Tuesday, December 6, 2016
The political discourse of this election cycle, and the respective postures of the two main political parties, suggest that social justice and economic prosperity are in opposition to one another. At times, it seems that some believe pursuing racial and gender equality are (at best) distractions from “real problems” like jobs and the economy. Others seem to think any form of business or industrial development is essentially sanctioning the destruction of the Earth and its people. Both are wrong.
Equity and fairness are not anathema to economic progress. In fact, in the big picture, they are essential. There is nothing inconsistent about being pro-business and supporting social justice. One can believe in social justice and still think there are too many regulations that hamper businesses. There are, for example, regulations that disproportionately keep women and minorities from opening their own businesses. And there are laws and regulations that create barriers to entry and help maintain market power businesses where competition is both warranted and necessary..
My colleague, Haskell Murray recently posted Faith and Work in Universities, which lists some resources related to religion and scholarly activity, particularly as it related to business. This is a worthwhile discussion, and far too often we see discussions of business and morality as separate areas – silos related to separate and competing goals.
This is not unlike the separation in environmental law and energy law I discussed in a recent short piece about the changing role of natural gas in the clean energy movement where I noted:
Electricity generation for industrial and residential consumers was one of the major drivers behind environmental regulation, but despite this long-standing connection, environmental law and energy law have often operated in separate silos. This fact has led to disjointed and ineffective policy and a poor understanding of the full scope of legal, regulatory, and business issues in the energy sector. (footnote omitted)
This is true in the broader business and social justice realm, as well. As Haskell’s compilation shows, though, that business and social justice (including, but not limited to, religion) are interrelated is hardly novel. When Pope Francis visited the U.S. Congress, he explained:
The right use of natural resources, the proper application of technology and the harnessing of the spirit of enterprise are essential elements of an economy which seeks to be modern, inclusive and sustainable. "Business is a noble vocation, directed to producing wealth and improving the world. It can be a fruitful source of prosperity for the area in which it operates, especially if it sees the creation of jobs as an essential part of its service to the common good" (Laudato Si', 129).
Social justice and economic development are not either-or propositions, despite what recent election choices may have implied. There is, I think, a vast underrepresented center in America that cares both about pragmatic economic decisions and basic fairness and equity. This past election, I hope and believe, demonstrated more about the priorities of various voters rather than clear divides about the issues themselves. To be sure, there are large numbers of people for whom this is not true -- there is some fundamental disagreement out there -- but I think the vast majority of people are decent caring people who have different ideas about the hierarchy of what is most important to move the country forward.
This is not to ignore the repugnant behavior, language and acts, from some people before and since the election. There have been outrageous acts of violence and intimidation. Shortly after the election, some of our law students were victims of such acts. As examples, one student was spit upon and racial epithets were shouted at another. There is no place hateful behavior, and it is unacceptable. A recent speaker invited to our campus said hateful and hurtful things about a valued faculty member. Free speech is a virtue, but this is simply not how we should treat each other, and it is shameful. And although racism, misogyny, anti-LGBT and anti-religious sentiment, and xenophobia have been part of virtually every government at some point, no government has found lasting peace or prosperity based on any of those things.
My point is not intended to suggest a Pollyanna-esque view of the world. I am not blindly asking, “Can’t we all just get along?” I am asking whether we can agree to try.
It's going to take a lot of work, and there are no simple answers. But we must start somewhere. Here are three modest principles to get started moving forward together:
- Stop succumbing to base and visceral reactions. We need to stop assuming everyone is lying and cheating and taking something from us so that we notice those who really are lying and cheating and taking something from us.
- Be skeptical of uncompromising absolutists. There are some absolutes in this world, to sure, but not nearly as many as we have been led to believe. And this is not a conservative or liberal issue. It’s an issue. Anyone who thinks they are right all the time is wrong.
- Reaffirm our nation’s founding principles and self-evident truths, that all people are “created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” I think it is right to say we have evolved from knowing such rights belong to men to know such rights belong to us all.
These principles require seeing compromise as valuable. Virtually all of us agree about that, because most of us have jobs and friends and loved ones. Compromise is a big reason why or we wouldn’t have those people in our lives. Compromise does not mean sacrificing one’s beliefs or values. It means recognizing the value and autonomy of others. It means seeing the mutual value of others in the world around us. But also, to be clear, compromise is not one side listening and being nice while the other side sits obstinately waiting to get what they want. Compromise requires that both sides work and give up something. Compromise is not, and cannot be, unilateral disarmament.
Let’s debate vigorously the best way to achieve economic prosperity. Let’s argue respectfully about how best to care for the nation’s poor and elderly. But let’s value and respect each other. In short, let’s get out of our own way. We have work to do.
Tuesday, November 29, 2016
When it comes to regulations and economic policy, I am quite conservative. Not a Republican-type conservative (probably more Libertarian in a political sense), but in the sense that I often advocate for less regulation, and even more often, for less changes to laws and regulations. People need to be able to count on a system and work within it. As such, whether it is related to securities law, energy and environmental law, or other areas of the law, I find myself advocating for staying the course rather than adding new laws and regulations.
For example, a while back, co-blogger Joan Heminway quoted one of my comments about securities law, where I noted "my ever-growing sense that maybe we should just take a break from tweaking securities laws and focus on enforcing rules and sniffing out fraud. A constantly changing securities regime is increasingly costly, complex, and potentially counterproductive."
After the BP oil blowout of the Deepwater Horizon well in the Gulf of Mexico, I similarly argued that we should approach new laws with caution, and that we might be better served with existing law, rather than seeking new laws and regulation in a hasty manner. I explained,
[T]here are times when new laws and regulations are necessary to handle new ways of perpetrating a fraud or to address new information about what was previously viewed as acceptable conduct. But often, new laws and regulations are not a reaction to new information or technology; they are a reaction to a unique and unfortunate set of facts that is more likely related to timing or circumstances than an emerging trend. Other times, it is a lack of enforcement of existing protections meaning the problem is not the law itself; it is the enforcement of the law that is the problem.
Choosing a Better Path: The Misguided Appeal of Increased Criminal Liability After Deepwater Horizon, 36 Wm. & Mary Envt'l L & Pol. Rev. 1, 19 (2011) (footnotes omitted). More recently, I have taken the same view with regard to hydraulic fracturing regulations:
There may well be a need for new regulations to improve oversight of hydraulic fracturing and other industries that pose environmental risks, but new regulations do not necessary lead to better oversight. . . . There is a strong argument that the problems related to hydraulic fracturing (and, for that matter, coal extraction, chemical storage, and hazardous waste operations) are more linked to a lack of enforcement and not a lack of regulation.
Facts, Fiction, and Perception in Hydraulic Fracturing: Illuminating Act 13 and Robinson Township v. Commonwealth of Pennsylvania, 116 W. Va. L. Rev. 819, 847 (2014).
I swear I have a point, beyond just quoting myself. Here it is: I'd like to urge the President-Elect and the 115th Congress to sit back and stay the course for a little bit to see where things are headed. I have a strong suspicion things are headed in the right direction from an economic perspective. This is not to suggest that there are not holes in the economy or people in desperate need of jobs, training, and education (there are -- I live in West Virginia. I know.). But with a White House and a Congress controlled by the same party, the GOP play should be simply: we're in charge now, and the economy is ready to move ahead.
We have already seen it -- the stock market is up and economic indicators look better. And there has been no new legislation or regulation (or repeals of either). It's just consumers believing the economy will get better. And consumer confidence is key to expansion. Who cares that it started before the election? What matters is whether we're going in the right direction. And it seems we are. The Financial Times reported today:
A gauge of US consumer sentiment has hit a post-recession high, painting a positive outlook ahead of the key holiday shopping season as recent data point to a strengthening US economy.
The Conference Board’s consumer confidence index climbed to 107.1 in November from 100.8 in October, the highest since July 2007 and above analysts’ forecast of 101.5.
Most of the survey was conducted before the presidential election on November 8. But “it appears from the small sample of post-election responses that consumers’ optimism was not impacted by the outcome,” said Lynn Franco, director of economic indicators at the Conference Board. “With the holiday season upon us, a more confident consumer should be welcome news for retailers.”
And, just to reinforce that is not a post-election position, I have been making this argument on this blog since at least 2010, when I wrote, How to Fix the "Broken" Financial System: Stop Trying to Fix It.
So, let's stay the course for a bit and see how people respond to a little stability. Let's see what a surge in consumer confidence can do for the U.S. and world economies. Let's make sure it's broken (and if so, how), before anyone tries to fix it. And maybe, in the meantime, we can spend a little time treating each other better.
Friday, November 18, 2016
Call for Proposals: “Teaching Cultural Competency and Other Professional Skills Suggested by ABA Standard 302”
The following comes to us from Prof. Kelly Terry, Co-Director, Institute for Law Teaching and Learning. Submit proposals to her at firstname.lastname@example.org by 2/1/17 .
Call for Proposals for the Institute for Law Teaching and Learning’s Summer 2017 Conference, “Teaching Cultural Competency and Other Professional Skills Suggested by ABA Standard 302.” The conference will take place July 7-8, 2017 at the University of Arkansas at Little Rock William H. Bowen School of Law.
The Institute invites proposals for workshop sessions addressing how law schools are responding to ABA Standard 302’s call to establish learning outcomes related to “other professional skills needed for competent and ethical participation as a member of the legal profession,” such as “interviewing, counseling, negotiation, fact development and analysis, trial practice, document drafting, conflict resolution, organization and management of legal work, collaboration, cultural competency and self-evaluation.” The conference will focus on how law schools are incorporating these skills, particularly the skills of cultural competency, conflict resolution, collaboration, self-evaluation, and other relational skills, into their institutional outcomes, designing courses to encompass these skills, and teaching and assessing these skills. The deadline to submit a proposal is February 1, 2017.
Wednesday, November 16, 2016
Last week on the eve of the election, I shared a series of predictions regarding the market's response to a Trump or Clinton presidential election victory. Almost all of the predictions were for a swift and negative reaction to a Trump victory. Immediate market predictions, like polling predictions, were, in a word: WRONG.
From the Wall Street Journal:
Stocks were mixed on Friday, taking a pause to end an eventful week that pushed the Dow industrials to their best week since 2011.
The Dow climbed 0.2% on Friday to 0.2%, pushing the index up 5.4% for the week to 18847.66.
The S&P 500 dipped 0.1% on Friday to 2164.45, while the Nasdaq Composite jumped 0.5% to 5237.11.
I find myself so disorientated in this post-election reality.
Thursday, November 10, 2016
I have been on hiatus for a few weeks, and had planned to post today about the compliance and corporate governance issues related to Wells Fargo. However, I have decided to delay posting on that topic in light of the unexpected election results and how it affects my research and work.
I am serving as a panelist and a moderator at the ABA's annual Labor and Employment meeting tomorrow. Our topic is Advising Clients in Whistleblower Investigations. In our discussions and emails prior to the conference, we never raised the election in part because, based on the polls, no one expected Donald Trump to win. Now, of course, we have to address this unexpected development in light of the President-elect's public statements that he plans to dismantle much of President Obama's legacy, including a number of his executive orders.
President-elect Trump's plan for his first 100 days includes, among other things: a hiring freeze on all federal employees to reduce federal workforce though attrition (exempting military, public safety, and public health); a requirement that for every new federal regulation, two existing regulations must be eliminated; renegotiation or withdrawal from NAFTA; withdrawal from the Trans-Pacific Partnership; canceling "every unconstitutional executive action, memorandum and order issued by President Obama; and a number of rules related to lobbyists and special interests.
Plaintiffs' lawyers I have spoken to at this conference so far are pessimistic that standards will become even more pro-business and thus more difficult to bring cases. That's probably true. However, I have the following broader business-law related questions:
- What will happen to Dodd-Frank? There are already a number of house bills pending to repeal parts of Dodd-Frank, but will President Trump actually try to repeal all of it, particularly the Dodd-Frank whistleblower rule? How would that look optically? Former SEC Commissioner Paul Atkins, a prominent critic of Dodd-Frank and the whistleblower program in particular, is part of Trump's transition team on economic issues, so perhaps a revision, at a minumum, may not be out of the question.
2. What will happen with the two SEC commissioner vacancies? How will this president and Congress fund the agency?
3. Will SEC Chair Mary Jo White stay or go and how might that affect the work of the agency to look at disclosure reform?
4. How will the vow to freeze the federal workforce affect OSHA, which enforces Sarbanes-Oxley?
5. In addition to the issues that Trump has with TPP and NAFTA, how will his administration and the Congress deal with the Export-Import (Ex-IM) bank, which cannot function properly as it is due to resistance from some in Congress. Ex-Im provides financing, export credit insurance, loans, and other products to companies (including many small businesses) that wish to do business in politically-risky countries.
6. How will a more conservative Supreme Court deal with the business cases that will appear before it?
7. Who will be the Attorney General and how might that affect criminal prosecution of companies and individuals? Should we expect a new memo or revision of policies for Assistant US Attorneys that might undo some of the work of the Yates Memo, which focuses on corporate cooperation and culpable individuals?
8. What will happen with the Consumer Financial Protection Bureau, which the DC Circuit recently ruled was unconstitutional in terms of its structure and power?
9. What will happen with the Obama administration's executive orders on Cuba, which have chipped away at much of the embargo? The business community has lobbied hard on ending the embargo and eliminating restrictions, but Trump has pledged to require more from the Cuban government. Would he also cancel the executive orders as well?
10. What happens to the Public Company Accounting Board, which has had an interim director for several months?
11. Jeb Henserling, who has adamantly opposed Ex-Im, the CFPB, and Dodd-Frank is under consideration for Treasury Secretary. What does this say about President-elect Trump's economic vision?
Of course, there are many more questions and I have no answers but I will be interested to see how future announcements affect the world financial markets, which as of the time of this writing appear to have calmed down.
November 10, 2016 in Compliance, Corporate Governance, Corporations, Current Affairs, Financial Markets, International Law, Legislation, Marcia Narine Weldon, Securities Regulation, White Collar Crime | Permalink | Comments (2)
Monday, November 7, 2016
As we gear up for the final show down and hopefully the end of the 2016 election (please, please, please let it end) I write today about the relationship between the markets and politics. It is apparently THE business angle in the news cycle this week. This is an admitted punt on substantive work and am instead providing you with a host of hyperlinks to nervously check and re-check in between nervously checking and re-checking polling estimates and vote counts. Please note, I am passing along a compilation of articles, a list that I have not editted to reflect a certain viewpoint.
Historical Accounts of the Relationship between politics and the markets
Merrill Lynch, How Presidential Elections Affect the Markets
Predictions regarding market reactions to the outcome of the 2016 election
Friday, November 4, 2016
Over the next few weeks, I plan to write a series of posts exploring developments in this area of faith and business. I plan three additional posts, looking at faith and business (sometimes called, "faith and work") initiatives in (1) universities, (2) churches, and (3) businesses. My comments in this series will have a Christian focus, as that is my faith and is the area with which I am most familiar, but I welcome comments from any faith tradition.
Based on what I have seen around the country, many universities, churches, and businesses seem to be increasing their focus on the integration of faith and business. For some, this is a terrifying development. For others it is long overdue. I submit that both sides should attempt to engage in perspective-taking and nuanced discussion in an attempt to reach common ground.
As someone who prioritizes his faith, I also want to share my personal thoughts on the area of “faith and business” in this introductory post. First, some Christians, myself included, often lose sight of the fact that Jesus said that all the law hangs on loving God and loving others. Jesus cared for the societal outcasts (here, here, and here), while strongly (but lovingly) criticizing the spiritual leaders. He had and has followers with a diverse variety of political views. Jesus did things like healing people on the Sabbath that appeared to break religious law, but actually fulfilled the true, loving spirit of the law. Second, as Inside Edition correspondent Megan Alexander reminded Belmont University students and faculty last week, Christians should focus on doing high quality work, because the Christian scripture instructs for us to our work “heartily, as for the Lord.” This is a tough one for me, as I am often dissatisfied with my work product, but I think the call is to do the absolute best work you can do, with your talents and given your various responsibilities. Third, and finally, I think participants in the “faith and business” conversation have to realize that people of faith are unlikely to be able to leave their faith at home. There can be good conversations about how that faith can and should be expressed in business, but I don’t think it is realistic to think that serious people at faith can just turn off their beliefs while at work. While the discussions about the interplay of faith and business may be difficult, they are important discussions to have in this pluralistic society.
Wednesday, November 2, 2016
General Electric (GE) and Baker Hughes (BHI) announced on Monday, October 31st, a proposed merger to combine their oil and gas operations. GE and Baker Hughes will form a partnership, which will own a publicly-traded company. GE shareholders will own 62.5% of the "new" partnership, while Baker Hughes shareholders will own 37.5% and receive a one-time cash dividend of $17.50 per share. The new company will have 9 board of director seats: 5 from GE and 4 from Baker Hughes. GE CEO Jeff Immelt will be the chairman of the new company and Lorenzo Simonelli, CEO of GE Oil & Gas, will be CEO. Baker Hughes CEO Martin Craighead will be vice chairman.
Reuters is describing the business synergies between the two companies as leveraging GE's oilfield equipment manufacturing ("supplying blowout preventers, pumps and compressors used in exploration and production") and data process services with Baker Hughes' expertise in " horizontal drilling, chemicals used to frack and other services key to oil production."
Baker Hughes had previously proposed a merger with Halliburton (HAL), which failed in May, 2016, after the Justice Department filed an antitrust suit to block the merger. Early analysis suggests that the proposed GE & Baker Hughes will pass regulatory scrutiny because of the limited business overlap of GE and Baker Hughes.
As I plan to tell my corporations students later today: this is real life! A high-profile, late-semester merger of two public companies is a wonderful gift. The proposed GE/Baker Hughes merger illustrates, in real life, concepts we have been discussing (or will be soon) like partnerships, the proxy process, special shareholder meetings, SEC filings, abstain or disclose rules, and, of course, mergers.
Sunday, October 23, 2016
The Association of American Law Schools (AALS) Annual Meeting will be held Tuesday, January 3 – Saturday, January 7, 2017, in San Francisco. Readers of this blog who may be interested in programs associated with the AALS Section on Socio-Economics & the Society of Socio-Economics should click on the following link for the complete relevant schedule:
Specifically, I'd like to highlight the following programs:
On Wednesday, Jan. 4:
9:50 - 10:50 AM Concurrent Sessions:
- The Future of Corporate Governance:
How Do We Get From Here to Where We Need to Go?
andre cummings (Indiana Tech) Steven Ramirez (Loyola - Chicago)
Lynne Dallas (San Diego) - Co-Moderator Janis Sarra (British Columbia)
Kent Greenfield (Boston College) Faith Stevelman (New York)
Daniel Greenwood (Hofstra) Kellye Testy (Dean, Washington)
Kristin Johnson (Seton Hall) Cheryl Wade (St. John’s ) Co-Moderator
Lyman Johnson (Washington and Lee)
- Socio-Economics and Whistle-Blowers
William Black (Missouri - KC) Benjamin Edwards (Barry)
June Carbone (Minnesota) - Moderator Marcia Narine (St. Thomas)
1:45 - 2:45 PM Concurrent Sessions:
1. What is a Corporation?
Robert Ashford (Syracuse) Moderator Stefan Padfield (Akron)
Tamara Belinfanti (New York) Sabeel Rahman (Brooklyn)
Daniel Greenwood (Hofstra)
On Thursday, Jan. 5:
3:30 - 5:15 pm:
Section Programs for New Law Teachers
Principles of Socio-Economics
in Teaching, Scholarship, and Service
Robert Ashford (Syracuse) Lynne Dallas (San Diego)
William Black (Missouri - Kansas City) Michael Malloy (McGeorge)
June Carbone (Minnesota) Stefan Padfield (Akron)
On Saturday, Jan. 7:
10:30 am - 12:15 pm:
Economics, Poverty, and Inclusive Capitalism
Robert Ashford (Syracuse) Stefan Padfield (Akron)
Paul Davidson (Founding Editor Delos Putz (San Francisco)
Journal of Post-Keynesian Economics) Edward Rubin (Vanderbilt)
Richard Hattwick (Founding Editor,
Journal of Socio-Economics)
October 23, 2016 in Business Associations, Conferences, Corporate Governance, Corporate Personality, Corporations, Current Affairs, Financial Markets, Law and Economics, Law School, Marcia Narine Weldon, Research/Scholarhip, Stefan J. Padfield, Teaching | Permalink | Comments (0)
Tuesday, October 18, 2016
Last week, I explained that the "War on Coal" Is Really A Competition Issue, with cheap natural gas prices as a major reason coal production and use have declined. Beyond the impact of natural gas on coal jobs, technology is also an issue. Technology is making mining more efficient, but it is making the market harder for coal miners. Following is a chart I created from Energy Information Administration data that shows coal production and employment statistics for 2013 and 2014.
Coal Production Data
|Coal-Producing||Number of Mines||Production||Number of Mines||Production||Number of Mines||Production|
|State and Region1|
|Powder River Basin (surface)||16||418,156||16||407,567||-||2.6|
Coal-Related Employment Data
|State and Region|
|Powder River Basin||-||6,592||6,592||-||6,635||6,635||-||-0.6||-0.6|
The data show the coal-production and employment figures for 2013 and 2014. Surface mining in the Powder River Basin (the highest producing region in the country) increased coal production 2.6% and employment dropped 0.6%, while underground mining production for Appalachia increased 2.8% even though employment dropped 8.9%. For the United States, overall coal production increased 1.5% between 2013 and 2014, while the number of employees dropped 6.8%. Thus, even as coal production increased modestly, the number of employees holding those jobs declined significantly.
This doesn't deter politicians from making other claims, though. As I noted last week, the presidential race has included rhetoric claiming anti-coal regulations are what really hurt coal jobs. And it's not just at the presidential level. Coal states often feature politicians promising to bring back coal jobs. In my home state of West Virginia, for example, both candidates for governor are making such a promise.
As an aside, in the Ohio U.S. Senate race between Rob Portman and Ted Strickland, Sen. Portman has made use of this similar line of attack, claiming that former Ohio and governor and U.S. Representative Strickland "turned his back" on Ohio by not supporting coal jobs. The advertisement, available here, features workers from (at least for a West Virginian) an interesting choice of mine: Rosebud Mining. (A perceptive former student, Ken Bannon, alerted me to the ad or I would have missed it.)
People outside of West Virginia may not recall the chemical spill in January 2014 that contaminated the Elk River and left 300,000 West Virginians without drinking water. As I noted in a post back then, the company that owned the chemical site was Freedom Industries, which listed as its sole owner, Chemstream Holdings, a company owned by J. Clifford Forrest. Forrest also owns the Pennsylvania company (that also has Ohio operations) Rosebud Mining, which was located at the same address Chemstream Holdings listed for its headquarters. It appears that Portman has a solid lead in the race, and if I were part of the campaign, I'd probably not feature a mining company that had been linked (through an executive) to such a major recent environmental disaster.
Despite the data (and the economic realities), claims of a war on coal continue. Even where there is some truth to the idea -- recent regulations are not especially coal friendly -- there are simply too many hurdles to overcome for coal employment numbers to go back to prior levels. One can conceivably win a war on regulations, but technology and the marketplace are far less forgiving. It's time we embrace that reality.
Thursday, October 13, 2016
Today I used Wells Fargo as a teaching tool in Business Associations. Using this video from the end of September, I discussed the role of the independent directors, the New York Stock Exchange Listing Standards, the importance of the controversy over separate chair and CEO, 8Ks, and other governance principles. This video discussing ex-CEO Stumpf’s “retirement” allowed me to discuss the importance of succession planning, reputational issues, clawbacks and accountability, and potential SEC and DOJ investigations. This video lends itself nicely to a discussion of executive compensation. Finally, this video provides a preview for our discussion next week on whistleblowers, compliance, and the board’s Caremark duties.
Regular readers of this blog know that in my prior life I served as a deputy general counsel and compliance officer for a Fortune 500 Company. Next week when I am out from under all of the midterms I am grading, I will post a more substantive post on the Wells Fargo debacle. I have a lot to say and I imagine that there will be more fodder to come in the next few weeks. In the meantime, check out this related post by co-blogger Anne Tucker.
Tuesday, October 11, 2016
The Trump-Pence campaign has adopted a common West Virginia criticism of U.S. energy policy under the Obama administration that is known as the "war on coal." This phrase is used to describe the current administration's support for U.S. Environmental Protection Agency (EPA) policies to reduce greenhouse gas emissions (via the proposed Clean Power Plan) and other environmental protections that relate to consumption of fossil fuels, especially coal. In the vice presidential debate Republican Mike Pence repeated the phrase several times, asserting that the EPA was killing coal jobs, especially in places like West Virginia and Kentucky. The problem is that regardless of the EPA's goals, it is not environmental regulation that is coal's main challenge. It is price.
As Charlie Patton, president of West Virginia-based Appalachian Power explained, "Forget the clean power plan. You cannot build a coal plant that meets existing regulation today that can compete with $5 gas. It just cannot happen." Cheap natural gas, made available by horizontal drilling and hydraulic fracturing in shale formations, has led to a significant increase in natural gas-fired electric power generation, most of which replaced coal as the fuel of choice. The shale gas boom, which started approximately in 2008, can account for most of this change. Here's the U.S. electricity generation data by fuel (my chart using Energy Information Administration data) for 2006 to 2015):
U.S. Electricity Generation, by fuel
|Annual Total||Coal||Natural Gas||Renewables|
Note the drop in coal begins modestly in 2008 and drops from 48.21% to 33.18% in 2015. In that time frame, coal lost 15.03% of the market, while natural gas increased 11.23%. Renewable sources (not including solar and hydropower) increased 3.61% to 6.65% overall. That means that natural gas and renewables picked up 14.84% of the market -- or 98.7% of the market lost by coal.
Coal production in my home state of West Virginia has declined from the peak of 158 million short tons in 2008 down to 95 million in 2015, with further decline expected for 2016. And the state is feeling the devastating effect of lost jobs -- West Virginia was the only state in 2015-16 to lose a statistically significant number of jobs. Tax revenues are down dramatically, and that decline, too, is expected to continue. The harm to the state of these lost jobs is real, but there is no reasonable governmental policy that could change this decline, even if we wanted it to. The reality is that natural gas is a cheaper option, it has long-term potential to work alongside renewables, and no energy proposal from any major candidate has suggested a proposal that would help coal take back marketshare from natural gas (despite promises to simply bring back coal jobs).
Living in West Virginia, a place I love to live, it is easy to want hope. We need hope, and we need a plan, but that plan has to include educating our workforce and expanding economic opportunities in other industries, not harkening back to another time that will never return. The reality is that the war on coal is not one that can be won. In the end, as a pricing problem, trying to win the war on coal is really trying to win a war on math. It just can't happen. The numbers don't add up.
Wednesday, October 5, 2016
The Wells Fargo headlines--fresh from a congressional testimony, a spiraling stock price, and a CEO with $41M less dollars to his name-- raise the question of whether this is a case study of corporate governance effectiveness or inefficiency. That the wrong doing (opening an estimated 2M unauthorized customer accounts to manipulate sales figures) was eventually unearthed, employees fired and bonus pay revoked may give some folks confidence in the oversight and accountability structures set up by corporate governance. Michael Hiltzit at the LA Times writes a scathing review of the CEO and the Board of Directors failed oversight on this issue.
The implicit defense raised by Stumpf’s defenders is that the consumer ripoff at the center of the scandal was, in context, trivial — look at how much Wells Fargo has grown under this management. But that’s a reductionist argument. One reason that the scandal looks trivial is that no major executive has been disciplined; so how big could it be? This only underscores the downside of letting executives off scot-free — it makes major failings look minor. The answer is to start threatening the bosses with losing their jobs, or going to jail, and they’ll start to take things seriously.
Whats your vote? Is the call for resignation an empty symbolism or a necessary consequence of governance?
Tuesday, September 27, 2016
As law professor, most of my students are Millennials. What does that mean? Well, Neil Howe and William Strauss, in their book Generations: The History of America's Future, 1584 to 2069, published in 1991, defined Millennials as those born between 1982 and 2004. I'll go with that. As one who is firmly part of Generation X (the age group and not the band, though that would be cool), I'm curious. It seems that some people think so. I don't think Gen Xers think of themselves as such very often.
What made me think of this? A political ad from NextGen Climate, funded by hedge fund billionaire/environmental activist Tom Steyer, apparently seeks to generate more support for Hillary Clinton by targeting Gary Johnson. The ad is below. The ad begins: "Thinking about voting for Gary Johnson? In case you missed it, climate change will cost millennials over $8 billion if no one does anything about it."
That's just weird to me. I know it's trying to motivate that age group of voters, but I am not sure many Millennials would think of themselves as such. That is -- does it resonate at all to have this ad targeted at them in that way?
I guess age-group labels like this are thrown around a lot, and I just forgot. The ABA has a mentoring article from 2004 called Generation X and The Millennials: What You Need to Know About Mentoring the New Generations. It's for "Boomers" who have to deal with us Gen Xers and Millennials. The piece makes some pretty bold assertions (some of which certainly aren't true twelve years later). For example:
All Millennials have one thing in common: They are new to the professional workplace. Therefore, they are definitely in need of mentoring, no matter how smart and confident they are. And they'll respond well to the personal attention. Because they appreciate structure and stability, mentoring Millennials should be more formal, with set meetings and a more authoritative attitude on the mentor's part.
Perhaps most of that is right. There is some value here, even though my experience is that formal mentoring is not always well received. Then again, maybe that's my bias. After all, "members of Generation X dislike authority and rigid work requirements. An effective mentoring relationship with them must be as hands-off as possible. . . .Gen Xers work best when they're given the desired outcome and then turned loose to figure out how to achieve it." I don't know about the first part, but last two sentences are definitely me.
So, while I find the description of Millennials a little overbearing, as I think about it, it explains a lot. I think a lot of us from the Gen X world can't understand why we can't tell students what we want and have them come back with a solution. That's what WE do, not necessarily what they do (unless we make it clear that's what we want).
I don't like broad generalizations of groups, but I have to admit that the 2004 article's suggestions for working with Millennials is actually consistent with a lot of what I have been doing (and working toward). I just never thought of it as trying to reach Millennials. I thought of it as trying to reach students. Turns out, in most cases, that's the same thing.
I remain skeptical of the likely efficacy of the ad, but maybe there's more here than I originally thought. Still, I'm not sure an anti-Gary Johnson ad gets anyone very far right about now.
Friday, September 23, 2016
In January 2015, I wrote about a resolution to take a break from e-mails on Saturdays.
That resolution failed, quickly.
Since then, I have been thinking a lot about my relationship with e-mail.
On one hand, I get a lot of positive feedback from students and colleagues about my responsiveness. On the other hand, constantly checking and responding to e-mails seems to cut against productivity on other (often more important) tasks.
Five or six weeks ago, I started drafting this post, hoping to share it after at least one week of only checking my e-mail two times a day (11am and 4pm). Then I changed the goal to three times a day (11am, 4pm, and 9pm and then 5am, 11am, 4pm). Efforts to limit e-mail in that rigid way failed, even though very little of what I do requires a response in less than 24 hours. On the positive side, I have been relatively good, recently, at not checking my e-mail when I am at home and my children are awake.
A few days ago, I read Andrew Sullivan’s Piece in the New York Magazine on “Distraction Sickness.” His piece is long, but worth reading. A short excerpt is included below:
[The smart phone] went from unknown to indispensable in less than a decade. The handful of spaces where it was once impossible to be connected — the airplane, the subway, the wilderness — are dwindling fast. Even hiker backpacks now come fitted with battery power for smartphones. Perhaps the only “safe space” that still exists is the shower. Am I exaggerating? A small but detailed 2015 study of young adults found that participants were using their phones five hours a day, at 85 separate times. Most of these interactions were for less than 30 seconds, but they add up. Just as revealing: The users weren’t fully aware of how addicted they were. They thought they picked up their phones half as much as they actually did. But whether they were aware of it or not, a new technology had seized control of around one-third of these young adults’ waking hours. . . . this new epidemic of distraction is our civilization’s specific weakness. And its threat is not so much to our minds, even as they shape-shift under the pressure. The threat is to our souls. At this rate, if the noise does not relent, we might even forget we have any. (emphasis added)
Academics seem to vary widely on how often they respond to e-mails, but I’d love to hear about the experience and practices of others. Oddly, in my experience with colleagues, those who are most prompt to respond to e-mails are usually also the most productive with their scholarship. I can’t really explain this, other than maybe these people are sitting at their computers more than others or are just ridiculously efficient. As with most things, I imagine there is an ideal balance to be pursued.
One thing I have learned is that setting expectations can be quite helpful. With students, I make clear on the first day of class and on the syllabus that e-mails will be returned within 24 business hours (though not necessarily more quickly than 24 business hours). I often respond to e-mails much more quickly than this, but this is helpful language to point a student to when he sends a 3am e-mail asking many substantive questions before an 8am exam.
Our students also struggle with "distraction sickness," and most of them know they are much too easily distracted by technology, but they are powerless against it. Ever since I banned laptops in my undergraduate classes, I have received many more thanks than pushback. The vast majority of students say they appreciate the technology break, but some can still be seen giving into the technology urge and (not so) secretly checking their phones.
Interested in how our readers manage their e-mails. Any tricks or rules that work for you? Feel free to e-mail me or leave your thoughts in the comments.
Thursday, September 22, 2016
Lately, I’ve been researching the twelve nation Trans-Pacific Partnership Treaty (“TPP”) because I am looking at investor-state dispute settlements (ISDS) in my work in progress proposing a model bilateral investment treaty between the U.S. and Cuba.
The TPP, which both Trump and Clinton oppose, has the support of U.S. business. Although President Obama has pushed the treaty as part of his legacy, just this morning, Vice-President Biden added his pessimistic views about its passage. More interestingly, over 220 law and economics academics, led by Harvard’s Laurence Tribe, have come out publicly to oppose TPP, stating:
ISDS grants foreign corporations and investors a special legal privilege: the right to initiate dispute settlement proceedings against a government for actions that allegedly violate loosely defined investor rights to seek damages from taxpayers for the corporation’s lost profits. Essentially, corporations and investors use ISDS to challenge government policies, actions, or decisions that they allege reduce the value of their investments... Through ISDS, the federal government gives foreign investors – and foreign investors alone – the ability to bypass th[e] robust, nuanced, and democratically responsive legal framework. Foreign investors are able to frame questions of domestic constitutional and administrative law as treaty claims, and take those claims to a panel of private international arbitrators, circumventing local, state or federal domestic administrative bodies and courts. Freed from fundamental rules of domestic procedural and substantive law that would have otherwise governed their lawsuits against the government, foreign corporations can succeed in lawsuits before ISDS tribunals even when domestic law would have clearly led to the rejection of those companies’ claims. Corporations are even able to re-litigate cases they have already lost in domestic courts. It is ISDS arbitrators, not domestic courts, who are ultimately able to determine the bounds of proper administrative, legislative, and judicial conduct… This system undermines the important roles of our domestic and democratic institutions, threatens domestic sovereignty, and weakens the rule of law.
Senator Warren, who also opposes TPP has argued, "“ISDS allows a small group of ultra-rich investors to extract billions of dollars from taxpayers while they undermine financial, environmental and public health rules across the world.” I look forward to the upcoming debates to see whether either Trump, who has labeled the proposal the “rape of our country,” or Clinton, who previously supported the deal, will cite the academics' letter as additional reason to oppose TPP.
Friday, September 16, 2016
Earlier this week the House Financial Services Committee voted to repeal the Dodd-Frank Conflict Minerals Rule, which I last wrote about here and in a law review article criticizing this kind of disclosure regime in general.
Under the proposed Financial Choice Act (with the catchy tagline of "Growth for All, Bailouts for None"), a number of Dodd-Frank provisions would go by the wayside, including conflict minerals because:
Title XV of the Dodd-Frank Act imposes a number of overly burdensome disclosure requirements related to conflict minerals, extractive industries, and mine safety that bear no rational relationship to the SEC’s statutory mission to protect investors, maintain fair, orderly, and efficient markets, and promote capital formation. The Financial CHOICE Act repeals those requirements. There is overwhelming evidence that Dodd-Frank’s conflict minerals disclosure requirement has done far more harm than good to its intended beneficiaries – the citizens of the Democratic Republic of Congo and neighboring Central African countries. SEC Chair Mary Jo White, an Obama appointee, has conceded the Commission is not the appropriate agency to carry out humanitarian policy. The provisions of Title XV of the Dodd-Frank Act are a prime example of the increasing use of the federal securities laws as a cudgel to force public companies to disclose extraneous political, social, and environmental matters in their periodic filings.
The House report cites a number of scholars and others who raise some of the same issues that I addressed in an amicus brief when the case was litigated at the trial and appellate level years ago.
This weekend I am attending the Business and Human Rights Scholars Conference co-sponsored by the University of Washington School of Law, the NYU Stern Center for Business and Human Rights, the Rutgers Business School, the Rutgers Center for Corporate Law and Governance, and the Business and Human Rights Journal. I present on Cuba, human rights, and investor-state dispute resolution, but a number of papers concern conflict minerals and disclosure in general.
As I have argued in the past, I’m not sure that repeal is the answer. I do believe that the law should be re-examined and possibly reformed to ensure that the diligence and disclosure actually leads to tangible and sustained benefits for the Congolese people. In short, I want to see some evidence of linkages between this corporate governance disclosure and reductions in rape, violence, child slavery, pillaging of villages, and forced labor. I want to see proof that the individual ethical consumers who claim in surveys to care about human rights have actually changed their buying habits because of this name and shame campaign.
Although I do not agree with many of the proposals in the House report and I am not against all disclosure, I do not believe that the SEC is the appropriate agency to address these issues. The State Department and others can and should take the lead on the very serious security and justice reform issues that I witnessed firsthand in Goma and Bukavu when I went to the DRC to research this law five years ago. These issues and the violence perpetrated by rebel groups, police, and the military persist. I look forward to hearing how and if proponents of the conflict minerals rule address this report during the conference.
Tuesday, September 13, 2016
I think, by now, most people have heard about Colin Kaepernick's protest, which he manifested by his refusal to stand for the national anthem before the 49ers' August 26 preseason game against the Green Bay Packers. Kaepernick explained his actions as follows:
I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color. To me, this is bigger than football and it would be selfish on my part to look the other way. There are bodies in the street and people getting paid leave and getting away with murder.
Many were offended by his decision; others have applauded it. What is it that makes people (particularly white people) so upset about someone choosing not to stand for the national anthem? I thought the anthem and flag were supposed to stand for freedom, which includes the freedom to dissent and disagree. It fascinates me that one football player could get this much press for deciding not to do something he was under no obligation to do (as his employer made clear). But it certainly explains why he did it. If nothing else, Colin Kaepernick reminded of us both of our ability to speak freely and that there are potential costs when doing so. He got people to talk about an important issue, and he used his platform to focus on a necessary conversation.
Free speech can, though, have consequences. And in many ways, it should. The Bill of Rights just protects our right to speech and limits the government's ability to impose consequences for exercising that right. The Denver Broncos' Brandon Marshall lost a credit union sponsorship for his actions in support of Kaepernick's protest. Personally, if I did business with that sponsor, they'd lose my money because I support his Marshall's right to protest and because I think the the protest, conducted in a peaceful way, raised issues worthy of discussion. (I will note that the sponsor cut ties in what appears to be a respectful and above-board way. I just disagree with the decision). That's the free market working in a (mostly) free country. I don't have any problem with the sponsor acting as they did, either. They, too, were exercising their rights (assuming they did not breach a contract, and I have seen no evidence they did). I am not mad the credit union made the decision it did; I just disagree with the decision, and I would let them know that by walking away.
Most striking to me about this uproar is the apparently binary way so many people view protests. One can love this country and hate injustice. We can protest as we try to reach our ideals. And we can disagree about the method of protest or the ideals themselves. But let's consider the point and be respectful of one another as we try to work through our differences. Brandon Marshall stated this position especially well. He explained, "I'm not against the military. I’m not against the police or America. I’m just against social injustice.”
Businesses, like people, have the right to associate with those they choose, and consumers (in turn) have a right to respond. That is not just free speech, it is how a free market operates.
Th United States, to me, is a great, yet greatly flawed, nation. The flag (and our national anthem) can represent the best of this nation and its people. The song and flag, like almost anything related to this nation that is more than 200 years old, also has ties to some of our very worst history, including slavery. That is also a reality. We have real and significant remaining institution problems related to race and gender, even if we're better than we used to be.
No matter what, the national anthem and the flag are neither bigger than, nor more important than, the citizens they are intended to represent. Speaking freely, even when it is not popular, is honoring the best of what the flag should represent, the best of this nation’s history, and (I sincerely hope) a sign of a great future. Free speech is not a liberal or conservative issue, and exercising our right to speak should be celebrated, whether you agree with the speech or not. Free speech begets free markets.
“All we say to America is, ‘Be true to what you said on paper.’ If I lived in China or even Russia, or any totalitarian country, maybe I . . . could understand the denial of certain basic First Amendment privileges, because they hadn’t committed themselves to that over there. But somewhere I read of the freedom of assembly. Somewhere I read of the freedom of speech. Somewhere I read of the freedom of press. Somewhere I read that the greatness of America is the right to protest for right.”
— Martin Luther King, Jr., Civil Rights Leader
“We are so concerned to flatter the majority that we lose sight of how very often it is necessary, in order to preserve freedom for the minority, let alone for the individual, to face that majority down.”
— William F. Buckley Jr., founder of National Review magazine
“We cannot have a society half slave and half free; nor can we have thought half slave and half free. If we create an atmosphere in which [people] fear to think independently, inquire fearlessly, express themselves freely, we will in the end create the kind of society in which [people] no longer care to think independently or to inquire fearlessly.”
— Henry Steele Commager, U.S. historian
Friday, September 9, 2016
Last year, on the suggestion of an ALSB colleague, I did a post on promotion, tenure, and administrative appointment news for legal studies professors in business schools. I continue that series this year, below. I am happy to add to this list, as I am sure it is incomplete. Congrats to all!
Robert Bird (UConn) - promoted to full professor
De Vee Dykstra (South Dakota) - appointed associate dean of Beacom School of Business
Marc Edelman (CUNY) - promoted to full professor and awarded tenure
Josh Perry (Indiana-Kelley School of Business) - appointed to Dean of Undergraduate Affairs
Jamie Prenkert (Indiana-Kelley (Bloomington Campus)) - appointed Associate Vice Provost
Scott Shackelford (Indiana-Kelley) - promoted to associate professor and awarded tenure
Wednesday, September 7, 2016
Stock pricing in the securities market responds to supply and demand. This is intuitive with regard to individual securities. We understand that if more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, the price decreases if more want to sell than buy. I wonder to what extent regulators have examined the role of retirement saving plans in flooding the market with demand to buy new securities and which can drive up stock prices overall. Consider this historical graph of the NYSE trading average. Observe the sharp rise beginning in the late 1980's with the introduction of individual retirement savings plan and the beginning of the defined contribution society.
chart source: Forecast Chart
New Department of Labor regulations open the door for state governments to sponsor retirement savings plans for non-government workers. See for example, California's proposed plans. The rules, proposed in 2015, became final on August 30, 2016. You can read a summary of the proposed plans published by The Brookings Institute and a DOL interpretive bulletin. Also being considered are proposed rules authorizing high-population cities to sponsor similar plans in states that don't create the non-government worker retirement savings plans. Collectively, these regulations are intended to facilitate the retirement savings of the estimated 55 million small business workers who do not currently have the option of participating in a retirement savings plan. This policy decision encourages retirement saving and promotes individual financial stability. It also means that more worker/saver/investors (a group I have called Citizen Shareholders in prior works) will be encouraged to invest in the private securities market. The demand cycle continues and can be sustained so long as there are as many or more worker/saver/investors as there are folks liquidating their retirement savings. In other words, a severely aging workforce/population could pose a demand/supply problem for the securities market.