Tuesday, March 31, 2009

Under a third of men at black colleges earn degree in 6 years

USA Today highlights the status of historically Black universities in the US.

MEMPHIS — They're no longer the only option for African-American students, but the country's historically black colleges and universities brag that they provide a supportive environment where these students are more likely to succeed.

That, though, is not necessarily true.

An Associated Press analysis of government data on the 83 federally designated four-year historically black colleges and universities (HBCUs) shows just 37% of their black students finish a degree within six years. That's 4 percentage points lower than the national college graduation rate for black students.

A few HBCUs, like Howard and all-female Spelman, have much higher graduation rates, exceeding the national averages for both black and white students. But others are clustered among the worst-performing colleges in the country. At 38 HBCUs, fewer than one in four men who started in 2001 had completed a bachelor's degree by 2007, the data show. At Texas Southern, Voorhees, Edward Waters and Miles College, the figure was under 10%.

To be sure, women are outperforming men across education, and many non-HBCUs struggle with low graduation rates. And the rates don't account for students who transfer or take more than six years, which may be more common at HBCUs than at other schools.

Most importantly, HBCUs educate a hugely disproportionate share of low-income students. Compared to other colleges defined by the government as "low-income serving," HBCU graduation rates are just a few points lower. Factoring in obstacles like lower levels of academic preparation, some research suggests that HBCUs do as well with black students as do majority-white institutions.

Still, HBCUs' low completion rates, especially for men, have broad consequences, on and off campus. Women account for more than 61% of HBCU students, the AP found. They have unprecedented leadership opportunities, but also pay a price — in everything from one-sided classroom discussions to competition for dates.

HBCUs educate only one-quarter of black college students, but produce an outsized number of future black graduate students and leaders. That group is distinctly female; HBCUs award twice as many degrees to women as to men.

The good news is some HBCUs are working hard to boost graduation rates — and succeeding. Experts say that proves failure isn't inevitable — but also means it's fair to ask tough questions of schools that are not improving.

HBCUs receive more than half their revenue from government. There is growing frustration with the waste of money — for students and taxpayers — when students have nothing to show for their time in college. President Barack Obama wants to return the United States to the top rank of college attainment by 2020. That will never happen if the colleges that do the heavy lifting of educating disadvantaged groups don't perform better.

Even some within the tight-knit HBCU community say the schools bear some responsibility. They say too many HBCUs have grown content offering students a chance at college, but resisting the hard work to get them through.

"I think HBCUs have gotten lazy," said Walter Kimbrough, president of Philander Smith College in Little Rock. "That was our hallmark 40, 50 years ago. We still say 'nurturing, caring, the president knows you.' That's a lie on a lot of campuses. That's a flat-out lie."

'Ladies pretty much run the yard'

Glancing around her classes at LeMoyne-Owen College in Memphis and in the stands at basketball games, sophomore Velma Maclin has noticed something odd. Most of the so-called "Big Men on Campus" are women.

"The ladies pretty much run the yard," said Maclin. Several male friends recently got discouraged and dropped out. She has little sympathy. She works the overnight shift at FedEx Corp. and says if she can stay in school, they can, too.

Women have probably outnumbered men at HBCUs for most of their history, but the proportion has been gradually rising, the AP found — from 53% in 1976 to about 61% the last few years.

On 17 HBCU campuses there are two women for every man. At a few, the ratio is three-to-one.

"I don't think any of us have put our finger on exactly why this seems to be exacerbating," said Norman Francis, the longtime president of Xavier.

It sounds like easy living for men at HBCUs, and some joke about the advantages.

"You have so many beautiful women around you (that) you get to see and so many to pick from. The net is real wide," laughed Eric Jefferson, a senior at North Carolina Central University in Durham, which is two-thirds women.

But while HBCU women are doing relatively well, many note the lack of gender diversity in their classes. The gender gap also weighs heavily on social life.

For many HBCU women, said Monet Phillips, an N.C. Central senior, the feeling is: "Even though that I'm the Monday woman, I'm going to be the best Monday woman so that when he's with the Tuesday woman or the Wednesday woman then he'll be thinking of me."

Like their counterparts at any college, HBCU women enjoy rewarding, lifelong friendships. But the competition for men can sometimes strain.

"It's sad to say, but in the African-American community, it's hard enough for women to get along without the issue of men," said Bridgette Alexis, a LeMoyne-Owen freshman from Springfield, Mass. "You throw a small percentage of guys into the picture, and women who are looking and hoping to have boyfriends and relationships, and there's not enough for everybody to have one. So that just makes the situation worse."

'No. 1 barrier': Not asking for help?

Why do so many men drop out? Money is the reason you hear most. More than six in 10 students at the HBCUs the AP analyzed get Pell Grants, which go mostly to students from families earning under $30,000.

The faltering economy is hitting HBCU students hard. Fisk University in Nashville has lost 11% of its enrollment since August.

Another reason is preparation. On average, black students are less well prepared for college — and black men less so than women. The best black students are now also being recruited by majority-white institutions.

At Edward Waters, virtually every student takes developmental courses — essentially, to finish the high school education they never fully received. Only then can they start progressing toward a college degree.

To explain the particular struggles of men, educators point to a range of cultural factors that affect black men everywhere, but which are especially visible at HBCUs.

Men have fewer role models, and also seem to think they have more opportunities without a degree. Educators also describe a constant battle against two poisonous ideas: that black men can't succeed, or that if they do they are somehow less than genuine.

Tyshawn Johnson, 20, a junior education major at Claflin University in South Carolina, says it's discouraging to see so few male faces on the campus, which is two-thirds female.

"When (men) come to school they think they're never going to make it," he said. "They start out and when they don't think they're up to snuff, they just quit. And that's why females will always dominate the college ranks."

There's no silver bullet strategy for boosting graduation rates. But persistence helps.

Elizabeth City State University, a public HBCU serving a low-income corner of North Carolina, tries to identify who's struggling and throw every possible resource their way. The best professors teach introductory and developmental courses. There are mandatory sessions to help students correctly apply for federal financial aid. When students drop out, ECSU calls them to find out what went wrong and try to persuade them to return.

The result is a graduation rate — around 50% — that substantially exceeds that of peers with similar student profiles.

At some HBCUs, there's a growing recognition that some strategies need to focus specifically on men.

Last semester, Philander Smith established mentoring programs for men and aggressively recruited them. Some are simple: Students who came from homes without fathers never learned to tie a necktie, said Kimbrough, the president, and were embarrassed not to have one during chapel. So the school teaches them how.

Graduation rates have improved from the teens to near 30%.

"There's still this idea that guys come to college, and if you need to help, you don't ask for it. To me that's the No. 1 barrier," he said.

"A lot of students are coming with issues students didn't even think about 30 years ago," Kimbrough said. "Our jobs have changed. I think we have to be much more intrusive."

'Some schools get it'

UNCF, the United Negro College Fund, which represents 39 private HBCUs, said on its website the "average graduation rate at HBCU(s) is higher than the average graduation rate for African-Americans at majority institutions" — a claim that is contradicted, both for HBCUs and UNCF members, by the AP's findings.

After inquiries from the AP, the organization removed that statement.

Karl Reid, UNCF's senior vice president of academic programs and strategic initiatives, says the group is working with researchers at Morehouse College, an all-male HBCU in Atlanta, to find ways to help more black college men. It hopes to increase black male enrollment 20% at its member schools over the next five years, and to improve overall graduation rates 10%.

"There seems to be a groundswell that we've got to get this right," Reid said. "Some schools get it." But he acknowledged, "the urgency varies."

Every HBCU has success stories — students like LeMoyne-Owen senior Jerome Heard. With his good looks, good manners and a dynamite singing voice, it's hard to believe he had a 2.0 high school GPA. If LeMoyne-Owen hadn't taken a chance on him, he says he'd still be working at the Hobby Lobby store back home in Chattanooga.

Here he has a 3.6 and was named "Mr. HBCU" in a national contest that crowns an informal HBCU student "king."

"The teachers here just took me in and saw something in me, and said, 'I think you will be successful,"' he said.

But the harsh reality is many HBCUs don't have the resources to give every student that kind of attention.

Howard and Spelman have endowments valued in the hundreds of millions, but Edward Waters has just $1.6 million. Flagship universities typically get the lion's share of state funding over public HBCUs.

In a perfect world, say experts like Kevin Carey of the think-tank Education Sector, HBCUs would have more resources to spend on the toughest students. But they don't, and "if you don't have the resources to serve students, you're not doing much good."

"Some of these institutions ... have struggled along for some time and have just tried to be available, an option for students, and have focused on the experience," said Marybeth Gasman, a University of Pennsylvania historian of HBCUs. Many do heroic work with students others ignore, she said. But graduation rates below one-quarter won't cut it in an era of tighter accountability.

"You have to keep in mind these students may be taking out loans and going into debt and still not get a degree," she said.

Philander Smith's Kimbrough says neither HBCUs nor any college should admit students if they don't have the resources they need to get them through.

"I think it's immoral to take someone when the indicators suggest this person is not going to graduate, and I don't have anything special for them," he said. "I'm just taking their money."

WSJ: Locke Vows to Push for 'Fair Trade'

An excerpt from a Wall Street Journal article by Amy Schatz:

WASHINGTON -- Commerce Secretary Gary Locke said in an interview that he will push for "fair trade" and said countries seeking open trade with the U.S. should abide by "minimum standards" for environmental and safety regulations.

"I've always believed in fair trade. I believe it's appropriate that there's minimum standards that other countries should abide by if we're allowing their products to come in to the United States," Mr. Locke said during an interview with The Wall Street Journal.

"If the apple growers of Washington State have to abide by all these environmental and health and human safety standards and the workers of other countries don't have to, it puts Washington State apples at a disadvantage," said Mr. Locke, a former governor of Washington State. "Same thing with Boeing airplanes. If other countries are able to significantly subsidize the cost of development and production of an airplane then it puts Boeing at a competitive disadvantage and it hurts the aerospace workers of America."

Mr. Locke's comments, during an interview on his first day on the job, echo the sentiments of many congressional Democrats and U.S. unions skeptical of the benefits of free trade. They have called on the administration to curb access to the U.S. markets for countries with less stringent environmental and labor safety rules.

Congress recently cited safety concerns as the justification for blocking access for Mexican trucks on U.S. highways outside a border zone. The Mexican government retaliated by slapping tariffs on about $2.4 billion worth of U.S. products ranging from grapes to toiletries. President Barack Obama is trying to defuse the conflict.

Going forward, lawmakers will have to seek a good and just balance between limiting trading restrictions and seeking labor and environmental protections in treaties with trading partners. My guess is that the U.S. will lean more towards using fair trade as an excuse for protectionism, judging by Sec. Locke's tone. However, I invite Gary Locke to prove me wrong.

Monday, March 30, 2009

Obama Administration feels GM and Chrysler failing to turnaround

As reported by CNN Money, the Obama administration turned down GM's and Chrysler's restructuring plans. GM gets 60 more days to prove it can run a viable business. Chrysler gets 30; the administration is saying it must merge with Italian automaker Fiat to do so.

The administration said that debtholders had not done enough. The companies had been trying to get bond holders to accept new equity in return for large portions of the outstanding debt. The bond owners had stonewalled, saying that they bought bonds, not equities of questionable value.

However, without reducing outstanding debt, neither company is going to make it. The Obama administration seems to be leaning towards putting them into a structured bankruptcy. Bankruptcy courts have authority to impose settlements on debt owners, as well as employee contracts and provisions affecting other stakeholders. This would be unfortunate but could prove necessary.

I'd previously noted that one company had produced a report for the auto industry, indicating that consumers were less likely to buy cars from an automaker in bankruptcy. It looks like the automakers will have to find out how accurate that report it (frankly, that report might not be accurate - things have changed and everyone's used to the idea that the Big 3 are in bankruptcy).

Friday, March 27, 2009

A tax plan charities should back

Joel Berg, writing an editorial in the Washington Post, also says that charities should back the 28% cap on charitable deductions.

Some of the nation's largest charities -- and the lobbyists they pay to represent them -- have been hyperventilating over President Obama's proposal to marginally roll back the amount of the tax deduction the very wealthiest Americans can take for donating to charity. Of course, conservatives who oppose any tax hikes for the rich also oppose it.

While these voices have created the impression that all nonprofit organizations oppose the plan, the reality is that many charitable organizations, especially ones that serve low-income populations, such as the one I run, strongly support it.
According to the Urban Institute-Brookings Institution Tax Policy Center, the proposal would affect only 1.2 percent of U.S. households -- those in the top two tax brackets. Nearly 99 percent of households would be unaffected. The plan would merely restore the deduction rate to Reagan-era levels.

Since the very largest donors (such as Bill Gates and Warren Buffett) already give more than they can deduct and numerous studies show that tax deductions are a relatively minor reason that the wealthiest Americans donate to charities, total charitable contributions are likely to decline by only about 1.3 percent if the proposal is enacted, the Center on Budget and Policy Priorities calculates.

Combined with other progressive Obama tax proposals, that change would not only start to redress the inequality gap that has engulfed America in recent decades but would also help to pay for many effective domestic programs, including efforts that fight hunger and improve nutrition; boost public education; improve health care and make it more affordable; and create jobs for low- and middle-income families. In other words, the funding would greatly reduce struggling families' need for charitable aid.

When the wealthiest Americans donate to charities, they are most likely to give to universities, hospitals and cultural institutions from which they and their families may benefit. Such organizations often have budgets and executive salaries equal to or greater than those of midsize corporations, stretching the definition of "nonprofit group."

While antipoverty organizations such as mine do receive some funding from the wealthiest Americans (for which we are extremely grateful), the bulk of our private donations actually comes from middle-income families.

Even if the largest tax deductions are kept in place only for anti-poverty organizations, a compromise that would directly benefit groups such as mine, there are at least two reasons I still don't think that would be wise public policy:
First, such tax deductions are a highly inefficient way to fund social programs. It is far more cost-effective for the government to simply increase supplemental nutrition benefits (formerly food stamps) that are immediately redeemed at for-profit food stores than to give massive tax deductions that only marginally increase donations to feeding charities, which then have to split such donated money between administrative costs and food purchases.

Second, voluntary private charity is a less equitable way to solve community problems. While many people assume that the rich amass their wealth on their own, the truth is that their business interests are almost always aided by public efforts, such as roads, bridges and ports through which they ship their goods or public schools that educate their workforces. Given that even the wealthiest benefit greatly from this modern "public commons," it is wrong to give them unilateral power to decide whether their taxpayer-subsidized donations should go to, say, well-heeled operas or lavish care of pets rather than to organizations that meet more pressing communal needs.

It is fashionable these days to say that "the community," not government, should solve social problems. Yet no nonprofit leader, myself included, was elected by the community as a whole. Elected officials, whether we like them or not, are picked by voting citizens. In America, the government is the most legitimate voice of the entire community.
The Obama administration should stick to its guns in fighting for tax equity, and Congress should support the effort. If charities want to prove that they value the public interest over their own self-interest, they, too, should get on board.

Joel Berg is executive director of the New York City Coalition Against Hunger and the author of "All You Can Eat: How Hungry Is America?"

In contrast, Diana Aviv, of Independent Sector, argues against the proposal. Incredibly, she cites the rising cost of health care among nonprofit employers as one of the reasons this should be opposed. Clearly she has no fucking clue about national budgeting - the President is proposing to use money raised from the limit on deductions to fund comprehensive health reform. This will, over time, lower the cost of providing health insurance.

She clearly has no grasp of math, either. She simply throws out the total charitable contributions of $220+bn in 2006. Elsewhere, she cited the Center on Budget and Policy Priorities' figure of $6bn in reduced donations out of context, forgetting that in the same year, over $300bn was donated.

Charitable deductions, the 28% cap, the furor and my response

The Episcopal Cafe recently posted a Washington Post story criticizing the impact of the President's proposed 28% cap on charitable deductions. That article was highly disappointing. I've submitted the following to the Episcopal Cafe and asked them to publish it:

On 3/25/09, JB Chilton posted an article in the Washington Post by Martin Feldstein on the impact of the proposed 28% cap on charitable deductions. Chilton said “It would be hard to find anyone more qualified than Martin Feldstein to predict the effects of President Obama's proposal to limit the tax deductibility of charitable contributions…”

I am very disappointed in Feldstein’s lack of analysis and in Chilton’s apparently unquestioning acceptance of Feldstein’s assertion. As readers may know, the proposal would allow earners in the top 2 tax brackets (earning over about $200,000 a year) to deduct donations at 28%. Normally, these earners would essentially be able to take deductions, if they itemized more than the standard deduction, at their top marginal tax rate of up to 39.6%.

First, Feldstein overestimates the net impact of the cap and doesn’t place it in the context of the total amount of charitable contributions. Paul van de Water, a senior analyst at the Center on Budget and Policy Priorities (disclosure: I am an intern there) shows that itemized deductions account for about 62% of total charitable giving. Only 18% of all itemized deductions would be affected by the President's proposal. The data used comes from the Urban-Brookings Tax Policy Center, a collaboration between two highly respected think tanks.

In total, van de Water calculates charitable giving would come down by only 2% - the article says 1.3%, but the Tax Policy Center just posted new data and we're updating. That's $6 billion out of $300+ billion in charitable contributions last year. That’s a bit less than Feldstein’s disappointingly unsophisticated calculations and not very much out of a large bucket.


Second, one would expect that the very largest charities, like universities and hospitals, would be more impacted by this proposal than the local soup kitchen, women's shelter or Episcopal church. Universities and hospitals usually generate higher operating surpluses from tuition and patient revenues than from donations.

Third, this proposal was attached to funding health reform. Feldstein is right that the proposal essentially transfers money from charities to the Federal government. These charities are exempt from federal and state taxes. A better way to see it is asking charities to pay a few percent in tax towards health reform.

The United States is insolvent in the long term if we don't get health reform done. Given the gravity of the situation, it's not too much a burden to ask. As related to the Episcopal Church, we want to see health reform done because of our commitment to the welfare of all people. If that means we need to run a slightly tighter ship, then let’s do so.

Marketwatch ethics monitor: dispelling the myth of clean coal

From Thomas Kostingen, writing for Marketwatch. Basically what I've been saying all along, although Kostigen doesn't discuss environmental damage due to mining.

SANTA MONICA, Calif. (MarketWatch) -- Turn on your television and soon enough you'll see an advertisement espousing the benefits of "clean coal." Wait a little longer and you might see an advertisement saying there's no such thing.
Let's be clear: The latter is true. There is no such thing as clean coal. It's like saying "dry water." It doesn't exist.

Yet a multi-million dollar advertising and marketing campaign by the coal industry is trying to sway public opinion about coal, an energy source targeted by activists and officials as harmful to our health and the planet's health when burned.

Burning coal spews carbon dioxide, among other pollutants, into the air. Still, we generate about half of our electricity in the United States with coal.

The American Coalition for Clean Coal Electricity says it believes "the robust utilization of coal -- America's most abundant energy resource -- is essential to providing affordable, reliable electricity for millions of U.S. consumers and a growing domestic economy. Further, ACCCE is committed to continued and enhanced U.S. leadership in developing and deploying new, advanced clean coal technologies that protect and improve the environment."

The sly campaign is to be expected. Coal's future is in serious doubt. With businesses and utilities looking to replace it as a power source, the industry is right to be afraid.

Disingenuous advertising campaigns, however, aren't the way to fix the coal industry's ills. If ever there was a time to embrace truly clean energy -- solar, wind, hydro -- it's now. Heck, even the major oil companies are smart enough to showcase their investments in the future by trotting out their alternative energy programs.

Coal companies, on the other hand, have their heads stuck in the mine. They are like cigarette companies that publicize the benefits of filters: low tar, less nicotine. Their product is still lethal, mind you -- just not as much. Think about that.

The health and pollution ramifications of burning coal are numerous. Air pollution is the leading cause of asthma. Asthma is the leading cause of school absences. Air pollution kills more people per year than automobile accidents.

Of course, abruptly ending our reliance on coal isn't feasible. We need to wean ourselves off it, and phase in alternative energy solutions. My energy provider is doing it, powering my house with less than half the coal used last year.

In fact, only 8% of the power for my electricity now comes from coal. The rest is a mix of renewable power, nuclear and natural gas. It's not ideal, but if my utility provider can ratchet down its use of coal, so can others.

As the Environmental Protection Agency threatens to label carbon emissions a dangerous pollutant and thereby subject the coal industry and all those who rely on it to onerous measures, it's time coal companies owned up to the fact that their time has come and gone.

By joining the alternative energy movement and investing in clean power for us, they could control and shape the future rather than fight for the dark past. China, India and Europe would be our customers if we had the silver bullet to coal use.
The coal industry should be looking to invent in its own replacement because someone somewhere is going to invent it, and then where will they be? Likely looking for bailout money, no doubt.

Coal players need to open their eyes and see what's coming. Instead, they are squandering an opportunity. We should be mad at them, just as much as we are mad at the finance industry that fooled us into subprime mortgages and false profits.
Let's not get fooled again by the myth of clean coal. It's dirty by nature.

Thomas M. Kostigen is the author of You Are Here: Exposing the Vital Link Between What We Do and What That Does to Our Planet (HarperOne). www.readyouarehere.com End of Story

Thursday, March 26, 2009

World to U.S. B-Schools: Thanks, but No Thanks

A Businessweek article discusses how an increasing number of prospective international students are choosing not to come to the US. Lack of visas and a generally hostile climate towards skilled foreign workers is one push factor. Other factors include the economy and the inability to find financing.

The Senate attempted to prohibit banks getting significant financial assistance from the US government from hiring foreign workers at all. The provision was watered down; the banks in question (Citi, Bank of America, AIG, Fannie and Freddie) must go through some additional hoops to hire foreigners. The procedures aren't especially onerous (any more so than the regular H-1B process). However, it's clear that the US government, particularly some Democrats, is adopting a hostile attitude towards skilled foreign workers.

In the long run, this makes no sense. Regardless of their position on general immigration (primarily by less skilled workers), labor economists generally agree that admitting skilled foreign workers is a boon to the economy. Admitting skilled workers through school is an especially attractive route; the workers are trained in local laws and customs, and they've already spent significant money in the local economy. This can be better than admitting them de novo from their home countries.

As the Businessweek article indicates, an increasing number of prospective students may be going to other business schools, like Insead. This is, frankly a good thing. A unipolar world is not good for the US or for anyone else. Of course, it would be nice for the US to ditch the fucking xenophobia and reduce the barriers to admitting skilled workers, as well as executing general immigration reform.

AIG: Bigger problem than bonuses

While I agree that the AIG bonuses shouldn't have been paid, the issue deserves less shouting and screaming than the fact that AIG still has $1.6 trillionof derivative contracts outstanding, as reported in a CNN Money article.

AIG is not going to be able to back up all of these contracts if they need to be paid out. The firm is attempting to extinguish the contracts through negotiation with counterparties. Should AIG have to liquidate, the losses incurred by many of the counterparties could lead to a large number of them being insolvent.

The American public should be more worried about AIG's outstanding liability - every U.S. taxpayer is on the hook for the consequences.

Wednesday, March 25, 2009

Univ of Michigan is latest to end deal with apparel maker

From the NY Times, by Steven Greenhouse.

The University of Michigan announced on Monday that it was ending its apparel licensing agreement with the Russell Corporation, becoming the 12th university to do so in response to the company’s decision to close a unionized factory in Honduras.

University of Michigan officials said an agreement under which Russell made T-shirts, sweatshirts and fleeces with university logos would end as of March 31 because Russell had violated the university’s code of conduct calling on licensees to guarantee the basic rights of workers.

Michigan joined Columbia, Cornell, Duke, Georgetown, Purdue, Rutgers and several other universities that curtailed agreements with Russell, a subsidiary of Fruit of the Loom, which is owned by Berkshire Hathaway.

On Jan. 31, Russell closed its Jerzees de Honduras plant, where 750 of the 1,800 employees had joined a union, and the management and the union were in a contract dispute.

The Worker Rights Consortium, a factory monitoring group sponsored by 185 universities, condemned the closing, saying it had been done partly because of antiunion animus. Another monitoring group, the Fair Labor Association, also found labor violations.

In a report issued Feb. 16, Russell said the closing was the result of “economic considerations and was not caused by the presence of the union at the factory.”

John Shivel, senior vice president for marketing, advertising and communications at Fruit of the Loom, said the company could not grant an interview about the universities’ decisions.

Kelly Cunningham, a University of Michigan spokeswoman, said the school ended Russell’s license on the recommendation of the university president’s Advisory Committee on Labor Standards and Human Rights.

“The committee found that the company had not respected the employees’ right to association and had not adhered to the company’s own standards of conduct,” Ms. Cunningham said. “We do not feel that continuing the license is appropriate.”

Scott Nova, executive director of the Worker Rights Consortium, said, “Over a period of two years, Russell engaged in the systematic abuse of the associational rights of its workers in Honduras, thereby gravely and repeatedly violating the universities’ codes of conduct.”

His consortium, an independent labor rights monitoring group, and the Fair Labor Association had previously found that Russell’s Honduras operation improperly fired 145 union supporters in 2007. After numerous universities and student groups protested, the company reinstated the workers, paid back wages and granted union recognition.

The consortium also found that factory supervisors had harassed and intimidated union supporters and had denied union officials and government inspectors access to the plant.

“This is a toxic company,” said Leigh Wedenoja, a University of Michigan senior who is a member of the president’s advisory committee as well as Students Organizing for Labor and Economic Equality. “We feel that if the university is serious about encouraging human rights, then we could not keep Russell as a licensee.”

Last Friday, Cornell announced it was ending its agreement with Russell. A University spokesman, Mike Powers, said “Cornell is committed to respecting the rights of workers around the world, and we expect the companies that are licensed to produce Cornell apparel to share that commitment.”

In its report last week, Russell wrote, “We acknowledge that management mistakes were made that led to a failure to adhere” to “standards on freedom of association.”

The company vowed to improve its compliance and enhance what it called its “overall corporate social responsibility process,” includes having third-party monitors inspect factories.

A comment on the EFCA and employee satisfaction

Michael D, in a comment on an earlier post, said:

Whether unionization is positive for business, the workforce, or the economy is a conversation best left to someone in a field other than mine. As an I/O Psychologist my interest lies in organizational success through the well-being of employees.

If no other good comes from EFCA, at least it is forcing companies to have an important conversation. In searching for ways to combat unionization, employers are realizing they need engaged employees – who feel communicated to, safe, valued, and a strong commitment to the company. I’ve been hearing a lot of chatter from the legal community about the need for ‘union vulnerability audits’ to ensure a satisfied workplace where unions are viewed unnecessary. Whether or not the EFCA passes I think employees (and organization) will benefit from the discussion.

I presume I/O means industrial/operational.

While I don't like this language about 'union vulnerability audits', I do want to see all companies become engaged workforces - even if their workforce is 'unskilled'.

Bankrate: Best time of the season to buy stuff

For readers who are interested in accumulating more material possessions (hopefully necessities), Bankrate has a nice article that tells you which season things go on sale, at least in the US.

Anglican news: SSPX asking to buy unused CoE church

The very conservative Catholic group, the Society of St. Piux X, has asked to buy an unused church from the Church of England.

Birth control and poverty

I believe that women and families have the right and responsibility to control the timing and number of births. Contraceptive methods that cannot reasonably be construed as abortion (e.g. hormonal contraceptives, intra-uterine devices, condoms) are generally available in the West and other relatively wealthy countries.

However, hormonal contraceptives and condoms have ongoing costs. Ideally, condoms shouldn't be used as ongoing birth control. That leaves hormonal contraceptives. However, to the growing number of people in the US who are uninsured or underinsured, the ongoing costs of contraceptives can be a barrier.

A recent Chicago Tribune article discusses family planning in a recession. The picture isn't good. One woman decided, with her husband, to end her pregnancy as they couldn't afford it. Ironically, affording the abortion, which was not covered by her insurance, was also a stretch. One Planned Parenthood clinic interviewed said that January was a record month for abortions (although one month at one clinic isn't necessarily conclusive, it's not a stretch that a similar trend could emerge nationwide).

Adoption agencies and the National Network of Abortion Funds (which provides financial assistance for abortion) reported increased demand for their services. In addition, women are waiting until later in their pregnancies to get abortions, as they need to raise the funds.

Another Planned Parenthood clinic reported that women were seeking longer-acting contraceptives. A monthly supply of birth control pills costs my fiance, who is insured, a $10 copay (copays are a flat rate one pays with medication or medical services; they are a form of cost-sharing). Our income at present is low as we are both searching for permanent jobs; $10 monthly is not an insuperable barrier now but it could be if our wages remain low.

However, many poor families are uninsured and will face a higher cost. That cost could be a sufficient barrier to them that they might switch to condoms or not comply fully with the medication regimen. However, either of these will increase the chances of pregnancy.

The folks who say they would like to ban federal funding for Planned Parenthood have yet to present an adequate solution for poor women and families. Frankly, some of the anti-abortion crowd would be inclined to let them starve. I think all of us would rather that families not be forced to resort to abortion. It is a difficult decision for everyone, contrary to what some might think.

To help reduce the number of abortions, the US needs an adequate safety net that delivers a reasonable amount of cash and non-cash assistance (the latter might include food, housing, childcare) and ensure that jobs at the bottom are delivering an adequate wage. The best way to do that is through provisions like the Earned Income Tax Credit and the new Making Work Pay credit.

Wednesday, March 18, 2009

Obama's messy stance on free trade

A CNN Money article by Nina Easton accuses President Obama of having a "messy" message about free trade. In part, he is trying to satisfy organized labor, which is often protectionist, and America's trading partners.

Obama is awkwardly trying to figure out how to position himself as a reformist free-trader without angering the anti-trade labor leaders who remain a central piece of his political coalition.

The Mexican trucking program was supposed to launch in 2000, but it was delayed repeatedly until 2007 because of organized labor and its allies in Congress. The Teamsters union, which has maintained that Mexican trucks are unsafe, is virulently opposed to it. (The Mexican trucks in the program are required to undergo safety certifications, and their government - which exported $215.9 billion worth of goods here last year - argues that its transporters shouldn't be forced into the costly and inefficient process of unloading cargo onto U.S. trucks.)

By keeping Mexican trucks off U.S. roads, the president sends a message that he wants to protect U.S. workers' jobs. But as he saw first-hand last month on his visit to Caterpillar Inc., the interests of workers - especially unemployed workers - aren't always in sync with the interests of their protectionist unions.

The Peoria, Ill.-based company - the world's largest mining and construction equipment manufacturer - has been battered by layoffs, and the White House had hoped its location at the heart of the nation's rust belt would provide an apt symbolism for the President's visit. "In many ways," Obama said there, "you can measure America's bottom line by looking at Caterpillar's bottom line."

What he didn't say was that Caterpillar counts on 60% of its revenue from foreign sales. Obama also didn't mention that Jim Owens, whom he appointed to his Economic Recovery Advisory Board, made it a point to tell him on Air Force One on the way to Peoria that a Buy America provision would mean retaliation from trading partners against companies like Cat.

That conversation may have contributed to the president's decision to recalibrate his message - he now says any Buy America provision must not violate World Trade Organization accords. And he told reporters during the Peoria trip that "a downward protectionist spiral [is] very dangerous."

Protectionism isn't the only problem on the table. The U.S. already risks falling out of step with the rest of the world on other trade fronts. During the height of the Democrats' protectionist rhetoric in last year's presidential campaign, then-U.S. Trade Representative Susan Schwab raised a serious concern: Even if a new White House didn't backtrack on trade - by reopening NAFTA, for example - a failure to move forward on new trade deals would put the U.S at a competitive disadvantage.

That failure is beginning to become apparent. This week, the South Korean government announced that it is close to a free-trade deal with the European Union. Meanwhile, a U.S. deal with South Korea is one of three trade agreements now languishing in Congress.

Let's hope President Obama's inability to deliver a clear message and act quickly aren't kicking off that downward spiral he claims to fear.

For the record, while I support unionization, I strongly disagree with organized labor's stances on protectionism.

Trade agreements between Western countries and less developed ones should contain labor and environmental protections. Western nations have no right to use protectionism to exploit countries in the Global South. You cannot deprive the poor of a possible livelihood. In turn, Western nations can benefit from their goods and services, and can help uphold human rights and the environment with trade treaties. Pity no one seems to have thought of this yet.

Trade War with Mexico?

By Steve LeVine of Businessweek.

Mexico has put $2.4 billion in tariffs on American items after the Obama Administration stopped some Mexican long-haul trucks from entering the U.S.

The Obama Administration, by putting an end to a program that allowed some Mexican long-haul trucks into the U.S., has triggered a slew of retaliatory tariffs from Mexico. The White House seems to be looking for a way to resolve a dispute that it failed to avert, despite much forewarning. But it looks like it may be too late to avoid the $2.4 billion in tariffs altogether, experts say.

On Mar. 16, Mexico announced tariffs on about 90 items from 40 U.S. states, mostly on agricultural products. It was retaliation for Congress' decision last week to kill a program meant to defuse a dispute that has lasted more than 13 years over the right of U.S. and Mexican long-haul trucks to cross each other's border carrying goods. Mexico contends that the U.S. is violating the North American Free Trade Agreement, which provides for free movement by each member state's trucks. Congressional critics say Mexican trucks are unsafe and do not belong on U.S. roads.

The dispute comes at a time of rising concern that financially ailing countries will erect trade barriers in an effort to boost their individual economies at the expense of other nations. In a statement on Mar. 17, the World Bank cited a rise of protectionism since the members of the Group of 20 pledged in November not to raise trade walls against each other. The bank said 20 G-20 countries had implemented 47 trade-restrictive measures against other nations in the last four months.
Detroit Bailout Draws Criticism

China had banned Irish pork and Belgian chocolates, India had banned Chinese toys, and America, in the eyes of many, had violated the spirit of free trade by bailing out Detroit. "Leaders must not heed the siren song of protectionist fixes, whether for trade, stimulus packages, or bailouts," World Bank President Robert B. Zoellick said. "Economic isolationism can lead to a negative spiral of events such as those we saw in the 1930s, which made a bad situation much, much worse."

President Barack Obama campaigned on a platform of stricter enforcement of existing trade agreements. But in the worsening financial crisis, he has sharply toned down his language and has instead joined the chorus warning against protectionism. Still, U.S. Trade Representative-nominee Ron Kirk has said the Administration will look to strictly enforce U.S. trade agreements.

Now the White Houe has to keep the clash with Mexico from escalating. John Murphy, vice-president for international affairs at the U.S. Chamber of Commerce, called the Mexican reprisal "a wake-up call" for the Administration. He said it demonstrates that, while the U.S. can focus on enforcement, it is vulnerable to economic retaliation. "We need to look at our side of the street as well," he said.

Teamsters Against Mexican Trucks

The dispute with Mexico goes back to 1995. The Clinton Administration was supposed to enact NAFTA's trucking provision, but opted not to do so. At the time, the International Brotherhood of Teamsters and other unions protested the provision. While critics of the provision cited the truck safety issue, supporters said the unions were more concerned about losing jobs.

In 2001 a NAFTA judicial ruling sided with Mexico's position that the U.S. was violating the trade treaty. But Mexico held back on trade reprisals while the Bush Administration crafted a pilot program that would permit a limited number of Mexican long-haul trucks to traverse the U.S. as a test to allay safety concerns. The program was launched two years ago as a transition to full-fledged compliance with the treaty. It has been clear for months that Congress intended to try to kill the program, and that if it did, Mexico would carry through on its threat to retaliate. Yet on Mar. 10, Congress passed a $410 billion government spending bill containing a clause inserted by Senator Byron Dorgan (D-N.D.) killing the pilot program, and the following day Obama signed it.

A study used as a weapon by both sides was issued on Feb. 6 by Joseph W. Comé, Assistant Inspector General for the U.S. Transportation Dept. The study concluded that long-haul Mexican trucks were in many cases safer than similar U.S. vehicles. But critics of the trucking provision note that the study included a caveat that, in Comé's opinion, the number of vehicles inspected was too small to be conclusive.
White House Seeking Conciliation

Dorgan called the Mexican reprisal "an outrage" in a Mar. 16 statement. "We are the country that should expect more from this one-sided relationship," Dorgan said, adding that the U.S. trade deficit with Mexico was $66 billion last year.

Teamsters President James Hoffa said in a statement, "The right response from Mexico would be to make sure its drivers and trucks are safe enough to use our highways without endangering our drivers. The border must stay closed until Mexico holds up its end of the bargain."

Obama's staff, in contrast, is making conciliatory gestures. On Mar. 16, White House spokesman Robert Gibbs said the Administration will work with Congress and Mexico "to propose legislation creating a new trucking project that will meet the legitimate concerns of Congress and our Nafta commitments." Gibbs added, "We don't want to find ourselves, in a time of economic slowdown, creating or erecting a barrier to that valuable trading partnership" with Mexico.
End Result May Mirror Pilot Program

Experts said the Administration will have a difficult time navigating among Mexico, the Teamsters, and Congress. But Gary Hufbauer, a trade expert at the Peterson Institute for International Economics, was optimistic that the Administration will succeed. Mickey Kantor, Clinton's trade representative from 1993 to 1997, said "there are interests on our side of the border that would like to stop the trucks forever," but that "the Obama Administration will sit down with them and work out an accommodation that makes sense."

The final product may look familiar, said John Magnus, a trade lawyer with the Washington law firm Miller & Chevalier. "I wouldn't be surprised if it ends up looking a lot like the pilot program that just got scotched," Magnus said. "It is a very logical intermediate step."

Some experts fault the Administration for failing to head off the trouble before it reached this stage. "Where was the Administration?" asked Bill Reinsch, president of the National Foreign Trade Council. "Having not made it go away, they are scrambling around. The Mexicans have retaliated, and they are left figuring out how to make lemonade out of lemons."

Tuesday, March 17, 2009

Andrew Ross Sorkin at NYT: The case for paying AIG bonuses

Andrew Ross Sorkin of NYT writes about the bonus controversy at AIG, where the folks who basically blew the company up are due to be paid retention bonuses, which were contracted in early 2008.

Do we really have to foot the bill for those bonuses at the American International Group?

It sure does sting. A staggering $165 million — for employees of a company that nearly took down the financial system. And heck, we, the taxpayers, own nearly 80 percent of A.I.G.

It doesn’t seem fair.

So here is a sobering thought: Maybe we have to swallow hard and pay up, partly for our own good. I can hear the howls already, so let me explain.

Everyone from President Obama down seems outraged by this. The president suggested on Monday that we just tear up those bonus contracts. He told the Treasury secretary, Timothy F. Geithner, to use every legal means to recoup taxpayers’ money. Hard to argue there.

“This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.”

On that last issue, lawyers, Wall Street types and compensation consultants agree with the president. But from their point of view, the “fundamental value” in question here is the sanctity of contracts.

That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.

As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts.

If government officials were to break the contracts, they would be “breaking a bond,” Ms. Meyer says. “They are raising a whole new question about the trust and commitment organizations have to their employees.” (The auto industry unions are facing a similar issue — but the big difference is that there is a negotiation; no one is unilaterally tearing up contracts.)

But what about the commitment to taxpayers? Here is the second, perhaps more sobering thought: A.I.G. built this bomb, and it may be the only outfit that really knows how to defuse it.

A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave — the buzz on Wall Street is that some have, and more are ready to — they might simply turn around and trade against A.I.G.’s book. Why not? They know how bad it is. They built it.

So as unpalatable as it seems, taxpayers need to keep some of these brainiacs in their seats, if only to prevent them from turning against the company. In the end, we may actually be better off if they can figure out how to unwind these tricky investments.

Not that any of this takes the bite out of paying these bonuses. For better or worse — in this case, worse — someone at A.I.G. decided this company needed to sign bonus agreements last year to keep people before the full extent of its problems became clear.

Now we can debate why A.I.G. felt it necessary to guarantee seven executives at least $3 million apiece when the economy was clearly on shaky ground. Perhaps we will find out these contracts were a bit of sleight of hand to enrich executives who knew this financial Titanic had hit the iceberg. But another possible explanation is that A.I.G. knew it needed to keep its people.

That is the explanation offered by Edward M. Liddy, who was installed as A.I.G.’s chief executive when the government effectively nationalized the company last fall. (He is being paid $1 a year.)

“We cannot attract and retain the best and brightest talent to lead and staff” the company “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he said.

There’s some truth to what Mr. Liddy is saying. Would you want to work at A.I.G.? Sure, maybe for $3 million. But not if you could go somewhere else for even more — or even much less.

“The jobs are terrible,” said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. “You have to read about yourself in the paper every day. These people are leaving as soon as they can.”

Let them leave, you say. Where would they go, given the troubles in the financial industry? But the fact is, the real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work — against taxpayers’ interests.

“The word on the street is that A.I.G. employees are being heavily recruited,” Ms. Meyer says.

Of course, if taxpayers had not bailed out A.I.G., these contracts would not be worth anything. Andrew M. Cuomo, the attorney general of New York, made the point on Monday, when he subpoenaed A.I.G. for the names of the people who received the bonuses. If A.I.G. had spiraled into bankruptcy, its employees would have had to get in line with other unsecured creditors.

Mr. Cuomo wants to know who A.I.G.’s lucky employees are, and how they have been doing at their jobs. So here is a suggestion for him. Get the list, and give those big earners at A.I.G. a not-so-subtle nudge: Perhaps they will “volunteer” to give some of their bonuses back or watch their names hit the newspapers. But in the meantime, despite how offensive and painful it might be, let’s honor the contracts.

Monday, March 16, 2009

Anglican Church of Nigeria continues to persecute LGBT people

Same sex marriage, apart from being ungodly, is unscriptural, unnatural, unprofitable, unhealthy, un-cultural, un-African and un-Nigerian. It is a perversion, a deviation and an aberration that is capable of engendering moral and social holocaust in this country. It is also capable of existincting [sic] mankind and as such should never be allowed to take root in Nigeria. Outlawing it is to ensure the continued existence of this nation. The need for doing this is urgent, compelling, and imperative.
--Archbishop Peter Akinola of Nigeria, in a position paper linked on Thinking Anglicans

Additionally, the Episcopal Cafe links to evidence that the Church of Nigeria is busing people to hearings in Abuja.

This needs to be said plainly: what Peter Akinola and the Church of Nigeria are doing is evil, is not Christian and is not sanctioned by God.

Even if God condemned homosexuality, God would not sanction violating the human rights of LGBT people.

Saturday, March 14, 2009

Obama, Brazilian President da Silva to meet @ White House

From the Huffington Post.

WASHINGTON — The economy, energy and the environment confront President Barack Obama and Brazilian President Luiz Inacio Lula da Silva in their White House talks Saturday.

Trade, relations with Latin America and the case of a New Jersey man trying to bring his 8-year-old son back from Brazil may come up, too.

The leaders planned to compare notes on two international forums on their schedules next month _ a meeting of the Group of 20 nations and the Summit of the Americas.

Brazil has become a major U.S. trading partner, and its cautious economic policies have helped South America's largest country weather the global financial crisis better than almost all other major economic powers. Brazil also has huge new sources of offshore oil and abundant ethanol, which could give it an important role in helping the U.S. wean itself from Venezuelan crude and shift to cleaner sources of energy.

Silva, who runs the world's fifth-most-populous nation and ninth-largest economy, has close ties with leaders across the political spectrum. He has been asked to lobby Obama for free trade on behalf of conservatives in Colombia and for dropping the U.S. embargo against communist Cuba.

Even Venezuelan President Hugo Chavez, who has had a prickly relationship with the U.S., has asked his Brazilian counterpart to put in some good words for him.

"I'm going to ask that the U.S. take a different view of Latin America," Silva said before leaving his country. "We're a democratic, peaceful continent, and the U.S. has to look at the region in a productive, developmental way, and not just think about drug trafficking or organized crime."

The world's largest exporter of ethanol, Brazil has seen little progress on its demand that the U.S. lift a 53-cent-per-gallon import tariff on the gasoline alternative. But in the past two years, Brazil has made offshore oil discoveries of some 80 billion barrels. The find could help turn Brazil into a major crude exporter and become a bargaining chip with the U.S.

The custody issue involves David Goldman of Tinton Falls, N.J., who is trying to bring his young son back from Brazil. The boy was taken there in 2004 by his mother, who died several years later while giving birth. She had divorced Goldman and married a lawyer from Rio de Janeiro. Both children are being raised by the lawyer's family.

This past week, the House unanimously urged Brazil to "act with extreme urgency" to return the boy to Goldman. Secretary of State Hillary Rodham Clinton said she has discussed the case with high-ranking Brazilian officials.

Thomas A. Shannon, the assistant secretary of state for Western Hemisphere Affairs, said Friday that Obama is aware of the case.

Silva was the first Latin American leader to sit down with Obama. Obama has met with Japanese Prime Minister Taro Aso and British Prime Minister Gordon Brown.


Associated Press writer Bradley Brooks in Rio de Janeiro, Brazil, contributed to this report.

Friday, March 13, 2009

Gov. Perry of Texas rejects stimulus money for unemployment compensation

The stimulus package in the US contains funds to extend the period of unemployment compensation. Workers in the US pay into state funds for unemployment insurance, and are eligible for benefits if laid off. Some states' unemployment insurance funds are experiencing stress in this time, and the stimulus fund bolsters these. The recent stimulus bill contained funding to bolster state unemployment pools.

Bizarrely enough, Gov. Rick Perry of Texas has rejected the stimulus funds for unemployment compensation. A few other Republican governors who are more concerned with political grandstanding rather than running their states effectively have stated an intention to do the same.

Texas' unemployment fund is, in fact, running low and may be bordering on insolvency. Gov. Perry suspended the unemployment compensation tax for businesses last year.

The linked article, by the Texas Statesman, outlines Gov. Perry's reasoning.

Thursday, March 12, 2009

Financial Times: Now is the time for a less selfish capitalism

Lord Richard Layard writes an interesting article for the Financial Times.

What is progress? The Organisation for Economic Co-operation and Development has been asking this question for some time and the current crisis makes it imperative to find an answer. According to the Anglo-Saxon Enlightenment, progress means the reduction of misery and the increase of happiness. It does not mean wealth creation or innovation, which are sometimes useful instruments but never the final goal. So we should stop the worship of money and create a more humane society where the quality of human experience is the criterion. Provided we pay ourselves in line with our productivity, we can choose whatever lifestyle is best for our quality of life.

And what would that involve? The starting point is that, despite massive wealth creation, happiness has not risen since the 1950s in the US or Britain or (over a shorter period) in western Germany. No researcher questions these facts. So accelerated economic growth is not a goal for which we should make large sacrifices. In particular, we should not sacrifice the most important source of happiness, which is the quality of human relationships – at home, at work and in the community. We have sacrificed too many of these in the name of efficiency and productivity growth.

Most of all we have sacrificed our values. In the 1960s, 60 per cent of adults said they believed “most people can be trusted”. Today the figure is 30 per cent, in both Britain and the US. The fall in trustworthy behaviour is clear in the banking sector but can also be seen in family life (more break-ups), in the playground (fewer friends you can trust) and in the workplace (growing competition between colleagues).

Increasingly, we treat private interest as the only motivation on which we can rely and competition between individuals as the way to get the most out of them. This is often counterproductive and does not generally produce a happy workplace since competition for status is a zero-sum game. Instead, we need a society based on positive-sum activities. Humans are a mix of selfishness and altruism but generally feel better working to help each other rather than to do each other down.

Our society has become too individualistic, with too much rivalry and not enough common purpose. We idolise success and status and thus undermine our mutual respect. But countries vary in this regard, and the Scandinavians have managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world.

To build a society based on trust we have to start in school, if not earlier. Children should learn that the noblest life is the one that produces the least misery and the most happiness in the world. This rule should apply also in business and professional life. People should do work that is useful to society and does not just make paper profits. And all professions – including journalism, advertising and business – should have a clear, professional, ethical code that its members are required to observe. It is not for nothing that doctors form the group most respected in our society – they have a code that is enforced and everyone knows it.

So we need a trend away from excessive individualism and towards greater social responsibility. Is it possible to reverse a cultural trend in this way? It has happened before, in the early 19th century. For the next 150 years there was a growth of social responsibility, followed by a decline in the next 50. So a trend can change and it is often in bad times (such as the 1930s in Scandinavia) that people decide to seek a more co-operative lifestyle.

I have written a book about how to do this and there is room here for three points only. First we should use our schools to promote a better value system – the recent Good Childhood report sponsored by the UK Children’s Society was full of ideas about how to do this. Second, adults should reappraise their priorities about what is important. Recent events are likely to encourage this and modern happiness research can help find answers. Third, economists should adopt a more realistic model of what makes humans happy and what makes markets function.

Three ideas taught in business schools have much to answer for. One is the theory of “efficient capital markets”, now clearly discredited. The second is “principal agent” theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of “continuous change”, promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.

We do not want communism – as research shows, the communist countries were the least happy in the world and also inefficient. But we do need a more humane brand of capitalism, based not only on better regulation but on better values.

Values matter and they are affected by our theories. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.

Lord Layard is at the London School of Economics Centre for Economic Performance. He has written ‘Happiness’ (2005) and co-authored ‘A Good Childhood’ (2009)

Jim Wallis: Employee Free Choice Act a "Fairness Issue"

Jim Wallis, writing on the Sojourners site, calls the EFCA an issue of fairness. Like me, Wallis is not a blue-collar man. His father worked for Detroit Edison's management, but was trusted by both labor and management during contract negotiations.

“Without justice, what are kingdoms but bands of robbers?”
– St Augustine.

I was surprised when Senator Bob Casey (D-PA) opened up his remarks before the Senate Health, Education, Labor, and Pension (HELP) Committee with those words from the great fourth century Christian theologian. Senator Casey is a committed Catholic and spoke during the hearing from a deep commitment to the “common good” in support of the Employee Free Choice Act (EFCA).

The bill is contentious to say the least. Earlier this week, a Politico headline ran “Union Bill Creates Jobs — for GOP Ops.” Big business and unions have already spent and will continue to spend tens of millions of dollars in opposition to and support of the bill. The details of the bill will be debated, revised, and compromised over the course of this battle. I testified before the Senate HELP Committee this week in support of the bill, but my remarks did not focus on the technical policy aspects of the legislation, but rather on the underlying moral precepts that the bill attempts to address.

The relationship between employer and employee is broken:

In 1965, U.S. CEOs at major companies made 24 times a worker’s pay – by 2004, CEOs earned 431 times the pay of an average worker. From 1995 to 2005, average CEO pay increased five times faster than that of average workers. While CEO pay continues to increase at rates far exceeding inflation, wages for the vast majority of American workers have failed to keep up with rising prices. In fact, real wages for the 90% of Americans who earn under $92,000 a year have actually fallen since 2001.

This is a fairness issue. The system of employee-employer relations is fundamentally lopsided. There’s a need to level the playing field, to redress a great imbalance. When a system is in such fundamental imbalance, it is our obligation on both sides of the aisle to remedy that. While the details of the legislation are worked and reworked, these fundamental questions of relationships between employer and employee, management and labor, must be addressed.

Twenty years ago, in their pastoral letter “Economic Justice for All,” the U.S. Catholic Bishops wrote:

The way power is distributed in a free market economy frequently gives employers greater bargaining power than employees in the negotiation of labor contracts. … The Church fully supports the right of workers to form unions or other associations to secure their rights to fair wages and working conditions. … In the words of Pope John Paul II, ‘The experience of history teaches that organizations of this type are an indispensable element of social life, especially in modern industrial societies.’ … No one may deny the right to organize without attacking human dignity itself.

My dad worked for Detroit Edison when I was growing up and was often involved with the labor negotiations at the company, not on the labor side, but on the management side. He was often preferred by both sides to be at the table of those tough contract and workplace issues negotiations. Why? Because he recognized the value of unions even if he didn’t agree with their every demand. And he believed a cooperative relationship between labor and management was better than a constantly contentious one. He knew that a good relationship between management and labor was essential to a stable and productive workforce and economy, and that union organizing and leadership helped contribute to that. Things have changed since then, but the principles of cooperation that I learned from my dad’s work with unions, that management and labor can be partners and not just antagonists, needs to be restored. And the great chasm that has now grown between CEO salaries and that of average workers, I know, would have appalled and offended my father.

Unions improve jobs at the bottom

Shawn Fremstad and John Schmitt argue on the website Fairer Globalization that unions improve low-wage jobs. While I don't agree with all the positions of organized labor in the US, I believe that workers must be allowed to unionize if they choose. It's important to have this context considering the furor over the Employee Free Choice Act, a bill that would reduce the ability of US employers to exert undue influence over workers as they organize.

In recent decades, many politicians, policymakers, and even some antipoverty advocates have come to the view that low-wage jobs are an inevitable part of a growing economy. Some go so far as to celebrate the growth of low-wage work and low-wage employers like Wal-Mart as part of a "progressive success story" benefiting workers, consumers, and owners of capital by lowering prices and increasing productivity.

Individuals who hold this view often acknowledge that low-wage work doesn't pay enough to make ends meet. To address this problem, they promote increased public funding for in-work benefits in order to "make work pay." These benefits, which are typically targeted to parents in low-income households, include ones that supplement cash income (the Earned Income Tax Credit), provide health insurance (Medicaid and SCHIP, which covers children), and offer direct assistance for other work expenses, expenses that, for higher-income workers, are subsidized in part through the tax code (such as child care and transportation). During the 1990s, the states and the federal government did expand some of these kinds of in-work benefits, while at the same time reducing the availability of income supplements (most notably, the now-defunct Aid to Families with Dependent Children (AFDC) and its replacement Temporary Assistance to Needy Families (TANF)).

According to the conventional view, the meager pay and limited benefits of low-wage jobs reflect the limitations of the workers holding these jobs, and increases in inequality and declines in middle-class jobs are explained by an increase in the return for skills and education driven by globalization and technology. Those who hold this view, including Federal Reserve Chairman Ben Bernanke, often acknowledge the problem of increasing inequality but put forward education and training as a silver bullet that will solve the problem.

Generally absent from this approach is any focus on reforming the labor market to improve the quality of low- and moderate-wage jobs. While some proponents of the make-work-pay strategy are simply agnostic on labor-market reform, others openly oppose reforms they characterize as "intervening" in the labor market.

The economic history of the last half a century in the United States suggests the agnostic approach will do little to promote shared prosperity. As MIT economists Frank Levy and Peter Temin have recently shown in an important National Bureau of Economics Research working paper, a greatly diminished role for labor-market institutions in promoting shared prosperity marks a significant difference between the recent decades of rising inequality in the United States and the immediate post–World War II period of mass upward mobility, when institutional concerns were at the forefront.

Of course, education, training, and in-work supports offer genuine benefits to low-wage workers. Where these policies are sufficiently generous and accessible, they can make a substantial contribution to improving the quality of life of low-wage workers. Nevertheless, an exclusive focus on low-wage workers rather than the failings of low-wage jobs has important limitations. The reality is that mobility out of low-wage work is surprisingly low. Most low-wage workers are adults already well into their work lives, not young people just starting out their careers. Recent research suggests that growth in low-wage (and very high-wage) jobs outpaced growth in middle-wage jobs in the 1990s, and projections of future employer demand suggests that most of today's low-wage occupations will be at least as numerous in the future as they are today.

More than 40 million jobs in the United States—about one in three—pay low wages. Even though expanding low-wage workers' access to high-quality skills training and education will help more low-wage workers move into better jobs, low-wage jobs constitute such a large share of jobs in the economy that expanded access to training and education provide only one prong of a multipronged strategy necessary to maintain and expand the middle class.

An approach based on strengthening labor-market institutions complements, rather than conflicts with, the make-work-pay agenda. Key elements of such an approach include enforcing and enhancing existing labor standards such as the minimum wage and other wage and hour standards, and establishing new basic labor standards, such as minimum guarantees of paid vacation, sick pay, and parental leave. Another essential element is the strengthening and encouraging of collective bargaining through greater unionization. By improving the bargaining power of low-wage workers, unionization promotes better pay, benefits, and working conditions.

In a new research study, we, along with Margy Waller and Ben Zipperer, take a closer look at the impact of unionization on the pay and benefits of low-wage jobs. The data suggest that even after controlling for differences between union and nonunion workers, union representation substantially improves the pay and benefits offered in what are otherwise low-paying occupations. On average, in the 15 important low-wage occupations we analyzed, unionization raised workers' wages by just over 16 percent—about $1.75 per hour—compared to similar, but nonunion, workers. The union impact on health-insurance and pension coverage in low-wage jobs was even bigger. Union workers in low-wage occupations were 25 percentage points more likely to have employer-provided health insurance, as well as 25 percentage points more likely to be in an employer-provided pension.

These union effects are large by any measure. Consider that between 1996 and 2000, a period of sustained low unemployment that helped to produce the best wage growth for low-wage workers in the last three decades, the real wage of 10th percentile workers rose, in total, about 12 percent. By comparison, at 16 percent, the union wage effect was one third larger than the full impact of four years of historically rapid real wage growth. Over the same boom period in the 1990s, health and pension coverage among the bottom fifth of workers rose only about three percentage points for health insurance (up 3.2 percentage points) and pensions (up 2.7 percent), about one-eighth of the impact of unionization on health and pension coverage among low-wage occupations we analyzed. The union effects are particularly impressive given the widespread belief that many of the jobs we examined are inherently incapable of providing decent pay and benefits.

The National Labor Relations Act, enacted by Congress in 1935, declares that it is the policy of the United States to encourage collective bargaining and to protect "the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection." While the NLRA remains on the books, unionization has steadily declined in the United States, in large part because of a failure to actively encourage and protect workers' full freedom of association.

The findings of our study demonstrate that the exercise of these basic and long-standing rights results in better wages and benefits for low-wage workers. Our findings complement other research, much of it summarized in the recent book What Do Unions Do? A Twenty-Year Perspective, suggesting that unions reduce employee turnover and wage inequality, and increase access to sick pay and annual leave. Taken together, these positive effects of collective bargaining argue that unionization is a key element of an effective strategy to build a stronger and more inclusive economy.

In this sense, unionization does more than boost wages. It also promotes social inclusion—the ability for workers, even those in low-wage occupations, to participate fully in the social and economic life of their communities.

Given the prevalence of low-wage jobs without benefits in our labor market, and the likelihood that these sectors will grow rather than decline, some attention to the strategy of improving the jobs is critical to strengthening our economy and communities. Unless these jobs are improved, our nation will permanently consign a large portion of workers in the United States to bad jobs. If this happens, we will be weaker as a nation.

This article is available under a Creative Commons license.

Sunday, March 08, 2009

Episcopal Diocese of Northern Michigan appoints Bishop who learned meditation and compassion from Zen Buddhists. The fucking conservatives get uptight

The Episcopal Diocese of Northern Michigan has elected Rev. Kevin Thew Forrester to be their bishop. Ruth Gledhill has good things to say about the new Bishop-elect on her blog for the Times in the UK. Sadly, some people are not happy.

Kevin Thew Forrester, The Episcopal Church's latest bishop-elect, is in trouble with the conservatives in the Anglican Communion because he has used the practices of Zen Buddhism to deepen his relationship with God and Jesus. He has also taken part in a ceremony that in the world of Buddhism is described as a 'lay ordination' but in which there is no laying-on of hands and which is a ceremony about embracing a life of compassion that bears absolutely no resemblance to ordination as Christians understand it.

Back in the 1970s, my own father in his ministry as a deeply-orthodox Anglican clergyman used to go for study retreats to Mirfield, the UK's main centre at the time of Anglo-Catholic contemplative spirituality. His spiritual director there suggested he learn Zen techniques of meditation to help him on his Christian spiritual journey. For three years, at my request he took me with him to the Zen yoga classes in a little school hall outside Uttoxeter. I started at about 12. This was the 1970s in remote Staffordshire, so there were no candles, no incense, just dusty bare floorboards and baking oil-fired radiators. We had an exotic young woman teacher with mirrored skirts who seemed to come from another planet. Our silences were punctuated by the sounds of mooing cows clomping by at milking time. The practices I learned there serve me to this day.

The conservatives at Stand Firm are making a huge issue of this. Perhaps I should visit with the Zen Buddhists, but what the fuck is their problem?

Thursday, March 05, 2009

James Dobson resigns as chair of Focus on the Family

James Dobson has resigned as chair of Focus on the Family, the conservative Evangelical organization.

Some say that his resignation and the broader defeats that conservative Evangelicals have sustained may well do Focus on the Family in. That would be the best outcome.

However, FoF may not die, as Richard Land (chair of the Southern Baptist Convention) says in the conservative newspaper Washington Times:

"There's no one with quite the niche Dobson has," said Mr. Land, who also made Time magazine's list. "He's not a minister but a psychologist. That puts him in a unique category. No one person will succeed him. You'll see a broader group of leaders with their own constituencies, but not a narrow band."

But, he cautioned, "Anyone who thinks evangelicals are going away as a social force is smoking something illegal."

That, perhaps, is an alternative that we can live with. An author at US News argues that Dobson's cult of personality kept FoF from connecting with younger Christians, effectively making the organization irrelevant. I would prefer that FoF die completely, but having them finally embrace global issues that are of genuine concern to Christians would also be acceptable.

Meanwhile, good riddance to Jim.

Wednesday, March 04, 2009

Academic endowments: the curse of hoarded treasure

A Businessweek article argues that U.S. universities are cutting budgets and shortchanging today's students to risk what's left of their endowments in financial markets. Harvard relies on its endowment for 30% of annual operating funds, and Yale gets 45% of its annual operating budget from the endowment.

Is there a better way? There could be. Here's an idea: Maybe rich universities should act more like companies, which somehow manage to operate without endowments. Universities could raise just as much money from wealthy alumni and other donors as they do now, but they wouldn't hoard it in a great big piggy bank. They'd spend it as it came in, the way companies spend their revenue on current needs.
Why must universities Hoard money?

Most universities that aren't super-wealthy already do behave like companies because they have little choice: They don't pile up endowments because they have urgent current needs for the money. Take California State University at Long Beach, where about a third of undergraduates are first-generation college students. The school does raise money from alumni and other sources, but it puts most of the proceeds to use right away for such purposes as scholarships. In a Feb. 27 interview, President F. King Alexander said: "Our students need that money. We're not wealthy enough to sock it away when we have so many needs on our campus right now."

Any ordinary company that followed the money-hoarding strategy embraced by such institutions as Harvard, Princeton, Yale, and Stanford would soon receive an inquisitive letter from the likes of raider Carl Icahn, who would want the CEO to explain why he or she couldn't find anything more useful to do with the money than stash it away. It's a fair question, both for companies and for universities.

The most frequent argument for having a big endowment is that it's supposed to tide schools over tough times. It sure isn't working out that way. True endowment funds can't be spent even in an emergency; only the cash income and capital gains from them can be spent. (Does anyone remember what capital gains are these days?) So-called quasi-endowment funds can be drawn down if necessary, but universities seem loath to do so even in the current circumstances, as if preserving capital is a higher priority than preserving academic programs.

Some of the larger and richer universities made things worse for themselves by investing in private equity and other illiquid investments that are harder to get out of. During the boom times, that seemed like a good strategy. Yale and Harvard's investment managers were highly regarded and became a bit like superstars.

The article also argues that assuming living standards continue to rise, saving donations for the endowment, as opposed to spending them in the general fund, can be tantamount to robbing present day students to give to future ones.

This is potentially an issue for many nonprofits, such as churches. The Episcopal Church has an endowment. Given that we are not a rapidly growing church in general, I'd argue that it's justifiable to continue to fund our endowments. However, one could make a counterargument to that.

Anyway, in closing:

Human foibles may be a better explanation for the accumulation of huge endowments, Hansmann seems to conclude. On the supply side of funding, he writes, "many donors restrict their gifts for use as endowment, not to advance education and knowledge, but to purchase a bit of personal immortality."

On the demand side, boards of trustees may solicit funds for endowment rather than current spending simply because they like the idea of presiding over a big pile of money: "It may be that, consciously or unconsciously," he writes, "university trustees tend to focus on the size of the university's retained earnings (that is, its endowment) as a measure of the success of the management of the institution." That amounts to collecting money for money's sake. Adds Hansmann: "One sometimes has the sense that universities compete among themselves to have the largest endowment."

Memo to the board of trustees: You're supposed to be running a service business here, not piling up treasure.

NYT Op Ed: How Words Could End a War

A New York Times op ed by an anthropology professor argues that symbolic gestures, such as Hamas recognizing Israel's right to exist or Israel apologizing for the displacement of civilians in the 1948 war, can have huge effects on the willingness of adversaries to compromise. Professor Atran argues that these symbolic gestures are more likely to bring peace than offers of material rewards - something that Western negotiators have so far failed to realize.

AS diplomats stitch together a cease-fire between Hamas and Israel, the most depressing feature of the conflict is the sense that future fighting is inevitable. Rational calculation suggests that neither side can win these wars. The thousands of lives and billions of dollars sacrificed in fighting demonstrate the advantages of peace and coexistence; yet still both sides opt to fight.

This small territory is the world’s great symbolic knot. “Palestine is the mother of all problems” is a common refrain among people we have interviewed across the Muslim world: from Middle Eastern leaders to fighters in the remote island jungles of Indonesia; from Islamist senators in Pakistan to volunteers for martyrdom on the move from Morocco to Iraq.

Some analysts see this as a testament to the essentially religious nature of the conflict. But research we recently undertook suggests a way to go beyond that. For there is a moral logic to seemingly intractable religious and cultural disputes. These conflicts cannot be reduced to secular calculations of interest but must be dealt with on their own terms, a logic very different from the marketplace or realpolitik.

Across the world, people believe that devotion to sacred or core values that incorporate moral beliefs — like the welfare of family and country, or commitment to religion and honor — are, or ought to be, absolute and inviolable. Our studies, carried out with the support of the National Science Foundation and the Defense Department, suggest that people will reject material compensation for dropping their commitment to sacred values and will defend those values regardless of the costs.

In our research, we surveyed nearly 4,000 Palestinians and Israelis from 2004 to 2008, questioning citizens across the political spectrum including refugees, supporters of Hamas and Israeli settlers in the West Bank. We asked them to react to hypothetical but realistic compromises in which their side would be required to give away something it valued in return for a lasting peace.

All those surveyed responded to the same set of deals. First they would be given a straight-up offer in which each side would make difficult concessions in exchange for peace; next they were given a scenario in which their side was granted an additional material incentive; and last came a proposal in which the other side agreed to a symbolic sacrifice of one of its sacred values.

For example, a typical set of trade-offs offered to a Palestinian might begin with this premise: Suppose the United Nations organized a peace treaty between Israel and the Palestinians under which Palestinians would be required to give up their right to return to their homes in Israel and there would be two states, a Jewish state of Israel and a Palestinian state in the West Bank and Gaza. Second, we would sweeten the pot: in return, Western nations would give the Palestinian state $10 billion a year for 100 years. Then the symbolic concession: For its part, Israel would officially apologize for the displacement of civilians in the 1948 war

Indeed, across the political spectrum, almost everyone we surveyed rejected the initial solutions we offered — ideas that are accepted as common sense among most Westerners, like simply trading land for peace or accepting shared sovereignty over Jerusalem. Why the opposition to trade-offs for peace?

Many of the respondents insisted that the values involved were sacred to them. For example, nearly half the Israeli settlers we surveyed said they would not consider trading any land in the West Bank — territory they believe was granted them by God — in exchange for peace. More than half the Palestinians considered full sovereignty over Jerusalem in the same light, and more than four-fifths felt that the “right of return” was a sacred value, too.

As for sweetening the pot, in general the greater the monetary incentive involved in the deal, the greater the disgust from respondents. Israelis and Palestinians alike often reacted as though we had asked them to sell their children. This strongly implies that using the standard approaches of “business-like negotiations” favored by Western diplomats will only backfire.

Many Westerners seem to ignore these clearly expressed “irrational” preferences, because in a sensible world they ought not to exist. Diplomats hope that peace and concrete progress on material and quality-of-life matters (electricity, water, agriculture, the economy and so on) will eventually make people forget the more heartfelt issues. But this is only a recipe for another Hundred Years’ War — progress on everyday material matters will simply heighten attention on value-laden issues of “who we are and want to be.”

Fortunately, our work also offers hints of another, more optimistic course.

Absolutists who violently rejected offers of money or peace for sacred land were considerably more inclined to accept deals that involved their enemies making symbolic but difficult gestures. For example, Palestinian hard-liners were more willing to consider recognizing the right of Israel to exist if the Israelis simply offered an official apology for Palestinian suffering in the 1948 war. Similarly, Israeli respondents said they could live with a partition of Jerusalem and borders very close to those that existed before the 1967 war if Hamas and the other major Palestinian groups explicitly recognized Israel’s right to exist.

Remarkably, our survey results were mirrored by our discussions with political leaders from both sides. For example, Mousa Abu Marzook (the deputy chairman of Hamas) said no when we proposed a trade-off for peace without granting a right of return. He became angry when we added in the idea of substantial American aid for rebuilding: “No, we do not sell ourselves for any amount.”

But when we mentioned a potential Israeli apology for 1948, he brightened: “Yes, an apology is important, as a beginning. It’s not enough because our houses and land were taken away from us and something has to be done about that.” His response suggested that progress on sacred values might open the way for negotiations on material issues, rather than the reverse.

We got a similar reaction from Benjamin Netanyahu, the hard-line former Israeli prime minister. We asked him whether he would seriously consider accepting a two-state solution following the 1967 borders if all major Palestinian factions, including Hamas, were to recognize the right of the Jewish people to an independent state in the region. He answered, “O.K., but the Palestinians would have to show that they sincerely mean it, change their textbooks and anti-Semitic characterizations.”

Making these sorts of wholly intangible “symbolic” concessions, like an apology or recognition of a right to exist, simply doesn’t compute on any utilitarian calculus. And yet the science says they may be the best way to start cutting the knot.

Earl Ofari Hutchinson: Shut up about Rush Limbaugh

Rush Limbaugh, the Mafia Don of the Republican Party, has come under several verbal attacks by Democrats - and actually, Michael Steele, the new Republican Party chairman, made a disparaging remark and later had to apologize. There's plenty of good reasons to hate Rush: he's foolish, bigoted, etc.

However, Earl Ofari Hutchinson, writing for the American Chronicle, argues that:

By making Limbaugh bigger than life in American politics, it gives steam to his inflammatory campaign of rumors, half truths, distortions, and flat out lies about Obama, liberals, and now Steele. Limbaugh´s aim with Steele is to further cow the GOP into line; the line that forms behind him.

At the start of his tenure as RNC chair, Steele had the good sense to know that kowtowing to Limbaugh was a prescription for even bigger disaster for the GOP. He resuscitated the old Bush line circa 2000, and talked about making the GOP a party of big tent diversity. Then like Bush he promptly forgot it.

Steele, by the way, is the Republican Party's first Black chairman. Hutchinson argues that the Republican Party's core demographic of white blue collar, heartland and deep South voters is only 40% of the entire US electorate. That percentage is shrinking, and the hard core Republicans are unwilling or unable to shift to a platform that would appeal to others. They've already made themselves obsolescent. The Democrats are better off focusing on governing well and leaving the Republicans to whatever fate they choose.

Tuesday, March 03, 2009

Justice for sale in America

The NY Times has an article about how the CEO of Massey Coal, a large coal miner based in West Virginia, bought a state Supreme Court justice. Again, please note that I changed the title to something less flattering.

MATEWAN, W.Va. — Don L. Blankenship, the chief executive of the nation’s fourth-biggest coal mining company, is not shy about putting his money where his mouth is when it comes to West Virginia politics.

In 2004, he spent $3 million on tough advertisements attacking a justice of the State Supreme Court who was seeking re-election. Some of the advertisements said the justice had agreed to free a sex offender.

“I thought we would beat him more easily than we did,” Mr. Blankenship said, reflecting on how hard it was to persuade voters.

Brent D. Benjamin won that election and went on to join the 3-to-2 majority that threw out a $50 million jury verdict against Mr. Blankenship’s company, Massey Energy.

The question of whether Justice Benjamin should have disqualified himself is now before the United States Supreme Court.

The case, one of the most important of the term, has the potential to change the way judicial elections are conducted and the way cases are heard in the 39 states that elect at least some of their judges. In many states, campaigns for court seats these days rival in both expense and venom what goes on in, say, a governor’s race. Yet it is commonplace in American courtrooms for judges to hear cases involving lawyers and litigants who have contributed to or spent money to support their campaigns.

Mr. Blankenship, a large man with small eyes that betray nothing, does not often sit for interviews. When ABC News tried to ask him questions last year about pictures showing him in Monte Carlo with yet another State Supreme Court justice, he shoved a cameraman and suggested that someone was “liable to get shot” if the journalists persisted.

But Mr. Blankenship seemed eager to tell his side of things over a barbecue chicken lunch in a restaurant here and in the warren of trailers that serve as his office just over the Kentucky line. It is just foolishness, he said, to think that he had spent millions of dollars to gain an advantage in a particular case.

“I’ve been around West Virginia long enough to know that politicians don’t stay bought, particularly ones that are going to be in office for 12 years,” he said, referring to the terms of State Supreme Court justices. “So I would never go out and spend money to try to gain favor with a politician. Eliminating a bad politician makes sense. Electing somebody hoping he’s going to be in your favor doesn’t make any sense at all.”

“Massey always has cases,” he added. Indeed, the company is a frequent plaintiff, and it has attracted lawsuits over environmental, workplace safety and labor issues.

“If someone wanted to accuse me of something,” Mr. Blankenship continued, “they would accuse me of trying to elect Benjamin to rule in our favor in hundreds of cases, not one case.”

But that is precisely what some people here, including a retired member of the State Supreme Court, say happened. “We have one justice who was bought by Don Blankenship,” Justice Larry V. Starcher said of Justice Benjamin in 2006, while the two men were colleagues on the court. “It makes me want to puke.”

When the United States Supreme Court agreed to hear the case in November, much of the legal establishment cheered. Here was an opportunity, bar associations and law professors said, to draw a line separating big money from judicial decision making.

But briefs from Massey and its supporters suggest that the case, Caperton v. A. T. Massey Coal, No. 08-22, which will be argued on March 3, is more complicated than it first appears.

Mr. Blankenship was, for starters, not a party to the state court fraud case that gave rise to the $50 million verdict. He is not an especially large shareholder of Massey, and he does not stand to win or lose very much — about $175,000, by Massey’s estimates — from its outcome.

On the other hand, Massey has paid Mr. Blankenship handsomely over the years — $23.7 million in salary, bonus, options and other compensation in 2007, by some estimates — and it is hard to disentangle his interests from those of the company.

His direct contribution to the Benjamin campaign was only $1,000, although that is the maximum allowed by law, and he spent most of the $3 million, paid from his own pocket, on television advertisements aimed at defeating the incumbent justice, Warren R. McGraw.

Mr. Blankenship said he was surprised they were not even more effective. “When you’ve got to choose between a guy who released a pedophile and a coal executive, it’s a tossup,” he said.

Mr. Blankenship, who has long been an active participant in the state’s political life, said he had no social or other relationship with Justice Benjamin, who has voted against Massey at least five times.

“Brent Benjamin, rightfully or wrongfully, thinks I had nothing to do with his election,” Mr. Blankenship said.

Justice Benjamin, now the court’s chief justice, declined to be interviewed for this article. In rulings discussing whether he should have disqualified himself from the case, he said he could be fair and impartial.

In a memorandum on Jan. 30, though, Chief Justice Benjamin did temporarily disqualify himself from all Massey cases, saying “it would be personally and judicially disrespectful to the United States Supreme Court and its justices for me to proceed.”

Lawyers for Massey suggest that the case is a Trojan horse whose real intent is to do away with judicial elections because any spending in such elections is suspect. “Any impartiality concerns raised by campaign spending are inherent in the state’s decision to hold judicial elections,” James Bopp Jr. wrote in a brief supporting Massey for the James Madison Center for Free Speech.

The briefs on Massey’s side add that states should be allowed to run their legal systems as they see fit. It would be impossible, they say, to fashion a sensible rule to determine when contributions or independent expenditures should require recusal under the federal Constitution’s due process clause. The other side says it has no problem with elections or financial support. But in rare cases involving especially large amounts from the people involved, they say, judges should be required to disqualify themselves.

Mr. Blankenship’s advertisements, which said Justice McGraw had released a pedophile, were rough and arguably misleading. They concerned a youth who had been sexually abused from the age of 7 by two adult family members and a teacher before going on, at the age of 14, to abuse a younger half-brother. The youth was released on probation soon after he turned 18.

“I’m just a West Virginia country lawyer running for office,” Justice McGraw said. Of the advertisements, he said: “They say our court set a child molester loose in our schools. It’s absolutely untrue. I’m embarrassed to go out in public. They’ve absolutely destroyed me.”

Mr. Blankenship cheerfully conceded that his real objection was to Justice McGraw’s rulings against corporate defendants. “Being the street fighter that I am,” he said, he had instructed his aides to find a decision that would enrage the public.

When they returned with an unsigned opinion in the sex abuse case, which Justice McGraw had joined, Mr. Blankenship said he knew he had hit pay dirt. “That killed him,” Mr. Blankenship said of Justice McGraw, smiling.