. . . because much of the content relates both to Washington, D.C., and "outside the beltway" -- the heartland, specifically Iowa -- and because after going from Iowa to Washington via Texas and California I subsequently returned, From DC 2 Iowa.
[9:50 a.m.. Brief, early report on Regents' meeting consideration of Stolar Report, just concluded (as the Board went into closed session, as predicted, for the final session evaluating the performance of President Sally Mason with regard to those events): As predicted, Mason began with an apology, following which no criticism was leveled at Mason. The Board approved a resolution essentially adopting the proposals of the Stolar firm. Discussion of whether the crime of rape should always be reported to the police by UI officials (as distinguished from the alleged victim being required to press charges) was postponed. The athletic department was proclaimed to be exemplary. The Gazette's running blog/textual notes of meeting are posted. Here's the Register's early report of the session: Lee Rood, "U of I president to regents: We'll do better,"Des Moines Register, September 25, 2008; and "Mason Apologizes to Alleged Victim, Family,"Iowa City Press-Citizen, September 25, 2008.
11:45 a.m. Mason's Pay Raise: The Regents, as predicted, held UI President Mason's base pay steady, while giving her more money, thereby assuring headlines like the Press-Citizen's: "Mason Gets No Raise in Base Pay,"Iowa City Press-Citizen, September 25, 2008. How does that work? Well, the base pay is a mere $450,000 a year. Given the high cost of living in Iowa City, where a football coach needs at least $2-4 million a year to survive, the University president requires both an additional "deferred compensation" package of $60,000 a year (more that a good many university employees get for their "entire compensation" package), plus an "incentive package." Although an incentive to what has never been defined by the Board, she was awarded the $50,000 for the first year automatically -- so we have to presume the way she handled the sexual assault was a part of what the Regents were trying to provide an incentive for her to do. Moreover, although the Board has still left undefined what it will be paid for, the incentive has nonetheless been increased from $50,000 to $80,000 a year -- on top of the $60,000, on top of the $450,000. Never mentioned, as is the usual practice with public disclosure of the pay packages of CEOs in the top 1% of the nation's wage earners, are such things as the value of the free housing in one of Iowa City's grandest homes, car and other travel allowances, additional expense accounts, retirement, health and other benefit packages, and so forth.]
So, what happened yesterday? Oh, not much, just . . .
o UI Vice President Phil Jones -- a 40-year employee who was planning on retiring next spring anyway, and was peremptorily fired Tuesday -- is appealing that decision to the Board of Regents as "wrongful termination," and released through his lawyers a statement of the reasons why, e.g., "It is indeed ironic that Phillip E. Jones is being terminated and criticized for failing to act when the university's athletic department was doing everything in its power to keep this matter 'informal' and prevent the dean from acting on a formal complaint based on an EOD investigation."
o The letters from President Mason to Jones, his lawyers' letter to the Board of Regents, along with a number of attachments, are now available online.
o "Sheldon Steinbach, a Washington, D.C., lawyer and former general counsel for the American Council on Education, said he had read the Stolar report and believes Jones and Mills were scapegoats, fired to protect Mason's job and to move on from the controversial story. . . . Steinbach said he believes the university has exposed itself to wrongful-termination lawsuits."
o UI General Counsel Marc Mills -- a 20-year employee who was also fired Tuesday, and who sent a 10-page letter of protest to the UI president and Regents -- has now hired his own lawyer.
o James Bryant, the Stolar lead investigator, has been thrown into defensive mode as he endeavors to respond to Marc Mills' criticisms of the firm's Stolar Report.
o The University, and the Board of Regents, are both refusing to release a copy of the Mills' letter to the media notwithstanding the media lawyers' assertion it is a "public record" under Iowa law that cannot legally be withheld and that "Mills said Wednesday that when he sent the memo he gave permission for it to be made public."
o Mark Schantz, a former UI General Counsel (1992-2005), says Mills was "thrown under the bus."
Schantz said he is upset about how Mills was treated and called the Stolar report "quite wrong" in some places and that some omissions with regards to Mills testimony were made consciously. Schantz particularly had issue with the rapid terminations. . . .
"This is not the way the university usually proceeds. I haven't heard of anyone being summarily dismissed short of a felony without at least telling their side of the story."
o Former law school dean Bill Hines is quoted as saying that for President Mason to peremptorily fire two long-term employees three business days after the Stolar Report appeared, for "an episode that began last year . . . seems like an almost indecent speed to find someone to blame things on."
o Meanwhile, before resolving any of the above, the Regents are going ahead with their special meeting today to review the University's response to the Stolar Report, and to conclude this portion of their review of President Sally Mason's first year on the job. (It should be available in streaming video from the Des Moines Register and The Gazette sites -- unless, of course, the Regents insist on closing the meeting to the media and taxpayers, as is a possibility.)
o A blockbuster buried in Brian Morelli's story is "I believe the decision was made by the regents, at least in the case of some, before they even saw the report," he [Mark Schantz] said." Of course, I cannot know (a) if Schantz said that (he's certainly never said it in my presence), or (b) if his assertion is true. How could I know? But neither do I have any reason for believing that it's not true. And it is confirmed in some ways by former UI interim President Gary Fethke, who supports President Mason's firing of Jones and Mills:
"I don't know there was any other alternative at this point," Fethke said. "I think she made the choice she had to make at this point. . . .
I think she had to go to the meeting with something, a credible and forceful response," he said. "Either she makes the decisions or they will be made by someone else."
"I believe the decision was made by the regents." "Either she makes the decisions or they will be made by someone else."
And see, Editorial, "More Questions to Answer, More Policies to Fix,"Iowa City Press-Citizen, September 25, 2008, p. A9 ("Suddenly, rather that having faith in the Stolar report's conclusions, we're experiencing a new round of he said/she said.");
Lee Rood and Erin Jordan, "New lawsuit, firings face Mason amid work review,"Des Moines Register, September 25, 2008 ("Sheldon Steinbach, a Washington, D.C., lawyer and former general counsel for the American Council on Education, said he had read the Stolar report and believes Jones and Mills were scapegoats, fired to protect Mason's job and to move on from the controversial story. 'In the heat of passion, with the spotlights of the media and public on you, the easiest thing to do is fire somebody,' Steinbach said. 'It's a desire to smooth the water and get off the front page of the newspaper. That's all fine except for the people summarily executed.' Steinbach said he believes the university has exposed itself to wrongful-termination lawsuits.").
Commentary: Which Would be Worse?
Why do I say those quotes from Schantz and Fethke constitute a blockbuster?
One of the biggest, and so far largely unaddressed, issues in all of this is yet another "which would be worse?" dilemma.
Earlier, in Nicholas Johson, "Rational Responses to Stolar and Global Finance," September 20, 2008, I wrote "Would it be worse that neither the University president, nor anyone else in administrative positions, has thought to review its organizational structure and procedures for handling football players' sexual assaults over the past six years? Or would it be worse that a review was conducted during President Mason's first year in office but no one thought of any of the obvious remedies proposed by Stolar?"
Now we have another.
Was President Sally Mason, in effect, ordered by one or more members of the Board of Regents to fire Marc Mills and Phil Jones? If so, that would of course raise all kinds of governance questions about the propriety of the Board intervening in that way, questions I've written about so often and at such length that I'm not even going to provide the links to those discussions once again. [Credit: Bob Patton, "Regents Adjust UI Half-Staff Policy" (with "Administration Credibility" flag at half-staff), posted September 26, 2008, and Iowa City Press Citizen.]
But put those serious concerns aside for a moment and focus on President Mason.
Let me preface this discussion by noting that my former beloved University of Texas Law School Dean, Page Keeton, made quite a reputation for himself standing up to a very tough Board of Regents, threatening to resign over matters of principle when he thought they'd stepped over the line. He never had to resign.
Now let us consider which would be worse: (1) That President Mason, after one year on the job, personally and unilaterally chose to peremptorily fire two University vice presidents with more than 60 years service to the university between them -- over a matter that has far more to do with the University's organizational structure and procedures (and football culture) than the behavior of any given individual (as even the Stolar Report concedes) -- or that, (2) being inappropriately told to do so by the Regents, she simply "followed orders" and took actions she knew to be wrong and did not personally support, rather than standing up to the Regents and threatening to resign if they persisted?
As Senator Joe Biden said in Iowa City during the primary season, "There are some things worth losing elections over." Well, there are some things worth losing one's job over. This may very well be one.
Permit me to note that I have not joined the chorus of those suggesting that firings are the answer to this -- firing some regents, the UI president, the football coach. I haven't suggested anyone be fired.
But I would note that a common response of those who defend the firing of Mills and Jones in the face of the assertions of others that this is not the way we handle such things (e.g., Mark Schantz, above: "I haven't heard of anyone being summarily dismissed short of a felony") is to cite cases of firings at other universities.
For example, The Gazette concludes its story this morning,
The Chronicle of Higher Education has reported in recent years on such situations at other universities. The University of Colorado at Boulder eventually lost its athletics director, football coach and President Elizabeth Hoffman — now the provost at Iowa State University — after two women claimed they were gang raped by football players and recruits at a 2001 party.
And Eastern Michigan University lost three leaders, including the president, over the handling of a rape and murder of a student in 2006.
Diane Heldt and Erika Binegar, "Former Dean Says He Was Wrongfully Fired," The Gazette, September 25, 2008, p. A1, available as earlier online version, "UI Official Says He Was Wrongfully Fired," September 24, 2008, updated 11:46 p.m.
I would simply note that at least in each of these two cited cases the university president was also fired. (And see the comments of Sheldon Steinbach quoted in the Register's story by Rood and Jordan, above.)
Iowa Athletic Department's Lying Basketball Ads
. . . And there's more to this blog entry, because the Athletic Department has been ruled out of bounds once again in a major way with regard to a series of decisions totally unrelated to this mess. Having been found by Stolar and the Regents to have behaved in an exemplary fashion when handling football players charged with sexual assault, it's now time to move on to the next allegation.
The UI Athletic Department, has long since decided to give the NCAA a poke in the eye with a sharp stick and continue the football program's ties to organized gambling by advertising to students and fans a local gambling casino on its enormous scoreboard at the Kinnick football stadium. Meanwhile the casino's customers are offered a shuttle service to and from the stadium from the casino, and its high rollers' package deal also includes game seats in a luxury Kinnick skybox where alcohol is served in an otherwise-dry stadium. (The Athletic Department's see-through justification for the ad promoting gambling is that because they do not use the word "casino" the ad isn't really promoting gambling -- as if any Iowan seeing that ad would fail to recognize that it was an ad for the well-known Riverside gambling casino. The actual corporate name, and Web site, is the "Riverside Casino & Golf Resort." )
Now this academic department that represents it's engaged in "character building" has decided that, as an alternative to actually winning basketball games, an easier alternative is simply to lie in its advertising in order to sell tickets.
Iowa's first full-page ad showed Hawkeye forward Jarryd Cole dunking the ball, claiming Cole's dunk brought the Ohio State Buckeyes to their knees and brought a sellout crowd to its feet. The problem is that Cole did not play against OSU last year.
Iowa's second full-page ad featured a picture of Hawkeye guard Jeff Peterson, claiming his steal against Illinois sparked a 14-0 run. There's a problem with that one, too. Peterson played against Illinois but was not credited with a steal, and Iowa never had a 14-0 run.
Rick Klatt, the director of Iowa's marketing department and an associate athletic director, told The Gazette that neither ad was a mistake. He said the ads are fictional examples of how "slam dunk" and "steal" can be used in a sentence. . . .
Steven Helle, a journalism professor at Illinois and an Iowa grad himself, sent an e-mail to Iowa President Sally Mason to complain about the ads. . . .
"To defend a slam-dunk that never happened not only as not a mistake but merely as 'an example of how the word 'slam-dunk' could be used in a sentence' turned my stomach. He added disingenuousness to prevarication." . . .
Bourne Morris, a journalism professor at Nevada, had similar thoughts. He teaches advertising and media ethics and spent 25 years in advertising in New York and Los Angeles.
"Writing a false story in an ad injures the credibility of the Iowa sports program and may make folks wonder what other bits of 'information' they made up, or might make up, just to sell tickets," he wrote in his e-mail to The Gazette. . . .
Sam Becker . . . served as chairman of the department of communications studies, wrote six textbooks and is the Samuel L. Becker whose name appears on the Communications Studies Building at Iowa. "I think it's a mistake to mislead people," he told The Gazette, referring specifically to the ads. He does not agree with Klatt's explanation. "I think he's wrong. I think especially at a university they should be truthful," Becker said.
The first recorded use of a "scapegoat" of which I am aware was 4500 years ago. Whatever the actual facts may be, clearly it is an ancient and -- in modern times -- sometimes dishonorable ritual. [Picture credit: William Holman Hunt, 1854; Wikipedia.]
Is it being played out once again right here in River City?
UI President Sally Mason has responded to the Stolar Report of the University's mishandling of an alleged sexual assault last October 14 ("a perfect storm," the firm's lead investigator put it) by firing the UI's General Counsel Mark Mills (and also UI Vice President Phil Jones). She first checked with the Regents, who indicated they supported her action. The matter is to be reviewed by Regents tomorrow when she will presumably apologize, and they will, presumably, tell her to "go forth and sin no more" -- while at least maintaining (if not increasing) her $500,000-plus salary and benefits.
In "The Case for Mills and Jones" I didn't attempt to defend everything the Stolar Report said they did (and didn't) do. But I noted five categories of reasons why their peremptory dismissals would not be appropriate -- never realizing last Saturday when I wrote it that they would be gone by yesterday (Tuesday). I mentioned, among other things, that because so many people were involved that it would be unfair to single them out; that if they were to be fired their overall performance needed to be evaluated in a routine and calm way (as the Regents are doing with President Mason); that "the buck stops," normally, at the CEO/presidential level, not the vice-presidential level; and that focusing on them, making it look like the problem was simply the consequence of the behavior of two individuals, diverts attention from the football culture of the campus and the need for organizational restructuring (as recommended by Stolar).
Finally, I noted that we had not yet really heard in full from Mills and Jones. We didn't know what the "back story" might prove to be.
We still don't know.
But we sure know a lot more than we knew yesterday afternoon.
I'll reproduce excerpts from Brian Morelli's story, below, and then provide some commentary of my own.
University of Iowa President Sally Mason was aware of how an alleged sexual assault investigation was being handled, a former UI executive said.
Marcus Mills said, "Yes, absolutely," when asked Tuesday if Mason knew what was happening in the investigation. . . .
Mills said he and Mason initially discussed student privacy concerns regarding the letters, but ultimately that did not preclude them releasing the letters to the regents.
The letters were not turned over because the regents didn't ask for documents during its investigation and because "we had the perception that whoever sent the letter, the family, did not want it to go to the regents and did not want it to be made public," Mills said.
Mills said he and Mason received a letter from UI public safety director Chuck Green, which Mills said he took to indicate Mason was aware of the family's concern about the letters becoming public. Mills declined to comment further on this.
Mills rejected his portrayal in the report as having the lead role in UI's investigation of an alleged sexual assault that involved two former UI football players Oct. 14, 2007, in Hillcrest Residence Hall.
"I didn't feel that I was overseeing the investigation. There wasn't an investigation in that sense. Different departments were heading up different aspects of the investigation," Mills said.
Mills also said Stolar failed to ask for his version of certain events and omitted parts of his testimony from their report, such as his side of conversations with the alleged victim's father. Mills also said UI's actions were affected by county attorney subpoenas, the criminal case against the former UI football players and a lawsuit filed by the Iowa City Press-Citizen.
"I think I handled this to the best of my ability with integrity under the circumstances," Mills said.
This is the report of the Regents' first investigation.
Why is that relevant?
Because it provides the foundation for judging the credibility of Marc Mills' assertions.
Consider the Board of Regents' characterization of their charge to Tom Evans regarding their own first investigation. As its "Executive Summary" puts it:
"On November 16, 2007, the Board of Regents requested the Board Office to review the University of Iowa’s compliance with University and Board policies and procedures and applicable statutes while investigating an alleged sexual assault that occurred on campus on October 14, 2007. The Board further requested the Board Office to examine whether current policies and procedures are adequate." (emphasis supplied)
And what was Evans' conclusion? "After a comprehensive review of the facts of the alleged incident and each of the applicable University policies, it is clear that University officials fully complied with internal procedural requirements."
Given this mission, and conclusion -- consistent with President Mason's assurances at the time that all procedures had been followed -- it becomes relevant to ask: Were any documents necessary to Evans' investigation? Were any documents asked for? If not -- especially if there was reason to believe that the alleged victim's family definitely did not want the letter/s made public at that time -- does the University President's, and General Counsel's, and others', failure to gratuitously offer up hundreds and hundreds of documents -- including those the family wanted to be kept confidential -- warrant the firing of the General Counsel?
I may have missed something (literally; I may have) but I can't recall off the top of my head anything in the Stolar Report of events -- of which the lead investigator said "everything that could have gone wrong did" -- that any one of those things "that could have gone wrong" included a failure to comply with internal procedures.
If President Mason thought there were none, and Evans found none, and Stolar mentioned none (after examining all those documents the University did not gratuitously offer up to Evans), and if Stolar found there was no effort at a "cover-up," it seems a little disingenuous to unceremoniously fire Marc Mills on the grounds, in part, that he failed to offer up the mothers' letter/s.
Moreover, if Mills' account is correct (and of course I'm not saying it is; how could I know?), it sounds like President Mason was more intimately involved in the decision not to turn over documents (including the letter/s) than she has yet let on. She earlier referred to a rationale that the material was covered by a federal law protecting student privacy. Mills is now saying they discussed, but rejected, that interpretation, and decided (jointly?) not to turn over the letter/s and other documents for other reasons. As Morelli reports, "The letters were not turned over because the regents didn't ask for documents during its investigation and because 'we had the perception that whoever sent the letter, the family, did not want it to go to the regents and did not want it to be made public,' Mills said."
Whatever President Mason has done with regard to Mills dismissal, and whatever the Regents may do about it tomorrow, I do think it is a little premature for any fair, impartial and judicious member of the public to be volunteering time and talent building the gallows for Marc Mills.
Got Questions? Like: Who's the latest addition to the football team's criminal record? Who said, "[I don't] care how many women the football team rapes, as long as it keeps winning"? What's the answer to "Guess who's not coming to dinner"? Which UI prof went toe-to-toe with President Sally Mason in the Press-Citizen's op ed pages? Should we really advocate for victim advocates? Congress decides the future of global financial collapse and "The Great Fountain Pen Robbery" on Wednesday, the first presidential debate is Friday, Homecoming is Saturday -- so what's happening Thursday? You'll find the answers on this morning's updated "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present.
Mattresses Enter Commodities Markets Mattress futures must be climbing about now. At least that's Bob Patton's view of our present financial dilemma: The headlines on the newpapers in the rack read "U.S. Near Financial Chaos" and "Where is our money safe?" One of the "Mattress Store" workers is saying, "Call me an alarmist, but I still say they know something we don't" as four customers are running down the street with mattresses on their heads. [Credit: Bob Patton, "Economic 'Down'turn?" Posted September 16, 2008; and Iowa City Press-Citizen.]
What they may know is that Treasury Secretary Henry Paulson has declared that his $1.3 trillion remedy must be enacted by Congress immediately, as he says, "Clean and quick."
Why have I always associated that phrase with a killing -- whether by the mafia, or the military, or of domestic animals?
Here we have another sense of a killing -- a killing being made, a killing being made by the bankers. The only folks actually being killed are us. And I don't think those killings are going to be "clean and quick." I have a sense they'll be messy and slow, perhaps going on for years and years. (See, Nicholas Johnson, "Global Finance: The Great Fountain Pen Robbery," September 21, 2008.)
On the other hand, as the Maverick episode put it, "If you can't trust your banker, whom can you trust?"
I'm not an economist -- "but I play one on this blog." So it's always reassuring when, after relying on gut instinct to think through a problem and present the results here as a blog entry, a couple of days later the "experts" in whatever area may be involved seem to be engaging in an analysis either identical to, or at least consistent with, my own.
Paul Krugman is a distinguished academic economist as well as a New York Times columnist. He is currently a Professor of Economics and International Affairs in the Woodrow Wilson School at Princeton, and was formerly Ford International Professor of International Economics at the Massachusetts Institute of Technology (from which he received his Ph.D.). He has also served on the U.S. Council of Economic Advisers. That may not mean he's "right," but it at least means he's well informed.
So take a look at his column from last Sunday: Paul Krugman, "Cash for Trash,"New York Times, September 21, 2008 ("[Secretary of the Treasury Henry] Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers’ money on behalf of a plan that, as far as I can see, doesn’t make sense. . . . [His plan] will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan? . . . [T]he financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place."). There's more to his analysis. The column is definitely worth reading.
I don't know Krugman's politics, but I do know former Speaker Newt Gingrich's politics, so for the benefit of those who might be more persuaded by an avid Republican spokesperson, this former Speaker of the House of Representatives and author of the "contract on America" thinks "what they're doing is just wrong. And I think that it's likely to fail, and it's likely to make the situation worse over time. And I think that [U.S. Treasury] Secretary [Henry] Paulson has shown almost no understanding of how a democracy operates. His initial draft would have given him $700 billion of your tax money with no oversight, no judicial review, no accountability. I mean, we're not a dictatorship." For more along the same lines see the transcript of his NPR interview and his National Review article. "Gingrich on Why Bailout Plan is 'Just Wrong,'" All Things Considered, National Public Radiio, September 22, 2008, Newt Gingrich, "Before D.C. Gets Our Money, It Owes Us Some Answers," The Corner, National Review, September 21, 2008 ("Congress has an obligation to protect the taxpayer. Congress has an obligation to limit the executive branch to the rule of law. Congress has an obligation to perform oversight. Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess.").
Yesterday I promised "Rational Responses to Stolar and Global Finance," September 20, 2008. I may or may not have satisfied you with the rationality of my response to Stolar. But I left you hanging with regard "global finance," since other things intervened before I could get back to it.
Now I've seldom if ever been charged with being a man of few words -- "turn on a light bulb and he'll make a speech," my critics say -- but the events of the past two weeks (or has it only been one week?) have been so totally appalling that I really am close to speechless.
One can just sputter and scream, of course; but having done that what more is there to say?
I'm wishing we still had Woodie Guthrie around to sing to us about it. Do you remember his "The Ballad of Pretty Boy Floyd" (March 1939)? The last two stanzas of lyrics read:
Yes, as through this world I've wandered I've seen lots of funny men; Some will rob you with a six-gun, And some with a fountain pen.
And as through your life you travel, Yes, as through your life you roam, You won't never see an outlaw Drive a family from their home.
T. Boone Pickens has been urging us to convert our cars to run on natural gas to avoid (or at least reduce) the "transfer of wealth" represented by our purchase of foreign oil. As he notes: "Over 700 billion dollars are leaving this country to foreign nations every year . . . The largest transfer of wealth in the history of mankind."
Well, ol' T. Boone has just been one upped by Secretary of the Treasury Henry M. Paulson, Jr.
Secretary Paulson -- with the support of President Bush, candidates Senators McCain and Obama, the leadership of the U.S. House and Senate, and the urging of their campaign contributors -- is about to provide "the largest transfer of wealth in the history of the United States," $1.3 trillion, to their wealthy friends in finance, banking and real estate, ultimately to be paid by our grandchildren.
"Campaign contributors"? Yes, campaign contributors. OpenSecrets.org, which tracks this kind of thing for us by industry sectors, has calculated that the "finance, insurance and real estate sector" has been the largest single sector providing support to both McCain and Obama. (It was the leading source of Senator Hillary Clinton's contributions as well.) Massie Ritsch, "Bundlers for McCain, Obama Are Among Wall Street's Tumblers," OpenSecrets.org, September 18, 2008.
How dumb do these bandits think we are? Unlike those who play by the rules of Pretty Boy Floyd, these are outlaws who not only would "Drive a family from their home," they've already done it.
Think about it. We're roughly six weeks from a presidential and congressional election. McCain is having a tough enough time distancing himself from President Bush. He darn sure doesn't want to have to distance himself from President Hoover as well.
Nobody knows the details of what's in Secretary Paulson's $1.3 trillion proposal, or the packages of worthless debt he's offering to buy from his friends. All we know is that (a) we're going to end up paying for it, and (b) he's got a provision in there that no one can oversee or challenge what he does. He himself acknowledges he can't guarantee it will work.
Appropriately, it's a strategy comparable to the "short term gains from long term risks" strategy that the financial geniuses undertook to enrich themselves and impoverish us and create this mess. So long as we aren't dealing with the next "Great Depression" on the day we go to vote -- November 4 -- who cares what happens between then and inauguration day?
If the McCain forces had access to enough troops they could have salvaged this thing by starting a war. See, "Wag the Dog." The Iraq War is going to end up costing us $2 or $3 trillion. But we could wage a third war for far less than this $1.3 trillion bailout if we could get it over with in something between six weeks and six months -- something like the promise regarding Iraq, or the reality with Granada. The problem, as I say, is that we don't have enough troops for the two wars we're already in; and besides with two wars going on a third wouldn't give McCain that much of a bounce in the polls.
So scaring the Congress into capitulation is the best short term strategy for the next six weeks. Anything to keep Obama out of the White House.
Besides, it's a way to pay back those campaign contributors in the coin they know best.
The problem for the taxpayers is the contributors' rate of return. We're used to campaign contributors being given a 1000-to-one to 2000-to-one return on their contributions -- from us, whether as taxpayers or as consumers. That's bad enough. But the payback on this corrupt deal is more like 30,000-to-one.
A $1.3 trillion transfer of wealth from the poor and middle class to the wealthiest class has got to be a record-setting "shock and awe" attack in class warfare.
Now I'm not saying that there may not be some problems in the financial sector of our economy. I'm not even saying that this unprecedented robbery may not produce some small benefit.
But I do see a lot of hypocrisy when those who've been most vocal in advocating free, unregulated markets -- while ridiculing socialism -- suddenly welcome the latter as an alternative to free private enterprise when their going gets rough.
It really is "heads I win, tails you lose." "If I'm lucky and make a profit, I get to keep it. If I'm not, I still get to keep my profits, salary, bonuses, stock options and golden parachutes, but I don't have to worry about the losses -- because I can just hand them off to you and all the other taxpayers." It's the very sweet deal called "socialism for the rich and free private enterprise for the poor."
By what rationale should taxpayers' money be going onto the bottom line of any for profit business at any time -- whether tax breaks, TIFs, subsidies, earmarks or bailouts? But even if you can answer that one, why should businesses be rewarded by taxpayers for their greed, risky behavior and stupidity when they fail? Isn't that just going to encourage them to continue the path of "short term gains from long term risk"? Whatever happened to Secretary Paulson's observation that "Market discipline is best served when shareholders bear both the risk and the reward of their investment"?
Consider the alternatives -- and what they say about the priorities of our elected officials who are funded by this "finance, insurance and real estate sector."
How else might we have boosted our economy with $1.3 trillion?
o We could have spent it upgrading and building infrastructure: roads and bridges, hospitals and schools -- providing employment for those 600,000 who lost jobs this year, and who would have put most all of that $1.3 trillion to circulating in our economy as well as paying off mortgages and credit card debt.
o We could use it to create T. Boone Pickens' plan: convert our cars, and build the natural gas infrastructure, to run our cars on natural gas -- plus, as he proposes, getting 20% of our energy from wind.
o We could use it to virtually eliminate future economic losses from flooding by moving homes and businesses from floodplains, and converting the floodplains to parks, pastures and prairies.
o As many acknowledge, if you really want to improve our economic position in the world, invest in education: K-12, college, graduate schools, research. The economic return on the post-WW II "GI Bill" (paying for veterans' college education) was enormous. The Sputnik "Defense Education Act" boosted our students' learning and preparation.
o If you want to use it to pay down debt, or eliminate bad debt, give it to those who have the debt: provide relief to those struggling under the weight of near-usurious interest rate credit card debt, buy up their debt, or the debt of those trying to get a college education -- or who got one, now can't find a job, and are unable to pay off their debt.
Now I'm not willing to undertake the burden of demonstrating that these expenditures would be wise either. We need more savings, not more expenditures. There is no secret slush fund from which this $1.3 trillion comes. We have a nearly one-half-trillion additional federal debt (expenditures greater than income) for just this one year. We are running our government, and country, on a credit card we never pay off with loans from the Chinese. The $1.3 trillion payment will run just our current debt to nearly $12 trillion -- the long term, unfunded obligations will now be more like $55 trillion.
No, all I'm saying is that it's kind of obvious what's going on here with this "fountain pen robbery" in terms of priorities and it's shameful.
As always, the best single source for current and background materials, documents, and links to newspaper coverage and more is to be found at "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present (incorporating and updating original blog entry, "UI Sexual Assault Update," July 19-August 9) -- to no one's surprise the most popular site here yesterday. Some eight new newspaper articles and editorials have been added there this morning. (And see that source for summaries of, and links to, the editorials and stories referred to below.)
"'The Case for Mills and Jones'?!" you exclaim.
Well, yes and no.
No, I'm not defending the behavior of either as presented, and criticized, in the Stolar Report. But I did get your attention, didn't I? And I don't think peremptory firings are appropriate -- for the reasons set forth below.
Normally I find myself in agreement with much that appears on the Register's editorial page from its editorial board and columnists. But this morning they went to bat twice and struck out both times in my opinion when they suggest that Mills and Jones should be fired and that it is the Regents who should be drafting new procedures.
A desire for self-preservation is only human. But it often interferes with our ability to understand systemic institutional failures when the most popular response is to scapegoat someone -- other than oneself, of course.
o FEMA's Michael Brown was not the sole reason for the institutional disaster that followed the Katrina disaster.
o Ralph Nader was not the sole (or even primary) reason for the failure of the Democratic Party's presidential campaigns in 2000 and 2004.
o And Marc Mills and Phil Jones were not the sole reason for the University of Iowa's disorganized and chaotic response to the alleged sexual assault of last October 14.
The Gazette's morning editorial acknowledged "[the] university’s mistakes, miscommunication and inconsistent actions [and the] lack of understanding and leadership [that] made a terrible situation worse [as] too many university leaders did too little to make sure the [situation] was handled humanely and efficiently." Editorial, "Inquiry Must Lead to Swift Changes," The Gazette, September 20, 2008, p. A4.
And, as he so often does, the Press-Citizen's classy editorial cartoonist, Bob Patton, captures it with a stroke of his pen this morning under his heading of, "The Heat is On." [Credit: Bob Patton and the Iowa City Press-Citizen, September 20, 2008, p. A21.]
The drawing shows the "Stolar Partnership" "Investigation into U.I. Handling of Sex Assault Case" as a magnifying glass focusing the heat -- like a small boy using a magnifying glass to cremate ants on a summer's day -- on Mills and Jones, while UI President "Mason" and "Rest of UI Administration" stand on the shady sidelines.
So, what's wrong with focusing on Mills and Jones?
1. It's unfair. As The Gazette acknowledges, and Patton portrays, there's plenty of blame to go around to all of those "too many university leaders."
2. Orderly and balanced personnel review. The Regents set the example: President Mason's performance review was bifurcated, as the Regents first considered (on September 17) her accomplishments and failings separate and apart from her handling of this sexual assault case, and will subsequently consider the latter.
Every employee's performance can be reviewed periodically. And when Mills and Jones next come up for review they should be entitled to no less consideration than President Mason: how they performed with regard to this case (however seriously deficient it may, ultimately, be found to be) should be considered within the context of their overall performance.
Peremptory dismissals -- the petulant, retaliatory, scapegoating firing of employees -- are as counterproductive as they are inappropriate and unfair.
3. The back story. Neither Marc Mills nor Phil Jones have had an opportunity to fully and candidly tell their side of the story.
Is it possible that Mills was not on a "frolic and detour" of his own, but was in fact doing either what President Mason directly told him to do, or what he assumed, based on prior experience, she would want him to do? Is it possible that Jones had a prior experience with the football culture that permeates the University, and experienced what happens to those who dare to challenge it, and knew it would be counterproductive as well as personally risky to challenge the Athletic Department's "informal procedure" in this case?
I'm not suggesting for a moment that either -- or other possible scenarios -- are true. How could I know? All I'm suggesting is that there may be some explanations for their behavior other than the knee-jerk conclusion that "both are ignorant, incompetent, unfeeling SOBs who must be blamed for all that happened and peremptorily fired."
And note that both are "damned if they do, and damned if they don't" reveal their back story.
Based on the refusal of virtually all administrators to speak to the media about this case and the UI's procedure for handling it since last October, one possibility is that they've been instructed by President Mason not to. If that's the case, for them to tell their side of the story either to the Stolar investigators or the media -- especially if their story involves putting more of the responsibility on her -- would not bode well for their continued employment by the University. And even if they were to wait to speak out until after being fired, that would scarcely endear them to any potential future employer.
4. "Take me to your leader." For The Gazette to talk about the University's "lack of leadership" suggests that the University has a leader. Indeed it does. It is the President of the University of Iowa. Whatever happened to "the buck stops here"?
Patton is right. President Mason has been given "a base on balls" by Stolar, the media, many of the public, and the Regents (so far).
I'm not suggesting "this is all her fault" -- any more than it is all anyone's fault -- or that she should be severely punished in some way.
What I am suggesting is that both (a) in terms of what happened and why, and especially (b) what now to do about it, the Regents and their universities would have much to gain by understanding what was, and was not, done by the UI President's office to review, redesign and refine the University's procedures for handling sexual assaults by football players both prior to October 14 and since that day.
Especially is this so given what must have been known by all regarding the University's handling of the Pierre Pierce case. As the Press-Citizen editorialized this morning, "more than six years after the first sexual assault allegations against former Hawkeye basketball star Pierre Pierce, the University of Iowa still hasn't figured our how to handle such situations correctly."
Following October 14, what "management information reporting systems" did she have in place to track the Unviersity's handling of the case? What procedures does she have in place for monitoring not only crises, but the operation of the University generally?
After all, most of the Stolar Report's recommendations are kind of no-brainers: crimes should be reported to the police; alleged victims should have assigned advocates throughout the process; there ought to be a single office/clearing house; it should not be the University's general counsel; the function should not be merged in EOD with its responsiblity for sexual harrassment generally.
That's not to say we're not in the firm's debt for pointing them out. It's only to say that, once they do so, one's response tends to be, "Why, yes, of course. And why weren't we already doing that?"
It's one of those "which would be worse" choices. Would it be worse that neither the University president, nor anyone else in admnistrative positions, has thought to review its organizational structure and procedures for handling football players' sexual assaults over the past six years? Or would it be worse that a review was conducted during President Mason's first year in office but no one thought of any of the obvious remedies proposed by Stolar?
5. Diversion of focus. So a final reason why it's a mistake to focus on Mills and Jones is that it diverts the attention of the public, media journalists and editorial writers, Regents, and Regents' universities' administrators from the systemic, managerial and administrative problems that must be addressed if any meaningful progress is to be made.
Governance and Drafting the New Procedures
At the top I mentioned two Register editorials this morning with which I disagree. The second proposes that it is the Regents that should draft a new set of procedures for how the Regents' universities' handle athletes' sexual assaults.
The point, in this limited context, is that under a governance policy in which a board limits itself to setting what John Carver calls "ends policies" (and the rest of us might call "measurable goals") (and leaves it to the CEO to select the means for reaching those ends/goals), creating the specific structures, procedures, hiring practices and training programs -- or whatever else a CEO might choose -- for dealing with sexual assaults is the choice of the CEO, not the Board. The Board focuses on the results produced by the CEO in reaching the Board's ends/goals -- which constitute both the CEO's "job description" and the basis for his/her performance evaluation.
That's not to say, in this instance, that it would be inappropriate for the Board to express its dissatisfaction with what happened at Iowa this past year, only that the expression of that dissatisfaction should take the form of "ends policies" rather than specific procedures.
Moreover, rather than come up with a one-size-fits-all set of organizational structures and procedures, the Regents might at least want to consider starting with both present structures/procedures, and proposals, from each of the three universities. At a minimum, that kind of approach might come up with some creative ideas that would otherwise not be considered; and it might just be that there are very good reasons for having variations between the schools.
September 19, 2008, 8:00 a.m. September 18, 2008, 3:15 p.m.
Stolar Report
For the most part, this morning's [Sept. 19] newspaper coverage of the Regent's meeting and the Stolar Partnership Report are not significantly different from the online coverage yesterday -- reports about "The Report." That full document is probably the best source for anyone really interested in the details. The Stolar Report [a pdf file uploaded by the Press-Citizen]. (The most complete Web site for all material related to these matters -- reports, basic documents, news coverage, commentary, and links to more -- remains "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present.)
Indeed, the Report is so relatively well done, candid and thorough (while attempting to avoid accusatory and mean-spirited language, e.g., "no cover-up"), that there is very little to add to it by way of anyone's commentary, including mine. (Of course, not everyone bought the "no cover-up" conclusion: "'The general counsel [Marc Mills] failed to turn over documents for no justifiable reason,' [Regent Michael] Gartner said, seeking clarification from Stolar. "What is a cover-up if there was a regents investigation by Tom Evans and there were relevant documents not turned over for no justifiable reason?' [Stolar lead investigator James] Bryant replied, 'I don't call it a cover-up, but it was certainly inappropriate.'" Source: Morelli and Hermiston story, below.)
On the one hand it's a cute and clever line. But if you think about it, it captures a useful analytical approach to understanding UI officials' behavior over the past year.
Like the governments' (plural) response to Katrina, there are often two categories of problems when things go very, very wrong with an institution's response to crisis: (1) the behavior of individuals within the system, and (2) the system itself.
1. Individuals' behavior. In the movie "War Games" a government official, frustrated over the possibility that someone responsible for launching a missile might freeze up and refuse to do it, proposes to "get the human out of the loop."
As long as there are humans in the loop one can make every effort to minimize ineffective and unbecoming human behavior, but never successfully eliminate all of it.
Whether picking a president of the United States or others in positions of responsibility in business, universities and other institutions, one can look for qualities: common sense, good judgment and wisdom as well as intelligence, knowledge and information; an ability to learn quickly ("a quick study") enough about new responsibilities and bodies of information to enable one to know what they know, what they don't know, how to frame the questions of experts to find out, and the ability of a "judicial mind" to hold judgment in suspension until all the facts are in; a demonstrated capacity for empathy, respect, compassion and sensitivity for "the least of these" as well as the most powerful; action based on an awareness of the difference between data and diatribe, information and ideology; a basic honesty and sense of ethics, willingness to confess error and change one's mind; an advocate for institutional honesty, democracy, transparency, and candor -- and so forth. You get the idea.
The other thing an institution can do, having hired such people, is to provide them whatever additional training may be useful.
2. "The system" and procedures. One of the major tasks for which administrators get the big bucks is proactively anticipating a variety of possible crises (as well as more mundane day-to-day challenges and operations), designing systems that will enable the institution to deal with them most efficiently, effectively and fairly, and then running drills to make sure they work, and tweaking the procedures so that they will work better.
Upon discovering years ago that a major corporation found it could save 30% on its winter heating bill for an industrial plant by having the employees close a large sliding door, I was prompted to observe that any bright 10 or 12-year-old could probably walk through any manufacturing operation that had not been overseen by a good industrial engineer for the last 5 or 10 years and do equally well in coming up with savings; the opportunities are so obvious.
Lest you assume I'm disparaging the quality of the employees, quite the opposite is my intention. Workers often have much more creative insights when it comes to efficiency than managers. But they also haven't been asked, have full time jobs that require all their attention -- and such suggestions for improvements as they may have offered in the past are as likely to have been rebuffed or ignored as implemented.
Every University administrator has, of course, responsibility for their own behavior -- regardless of the system within which they must function. But it is not the responsibility of the football coach, or the director of EOD, the University's general counsel, or the Vice President for this or that, to address, let alone redesign, the procedures for handling sexual assaults by athletes -- or others. They have full time jobs operating under the system (or rather the lack of a system) that is currently in place. Even if they had the time, they might well have been criticized for undertaking such a redesign, and been charged with having meddled in something that "is none of their business."
I'm not prepared to make a judgmental declaration as to what the Regents and UI administration "should" have done. But I am willing to suggest that much if not all of what's involved in "Story One" (events of last October 14), "Story Two" (what UI administrators did thereafter) and "Story Three" (the Regents' response and first, and now second, investigation of Stories One and Two) could have been prevented, and would have been avoided -- up to and including the current, postponed evaluation of UI President Sally Mason -- had more attention been given to the formulation (and application) of a workable "governance model."
Systems design and procedures are, in the first and last analysis, the responsibility of an institution's CEO. And whether one's primary concern is for the institution's (and one's own) public relations, or a genuine compassion for victims, a university's systems and procedures that deal with sexual assaults by athletes would seem to be one of the first and most predictable of the potential crises that could be dealt with proactively by any major American university with multi-million-dollar semi-pro athletic teams.
So there it is as my guide as to what to look for while reading through the Stolar Report -- because it deals with both: Ask yourself, Is this part of the Report dealing with the (a) behavior of given individuals operating within the current non-system, or is it (b) describing that non-system, or making recommendations as to how an appropriate system might be designed? They are, as I've noted, questions that might equally well be asked with regard to Katrina -- or our current global financial crisis.
A Serious Suggestion for Iowa City City Council's Revisit of Alcohol Regulations
Occasionally I give the University and the City Council (and bar owners) a bit of a hard time for their failure to do anything meaningful and effective with regard to students' irresponsible drinking and its consequences.
So when the Council appears willing to take another look at the matter I want to acknowledge that fact, and make what I hope will be received as a serious suggestion. Chris Rhatigan, "Council to look at alcohol rules,"Iowa City Press-Citizen , September 17, 2008, p. A3 ("The Iowa City Council will discuss regulations on alcohol at its next work session [Monday, September 22, 6:30 p.m.]. Mayor Regenia Bailey said a variety of alcohol-related issues will be on the table. . . . One subject that will be addressed is well-drink or mixed-drink pitchers.").
I don't claim that this idea has been thoroughly thought through and vetted, or that it couldn't be improved with at least some tweaking. But I do think it's something consistent with what the Council and others have talked about in the past, and is at least worth the Council putting on the table and considering along with its other options.
Of all the efforts to discourage those 3000 youngsters who become the tobacco industry's "replacement smokers" each year (i.e., replacements for the industry's customers killed by tobacco) one of the most effective turned out to be simply raising the price of a pack of cigarettes. Might that also be a useful approach to excessive consumption of alcohol?
And no, I'm not about to suggest the Iowa City City Council start setting the city-wide price of a glass of beer. (Joke follows: Although if it would impose a sufficient city beer tax it could probably eliminate the property tax as well as the binge drinking.)
What I'm about to propose be considered can be thought of as a sub-set of the focus on keg sales, beer pitcher specials, and what the Council referred to as "well-drink or mixed-drink pitchers."
Would it be possible for the Council to legislate the elimination of such discounts? (I've made no effort to research the legality of its doing so.)
The Council would not be setting prices. Each bar owner could continue to do that -- presumably coming up with prices that would maximize his or her income.
But it would be required to be a permanent, fixed price -- per ounce or other volume -- that would not vary by occasion (e.g., 21st birthday), day of the week or year, or time of the day (e.g., "happy hour").
Say, to just arbitrarily pick a number, a bar owner decides to sell domestic beer for 20 cents an ounce. A 12-oz. glass is $2.40, a 16-oz. glass is $3.20, a gallon (128 oz.) is $25.60. There would be no economic incentive to buy (and consume) larger quantities -- or to come to the bar when discount price "specials" were offered.
(Presumably there might be a need to have separate per-ounce prices for domestic and imported beers, and of course for hard liquor -- but that would also be the bar owner's choice.)
Prices would be set by the bar owners: s/he could charge 15 cents or 30 cents or whatever other amount they wished for beer; but whatever they chose would be their price 24/7 (subject, perhaps, to some opportunity for adjustment up or down to a different, "permanent" 24/7 rate every, say, 90 or 180 days as their experience, and profits, might dictate).
This is, admittedly, a very limited proposal with presumably relatively limited effect. It doesn't deal with the sale of kegs or cases of beer, or the incongruous practice of permitting under age customers into a business the sole purpose of which is to profit from the sale of alcohol when the sale to those individuals is a violation of law (for all of which I have other ideas).
This approach would not interfere with "social drinking," responsible alcohol consumption in bars -- whether legally or illegally. What it would do is reduce the economic incentive to binge drink, and the consequences of such intoxication, provided by the "specials" that make such behavior so much more economically affordable.
For the next week or so the Regents and UI will be major news.
In a move reminiscent of the old line, "Aside from that, Mrs. Lincoln, how did you like the show?" the Regents will be holding a special, closed session this afternoon to evaluate UI President Sally Mason's performance during the past year -- except for the matter of the UI's handling of the alleged sexual assault last October 14.
The Regents are meeting near Iowa City today (September 17) and tomorrow.
Tomorrow, as the last item on the agenda, they will be receiving the Stolar Partnership's Report on how the University handled the October 14 events and their aftermath -- along with how the Regents themselves handled the first investigation of the matter, that concluded everyone had done well. Presumably the report will at least be available online later tomorrow.
Then the University is apparently going to be given a week (and perhaps more) before being asked to respond to the Stolar Report -- at an additional Regents meeting called specially for that purpose.
Some legislators had earlier asked that a presentation be made to them as well, though little has been heard of that recently.
In any event, the Web page, "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present, has been updated this morning with these items and more -- including links to a couple basic documents and some of what the formerly withheld 3200 pages of documents reveal about how this case was handled.
Unprecedented: Two Consecutive "Hats Off" Awards to Press-Citizen
Yesterday's Press-Citizen editorial earned it a "Hats Off" journalism award -- in this case "civic journalism" in the best tradition of putting the interests of readers/taxpayers ahead of the interests of government subsidized businesses. Editorial, "Center to Open Without Public Assistance," Iowa City Press-Citizen, September 15, 2008, p. A9. See Nicholas Johnson, "Taxpayer Rescue," September 15, 2008.
I don't know if anyone's put lipstick on the Sheraton, but it's sure had its snout in the trough more than once. It (and its predecessors) squatted down over Dubuque Street, promising to at least keep a walkway open. Now it wants to seize more of that City property for its own -- without paying taxpayers a dime -- while asking us to pick up at least half the cost of the remodeling necessary to complete this land grab.
Since neither the City nor the University is prepared to do anything meaningful to cut back on the downtown drunkenness, with all of the attendant consequences that predictably flow from our surfeit of bars and illegal sales to underage patrons, the hotel has also reasonably requested that it be permitted to close off the walkway after 11:00 p.m.
The common sense resolution? Permit the post-11:00 p.m. closure. Deny the narrowing of the walkway and the movement of taxpayers' money to the hotel's bottom line. That's what the Press-Citizen is proposing. Will the City Council have the courage to take this course? Watch this space and see.
Financial Crisis: How We Got Here, Where We're Going
And there are significant lessons here for this year's presidential election, and regulation generally.
As I've often conceded, when it comes to servicing their major campaign contributors (big corporations and the wealthiest 1/2 of 1%) George Wallace was right: "there's not a dime's worth of difference" between Democrats and Republicans.
Having said that, the Republicans are both more comfortable, and skilled, at doing so. Democrats never have been very good at "Republican light."
President Reagan summed up the ideology: "government is not the solution; government is the problem." An unregulated market is the consumer's best friend. "Deregulation" and "re-regulation" are heralded as the rising tide that will lift all boats. "Get the government off our backs" -- unless it's about to put money in our pockets -- they say.
Well, in my view the consequences of unrestrained and unregulated greed and selfishness have left in their wake in our economy and society what Hurricane Ike left in its wake in Galveston.
This financial collapse is just one example. The collapse of coal mines on miners is another. The growing disparity between the wages of workers and those of CEOs is another. The examples are endless. Just look around.
I don't think either McCain-Palin or Obama-Biden are inclined or able to return our country to sanity with regard to business' excesses. I just think the Democrats will be marginally better, and that the margin is well worth our voting for.
As Story and Andrews report:
"During the Depression, Congress separated commercial banks, which take deposits and make loans, from investment banks, which underwrite and trade securities. The investment banks were allowed to do business with less oversight, while commercial banks operated with tighter supervision.
"But after Congress repealed those Depression-era laws in 1999, commercial banks began muscling in on Wall Street’s turf. As the new competition whittled down profit margins, investment banks used more of their capital to trade securities and also began developing financial derivatives to fuel profits."
On a lighter note . . .
. . . if you haven't yet seen the September 13 NBC "Saturday Night Live" routine that's all over the Internet, take five minutes to watch:
[Credit: Tina Fey and Amy Poehler, NBC "Saturday Night Live" Source: http://entertainment.msn.com] With a whole lot of common sense, courage and a sense of humor we'll get through all this.
The Way Free Private Enterprise is Supposed to Work: Thinking and Acting Globally and Locally
Looks like the taxpayers aren't going to be picking up the losses for the 158-year-old Lehman Brothers, now on its way to bankruptcy. It's not like the Bush Administration (and many Democratic senators and members of Congress) wouldn't like to send us the bill. After all, they had no qualms about having us pay for the JP Morgan Chase takeover of Bear Stearns in March, thanks to the Federal Reserve, and the $200 million or more they asked our grandchildren pay off in order to keep Fannie Mae and Freddie Mac struggling along, since all they otherwise would have had was ownership of half the homes in America, worth over $5 trillion.
Much was made this past week of the government's refusal to have us taxpayers pick up the cost of the U.S. auto industry management's persistent errors of economic and market judgment. The companies wanted some $25 billion from us. But then I read somewhere that the Administration had already given them $25 billion; this was just an additional request for the same amount. (Also in the financial news: the Bank of America has purchased Merrill Lynch (also in trouble and worth $100 billion last year) for $50 billion; and AIG is looking around for someone with $40 billion in spare pocket change to help them out.)
Corporate operations have become a "heads we win, tails you lose" proposition of "socialism for the rich and free private enterprise for the poor" in this country. When a company makes a profit it gets to keep it -- indeed, more and more of it, as tax rates for corporations and the rich have been slashed from what they once were. On the other hand, if it has losses that are big enough, the shareholders can just ask the taxpayers to cover those losses. It's a sweet deal.
So now there seems to be at least one example the Bush Administration can point to when this standard practice was not followed: Lehman Brothers, after reporting a half-billion of income has conceded a $2.8 billion loss one quarter followed by a $3.9 billion loss the next, and without a taxpayer bailout is headed for bankruptcy.
Why the switch? Who knows? Maybe someone in Washington has looked at the books and discovered we're $53 trillion in the hole (debt, plus unfunded future obligations) and decided we just couldn't afford it. Maybe there's a Republican fear of the remote possibility that the electorate will be treated to some discussion of issues other than lipstick on animals before they go to vote -- say, the economy -- in which case it would be handy for the Republican team to be able to cite at least one example of a time when the free private enterprisers didn't send the taxpayers the bill for their losses.
Anyhow, it's lucky Hong Kong's Hang Seng and Tokyo's Nikkei are closed today for national holidays. London's FTSE and Frankfurt's DAX are going to end their trading days down at least 2-3% and it would have been worse if the Asian markets were open. (India's SENSEX index was down over 5%.) Based on the Dow Jones and S&P 500 futures this morning, it looks like the U.S. markets will be down about 3% today.
Meanwhile, a comparable if short-lived burst of sanity has occurred right here in River City, and been memorialized in a Press-Citizen editorial. Editorial, "Center to Open Without Public Assistance,"Iowa City Press-Citizen, September 15, 2008, p. A9.
Of course, in a way it's kind of sad. It's like the headline, "Man Bites Dog." The extent to which our public officials let for-profit businesses stiff the taxpayers for start-up costs on the front end and their losses on the back end is so endemic to government these days that "Taxpayers Spared Cost of Starting New For-Profit Business" is news.
But the fact that it's rare doesn't mean it shouldn't be celebrated, and editorialized about.
I have often written of "why business subsidies don’t make sense for any city [and are] especially inappropriate for Iowa City." In one Press-Citizen op ed column I itemized some 11 categories of reasons why this was so. Nicholas Johnson, "Courage, Councilors," October 3, 2007.
Of course there are examples of for-profit companies that, with the generous assistance of taxpayers, have not later gone belly up, or left town, leaving the taxpayers holding the bag. But such examples do not come close to constituting a persuasive case why taxpayers should move their money to the bottom line of for-profit companies. To the best of my knowledge, no one has to this day ever taken on that column's itemization of categories and documented why all of them are wrong.
One of those categories was:
“Need” is impossible to know. Many projects will go ahead without subsidy. If tax breaks are available, of course entrepreneurs will say they won’t act without them. But how can we know when that’s just blackmail?
Today's Press-Citizen editorial involves a case study illustrating this very category:
We're glad that Mercy Hospital and a group of local surgeons have managed to find enough funding to build a new ambulatory surgical center in Iowa City's Northgate Plaza . . ..
But we're even more happy that the Iowa City Council didn't offer any tax incremental financing to help the development of the project. After all, the first question of determining whether a project deserves a TIF should be, "Can it succeed without public financing?" Since the answer in this case was clearly, "Yes," the city was right to deny the request eventually -- although it could have done so much earlier in the process.
Last year, investors for the surgeons' group and Mercy came to the city requesting a $600,000 TIF to help build their proposed 24,000-square-foot facility.
The point is not that we couldn't have known whether the doctors really needed the $600,000 or not. The point is, as I wrote last year, "If tax breaks are available, of course entrepreneurs will say they won’t act without them."
The point is that while I would contend that we can always know that taxpayer funding of for-profit businesses is inappropriate for all the reasons I've itemized, one of those reasons is that we can virtually never know whether more appropriate funding sources could and would be found if taxpayer money was not available.
The paper's editorial doesn't go that far. The editorial board expressly says, "As an editorial board, we've never viewed TIFs as the automatic four-letter word of economic development."
But it's entitled to this blog's "Hat's Off" journalism award anyway for the rest of its conclusion:
[T]the decision on whether to grant a TIF needs to be based on much more than a bottomline explanation on how it offers a win-win arrangement for both the city and the business. Otherwise the city risks granting businesses massive tax breaks for doing simply what their corporate officers and the current market would have them do anyway. . . .
We don't want the city to be hostile to new businesses or expansions . . .. But neither do we want the city to fork over cash every time someone shows there's a little profit to be made.
On behalf of my grandchildren and great grandchildren, I thank you Press-Citizen editorial board -- and, oh yes, you too Federal Reserve Board.
The Register editorializes this morning that we should have more foreign language instruction in Iowa's schools. Editorial, "Encourage Learning Foreign Languages,"Des Moines Register, September 14, 2008, p. OP1 ("Marcia Harmon Rosenbusch, director of the National K-12 Foreign Language Resource Center at Iowa State University in Ames, said all children should have the opportunity to study foreign languages in elementary school. Many European Union youngsters learn a second language starting in preschool. 'I think high school is really late,' she said. It's also out of sync with President Bush's 2006 National Security Language Initiative, which calls for better developing foreign-language skills. . . . That's why Iowa school districts should look for more creative solutions, with help from the state. The status quo is falling short.").
Here's my response -- too long for the Register's limitation on the number of characters it permits in comments about its stories:
Great Idea -- But Let's Pick One
As someone who has used foreign languages during considerable international travel, I couldn't agree more with the desirability of Iowa's schools requiring, or at least offering, foreign languages.
But given the small number of our high school students who are truly fluent in reading, writing and speaking a foreign language when they graduate we might want to consider some alternative approaches.
Here's one.
1. Pick one foreign language. When I was in school it was French, then the international language. Today the international language is English -- and a second, rapidly gaining, U.S. language is Spanish. But whatever the choice, just pick one.
2. Start teaching it in kindergarten and continue every year until high school graduation -- and students' mastery.
3. Forget the cafeteria choice of foreign languages. Concentrate resources and teachers on one. But when parents or students want to, make it possible for K-12 students to get credit for studying additional languages from universities and community colleges, private companies and tutors, or study abroad programs.
It's one more example of how, when we put our minds to it, we can get a greater return on less investment in our schools. Every high school graduate would be truly fluent in at least one foreign language (something they, and we, can't claim now) -- and at far less public expense than what our present K-12 foreign language programs costs.
And no one who wanted to do so would be deprived of the opportunity to earn credit for learning additional languages.
The UI Athletic Department, has long since decided to give the NCAA a poke in the eye with a sharp stick and continue the football program's ties to organized gambling by advertising to students and fans a local gambling casino on its enormous scoreboard at the Kinnick football stadium. Meanwhile the casino's customers are offered a shuttle service to and from the stadium from the casino, and its high rollers' package deal also includes game seats in a luxury Kinnick skybox where alcohol is served in an otherwise-dry stadium. (The Athletic Department's see-through justification for the ad promoting gambling is that because they do not use the word "casino" the ad isn't really promoting gambling -- as if any Iowan seeing that ad would fail to recognize that it was an ad for the well-known Riverside gambling casino. The actual corporate name, and Web site, is the "Riverside Casino & Golf Resort." )
