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29 March 2006

CEOs and Stakeholders

I'm a stakeholder in Procter & Gamble. Not only do I use its products; my index fund is affected by the performance of P&G, a major stock in the markets it tracks. Moreover, my parents own P&G stock, so by extension I am also a shareholder.

CEOs today are well-paid because they can affect their company's market-value in many ways beyond maximizing operating or financing revenues. In fact, in the case of the largest public companies, public relations--"constructive engagement" in the words of P&G's chief executive--may be their main job.

Although CEOs must report formally to their Boards and through them to their companies' owners, they are indeed accountable to all those on whom the well-being of their companies depends. The value of a company's shares is ultimately determined by how much they appeal to those who would become their new holders.

25 March 2006

Democracy’s Particulars are not Universal

In his article in the Wall Street Journal on March 24, 2006, Amartya Sen characterizes the West’s attitude towards non-democratic states as a sort of cultural imperialism. His mistake is that Democracy, as the system originated in Greece millennia ago was called, is not a universal value. It is merely a device for achieving equity in self-rule. Cultural differences are, indeed, responsible for the variety of government structures that have been used by people to organize their common affairs.

Use of the term Democracy to denote participatory government has indeed become culturally intrusive. Although its derivation signifies rule by the people, it has gathered baggage over the years that includes representative republican form, selection of officials and policies by ballot, and liberal social values.

If we were to get away from this narrow identification of control over civic affairs by the members of the community with the apparatus used in the West to achieve that goal, we might also escape the trap that finds threats to our “way of life” in other cultures whose rhetoric and willing discriminatory treatment of their members are confined to their own borders.

One of the deceits of our culture is to ascribe universality to our way of organizing society, including equal treatment of the sexes, transparent decision-making in government and business, freedom of religion and expression, etc. Among other things, it makes us vulnerable to being taken advantage of by those who appeal to that sentiment in order to sell us on things, like military exploits that create no more benefit for our well-being than wealthier industrialists.

24 March 2006

Immobilizing Chase Cars

In recent reports on NPR and The New Yorker Online, the Los Angeles Police Department was said to be undertaking new technologies in order to reduce the danger of dealing with automobile chases on the streets and freeways. The techniques they are using include controlled collisions with patrol cars, spike trays thrown on the road in the way of speeding vehicles, and GPR darts shot into the car bodies that allow the chase vehicles to be tracked via satellite.

There must be a remote disabling gun, based on laser or magnetic technology, that would immobilize runaway vehicles by shorting out their electrical ignition systems. Isn’t it better to stop a wild driver in his tracks and apprehend him than to find his abandoned vehicle after the chase has been given up?

16 March 2006

Pedantic Majoritarianism

The political climate of technologically advanced countries in North America, Europe, and soon many other societies, like China and India, has progressed beyond the need to define democracy pedantically as electoral majoritarianism. In fact, it may be insistence on that structure that enables well-financed smart campaigns to manipulate the outcomes of national voting.

Moreover, majority rule doesn’t promote global competitiveness. It tends to spread rewards instead of rewarding excellence. Maybe that's ok. But if you believe growth and innovation are important to preserving our way of life, you have to make allowance for entrepreneurship. It's that maverick element that the quirky American system has encouraged.

The course of our government’s policies is more stable than Europe’s, like a heavy ship on the high seas. It cannot be diverted by a no-confidence vote, for example. To use another metaphor, divorce is not an option. Even impeachment leaves the sitting Administration in power.

The Electoral College system for selecting American Presidents, of course, is an artifact of history. It was invented to settle state-to-state rivalries prevalent at the time, and has been amended since. It is imperfect and not appropriate to gubernatorial contests because it reflects the historic regional autonomy of America. The regional roots of our country are still strong, recently illustrated by differences in state abortion and minimum wage laws.

Nevertheless, the Electoral College could be discarded, if only to avoid anomalies like the 2000 election. In any case, it’s not the process of majority election that makes a democracy--it’s the accountability of officials that a democracy achieves and the just policies it forces them to adopt. In today’s world of advanced information technology, it is the responsibility of those who would live in a democratic system to devote their energy and resources to keeping it. This is a tougher challenge than drafting a Constitution was in 1789.

Modern IT has made it necessary constantly to impose the rule of the governed on their officials, if only because it is possible. Otherwise, rule will be imposed by those who have something else to gain from the effort.

05 March 2006

Count ‘Em

Hendrik Hertzberg makes a few erroneous assumptions in his article in the March 6, 2006, New Yorker. First, and foremost, is the implication that the U.S. Constitution provides that the President of the United States should be elected by its people. In fact, the Constitution stipulates that the States shall select the President according to a system that deliberately favors constituencies with fewer voters over larger constituencies. Finessing this stipulation will certainly require an amendment to the Constitution. Moreover, it is hard to believe that a group of states including Texas, Ohio and Florida plus the majority of small states will agree to the strategy espoused by the Campaign for a National Popular Vote for circumventing the Electoral College.

Other mistakes in Mr. Hertzberg’s article include the following:
1. The benefits of the Electoral College system are an issue of states rights, not of partisan politics.
2. Ours is not a “democratic order;” the success of the U.S. system depends on the health of America’s federal order.
3. American Presidential campaigns were never truly national; they were always intended to be state-by-state.
4. Neither party could be sure of preserving its lock on one-half of a two-party system; national popular elections would very likely have as their unintended consequence the proliferation of numerous small parties.
5. The final month of Presidential elections in a “national” voting system would be fought not in battleground states, but in high population markets, defined by the size of their television and radio audiences.
6. Size would matter a great deal in a “national” voting system, making it not at all surprising that Mr. Hertzberg’s view is published in The New Yorker.

The National Popular Vote plan advocated in Mr. Hertzberg’s article would lead to a rivalry in U.S. government between a popularly elected President and a state-biased Congress. The tendencies toward gridlock in getting work done in Washington are already strong enough. We may indeed need to have a voice for the people in national affairs that can actually take initiatives. The models of Proposition voting in California and other states may offer guidance for using the Internet or another vehicle to exercise direct popular control of government actions on an issue-by-issue basis. The key to success of this strategy will be preserving the autonomy of local governments—protecting their role in implementing popular will on matters of citizen concern.

02 March 2006

U.S. Waste and Scrap

Richard Wolffe, senior White House correspondent for Newsweek, remarked on the Brian Lehrer NPR show today that, among other things, the controversy over the impending takeover of the operation of six U.S. ports by Dubai Ports World highlights the shamefulness of American participation in world trade. As he said, the largest share (probably by weight and bulk) of export shipments through the Port of New York is accounted for by waste paper and scrap metal.

What this statement fails to recognize is the transformation that the U.S. economy has undergone that makes physical trade a smaller component of its impact on the world than ever before. Of course, other ports in the U.S. handle the main physical commodities that the world depends on America to supply, like food. Moreover, certain high value items, like medical imagery equipment, can greatly skew the figures.

But, aside from that, the value of U.S. sales to its trading partners is now dominated by technological, financial, and other knowledge services that enable those countries to produce the physical things that are moved in international commerce. They also facilitate the outsourcing of both factory and service jobs. The success of the U.S. in supplying these key ingredients for the world economy is evidenced by the fact that it is the world’s largest consumer market. Those consumers generate a lot of scrap and waste, which fill the bottoms and decks of the many ships needed to carry the manufactured items they spend their wealth on.

Yes, they borrow enormous amounts of capital from the rest of the world to finance their consumption habits. They pay interest to those lenders, and those lenders are confident in America’s ability to repay the loans. In fact, those lenders probably envy the ability of the U.S. to survive on sales of waste paper and scrap.

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