Month: July 2016

More Banking Mystifications

By James Kwak

Apparently, both parties have platform planks calling for the reinstatement of the Glass-Steagall Act of 1933, the law that separated investment banking from commercial banking until it was finally repealed in 1999 (after being watered down by the Federal Reserve beginning in the late 1980s). Bringing back Glass-Steagall in some form would force megabanks like JPMorgan Chase, Citigroup, and Bank of America to split up; it would also force Goldman Sachs to get rid of the retail banking operations it started in a bid to get access to cheap deposits.

In his article discussing this possibility, Andrew Ross Sorkin of the Times slips in this:

“Whether reinstating the law is good idea or not, the short-term implications are decidedly negative: It would most likely mean a loss of jobs as part of a slowdown in lending from the biggest banks.”

I looked down to the next paragraph for the explanation, but he had already moved on to another unsubstantiated claim (that the U.S. banking industry would be at a competitive disadvantage). So, I thought, maybe it’s so obvious that Glass-Steagall would reduce lending that Sorkin didn’t think it was worth explaining. I thought about that for a while. I couldn’t see it.

Continue reading “More Banking Mystifications” →

That’s So PC

By James Kwak

In an article about political correctness in contemporary politics, Amanda Hess of the Times writes:

“Politically correct” was born as a lefty in-joke, an insidery nod to the smugness of holier-than-thou liberals. As Gloria Steinem put it: “ ‘Politically correct’ was invented by people in social-justice movements to make fun of ourselves.”

As far as I can tell from publicly available sources, Amanda Hess went to college during the George W. Bush administration, so I take it she is working from sources (like Gloria Steinem) here. But she’s not far off the mark.

I went to college in the late 1980s, which is when the concept of political correctness was spreading. My first recollection of political correctness is of a friend saying, “That’s so PC,” talking about someone else who was always sure to participate in the left-wing cause of the day. “Politically correct” absolutely was a phrase that lefties came up with to make fun of themselves. And it did not have the connotation of criticizing other (politically incorrect) people that it has today. If you were PC, that just meant that you were against the Nicaraguan contras, in favor of divesting from companies that invested in South Africa, against discrimination against people with AIDS, in favor of a nuclear freeze, and so on. Those were the issues–not the vocabulary used by rich white frat boys.

In other words, being politically correct meant adopting the appropriately subversive position on every issue. It was a faintly derogatory term because it implied that you didn’t think about issues independently; you just lined up on whatever side the left was supposed to line up on. “Politically correct” was a way to describe the herding behavior of left-wing people–not a way to criticize right-wing people.

Today, political correctness has become one of the favored bogeymen of the Trump campaign and of conservatives in general. People of my generation could genuinely be either baffled or aghast: It was a JOKE! Don’t you get it? But etymology is not destiny, of course. Conservatives have changed political correctness into something it wasn’t back in the old days, and that’s just the way it is.

But in its original meaning–the idea that you have to toe the party line, to be the hardest of the hard core–it is among conservatives that political correctness reigns supreme. On virtually every issue–taxes, Obamacare, abortion, Medicaid block grants, Dodd-Frank, guns, climate change, even the theological status of Barack Obama and Hillary Clinton–every Republican falls in line for fear of offending the omnipotent Base. Do you really think that every Republican member of the House and Senate honestly believes that human activity has not had an impact on the climate? Do they honestly believe that allowing anyone to carry a gun makes the world a safer place? But they have to pretend that they are as stupid as they sound for fear of offending Exxon Mobil, the NRA, and the conservative activists who really do believe that climate change is a fantasy concocted by intellectuals and that the best solution to crime is more guns.

So yes, political correctness is a problem. It’s a problem among Republicans. As for Democrats, who can’t even figure out if we are for or against the TPP, we can’t even get our act together enough for political correctness to be an issue.

Good-Bye, SSRN

By James Kwak

You may know that SSRN, the shared web server for social science and law papers, was recently bought by Elsevier, a publishing company that charges what many people think are outrageous amounts for subscriptions to its journals or access to individual papers. Recently, Elsevier appears to have started taking down papers from SSRN without notifying the authors, even when the authors in some cases had valid permission to publish those papers on SSRN.

Elsevier’s defense is that this was a simple employee mistake (maybe like forgetting to rewrite direct quotes from someone else’s speeches?): “A couple of processing emails were sent incorrectly and in the wrong order.” I’m not buying it, though. Even if the wrong email was sent, they were still taking down papers unilaterally without bothering to ask if the author had the appropriate rights. If they’re not doing it in response to a DMCA notice, and they have people doing it manually, they could at least send the email first before deleting the paper.

If you’re interested in the issue, there is some detailed analysis in the comment section of PrawfsBlawg. In any case, it was enough for me to stop using SSRN. In my view, SSRN is really just ugly, clunky PDF hosting anyway. The main way I use it is as follows:

Find out about paper through some better filtering mechanism (email, blog, Twitter, or, most often, Google).
Google the title of the paper.
See link to paper on SSRN.
Follow link and download paper.

As you can see, nothing about that process relies on SSRN; if the paper were hosted anywhere else within reach of Google’s robots, it would work just as well. In theory, SSRN could be a place for people to actually discover relevant work, but for the most part it fails miserably at that because (a) it’s not as comprehensive as Google, so you can’t rely on a search there and (b) its usability is stuck in the mid-1990s.

So anyway, I uploaded my papers to a new page on my personal website, which allows you to download PDFs just as well as SSRN does. It’s hosted by WordPress.com, which means that you could do the same with about ten minutes of setup effort and another minute or so per paper, all for free. Or I imagine you could use bepress or SocArKiv. It really doesn’t matter. As long as your paper is somewhere on the Internet that is visible to Google, it will work just as well.

Now: How can I completely eliminate my papers from SSRN (not just take down the PDFs) so they don’t appear at all? It’s not at all apparent from their horrible user interface.

Update: Thanks to anon for pointing out the MODIFY button. SSRN’s support page discusses a REMOVE button that doesn’t actually exist. Now my papers are all inactive on SSRN.

Big Tents

By James Kwak

“This is a Hillary Clinton, Elizabeth Warren, Bernie Sanders party. Our party has moved right, their party has moved really left.”

That’s Paul Ryan on the Democratic Party. In Vox, Matt Yglesias points out that Ryan is being disingenuous, but only “in part.” Yglesias goes on to say this:

“In a fundamental way, Ryan is correct — in 2016, the center of gravity in the Democratic Party is much closer to Bernie Sanders than it was in 2006 or 1996.”

Except, that just isn’t true.

Continue reading “Big Tents” →

CEOs, Politics, and Other People’s Money

By James Kwak

I am, on paper, a corporate law professor, because—well, I guess because I used to work for a corporation (two, actually), and the books I write sometimes have corporations in them, and I teach business organizations as part of my day job. (Secret for those looking for a job as a law professor: UConn was looking for someone to teach corporate law, and I wanted the job, so that’s what I said I could do.) But I’ve made it this far writing exactly one corporate law paper (my summary here), and that was actually about corporate political activity—namely, whether and how shareholders can challenge political contributions that they think are not in the corporation’s interests.

It is well known by now that, in Citizens United, Justice Kennedy committed one of the true howlers of recent Supreme Court history:

With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are “‘in the pocket’ of so-called moneyed interests.”

The obvious problem is that there is no disclosure of corporate contributions to 501(c)(4) social welfare organizations and 501(c)(6) associations (such as the Chamber of Commerce), and even contributions to 527 Super PACs can be easily laundered through intermediary entities whose owners are secret. The second, slightly less obvious problem is that, under existing standards, there is precious little that shareholders can do to “hold corporations accountable” for political donations. Given the traditional deference that courts show to decisions made by corporate directors and officers, the latter have pretty much free rein to do what they want with their shareholders’ money.

Continue reading “CEOs, Politics, and Other People’s Money” →