misguidedly supported the disastrous invasion of Iraq, he was the first to call for Rumsfeld's sacking and has been an ardent opponent of torture.

American liberals have to vote for someone. I would vote McCain.


Wednesday, January 30, 2008

Big Government Is Bad For Your Wallet

'Big government is bad for economic growth.'

No shit, Sherlock, i hear you cry.

But this isn't my view, nor one of a neo-liberal free market think tank.

It's from that respected institution and dogged inflation-fighter, the European Central Bank, which has come to this conclusion all by itself. It is papers like this that will help spread the gospel.

The paper concludes that each additional 1% of government spending reduces growth by 0.13%.

One interesting finding. The taxes that have the least harmful effects on growth are income taxes. Those that hinder growth the most are consumption taxes and government subsidies.

Something to chew on.

via UK libertarian and freakonomics-style blogger, Chris Dillow.


Tuesday, January 29, 2008

Creative Capitalism

I admire Bill Gates. He has built a huge company from scratch and in so doing has produced hundreds of thousands of jobs and paid a fortune in taxes. He has been instrumental in driving down the cost of computing (and don't tell me that Microsoft is an evil monopoly - every company aspires to be a monopoly) so that almost anyone can have broadband access to the internet. Also, unlike many arch-capitalists, he is clearly concerned with bettering the lot of the world's poor.

So it was with great disappointment that i read his speech last week to the World Economic Forum assembled at Davos (in my previous life as an Emerging Markets bond trader, i've been to one of these and they are the ultimate taxpayer-funded boondoggle), outlining his vision for 'creative capitalism'.

“We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well. I like to call this idea creative capitalism."

He gave an interview to the WSJ expanding his thoughts in further detail,

Mr. Gates said that he has grown impatient with the shortcomings of capitalism. He said he has seen those failings first-hand on trips for Microsoft to places like the South African slum of Soweto. "The rate of improvement for the third that is better off is pretty rapid, the part that's unsatisfactory is for the bottom third -- two billion of six billion." Among the fixes he plans to call for: Companies should create businesses that focus on building products and services for the poor. "Such a system would have a twin mission: making profits and also improving lives for those who don't fully benefit from market forces," he plans to say. With today's speech, Mr. Gates adds his high-profile name to the ranks of those who argue that unfettered capitalism can't solve broad social problems. Muhammad Yunus, the Bangladeshi economist who won the 2006 Nobel Peace Prize for his work providing small loans to the poor, is traversing the U.S. this month promoting a new book that calls capitalism "half developed" because it focuses only on the profit-oriented side of human nature, not on the satisfaction derived from helping others.

That such an intelligent man can utter such drivel is surprising and sad. He is hugely influential and many free-market agnostics will read his words and conclude that capitalism is a rich man's plaything. They would be so wrong.

What is needed is not 'creative' capitalism but 'more' capitalism. The Soweto slums he identifies are poor because the free market is not being allowed to work. China, India, Vietnam, South Korea, Eastern Europe to name but a few have pulled hundreds of millions of people off the bread line simply by abandoning socialism and embracing capitalism.

Additionally, a paper published by William Nordhaus in 2004 showed that only a 'miniscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers'.

Writing for the Globalisation Institute, Tim Worstall remarks that although Gates cites Adam Smith's, 'Theory of Moral Sentiments' as one of the great influences of his vision, he would do well to remember this passage from the follow up to that book, 'Wealth of Nations',

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from a regard to their interest."

A great man but with little vision.


Friday, January 25, 2008

SocGen Boss Speaks Out


Wednesday, January 23, 2008

Culture War

Geert Wilders - Boris Johnson's uglier brother?

The greatest worry for all parents of schoolchildren is bullying. The government agrees and hence all schools must have an anti-bullying policy. All parents know that the worst course of action is to appease bullies. Yet this is precisely what European governments are doing to the Islamic bullies in their communities. For instance,

1. Jacqui Smith, the UK Home Secretary, has declared in truly Orwellian style that all future Islamic terror atrocities will be referred to as 'un-Islamic'. Quite why she seeks to speak on behalf of her Muslim constituents is beyond me. Or quite how she would know is also a mystery. Still, there you have it. Islamic terrorist attacks are now to be known as 'un-Islamic criminal acts'. Terrorists have been defeated by Labour as they have been re-branded criminals. And Ignorance is Truth. It's like calling the Spanish Inquisition 'un-Catholic'.

A survey for Policy Exchange revealed that 1 in 8 young British Muslims support terror groups such as Al-Qaeda and 1in 3 believes that apostates (Muslims who leave their faith) should be killed. So yes - it's not a majority, but it's not exactly a trifling minority either.

2. Next up is the case of Hani Ramadan, a schoolteacher in Geneva. He wrote an article in French newspaper, Le Monde, stating that adulterers should be stoned. He was sacked. However, a Court of Appeals has just reinstated him and awarded him two years pay in damages.

3. And then there's the Dutch. Looking at Holland and its Muslim population is akin to peering ten years into the future for England (and possibly a generation for Australia). Tensions are already elevated in Holland following the murder of Theo van Gogh three years ago by a Muslim extremist for dissing the Koran.

Enter stage left Geert Wilders, leader of the far-right Freedom Party and not a man known for his ability to smooth troubled waters. Geert has made a film about the Koran. No surprises for guessing that it doesn't exactly portray Mohammed and the Koran in a positive light. In fact, Geert himself stated that his film will show the Koran as a "source of inspiration for intolerance, murder and terror". Right on queue and without a trace of irony, the Grand Mufti of Syria has indicated that Geert will be 'responsible for inciting wars and bloodshed'.

Nothing surprising so far. Just another example of Europe's big, big problem. But here comes the shocker from Dutch Foreign Minister, Maxime Verhagenstated,

"Freedom of expression doesn't mean the right to offend"

Chew on that oh-lovers-of-liberty and start preparing your kids for a real culture war.


Thursday, January 10, 2008

Cricket Shambles

Ten observations on the cricket fiasco from a cricket-loving pommy.

i) Peter Roebuck is an unmitigated, pretentious twat and an embarrassment to my country.

ii) That 70% of SMH readers agree with him is an embarrassment to your country.

iii) The Australian cricket team is one of the world’s outstanding sports teams, if not the best.

iv) Australia play thrilling cricket (contrast the 376 runs scored on Day One with the torturous approach to batting adopted by the Indians) and have done more to pull the crowds back into Test Cricket than any other team.

v) Ricky Ponting is already one of the most successful Test captains of all time. 16 victories on the trot is not shabby.

vi) As a four-time tourist with the Barmy Army (lost all four series), i can safely ascert that every single last fan of this traveling band would give their right eye to see Freddie and Vaughny celebrate with impunity and grind our opponents into the dust if we could replicate a fraction of Punter’s success.

vii) We live in a world of hyper-sensitivity towards race. The captains were given strict prior instructions by the match referee to report any incidents of racial abuse. Ponting had no choice but to report the ‘monkey’ comment. He would have been slaughtered had he urged Symonds not to make a meal out of it. The Test has exposed the stupidity of this sensitivity towards racist remarks. Is it worse to call someone a ‘monkey’ than his mother a ‘whore’?

viii) Sledging is a part of the game. It’s not pleasant nor sporting and the Aussies are the worst. But now talk is of ‘banning sledging’ - the knee-jerk cry of the nanny-state. During Barmy Army tours, we sang this of Shane Warne, hoping it might piss him off and affect his game,

(to the tune of ‘My Old Man’s a Dustman’ - an old English working class favourite)

Shane Warne is a druggie
He should be in rehab
He took his mummy’s little pill
To try and lose the flab

He took it to lose some weight
From all the pies and beer,
But when the ICC found out
They banned him for a year

It didn’t work. Should the Barmy Army be pre-emptively banned? Is this discriminatory towards fat people or towards druggies?

ix) You never blame the umpire/referee if decisions don’t go your way. This leads to football. Umpiring a game of cricket is impossible, especially with wonderful TV technology to expose your mistakes. Surely all contentious decisions will now have to be referred to the third umpire. Far from holding up the game (which is the current reason the technology is not more widely used), they add to the tension.

x) Given the surprising support for Roebuck’s call to have Ponting sacked, i can only assume that Australians are becoming queasy about winning. Especially against non-white nations. This is not good for your long term sporting outlook.