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Thursday, January 29, 2015

Universities and Hospitals: Time for American States to Tax Nonprofits?

The 2015 budget that Gov. Paul LePage proposed to the Maine legislature takes aim at the “sacred cow” of property-tax exemption for nonprofit organizations. Colleges and hospitals, for example, would be levied a property tax, with places of worship and government-owned entities remaining exempt. The rationale is that of fairness to home-owners, who must bear a disproportionate weight particularly in New England, where colleges and hospitals in particular are ubiquitous. However, I submit that a second justification exists—one based squarely on the colleges and hospitals themselves.


The full essay is at “Universities and Hospitals.”

Wednesday, January 28, 2015

Syriza Party Governing in Greece: Austerity and the E.U.

Clarion calls of confrontation roiled through the E.U. after the state election in Greece on January 25, 2015. Would the E.U., heavily dominated by its largest state, and the European Central Bank (ECB) accept a larger public deficit (i.e., more government spending to alleviate the austerity) and continue the cheap loans, or would Alexis Tsipras, the new Greek prime minister, have to choose between continued austerity and default? 

The full essay is at “Governing in Greece.”

Saturday, January 24, 2015

Standard & Poors: Internal Controls Enabling a Conflict of Interest

After the financial crisis of 2008, rating agencies reassured the public that additional “internal safeguards” would prevent the sort of over-stated ratings that had contributed to the crisis. Congress did not deconstruct the structural conflict of interest wherein a rating agency is tempted to overstate the rating on financial security such as a corporate bond because the agency’s revenue would be higher if more of the bonds are sold. I contend that reliance on a company’s internal “fire walls” is naïve, given the strong, sustained temptation that exists as long as an institutional or structural conflict of interest is in place. To obviate the problem, the conflict itself must be deconstructed.


The full essay is at “Standard and Poors

Friday, January 23, 2015

Deficiencies in the E.U. Capital Markets: A Silver Lining

Even six years after the financial crisis of 2008, the limited scale of the E.U.’s capital markets relative to their American counterparts exacerbated the E.U.’s problems with state debt. Most directly, the lack of diversification on the types of capital markets meant that the focus on the bonds issued by state governments would continue.[1] Having had years to develop alternative markets since the financial crisis, E.U. policy makers had no one to blame but themselves—it would seem. However, a bright spot in European culture may be responsible for the lack of development.

The full essay is at “Deficiencies in the E.U. Capital Markets.”


1. Simon Nixon, “A Continent in Need of Greater Capital Markets,” The Wall Street Journal, January 20, 2015.

Wednesday, January 21, 2015

Police Snatching Property: A Conflict of Interest While American Federalism Sleeps

The U.S. Justice Department halted its adopted-forfeitures program in early 2015 out of a sense that state and local law-enforcement agencies had been using the federal program to retain a greater portion of seized property, including cash, than state laws permit. Asset forfeiture had grown since the 1980s largely as a strategy in combatting drug traffickers, yet the agencies themselves benefited in being able to spend the cash. Besides this conflict of interest, the federal-state dynamic here demonstrates federalism in action, though perhaps not as strongly as the system of government allows.


The full essay is at “Police Snatching Property.”

Monday, January 19, 2015

The Imitation Game: Machines Imitating Man?

What does it mean to understand something? Put another way, what counts as understanding? The film, The Imitation Game (2014), touches on the question of whether machines (i.e., computers) can think, but the film falls needlessly short in pursuing the question. My aim here is to show how film can be more substantive along philosophical lines without sacrificing on entertainment value.



The full essay is at “The Imitation Game.”

Sunday, January 18, 2015

Behind the Lower 2014 U.S. Federal Budget Deficit: A New Default

The U.S. Government’s fiscal deficit of $483 billion for fiscal-year 2014 is the lowest since 2007.[1] At a preliminary 3% of GDP, that deficit is much better than the 2010 deficit, which came in at 10% of the GDP. To be sure, the American economy was larger in 2014. Also, the federal government’s overall fiscal improvement masks changes “behind the curtain” that may not be so palatable.

The full essay is at “U.S. Federal Budget Deficit.”


[1] Josh Zumbrun, “Budget Deficit Reaches a Seven-Year Low,” The Wall Street Journal, January 14, 2015. The budget deficit for the calendar year came in at $488 billion.

Relaxing State Deficit Restrictions: Power-Grab by the European Commission

As the World Bank came out with its revised prediction of 1.1 percent economic growth for the E.U. (“eurozone”) in 2015, down from the earlier estimate of 1.8%,[1] the European Commission announced that it would allow states more leeway in meeting the federal requirement that state budget deficits be no more than 3 percent of their respective economic outputs. Lest this appear as a sign of political impotence, the “strings” demonstrate the opposite.

The full essay is at “EU Commission Power Grab.”



[1] Ian Talley, “World Bank Lowers Global Outlook,” The Wall Street Journal, January 14, 2015.

Oil Supply: Problem or Panacea?

Between June 2014 and January 14, 2015, crude oil prices fell by 57 percent. Between November 1985 and March 1986, the prices had fallen by 67 percent.[1] That time, it took nearly two decades for oil prices to rebound. Would it take that long again? The answer has implications for how efficient the market mechanism itself is, and in turn for public policy on energy and global warming.

The full essay is at “Oil Supply.”





[1] Russell Gold, “Back to the Future? Oil Replays 1980s,” The Wall Street Journal, January 14, 2015.

Friday, January 16, 2015

God Versus Physics: Is Creation Behind the Big Bang?

In his doctoral dissertation, Steven Hawkins demonstrates that the universe could have begun spontaneously. That is to say, the big bang could have gone off without being triggered by a divine intelligent being, or God in the sense of the word as used in the Abrahamic religions. To say that the universe could have begun in a moment of singularity is not necessarily to vitiate the deity-concept of all content. In fact, Hawkins’ work may one day trigger a movement to hem in the concept to the terrain that is distinctly religious.


Thursday, January 15, 2015

Religion and Violence: On the Power of Self-Idolatry

Religion and power make awkward bed-fellows. Speaking in January 2015 on religious fundamentalism, Pope Francis suggested that violence belies claims of religious validity. That is to say, actions speak louder than words, and harming other people effectively renders a person’s claims of religious motivation null and void. Unfortunately, the typical assumption that people have that they cannot be wrong when it comes to their own religious beliefs also operates when political ideology is the actual motivation. Such pride, which I suspect is rooted in self-idolatry, stands as a wall preventing such remarks from influencing potential culprits.


The full essay is at “Religion and Violence.”

On a Central Federal Policy in Education in the U.S.: Implications for American Federalism

In a speech in January 2015, U.S. Education Secretary Arne Duncan urged a continued central role for the federal government in education policy. He said the president was proposing to increase federal spending on elementary and secondary schools by $2.7 billion; Congress had appropriated $67 billion to the U.S. Department of Education—with $23.3 billion for the Elementary and Secondary Education Act—in the 2015 budget.[1]  Typically, debate on the federal government’s role had focused on the use of standardized tests in holding schools accountable. I submit that a self-governing people has a duty to consider the wider implications, such as the impact of a greater role on the federal system. Otherwise, unintended consequences may show up after it is too late to do anything about them.

The full essay is at "Federal Policy in Education."





[1] Caroline Porter and Siobhan Hughes, “Education Secretary Presses Central Federal Policy Role,” The Wall Street Journal, January 13, 2015.
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Fiscal Responsibility in Alaska: On the Challenge of Falling Oil-Tax Revenue

With West Texas Intermediate (WTI), the U.S. benchmark oil price, at $46.07 on January 12, 2015, lawmakers in Alaska were getting nervous because the government was relying on oil-industry taxes to cover 89% of the government’s operating revenue.[1] At the time, the government had a $3.5 billion deficit in the $6.1 billion budget.  How the governor, Bill Walker, planned to deal with the shortfall can give us a glimpse of what fiscal responsibility might look like in government.

The full essay is at “Fiscal Responsibility in Alaska.”



[1] Ana Campoy, Mark Peters, and Erica Phillips, “Energy-Heavy States Get a Crude Awakening,” The Wall Street Journal, January 13, 2015.

Monday, January 12, 2015

Stockholder Activism at DuPont: A Conflict of Interest for Management

In American corporate governance law, the business judgment rule gives management expertise the benefit of the doubt over stockholder proposals. Compared with executive skill, they look rather populist and thus potentially irrational in nature. Nevertheless, with the rule chaffing up against the property-rights foundation of corporate capitalism, the managerial prerogative can be said to be dubious. Indeed, a strict private-property basis justifies displacing the default profit-maximization mission for a given corporation. Alternatively, stockholders may want to use their concentrated, collective wealth for other purposes, such as to alleviate hunger. Once enough profit has been made for the business to be sustained for another year or two, any additional surplus would be spent on food pantries, for example, rather than going out as dividends or being retained by the corporation. Because managerial skill is premised on the profit-maximization goal and its associated strategies, corporate executives intrinsically resist alternatives proposed by stockholders. The managers face a conflict of interest in providing their recommendation for stockholders. Even when the proposal assumes profit-maximization but differs from a current strategy (i.e., adopted by management), a conflict of interest exists should the management seek to provide a recommendation for the stockholders. In this essay, I use the activism of Trian Fund Management at DuPont to illustrate this point.


The full essay is at “Stockholder Activism at DuPont.”

Is Dark Trading Ethical?

“Dark trading” has a subterranean connotation, as if it were done by slithering snakes in the river Styx. In actuality, the term refers to trading in stocks that is done on computers that are less public than the exchanges. That is to say, the bid-and-ask quotations on a given computer network are known only to participants on it, and not to the traders on the public exchanges. Ethically, the public-private dichotomy is relevant. I submit that it reflects a wider trend in American society.


The full essay is at “Dark Trading”