Posted 7:51 PM by Robert

Pathetic ... And Bound To Lose VII: Captain Renault Reports!

Why is the British newspaper - the Telegraph - reporting this as if it were a shocking discovery:

Senator John Kerry, the presumed Democratic presidential candidate who is trading on his Vietnam war record to campaign against President George W Bush, tried to defer his military service for a year, according to a newly rediscovered article in a Harvard University newspaper.

He wrote to his local recruitment board seeking permission to spend a further 12 months studying in Paris, after completing his degree course at Yale University in the mid-1960s.

The revelation appears to undercut Sen Kerry's carefully-cultivated image as a man who willingly served his country in a dangerous war - in supposed contrast to President Bush, who served in the Texas National Guard and thus avoided being sent to Vietnam.

Could it be that the Telegraph is reporting this to its readership as a new and shocking development because the paper thinks that its readership will take the report as new and shocking? Maybe that's because the mainstream media has completely failed to draw this aspect of Senator Kerry's past to the public's attention - in this country as well as Britain? Of course, OpinionJournal noted the Harvard Crimson article and the Senator's draft history on February 11 - making for an interesting use of the term a newly rediscovered article by the Telegraph. But for some reason the mainstream media hasn't really followed up, yet.

Personally, I'm shocked, shocked to find that self-serving exaggeration, misrepresentation and misleading representation of Senator Kerry's military service is going on in and through his campaign! I wonder how long the Bush campaign will take to ensure the public is better educated?

Posted 5:49 PM by Robert

The Fall Of The House Of Eisner XII: Graceful Exit, Or Pathetic ... And Bound To Lose VI

The Blogosphere's very name indicates that it is non-Euclidean: all of its parallel lines meet. And so it is here at the Man Without Qualities that the completely independent trajectories of the two series The Fall Of The House Of Eisner and Pathetic ... And Bound To Lose unexpectedly converge - drawn together by the fundamental organizing geometry of the Blogosphere.

What is behind this Blogospherical equivalent of the Michaelson-Morley Experiment or Ultraviolet Catastrophe? Well, the solution to Disney's difficulties may be in providing a graceful exit for Michael Eisner - perhaps something that could be presented as a career advance. Alan Abelson writing in Barron's has just the ticket:

IN CHOOSING JOHN KERRY as their de facto challenger to Mr. Bush -- the formal anointing comes in July -- the Democrats got what they had been seeking desperately: a man of imposing stature. And there's no question that at 6 feet 4 inches, Mr. Kerry stood tall in a field of pygmy opponents. Once a movement to draft Shaq O'Neal (7 feet 1 inch) fell apart -- Shaq wasn't keen on a career change at present and, in any case, has zero interest in trading down -- Mr. Kerry won a free pass to the nomination.

Now, of course, the big question is: Who'll get his nod as vice president? ....

A long shot, admittedly, but someone with a plethora of compelling attributes Mr. Kerry might consider is Michael Eisner, who sooner rather than later may be available for vice president. Granted, he lacks direct political experience, but years in the Hollywood trenches spent in lethal combat with agents and stars and fellow moguls have equipped him with all the tools necessary (brass knuckles, daggers, poison, tactical nuclear weapons) for a successful career in politics. And his extended tenure as top dog at Disney and long relationship with cartoon characters ensure an easy adaptation to Washington, its folkways and its folks.

What's more, Mr. Eisner, thanks to a veritable explosion of recent publicity, has become a household name even in households that do not subscribe to Variety. Most important, Mr. Eisner is far richer than even Robert Rubin and, by simply reaching into his small-change pocket, he could more than wipe out Mr. Bush's huge financial advantage.

Our commendation of Mr. Eisner -- or Mike, if he's going to buddy up to the voters -- is, of course, completely disinterested, a civic obligation happily discharged. Should he emerge as Mr. Kerry's choice -- and let's emphasize this as strongly as possible -- we do not expect, nor will we accept, a finder's fee. Especially if, by some bizarre accident, the Kerry-Eisner ticket turns out a loser.

Talk about thinking outside the box!

Posted 1:28 PM by Robert

Tall Tux Tales At The Times

The New York Times runs an article on the decline of the traditional dinner jacket that includes the oft-repeated story of its creation:

Tuxedo purists can not complain that it didn't have a good run. It made its debut in 1886, when the stylish upstart Griswold Lorillard wore one to a white-tie-and-tails ball at the Tuxedo Park Club in upstate New York. The short black jacket shocked the crowd with its informality. By 1900, the "tuxedo" was a formal wear staple, standing stock-still for a century while women's evening wear waltzed every which way.

That's a nice story. The only problem is that the story is almost certainly completely untrue, and while the origin of the dinner jacket (or "tuxedo") is hardly of real significance, it's still more than a little weird that the Times keeps spreading a long-discredited cannard.

The matter is discussed in GRIZZY'S LARK AND A LEGEND - Why Griswold Lorillard did not introduce the dinner jacket - How two words in Town Topics were misinterpreted, Written for the Tuxedo Park Library by J. Earle Stevens:

When we seek the origin of the dinner jacket - or Tuxedo as it is now known - we constantly come across a story about its introduction to this century by Griswold Lorillard at the first Tuxedo Autumn Ball in 1886.

The trouble with this story is that it is based entirely on a quotation from a society journal called Town Topics. According to an October 1886 issue of the journal, young Griswold Lorillard appeared (at the Ball) in a tailless dress coat, and waistcoat of scarlet satin, looking for all the world like a royal footman. ... Taken literally, this quotation seems quite plausible but, unfortunately, it has been misinterpreted. A tailless dress coat has been taken to mean a dinner jacket and, as a result, we have a story which is hard to believe, Griswold, or Grizzy as his friends called him, may very well have worn a tailless dress coat as a lark but this does not mean that he introduced the dinner jacket. Such an assumption is wrong for several reasons.

First of all, Grizzy’s tailless dress coat was much too short to be a dinner jacket. ... Secondly, Grizzy would have been far too young to introduce a new fashion to his elders at the Ball. ... Finally, a formal ball would not have been the right occasion to introduce what was then an informal dinner fashion. ... The Ball did, however, offer Griswold and his friends an opportunity to play a prank, inspired perhaps by the dinner jackets which his elders had recently adopted. ...

Griswold’s lark has nothing to do with the dinner jacket ... Fortunately, there is a reliable, although little known, source of information. Some sixty years ago, Grenville Kane, last founder of the Tuxedo Club left alive, revealed to this writer that it was James Brown Potter, one of Tuxedo’s first residents, who, after staying with the Prince of Wales at Sandringham in the summer of 1886, brought back the new fashion to Tuxedo and introduced it to the members of the club.

Posted 10:06 AM by Robert

Kitty Litter Is Not A Public Good

From time to time the Man Without Qualities sets his face against the considerable number of internet users who deem copyrighted material to somehow constitute a "public good" whose full value is suppressed by the nefarious property right. Sometimes the assertion is made that copyright depends on "market power" as the return and incentive for originality - and the argument is then spun that ordinary competitive neoclassical economics just doesn't apply. But the huge majority of copyrighted properties obviously possess no market power at all, and, to the extent there is market power it is derived from the originality and uniqueness of the author's work - which almost never confers more market power than the distinctive properties of, say, a given, well-positioned parcel of real estate. Indeed, the common law respected the notion that every parcel of real property was unique. Yes, an original and unusual copyrighted work is not fully interchangeable with other works, which therefore do not compete fully against them (hence the market power). But that is also true of any given parcel located in, say, midtown Manhattan. The value of that parcel is not all in the "scarcity rent." The peculiarity of the "market power" argument is even stranger given that some of the people making this argument (Professor Lessig, for example) seem particularly concerned with copyrights in materials - such as old photographs - so obscure that the copyright owner can't even be identified. Apparently, we are to take seriously the suggestion that a photograph of, say, a San Francisco street corner has "market power" sufficient to abrogate competitive analysis, but the actual real property located on that corner does not. I demur.

But perhaps the most peculiar argument offered up by the "common good" enemies of copyright is the assertion that use of copyrighted material doesn't degrade the value of the original. That assertion is not equivalent to the putative "public good" claim, but it's a step along the way. Here is yet another counterexample of that assertion from today's OpinionJournal:

Dr. Seuss the great author has become "Dr. Seuss" the commodity. ... All this is overseen by his widow, Audrey Geisel, who authorizes (or not) everything having to do with the author. It's a law of nature that books, plays and other cultural treasures will sooner or later be leveraged and adapted and made to yield multiple varieties of financial return. A corollary is that, without careful watch, travesty is the result, or kitsch, or the kind of distortion that does damage to the original itself.

A.J. Rowling famously negotiated ironclad agreements with Warner Bros. to make sure that her Harry Potter books made it to the screen in the right way. (What you saw was what you read.) The stewards of Beatrix Potter have kept a watchful eye, too, permitting animated versions of her stories that hew to the letter and spirit of her work.

The legacies of A.A. Milne and Rudyard Kipling have not been so lucky, however. Their literary greatness is unrecognizable in Disney's adaptations of "Winnie the Pooh" and "The Jungle Book." More grotesquely, Dr. Seuss, in movie form, has suffered the same fate. Hollywood cashed in as Mr. Carrey and Mr. Myers mugged and romped, earning each film about $250 million. (With its imminent video release, "Cat" is set to earn more.) But such success nearly wrecked the brand.

As a writer, Geisel was the heir of Lewis Carroll and Edward Lear. ... But if the literary Seuss is Edward Lear, the Hollywood Seuss is "Saturday Night Live"--adult-themed humor that gets its laughs by pushing the envelope and trading in adolescent versions of sex, violence and scatological humor. The characters themselves are slightly frightening, as if in the grip of dark impulses.

These blowsy, mega-hyped film adaptations transformed Dr. Seuss ....

But the spirit of his work and its genius--the wild invention, the meaningfully meaningless patter of the words, the quiet truths of the characters (however odd they may otherwise be), the subtle mix of their motives--lose their logic and force when, say, Rosie O'Donnell turns Dr. Seuss into a Broadway star-turn or when the Cat in the Hat becomes a theme-park goofball. A similar sort of travesty can be seen in the mounting pile of licensed tchotchkes--excuse me, merchandise: "One Fish Two Fish" switchplate covers, Horton trash cans, "Green Eggs and Ham Pinball," "Cat in the Hat-opoly," a board game fusing Dr. Seuss and Monopoly. ...

Never mind that "Cat" was based on a Geisel book. Since the movie's release, bookstores have been selling "The Cat in the Hat Movie"--not the original text but a Dr. Seuss novelization based on the film and written by another author.

"Brand" here is not limited to just the trademarks and goodwill involved. The value and public perceptions of the copyrighted original is at stake. For example, people are buying the degraded movie-ized books instead of the the originals. In this case the debasement of the copyrights is attributable to bad judgment on the part of a poor licensor. That's bound to happen sometimes - and does not contradict the rather obvious and correct observation that the value of the original is probably devalued by the "copies" and the uses to which they are allowed to be put. The complete abrogation of the Seuss copyrights would allow any user to use (and degrade) the property - and in that sense differs from the effects of poor licensing. But the evidence that the original is devalued by the copy remains.

Posted 8:46 AM by Robert

Angry - Really, Really Angry

It seems to be true. Democrats all over are angry. They're energized. They're committed. They're red faced and screaming and their men are willing to run an increased risk of stroke! They don't seem to like Senator Kerry all that much personally - but they're mad as hell and they want that other guy out, out, OUT!

"That other guy" being Ralph Nader (from the Los Angeles Times):

You could practically hear the fractious left, newly unified under the anyone-but-Bush standard, coming unglued: The chairman of Florida's Democratic Party told a local newspaper that Nader is a "Benedict Arnold of modern democracy."

Why are so many Democrats newly obsessed with Benedict Arnold? But I digress. The LA Times continues its catalogue of "unglued" Naderhater Democrats:

"Outside of Jerry Falwell, I can't think of anybody I have greater contempt for than Ralph Nader," said James Carville on CNN's "Crossfire."

The columnist Robert Scheer compared Nader to a "faded chanteuse in a dingy nightclub." ....

Jason Salzman ... vot[ed] for Nader in 2000. ... But he soon started having second thoughts, and not just because anonymous correspondents were slipping "Nader is evil" notes under his windshield wipers. ....

To many Democrats, Nader represents an election-stealing evil just this side of the anti-Christ. Cynthia Yorkin ... practically started shouting on the phone the other day when [Nader's] name came up. ....

Rob Reiner [said to] Van Jones ... who was Northern California political director for Arianna Huffington's gubernatorial campaign ... something that he has said often in public and in private: that when Nader said there was no difference between Bush and Gore, he was telling "the biggest lie that any politician in this country has ever told." Jones disagreed ... Reiner ... was not pleased. "His face turned beet red, he started literally screaming at me," said Jones. Jones said he thinks "that there is a level of irrational anger and hostility toward Ralph Nader. You can't call yourself a Democratic Party and when people exercise their democratic right to a candidacy you don't like break out your nuclear weapons." ... But people do. ...

Koryne Horbal, a longtime Minnesota Democratic activist, said she didn't speak for a whole year to a friend who voted for Nader in 2000.

Bush? They hate 'im. Just hate 'im. Passionate about it. Committed. Unified. Energized. TICKED OFF!

Nader? Same.

It's getting to the point that an ordinary American - right or left - doesn't want to be alone in a dark alley with a committed Democrat.

"That other guy" is currently polling at about 6%.

Posted 11:01 PM by Robert

Hillary Speaks! And World Trade Trembles!

Unlike Herr Doktorprofessor Paul Von Krugman, Senator Hillary Clinton is ready and willing to state what she thinks should be done to stem the loss of manufacturing jobs in this country!

Senator Clinton says we should subsidize "old economy" industries through the tax system:

The senator argued for the creation of an across-the-board 10-percent cut in corporate taxes for American factories in order to retain and attract jobs that might otherwise go overseas. She also proposed the creation of a Manufacturing Research Agency, most likely within the Commerce Department, to oversee and encourage research and development projects in manufacturing. ... Nationwide, 3 million manufacturing jobs have been lost since July 2000.

Herr Doktorprofessor is also concerned about what he sees as a jobs shortage: U.S. employment is at least four million short of where it should be. Imports and outsourcing didn't cause that shortfall.

Dear me, Herr Doktorprofessor seems to be saying that Senator Clinton is way off base - that the jobs shortage is not caused by jobs moving overseas. If that's so - and the manufacturing jobs "shortage" is being caused by, say, increasing productivity through fancy automation - giving factories a tax break might still increase the number of US manufacturing jobs just by encouraging an inefficient over-investment in manufacturing facilities. Of course, that would all be accomplished at the expense of other American jobs - which would have to be taxed (directly or indirectly) more to finance the tax subsidy given to manufacturing. Is that coherent economics or policy? Is there some reason why we should prefer to tax people in the United States who do things efficiently in order to subsidize less-efficient manufacturing businesses? Of course, that would also create an incentive to move those over-taxed jobs off-shore - and most of the things the US is really good at now are services. Like financial services - the kind they do a lot in New York City.

So Senator Clinton seems to be proposing a scheme that will probably lead to more of the services consumed in America being provided by non-Americans. Maybe by people in India or China? Isn't that called "outsourcing?" Isn't outsourcing supposed to be the BIG PROBLEM? (The Wall Street Journal reports today: Research budgets are so spare the brokers have even dabbled in outsourcing. J.P. Morgan Chase & Co. has hired 50 junior analysts in Bombay, India. The move has helped cut the yearly cost of covering a stock to $117,000 from $185,000 in 2001, a spokesman says.) Well, at least in the first instance it's a tax cut on somebody she's proposing. [BTW: Blogger Don Luskin's financial research shop and its fortunate clients are noted in the Journal article.]

Herr Doktorprofessor gives wise counsel: old fallacies about international trade have been making a comeback lately (yes, Senator Charles Schumer, that means you).

But, hey, Herr Doktorprofessor! You missed one! Yoo-hoo! Check out the other Senator from New York! Yoo-hooooooooo!

Yes, indeed. Leave it to the smartest person in the world to think of something like that. And, of course, send her to the White House in 2008 as her reward!

Posted 12:31 PM by Robert

The Fall Of The House Of Eisner XI: The Board Journeys Deeper Into The Old Corporate Muddy

The naming of attorney and ex-politician George Mitchell as Chairman of Disney is drawing predictable, bad reviews:

Mitchell "knows absolutely nothing about business," said Morris Mark, head of New York's Mark Asset Management Corp. and a holder of shares in both Disney and its unwanted suitor, Comcast Corp. In Mark's view, Disney's next chairman "needs some combination of vision and experience" in the company's businesses. Disney's best hope of finding such traits, Mark said, would be for Comcast's takeover bid to succeed — leaving that company's CEO, Brian L. Roberts, to fill Eisner's shoes.

The Man Without Qualities believes that Comcast would make better use of Disney's existing assets than current Disney management is doing. But that's far from saying that Comcast is the best owner of Disney. Disney's biggest problem is its failure to create great intellectual property - what Comcast brings is a likely ability to better exploit existing intellectual property.

Nevertheless, Mr. Mark's comment puts Chairman Mitchell in an interesting light. It appears to be quite right that Mr. Mitchell "knows absolutely nothing about business." That means that either (1) the Board has placed a man who "knows absolutely nothing about business" in charge of Disney, which is a fairly clear violation of the Board's fiduciary obligations to the shareholders or (2) Disney still has someone at the helm as de facto Chairman who does know something about business because Mr. Mitchell is just a cat's paw for Michael Eisner - and the "new" appointment is essentially a fiction.

It is getting a little strange and precarious for the individual members of the Board that their best defense to a breach of fiduciary duty law suit is the argument that their vote to appoint the new Chairman is really a fiction. Are these individual Board members actually speaking to their own, personal, attorneys? If they are, they need new attorneys - attorneys not paid by Disney, and with no hope of ever being paid by Disney.

Posted 10:38 PM by Robert

Happier Days At 1600 Pennsylvannia Avenue

OPEC will consider raising oil output if prices remain high for the next two weeks, according to cartel officials, as signs mount that the producers' group miscalculated last month in calling for an output cut amid strong demand.

But it actually has to happen to matter.

Posted 9:32 PM by Robert

The Fall Of The House Of Eisner X: The Second Shoe Drops

So far, I'm wrong. The Board is trying to get by with appointing George Mitchell as Chairman. That's a big mistake for Disney. Twenty-four percent of the shareholders voted against even keeping Mitchell on the Board - and now the Board unanimously has made him Chairman. Repercussions have no doubt already started - and by tomorrow Disney will be in full-blown crisis.

Well, it is an entertainment company.

The Disney Board has issued the following press release "explaining" its bizarre decision:

The Board of Directors, mindful of the shareholder vote today, announced that it is separating the positions of CEO and Chairman. Effective immediately, the Board created the position of Chairman of the Board. The Board has unanimously elected former Sen. George Mitchell to serve in that non-executive position.

While making this change in governance, the Board remains unanimous in its support of the Company's management team and of Michael Eisner, who will continue to serve as chief executive officer. Following recent detailed reviews of each major business and with an ongoing, in-depth knowledge of our operations, the Board has confidence in the strategic direction of the company. Our belief in the Company's strategy, financial results over the last several quarters, and the level of earnings and improved returns we expect going forward
make us confident that results will validate our judgment on the quality of our management team.

While there appear to have been a number of different forces at work in the shareholder vote, a significant message conveyed in the vote was in the area of governance, as evidenced by governance-driven withhold recommendations by two influential proxy recommendation groups and the public and private statements by a number of other shareholders. In particular, there was substantial focus on the question of whether the Chair and CEO functions at the Company should be split.

That is not to say that we view the vote as limited to governance issues alone. We are aware that some voted for an immediate change in management and in the board. However, taking all of these factors into account, we believe the action we have taken today is in the best long-term interest of the shareholders of the company.

With respect to the statement made by Comcast, the Board of Directors stated that it does not believe today's reiteration by Comcast of its previous proposal, which we rejected as inadequate, would lead to a transaction beneficial to Disney shareholders. The Board will carefully review and analyze any reasonable proposal.

Could there be stronger evidence that the Board is completely clueless? No mention is made, for example, of the fact that 24% of shareholders signaled that Mr. Mitchell, the man the Board has now appointed Chairman, should not be on the Board at all? Disney needs a lot of work, urgently and right now. After the shareholders vote, Mr. Eisner's management team cannot be expected to do it. It has no credibility.

The Disney Board is beginning to cross the boundary where the individuals may be flirting with very, very large personal liabilities for their acts. Whatever else this press release may evidence, it does not evidence due care by this Board in managing this company.

There's an old cartoon cliche: The sound of the third dropping shoe. Expect it.

Posted 1:08 PM by Robert

The Fall Of The House Of Eisner IX: The First Shoe Drops

The Wall Street Journal reports:

Some 43% of Walt Disney Co. shareholders withheld their support for Chairman and Chief Executive Michael Eisner, an enormous rebuke of his leadership that could prompt company directors to force Mr. Eisner to relinquish his chairman role. The number of shares withheld was higher than many had been expecting.

Of course, that is a little less than what the Man Without Qualities predicted. But, on the other hand:

Disney executives said about 1.8 billion Disney shares were represented at the meeting, or about 87% of the 2.1 billion outstanding shares.

What to think about the 13% of current shareholders who didn't bark at all?

The Disney board will now hold a meeting at which it is supposed to at least remove Mr. Eisner as Chairman. That, of course, would be wilfull disregard of an almost unprecedented show of shareholder dissatisfaction.

Another Man Without Qualities prediction:

Michael Eisner will soon be completely removed as Chairman and CEO by his own kennel of lap dogs - and offered a token "production deal" so he can play studio executive.

Posted 10:33 AM by Robert

"Never Mind" Coming?

It's beginning to look like the whole Senate Judiciary Committee "memogate" mess will just fizzle out. Evidence is pointing towards the supposedly purloined Democratic memos actually being freely available to the entire office.

Here's the Hill article, and here's the entire Manny Miranda statement.

Links from Washington Republicans.

Posted 2:33 PM by Robert

Passionate Numbers

I haven't seem The Passion of the Christ yet, but reports of its financial and audience successes just seem to keep getting stronger:

Mel Gibson's "The Passion of the Christ" keeps on defying conventions. The film's boffo preliminary weekend estimates were revised upwards Monday when final numbers came in. The Friday-to-Sunday haul came in at a stunning $83.8 million, bringing total sales to a massive $125.2 million since its Wednesday opening. (The number includes $3 million from private previews the prior two days.) Early estimates on Sunday put the weekend at $76.2 million and the total at $117.5 million. ... When the final grosses were in, Friday's was $22.9 million, Saturday's was $33.1 million, and Sunday's was $27.9 million -- 22% higher than Friday and down just 16% from Saturday. For a film to sustain such a small drop from Saturday to Sunday, and likewise make that big of a leap from Friday's gross, is unheard of at the box office in this day and age. ... The weekend debut of the Icon Prods. film is by far the biggest opening in history outside of the near-summer and year-end holiday periods; it's the ninth-highest grossing weekend of all time; the biggest opening in February ... it's the second-biggest debut for an R-rated film ... and it's the largest debut ever for an independent film. "Passion" holds the crown for the second-highest-grossing first five days for a film opening on a Wednesday. ... [I]f exit polls are any indication, the picture should hold up very well in the weeks ahead.

That's all very curious, especially since the film received mixed but mostly negative reviews. Many of the reviews are, in my opinion, distinctly strange. Who knew that so many movie reviewers were also religious theorists with pointy opinions of what must go into a Biblical epic to make it appropriately well balanced? And who could have imagined that images of harm done to one man would generally offend as "too sadistic" or "too gory" the very same group of movie critics who generally just loved Black Hawk Down - an extended exercise in hideously realistic violence visited on a group of American servicemen? (Sample: "Black Hawk Down is a lean, mean war movie will astonish you with its stark realism and exhaust you with its intensity.") Beyond that (as Herr Doktorprofessor says) who could have known that the critics would be so utterly out of touch with the viewing public when the critics served up a 54% "Rotten" rating for Mr. Gibson's opus: According to CinemaScore.com, a sensational 99% of respondents gave "Passion" a positive grade. Yes, Passion seems to be a critic-proof movie, an honor it shares with virtually any Adam Sandler effort. And despite all the violence and gore, it's a chick-flick! The audience skewed slightly female at 52%. Well, the world is indeed a strange and wonderful place.

And while the Passion is overturning much conventional Hollywood wisdom (there is no wisdom more conventional than conventional Hollywood wisdom), one thing is certain from these blow-out numbers:

THERE HAS TO BE AND WILL BE A SEQUEL AND A PREQUEL!

Industry sources speculated that midweek business for "Passion" would probably be cut in half or more from the weekend totals, and that next weekend's box office should hold up very well, slipping perhaps 30% or so. Most blockbusters lose about 50% in their second weekend.

But, you know, this blockbuster may be just a little bit different on its second weekend, too. A 99% positive grade is, shall we say, unusually strong word-of-mouth.

Best line I've heard: "If you didn't like the movie, you probably didn't like the book."

Posted 11:03 PM by Robert

The Fall Of The House Of Eisner VIII: The Dog That Didn't Bark

The Walt Disney Company's annual meeting in Philadelphia is almost upon us, and the company's management is resigned to investors representing more than 30 per cent of its shares registering their dissatisfaction with Mr Eisner's leadership and the company's performance.

The percentage of Disney shareholders expressing their dissatisfaction is likely to be far north of that 30%.

To see why, consider first that the level and extent of market hostility to Disney is far broader and deeper than that expressed by current shareholders. It is an obvious fact of life that in a free stock market the most severe critics of any public company will not be found among its current shareholders - but among those investors that will not buy the company's stock at all, and therefore aren't heard from at any shareholders meetings: the dogs that don't bark. Here, Disney is really exceptional. Consider the Capital Group Companies, Inc. - a huge institutional investor managing about $850 billion in managed assets. Capital is headquartered in Los Angeles, just a few miles from Disney's headquarters in Burbank. At one time Capital was a major Disney shareholder. Today, the inside word is that Capital owns no Disney shares whatsoever. Capital is not exceptional. Many managers of institutional funds and mutual funds who would once, not so long ago, have insisted on holding significant Disney stock have decided that they will no longer even consider touching it. And Michael Eisner is a very big reason in many of those decisions. In sum: there is a pervasive hostility to Michael Eisner through most of the investor community throughout the nation - current shareholders are mostly his least severe critics.

Now add to that pervasive hostility to Mr. Eisner the fact that about two-thirds of Disney's stock is held by institutional and mutual fund owners. That is: About two-thirds of Disney's shareholders are fiduciaries. In ordinary times such holders vote with management. But these are not ordinary times. Right now, some of the nation's largest shareholder consultants have recommended against a vote for Michael Eisner, which just reflects the general hostility towards him. Many of the nation's largest and most influential public pension funds - including the two largest such funds in Disney's home state of California - have expressed unvarnished hostility for Mr. Eisner's continued presence. Not even a single large investor is really defending him loudly. Disney admits he will probably lose at least that 30% of the shareholders.

Why would any fiduciary want to fight all that, especially where Mr. Eisner has no big, respected defender? Why would a fiduciary want to explain a vote that runs contrary to such general market hostility, especially where Mr. Eisner and Disney have offered no compelling reason to do so? It is much easier for a fiduciary to explain that he or she voted the Disney shares they held in trust as the consultants and public pension funds did and in accordance with the general, national hostility towards Mr. Eisner. Fiduciaries generally take the easiest road.

And the easy road in Philadelphia leads to a substantial majority of Disney shareholders just saying "no" to Michael Eisner this time around.

We'll know in a very little while.

Wednesday Morning Update:

Wednesday morning, the State of Wisconsin Investment Board and the Missouri State Employees Retirement System joined other pension funds -- including the Florida Retirement System -- in withholding their votes for Eisner's reelection.

The American Federation of State, County and Municipal Employees Pension Plan, the Ohio Public Employees Retirement System, the California Public Employees' Retirement System, the New York State Common Retirement Fund, the Massachusetts Pension Reserves Investment Trust, and funds in Connecticut, North Carolina and New Jersey have also decided to withhold their votes for Eisner. Dissident former Disney Co. board members Stanley Gold ... predicted 40 percent of those voting on Eisner and the board's reelection would vote to withhold their support.

In addition to resistance from fiduciaries, my guess is that the general market hostility towards Eisner will be reflected in a large negative vote from non-fiduciary shareholders, too - all of which will put the anti-Eisner vote north of even the 40% Mr. Gold suggests.

Posted 10:04 AM by Robert

Hi-ho! Herr Doktorprofessor Trades Again!

Posts responding to columns of Herr Doktorprofessor Paul Von Krugman have been scarcer here recently because, frankly, it is almost impossible to find a respect in which to take him seriously, including, without limitation, as an economist, a columnist, a reporter or as a provider of political arguments. He is mostly of "interest" as a free rider, degrading the credibility, good will and other intellectual property of institutions that have allowed him access to their respective tills: Princeton, the New York Times, the regretful John Bates Clark Medal committee and, increasingly, the Democratic Party itself. But that's a fairly esoteric, second-order kind of "interest."

Herr Doktorprofessor these days may warrant a kind of "batch processing." His columns are increasingly repetitive and dilute, so perhaps by treating them as the kind of a nearly fungible sour mash one can distill something with a bit of a kick. Not that Herr Doktorprofessor these days includes much of substance to toss into the hopper. For example, consider his employment columns. It is some measure of Herr Doktorprofessor's descent into self parody that his view of America is exactly the same as the partisan view presented by the Democratic contenders. His column titled Jobs, Jobs, Jobs, could have been trimmed by his Times editor without losing any essential material to just one sentence:

"Nyah, nyah, nyah ... there aren't as many jobs as the Republicans hoped for ... thrthrtrhrthrtrthrthrtrhrthrtr."

For this we need Princeton? The column is little more than cites to various selected, negative employment statistics. Herr Doktorprofessor does add nasty, unoriginal, visionless and mostly misleading apercus with not a suggestion of analysis. But there is not even a hint in Jobs, Jobs, Jobs as to what Herr Doktorprofessor thinks might be causing this putative scarcity of jobs generation or what, if anything, this or any president might have done to create more. Trade? Silence. Increasing productivity? No mention. Overhang from the huge over-and-mis-investment boom of the late Clintonian era? Peepless. Increasing self-employment, start-ups and contracting-out? Not a word. Mandated employee benefits costs? Doesn't say. Counterproductive, burdensome regulation? He's too busy. Too-high taxes on employers? Please! Don't get him started!

Reading Herr Doktorprofessor's insights one would be left in amazement that today the stock market is up again on good employment and manufacturing news that the Wall Street Journal reported this way:

The Institute for Supply Management reported Monday that its purchasing-managers index slipped to 61.4 from 63.6. Any reading above 50 indicates expansion, while those below denote contraction. "This month, many respondents are particularly encouraged by the increased breadth of the recovery in manufacturing. All 20 manufacturing industries reported growth," said Norbert J. Ore, chairman of the group's survey committee. .... The employment index, meanwhile, shot up to 56.3, the highest level since December 1987, from 52.9. February marked the fourth straight month that the manufacturing sector has seen an improvement in hiring activity. ... The employment reading is "consistent with manufacturing payrolls accelerating to a 50,000 per month pace over the next few months," wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a note to clients. "In short, ignore the dip in the headline, this is a strong report." If February's reading of 61.4 were to be maintained for an extended period of time, it would be consistent with a 7.2% annualized increase in the U.S. gross domestic product, according to the report.

CBS Market Watch chimes in that The [Institute of Supply Management's] index has been above the 60 percent mark in the last three months, but only nine times in the past 20 years. Reuter's also reports on the same developments: U.S. factories boomed at close to a 20-year high in February, according to a survey released on Monday that also suggested a turnaround in hiring may be on the horizon after a three-year struggle. ... The employment index jumped to 56.3 in February -- the highest since December 1987 -- from January's 52.9. ISM's Ore said more and more factories were reporting hiring though it has yet to show up in government employment statistics.

There are some worrying trends and less encouraging news. That's part of economic health and growth, there's almost always some worrying trends and less encouraging news except when the economy is in a bubble preceding a large correction. In a bubble almost all news is sunny and almost all trends seem to ascend. But today's reports are hardly the first breaths of economic spring. As noted above by the Journal, the manufacturing hiring has been improving for four straight months. Government employment statistics are often lagging indicators. Nor is it surprising or alarming that popular belief lags positive results by even more than government statistics. After all, it's always a lot easier to focus and rely on what is known, but leaving, than on what is unknown, better and coming. For example, as the Journal separately reports:

[C]ontrary to popular belief, the U.S. is creating new high-paying jobs. Here is one growing field: logistics. The frenetic pace of global trade, coupled with outsourcing of manufacturing around the world, has transformed delivery into a complex engineering task. Companies enlist logistics consultants to untangle supply chains and to monitor shipping lanes and weather patterns.

Jobs, Jobs, Jobs does not include a single suggestion as to what might be done now - what, say, a Democrat might propose. Of course, one doesn't expect to be presented with an integrated version of economic developments from the Democratic presidential contenders or their media sympathizers, who apparently think it their job to portray America as wallowing in deep recession, on the brink of a still deeper depression, suffering under the worst president ever, and with nearly everyone's job about to escape to, say, India. (Do reporters or politicians ever wonder how their jobs could be outsourced overseas?) But shouldn't Herr Doktorprofessor be suggesting things for his favored economic demagogues to say, rather than paraphrasing their rantings? His "new" column, The Trade Tightrope, is similarly deficient when it comes to corrective action or constructive suggestion:

First and foremost, we need more jobs. U.S. employment is at least four million short of where it should be.

Here! Here! Herr Doktorprofessor! ... Er, got any thoughts on how we should actually get those jobs you say we need? Operators at the White House and Kerry and Edwards campaign are standing by to take your calls!

Herr Doktorprofessor, apparently thinking that he's on a roll, continues:

Beyond that, we need to do much more to help workers who lose their jobs. It didn't help the cause of free trade when Republican leaders in Congress recently allowed extended unemployment benefits to expire, even though employment is lower and long-term unemployment higher than when those benefits were introduced.

What's with the "Beyond that?" Beyond what? There must be some text missing. There's no "that" there. Maybe the Times' editor accidentally cut the key sentence in the whole column - the sentence that actually contains Herr Doktorprofessor's economic advice on jobs creation? What a pity.

And what is one to make of Herr Doktorprofessor's assertion that It didn't help the cause of free trade when Republican leaders in Congress recently allowed extended unemployment benefits to expire? At most one might argue that free trade is related to extended unemployment benefits for workers whose jobs have been displaced by foreign competition. Later in the column Herr Doktorprofessor admits that imports and outsourcing didn't cause that shortfall in jobs he says we need. So how can it be so important to extend unemployment benefits? And doesn't Senator Kerry have an obligation to explain to the public that imports and outsourcing didn't cause that shortfall, instead of chattering on mindlessly as he does about "Benedict Arnold C.E.O.'s," especially where the Senator says he is offended by those who question another American's patriotism? Even with respect to jobs that are displaced by trade and imports there is a huge economic issue ignored by Herr Doktorprofessor's partisanship. Ultimately, the cause of free trade is served best by demonstrating that free trade quickly creates more good jobs than it destroys. Extending unemployment benefits for workers whose jobs have been permanently displaced would extend their period of unemployment because such extended benefits dis-incentivise such workers from retraining or finding wholly different employment. And government sponsored jobs training programs are particularly dicey in an economy in which it is especially unclear to government representatives which sectors of the economy are creating or maintaining lasting jobs. Are we really better off having the government training people to be logistics consultants, for example? No.

Similarly, Herr Doktorprofessor says he thinks universal health care is key to keeping political sympathy for free trade up. But he also says that first and foremost, we need more jobs - and countries like Germany with generous welfare benefits and universal health care have had lots more problems generating jobs than the US has had. Aren't his imperatives in serious conflict? One is no closer to answers - or even the right questions - after reading Herr Doktorprofessor's columns purporting to deal with jobs or trade.

The anti-free-trade measures offered up by Senator Kerry get a pass in Krugmanian foreign trade theory:

Mr. Kerry's Wednesday speech on trade ... decried the loss of jobs to imports, but was careful not to promise too much. You might say that he proposed speed bumps, rather than outright barriers to outsourcing: rules requiring notice to employees and government agencies before jobs are shifted overseas, steps to close tax loopholes that encourage offshore operations, more aggressive enforcement of existing trade agreements, and a review of those agreements with an eye toward seeking tougher labor and environmental standards. I don't see anything there that threatens to unravel the world trading system. If anything, the question is whether it provides enough of a "political safety valve."

In fact, Senator Kerry's proposed review of existing trade agreements with an eye toward seeking tougher labor and environmental standards would obviously very much threaten to unravel the world trading system if the United States were really serious about demanding any such result. Could there be a surer way of blowing up the WTO than for the United States to demand that, say, China and India comply with something like US environmental or labor standards? President Bush's insistence that those two countries abide by environmental restrictions similar to those applicable to the United States was a major reason why the Kyoto Accord foundered. Now President Kerry wants to introduce that same dynamic that upset the Kyoto Accord into renegotiations of every single existing American trade agreement - and Herr Doktorprofessor says he doesn't "see anything there that threatens to unravel the world trading system." Sometimes we see what we want to see.

What about internal Krugmanian inconsistencies? No recent column by Herr Doktorprofessor is complete without a howling internal inconsistency brought on by transparent partisanship! And his most recent column purporting to deal with trade does not disappoint. Ah, yes, those "political safety valves." When last we heard about political safety valves from Herr Doktorprofessor he had adopted a rather different approach regarding the Bush steel tariffs:

Just a few days ago ... George W. Bush ... capitulated, with a cravenness that surprised even his critics. ...[T]he Bush administration is all hat and no cattle when it comes to free trade, and probably free markets in general. ... We can ... dismiss the claim that this was "temporary relief so that the industry could restructure itself." Traditional steel producers are in long-term decline ... exacerbated by the fact that an increasingly service-oriented economy uses far less steel per dollar of G.D.P. than it used to. A temporary import tariff won't turn this trend around.

Does Herr Doktorprofessor thinks that Senator Kerry's "speed bumps" will turn around the trend to using foreign service providers when they're cheaper than Americans? And doesn't Senator Kerry imply that he intends to erect more than "speed bumps" with his constant references to executives who import services -- such as using lower-paid workers in foreign countries to handle customer-service calls and Internet queries from American consumers -- as "Benedict Arnold C.E.O.'s?" Doesn't one shoot traitors like Benedict Arnold? Indeed, Herr Doktorprofessor has not always been so forgiving of those who transgress free trade principles. For example, he suggested that the Bush steel tariffs did threaten to unravel the world's trading system (or something close to that) even though the United States never suggested that it would defy an WTO decision to impose sanctions for that decision. But a treaty is a contract, and a contract party's election to pay damages (or endure other remedies) for breaching a contract is not generally viewed as a threat to the rule of law - indeed, Oliver Wendell Holmes, Jr. thought such elections were the rule of law. And Senator Kerry vigorously objected to the President's removal of those very same steel tariffs. But Herr Doktorprofessor now thinks Senator Kerry just articulates a realistic political strategy in support of world trade although the imposition of those same steel tariffs showed us that the Bush administration is all hat and no cattle when it comes to free trade, and probably free markets in general. Gee.

And, while we're on the topic, why doesn't Herr Doktorprofessor think that Senator Kerry has some obligation as a "national leader" to actively oppose the "blizzard" of often loony anti-free-trade bills now being pushed by Democrats in Congress - many of which bills go far beyond the "speed bump" category? In fact, the biggest threat to American jobs is the poor education system - a threat squarely attributable to the Democratic Party and it's central public education employees constituencies. Herr Doktorprofessor also tells us that somebody (not him, of course, but the "Nelson Report," a newsletter unknown to, and unobtainable by, the vast majority of his readers) has suggested that Senator Kerry is basically a free trader. One might therefore ask if Senator Kerry's departure from his supposed commitment to free trade principles means that in giving in to the current anti-trade Democratic zeitgeist and in failing to oppose what Democrats are trying to do in Congress he "capitulated, with a cravenness that surprised even his critics."

Just asking.