The Progressive Ensign

insights and analytics to build an economy that works for all

Category: Conflicts of Interest

AT & T Wins Time-Warner – Americans Lose Free Press

 

Photo: Free Press

A federal court judge approved the $85 billion bid by AT &T of Time – Warner, creating a huge vertically integrated media giant.  The judge found no need for the kind of conditions placed on the Comcast acquisition of NBC Universal in 2011, or ensuring a free press.  Though both cases are quite similar in that AT & T and Comcast are both major media companies acquiring content providers and news organizations (NBC, and CNN).  In approving the Comcast – NBC bid, the judge laid out detailed conditions to protect consumers, requiring adherence to net neutrality for Internet supported content providers and assistance for low income users. Since the Comcast – NBC merger Comcast has violated several provisions of the agreement as outlined by former FCC commissioner Mignon Clyburn and Senator Richard Blumenthal including: not adhering to network neutrality in providing channels to consumers, slow implementation of low income Internet assistance programs, not providing smaller cable channels with fair rates to access regional sports networks and discriminated against Bloomberg Television (a competitor of CNBC).   Clyburn and Blumenthal in their op-ed piece pose three key questions to be answered in every major merger (our answer):

  1. How will consumers be affected? Negatively by lack of competition
  2. What will this do to competition in the industry? Reduce competition significantly
  3. What will it mean for small businesses? Small businesses will be squeezed out of the market

For some reason, the court in the AT & T – Time Warner case did not seem interested in answering these questions related to safeguarding consumers, businesses or freedom of the press. Federal regulators found in the Comcast – NBC bid the need for 150 conditions to be placed on the merged corporate organization.

Today, the court saw a need for no conditions?  Why? When we have a deregulation federal government policy wave rolling across the country today it is even more imperative that conditions be in place if these giant mergers are to be approved.

Next steps:

Our position is the merger juggernaut needs to be stopped now, and this merger not approved – later we will have to break it up anyway.  Mergers contribute to lack of jobs as well which hurt wage gains by workers.  Media concentration limits access to information and choices for media coverage. In 1983, 90 % of media, entertainment and distribution markets were controlled by 50 companies, today, there are 6 major players:

By approving the AT &T – Time-Warmer deal the court is giving a green light to deals now under review like the Disney bid (Comcast biding too) for 21st Century media which would create yet another huge conglomerate strangling competition and reducing the number of news sources. Other major Internet players are waiting in the wings like Apple, Google, Amazon and Facebook who are flush with cash and looking to control both the Internet, broadcast and film content and distribution.

We have said that deals like this need to be reviewed in supporting the common good ensured by freedom of the press.  This AT &T deal should not be approved on media concentration and press limitation grounds.  Jefferson and Madison observed correctly that a democracy can not long survive without a well-informed citizenry making decisions based on multiple points of view. Major corporations win in deals like the AT &T – Time Warner merger, the American citizen loses.

Maybe We Do Make Choices for the Common Good – More Than We Think

 

Image: Your Little Planet

James Madison was concerned that the basic character of man was self-interest and he would not act if in a power position for the common good.  While, this self-interest aspect of people is turbo charged in capitalist nations, it may not be the choice many of us make when we see the light of the common good and make choices that benefit all of us. Certainly, Madison put great faith in a diverse, well informed citizenry making good choices for their representatives who would act with ‘enlightened interest in the public good’.  Our government of checks and balances provides a way for the this enlightened good idea to be discovered from free speech and forcing self-interested people to recognize they had gone too far and needed to see the needs of all the people.

Our media has taken the negative perspective (it sells advertising and gains attention) that there is a tragedy of the commons, which Prof Garrett Hardin popularized in 1968, that people have a tendency to always go for the self–interest choice, i.e. overgrazing a plot of land to make more money from the ever increasing number of livestock that a herder wants to graze causing overgrazing and killing the life support ability of the land.  There are countless examples of over farming from large regions like the Midwest in the 1930s causing huge dust storms and forcing migration of farmers to California and the West.  Today, we see self-interest to the max in stock buy backs where corporations purchase their own stock to reduce the number of shares and drive the price up, so executives and shareholders would make more money – at the expense of employees not receiving raises, investments in research to increase productivity and reduce product prices or increasing investments in employee training and development.

Yet, maybe we do make the choice for the common good when offered.  Lecturer, Dylan Selterman, at the University of Maryland, asked his students an extra credit question if they would like to have 2 or 6 extra credit points to your final grade, but if 10 % of the students asked for 6 extra points none would receive them.  Class after class would go over the 10 % limit, until he provided a third choice – altruistic – you can select zero points.  After offering the third choice enough selected the zero point or two-point option so that would be under the 10 percent limit. The classes learned if they were not too greedy with their extra credit point choice they all could win.

So, how does choice and information play a role in developing and implementing common good policy?  A 2008 classic study by consumer researchers found that if hotel guests were provided a message that said ‘the majority of guest reuse their towels’ then towel recycling would increase dramatically. While, today we are used to recycling towels there were two elements:  one – providing information that towel recycling would reduce water usage and two – you have a choice to reuse or not reuse your towel.

Source: Journal of Consumer Research – 2008

The common good dilemma in regulating industry is more challenging because of the profit motive and personal benefit in making more money by increasing profits and reducing costs.  For chemical factories, installing scrubbers and extra equipment to return cleaner air to the sky is a cost, while just using the air for their factory and workers is free. Yet, all people beyond the factory are hurt from air pollution.  Generally, penalties for violating air pollution standards, or court cases have been the only way to stop polluting behavior.  But is there another way; getting an industry sector to work together, see that in their own interests if they all reduce air pollution they will benefit because they all breathe cleaner air – and they all have the similar costs if they all install equipment or even share technology and air pollution equipment in a group purchase.  Maybe when everyone is taking action, it is seen as the right choice and reduce costs for all with the benefit that everyone will enjoy clean air. Plus, if everyone is making the same investment, the costs will be similar across the industry and no single company is hurt financially or by Wall Street analysts.

What Happened to Our Common Good?

 

Image: Your Little Planet

Alexander Hamilton, James Madison and John Jay wrote a series articles in 1787 called the Federalist Papers defending the newly written Constitution. In Federalist Paper No. 57, Madison proposed to ‘first obtain for rulers men who possess the wisdom to discern, and most virtue to pursue the common good’. They were quite concerned that an overbearing majority would run over the needs of the public good or a minority group.  Or that a ruling class of the privileged and wealthy would use the tools of government to continue to gain more wealth at the expense of the common people.

Today a sense of the common good is almost non-existent in our political discourse as our federal government has become so partisan as to be completely inept at coping with the common problems facing Americans.  There is intense conflict between factions about our public interest in clean air, water and land, safe communities, equal economic opportunities, an open education system for all, justice for immigrants seeking to contribute to our country and being a leading light of democracy around the world.  On many issues, corporations, public interest groups and other nations are ahead of us by 10 – 20 years in solving many foundational issues of our time.

What happened to our shared sense of the Common Good?  One way to understand the loss of our common shared interest is in the lack of trust Americans feel in their democratic institutions that have the responsibility to protect and sustain our common interests and public good.

Source: Pew Research Center – 12/14/2017

There has been a slow and continuous decline in public trust since President Eisenhower until the ultimate low today during President Trump’s administration.

We see two major factors for the lack of trust.  One, is that economic inequality has been increasing over the last 60 years to the point where it is at the worst it has ever been since 1929.  Americans expect their government to be the rule keeper of a fair shot at economic opportunity not a bastion for the rich and powerful.  As wealthy donors have taken over control of both major parties, the influence of the average citizen has been reduced to nearly nothing except at the ballot box – but not in legislative policy.  A study by Professors Martin Gilens of Northwestern, and Benjamin Page of Princeton found that the opinion of the bottom 90 % made no difference in laws passed by Congress over a 20-year period. For example, the present GOP Administration is out of step with most Americans that want a clean environment even if there is an economic cost based on a Gallup poll. Americans know that the system is rigged as both candidates on the far left and far right, Bernie Sanders and Donald Trump gained great support by proclaiming that the economy and government was rigged against them.

The second major factor was the evolution of media and the Internet.  In the 1950s and 1960s families gathered around the television set to watch Walter Cronkite or Huntley and Brinkley bring them the news for the day.  These news anchors had teams of trained journalists on how to gather news, ensure airing of opposing views and investigation to reveal the facts of the story. As cable news programs became popular people drifted away from central network journalist supported news programs toward popular ‘viewpoint news’ programs like Fox News or CNN.  Then, from 1995 until today, the Internet was a catalyst for the growth of blogging, and ‘friend news’ which had virtually no formally trained journalists and limited understanding of the difference between facts and opinions.  Opinions spread virally through the Internet often with no foundation in formal fact gathering or fact finding investigation techniques. Today, we even have presidential spokespersons talking about ‘alternative facts’ to justify their policies or opinions.

We have come a long way from a shared common understanding of the facts to base opinions and policy ideas about. Unfortunately, the factional conflict is tearing at the foundations of our democratic institutions that keep our country free and protect the rights of all.

Next week, we will examine deeper how Madison and the founding leaders viewed factions and how to deal with them to keep new ideas coming yet keep the Union together.  They had ideas that are insightful for our situation today as they placed their trust in the people to make the right decisions when provided with good information and facts.

Consumer Protection Head Mulvaney Panders to PayDay Lenders

 

Photo: wikipedia.org

Mick Mulvaney, the interim head of the Consumer Financial Protection Bureau (CFPB)  told a group of banking executives yesterday that it was their job to persuade Congressman on policy decisions and when he was a Congressman he only talked to lobbyists who contributed to his campaign. At least he is honest about how corrupt his motivations are; he operates on ‘pay to play’ basis.  He does say that constituents are top on his list when they sit out in front of his office. But, who does he listen to and represent? His first priority should be consumer protection.

Since coming to the CFPB he has called off investigations into payday lenders, limited or cancelled investigations of banks and other lenders, reduced public access to information about financial services practices and now wants to end its independent funding from the Federal Reserve (to keep Congress from meddling in it investigations).

Based on his actions, not words we know now he works for the payday lenders not consumers. He received almost $63,000 for his campaign in 2017 from the Pay Day Lender lobbying association.  The Pay Day Lender group spent $4.175 million in 2014 on lobbying activity to keep its predatory practices going with limited restraints. Fourteen states have outlawed pay day lending completely while 36 states and the District of Columbia allow payday lending with some limiting the percentages charged.

Source: opensecrets.org

Payday lending markets to low income borrowers who can’t otherwise get access to a small loan, many do not have bank accounts and some are immigrants.  Most do not have good credit or limited credit records so they are willing to pay 400 % or 1209 % with fees for some loans. This practice is usury at its worst. The CFPB found that 4 of 5 loans were rolling debt into larger and larger loans forcing borrowers into a position of not being able to pay back the loan.  The agency fined ACE Cash Express $10 million for bullying practices forcing consumers into cycles of debt.  Major banks participate in this market too as Wells Fargo offers a ‘Direct Deposit Advance’ service for 120 %.

Next steps:

  1. Phase Out the Industry – just because these companies can do it does not mean we should make loan sharking legal. There are other answers, already 14 states figured this moral issue out.
  2. Micro Loan Model – the micro loans offered in emerging countries like India have been quite successful, charging fair interest fees using the Internet and cell phones to keep costs low, and credit counselors to teach borrowers good credit management practices. We need to help low income people learn about responsible credit management not make them prey for companies.
  3. Limit Lobbying Funding – Pay Day Lenders and other companies should be limited in the campaign funds they give to candidates to what citizens are limited to $2400. After all, based on the Citizens United decision if corporations are people then we should treat them like citizens not special entities.
  4. Directors and Government Leaders Recusal – Any government official with a financial interest from the last 5 years needs to recuse himself or herself from any decision making on the matter affecting the industry.
  5. Ethics Violation for Corruptions – any pay for play scheme even without a direct quid pro quo time frame is unethical, immoral and unjust. Any official changing government policy for an entity that they received funding from in the last 5 year should be found in violation of government ethics law, fined, released from his/her position and for severe offenses jailed.
  6. End Lobbyist Revolving Door – 75 % of lobbyists for Pay Day Lenders end up in government jobs, this practice needs to stop, with no lobbyist working in government for 10 years.  We noted how harmful this practice was in our blog on December 14th archive on the new FCC Chairman being a former cable industry lobbyist.

EPA Continues Attack on Health in Disguised Policy

 

Image: epa.gov

The EPA quietly has been planning a change to its policy on the use of scientific research to make it more ‘transparent and scientific’.  Their plan is to disregard any scientific research that uses confidential study data.  So, research into the health of American’s affected by fossil fuels with confidential health records of study patients would have to be redacted and made available for researchers from industry or universities taking industry funds. The process of de identifying patient data would cost millions of dollars.  The EPA is standing sound scientific research on its head by telling us they are making it more ‘scientific’ while they throw out studies like the ‘Six Cities’ 1993 study by Harvard University identifying a link between air pollution and premature deaths.  The new kill scientific data based studies policy will have broad ramifications across all policy areas, providing the EPA with the means to select whatever research it likes to relax regulations on industry behavior that will be harmful to our health.

Meanwhile, most of the energy industry is looking ahead investing in renewables:

Source: EIA, The Wall Street Journal, The Daily Shot – 3/13/18

The EPA is looking to protect the revenue streams of fossil fuel companies who are already in need of a change in their business models.

The American Lung Association reports that in 2017 that 40 percent of Americans still live in areas where the air is still unhealthy to breathe.  So, the EPA has more work to do, not relax regulations.

Next Steps:

It is clear what is happening with this new bogus policy, EPA leadership is working to dismantle the work of the agency over the past 20 years to protect American’s health, by undermining the scientific foundation of EPA policies and federal laws.  Our political leaders in Congress need to take a look further than next quarter’s profits for the fossil fuel industry and do its job of protecting the health of 125 million Americans breathing unhealthy air.  Our Insight Byte of March 15 in our Insight Byte Archive reviews how our economy related to the environment is interlocked and connected as well as our health.

Investigate Possible POTUS Violation of the Emolument Clause of the Constitution, Next Steps

[Image: The Daily Shot – Wall Street Journal]

The View:

POTUS has not committed to disclosing his federal tax returns, publishing a complete listing of business interests, obtained approval from the Ethics Office for complying with conflict of interest requirement in federal law or the Emolument Clause of the Constitution.  The Solution: He needs to immediately disclose his federal tax returns, put his business investments and company into a blind trust and develop a conflict of interest plan that is approved by the Office of Government Ethics. Today, a suit has been filed by a distinguished team of professors and litigators from the Citizens for Responsibility and Ethics in Government – CREW in US District Court in New York requiring that POTUS comply with the Emolument Clause of the Constitution.

The Story:

I still remember when I was ten years old, I wasn’t telling my Mom the truth about something. She could tell I was holding back, then sternly instructed: “If you are not doing anything wrong, then you don’t need to lie or cover it up”.  She was right and I learned a valuable lesson.

POTUS45 has decided not to place his private business into a blind trust as the Office of Government Ethics has recommended he do to eliminate all conflict of interest concerns and possible Emolument Clause violations.   Why not?

There are a number reasons why the American people are entitled to have a President (from any party) completely committed to his job, not constantly weighing conflicts of interest and setting himself up for extortion (and thereby threatening US interests):

  1. Full Time Job Commitment – without completely dropping his business interests he is going to be distracted consciously or unconsciously by the interests of his company versus the right policy or action for the American people. The President’s job is the most demanding job in the world, if he is committed to doing it he must sacrifice personal gain for service as Office of Government Ethics Director, Walter Shaub, has noted: “He’s going to be asking his own appointees to make sacrifices. He’s going to be asking our men and women in uniform to risk their lives in conflicts around the world. So no, I don’t think divestiture is too high a price to pay to be the president of the United States of America.”
  1. Conflicts of Interest – this is a basic business and organizational requirement, that he should never be in a position where his interests are being considering in weighing a course of action. He has properties in many cities in the US and the world, he will be making decisions that will enhance the value of his properties or possibly decrease the value.  For example, he has property in Scotland, a golf course on the beach, meantime the Scottish government decides to enforce shore environmental laws or place windmills out to sea (an idea being discussed now).  He sees this move as reducing the value of his property, so he drops funding to the Scottish government for military training. The point is that he can’t be dealing for his own interests at the same time he negotiating on behalf of our interests.
  1. Foreign Government Extortion – our President has a number of resorts all over the world, in Asia he has partnered with a business man who is running for office and connected to opposition groups to an existing government. Extortion may occur when a foreign government may say: if the US government does not provide funding for a government project, then the government may find the POTUS family owned resort in violation of government taxes owned, food safety violations, or zoning violations.  Even trumped up charges could be used to make our president think twice about doing the right thing for the US, and to possibly punish his partner.  Worse yet, the government may in prison the in-country business partner and make demands of the US government for his release such as a change in policy or to supply military assistance.
  1. Emolument Clause – he has just taken the oath of office declaring that he will ‘uphold the Constitution’ – ok good. The Emolument Clause Article 1 Section 9 Clause 8 states: “No title of nobility shall be granted by the United States: and no person holding any office of profit or trust under them, shall, without the consent of the Congress, accept of any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state.”  He can’t allow his sons (possibly nepotism law violation) or his businesses to accept remuneration or compensation from any foreign government official or employee – this clause is clear. Randall D. Eliason, a law professor at the Georgetown University Law School, and former Assistant United States Attorney for the District of Columbia, has observed that the clause is broader than a simple bribery condition, but also requires government officials to avoid the appearance of impropriety.

These are more than enough logical reasons for the President to place all his properties, investments and businesses into a blind trust – where he has no knowledge of whether his actions are increasing or decreasing their value.

The Solution:

  1. Disclosure of Federal Taxes – we don’t know where all his properties and investments are, under a bi-partisan investigation a subpoena would force disclosure of his business interests. Then, we and government ethics officials would be better informed in monitoring the President.
  1. Bi-partisan Investigation – next his investments need to be investigated for accuracy, possible foreign government links and contract conflicts. The present approach where his sons run his businesses, he pledges to make no new deals and then go back to it after he leaves office is not good enough to meet the ethics office standard.
  1. Ethics Office Plan Approval – he needs to work with the Office of Government Ethics, write up an acceptable plan that is approved by the ethics department. We ask all his appointees to do this, many have complied, Rex Tillerson. cabinet appointee for Secretary of State has worked closely with the ethics office and may lose as much as $ 7M, but he wants to serve the country well.
  1. Lawsuit Against POTUS – The Citizens for Responsibility and Ethics in Washington – CREW filed a civil complaint today in US District Court in Manhattan, finding that POTUS had violated the Emolument Clause of the Constitution. The CREW team includes: Harvard law professor Laurence Tribe, University of California-Irvine Law School Dean Erwin Chermerinsky and Fordham University law professor Zephyr Teachout, as well as Supreme Court litigator Deepak Gupta.

We the people he serves are looking for leadership on his part to set aside personal wealth and privilege to focus on being our President first, not second.

We deserve nothing less than full impartial commitment to the most important job in our country, otherwise conflicts of interest will dog his administration continuously impacting his ability to govern and lead the free world.

Editor Note: References for this post appear in the Research tab under Emolument Clause & Conflicts of Interest)

Update – Sen. Feinstein Calls Out Trump On China Trademark Approval – Feb 17 2017

“China’s decision to award President Trump with a new trademark allowing him to profit from the use of his name is a clear conflict of interest and deeply troubling,” said Sen. Dianne Feinstein (D-Calif.) in a statement. “If this isn’t a violation of the Emoluments Clause, I don’t know what is.”

Right after this approval he changed his policy moving to the One China Policy – will he stay with this position, or when Taiwan gives him something will he shift to recognizing them?

http://www.politico.com/story/2017/02/trump-china-trademark-dianne-feinstein-235147

 

 

Powered by WordPress & Theme by Anders Norén