Posted 8:06 AM by Robert

Voyage To Krugmania

It has long been difficult to take anything Herr Doktorprofessor Paul Von Krugman writes in any way seriously, and today's column demonstrates why that is the case. His argument proceeds first with the assertion that the President is out of touch with the Krugmanian "fact" that the economy is doing rather poorly, and then the "explanation:"

According to John Snow, the Treasury secretary, the global economy is in a "sweet spot." Conservative pundits close to the administration talk, without irony, about a "Bush boom." ... Is the administration's obliviousness to the public's economic anxiety just partisanship? I don't think so: President Bush and other Republican leaders honestly think that we're living in the best of times. After all, everyone they talk to says so. ... Actually, it's quite simple: Mr. Bush and his party talk only to their base - corporate interests and the religious right - and are oblivious to everyone else's concerns. .... Americans are feeling a sense of dread: they're worried about a weak job market, soaring health care costs, rising oil prices and a war that seems to have no end. And they're starting to notice that nobody in power is even trying to deal with these problems, because the people in charge are too busy catering to a base that has other priorities.

One should count one's blessings: At least today's "Bush is delusional" argument is not another "Bush lied" column. But it would have been nice - or at least intellectually coherent - for Herr Doktorprofessor to have begun his argument with some actual relevant evidence that the administration is out of touch. Mr. Snow's out-of-context statement about the global economy does not even purport to express his views on the domestic American economy. The "administration" does not include "conservative pundits." And Herr Doktorprofessor couldn't find even a single statement by the President indicating that he is out of touch, even though Herr Doktorprofessor deems that to be the defining characteristic of the President and his administration? - could not find even one such statement taken completely out of context? Maybe that's because the President has been saying things like this:

"Millions of American families and small businesses are hurting because of higher gasoline prices," Bush said. "I wish I could simply wave a magic wand and lower gas prices tomorrow; I'd do that. Unfortunately, higher gas prices are a problem that has been years in the making."

And today there is this:

President Bush on Monday said he would tell Saudi Crown Prince Abdullah that high oil prices will damage markets and will discuss the kingdom's oil production capacity with the Saudi leader.

Herr Doktorprofessor was last seen dismissing a "Bush Boom" back in July of 2004 (Bye-Bye Bush Boom). In fact, today's column could be a hasty recycling of that pre-election effort, as these excerpts from the old column indicate:

When does optimism - the Bush campaign's favorite word these days - become an inability to face facts? On Friday, President Bush insisted that a seriously disappointing jobs report, which fell far short of the pre-announcement hype, was good news ... But Mr. Bush has already presided over a bust. ... Americans badly need a boom to make up the lost ground. And we're not getting it. .... And economic growth is passing working Americans by. ... Whatever boost the economy got from the tax cuts is now behind us... One last point: government policies could do a lot about the failure of new jobs to come with health benefits, a huge source of anxiety for many American families. John Kerry is right to make health care a central plank of his platform. I'll analyze his proposals in a future column.

Well, there you have it. As of July 2004 President Bush was hopelessly out of touch, the Bush Boom was a delusion, John Kerry was then on a roll with his health care talk and, of course, was resoundingly elected president in November 2004 after seizing the idea-weaponry handed to him by Herr Doktorprofessor (that intellectual Vulcan to the Democratic gods!), as the Democrats swept control of Congress from the delusional Republicans!

Gee, where did that syllogism go so badly off the tracks?

Anyway, in today's column Herr Doktorprofessor also assures us that wage-earning Americans aren't part of the [Republican] base, which consists of corporate interests and the religious right. I wonder what happened to all the wage earning Christian conservatives in the country? Have they all become independent contractors churning out software for all those corporate interests? Or does Herr Doktorprofessor think that these Christians are so wrapped up in advancing "family values" that they don't care about feeding their families? Does he think that they live off dividends or capital gains, as Herr Doktorprofessor seems to suggest? Or is that just what happens once they retire and have to depend on their retirement savings? If only Herr Doktorprofessor were here to explain.

Then there is his odd "explanation" of why the administration is "out of touch." Surely not even Herr Doktorprofessor thinks that the President and the administration literally (or even substantially) talks only to the Republican base. The President and his people have read all the public opinion polls that Herr Doktorprofessor (pathetically) quotes to demonstrate his own unity with, and knowledge of, the American people. And the President and his people also know about the government statistics Herr Doktorprofessor cites and distorts. It's not even worth asking why Herr Doktorprofessor thinks "wage earners" are so different from and more important than the self-employed, for example - it would just raise all that "two employment indices" stuff again. Do we need a Princeton economist to recite public opinion polls or "speak for the people" - especially when he doesn't even mention the actual 5.2 percent unemployment rate in his passion to argue that ordinary people are being left behind? Nor does Herr Doktorprofessor seem very good at reading those polls, since (as Don Luskin points out) those wage earners do seem to support the President's private account Social Security reform - contrary to Herr Doktorprofessor's assurances. And, after all the push-polling was swept away, newer, better polls (here, for example) suggest that the public does not line up against the Republicans on Terri Schiavo the way Herr Doktorprofessor thinks. Actually, I don't see how Terri Schiavo's death much fits into Herr Doktorprofessor's argument that the religious right is happy, happy, happy with recent developments. Does Herr Doktorprofessor think those Republican corporate interests are particularly pleased with what happened to Terri Schiavo?

So what the heck does Herr Doktorprofessor think about the topic of his column? What does he think he has contributed? One finds hardly a hint in the column itself.

POSTSCRIPT:

Detroit Free Press management investigated an April 3 Mitch Albom column that contained inaccurate information. Albom was allowed to resume writing columns for the Free Press, but his work was suspended for a while after he addressed the incident with readers on April 7. The inaccuracies underlying the whole mess are summarized by the Free Press this way:

Mitch Albom's column in the Sunday section said NBA players Mateen Cleaves and Jason Richardson attended Saturday's Michigan State-North Carolina NCAA tournament basketball game.

This all happened just because Albom wrote his Sunday column early - just as Harris, Steve Martin's weatherman character in L.A. Story, pre-recorded his next weekend forecast, promising lots of sun ("Harris, should you really be pre-taping the weather report?" Harris: "The weekends are very tough for me to come in, you can imagine my busy weekend schedule. Besides, this is L.A., what's gonna change?"But something did change: No sun, just rain.)

Seriously, who cares if these two guys were in the audience or if Mitch Albom pre-wrote his column? Compared to the whoppers Herr Doktorprofessor lets fly almost every week, Albom's misdemeanors are trivial. Heck, Herr Doktorprofessor routinely misquotes government statistics and outright lies about many private studies. And he often does it crudely, allowing interested readers to sense that he's committing some misdemeanor by not giving whatever information would make it easy to identify or access his source.

But the New York Times never holds Herr Doktorprofessor to account for his journalistic crimes the way the Detroit Free Press nailed poor Mitch Albom. And, unlike Mitch Albom, Herr Doktorprofessor hasn't even written a run away best-seller! (And don't even get me started on Maureen Dowd!)

I guess that just shows that the Detroit Free Press has journalistic standards that are quite a bit higher than those of the New York Times!

Posted 10:01 PM by Robert

The Envy Of The World? O, Please!

Ted Olson has created some fuss with his Wall Street Journal Op-Ed argument that politicians should lay off the judiciary, an argument that he says largely proceeds from the following premise:

We might start by getting a firm grip on the reality that our independent judiciary is the most respected branch of our government, and the envy of the world.

The envy of the world? Well, it is often and correctly noted that imitation is the sincerest form of flattery - and that should hold for envy, too. But if the American judiciary is the envy of the world, why have so few other nations chosen to emulate this most respected branch of our government? Considerations of "independence" of the judiciary in American arguments slide frictionlessly into considerations of "judicial supremacy" - the doctrine under which courts strike down unconstitutional statutes. Mr. Olson's argument is no exception. But Britain, of course, famously has no written constitution, and a written constitution is often said (by Chief Justice John Marshall, for one) to justify judicial supremacy. British courts will issue rulings of "incompatibility" where Parliament's acts are found to be in conflict with other laws, including the unwritten British constitution (or with EU and other international law). But while the British certainly consider their courts to be "independent" in their own way, the highest court in Britain (the Law Lords) is formally part of the House of Lords, and since the 17th Century the British Parliament has always retained supremacy over any ruling of the British Courts. Parliament is supreme in the Netherlands. New Zealand courts are prohibited from striking down laws passed by the New Zealand Parliament - so their courts also lack American "independence." The American constitution was a major, express exemplar for the Australian constitution, so it is no surprise that the closest approximant to the American judicial system can perhaps be found in Australia, where the courts exercise a judicial review similar to (but by no means equivalent to) the American version - but there is little in the way of an express bill of rights. The notorious "notwithstanding" clause of the Canadian constitution allows that country's parliament to pass laws squarely inconsistent with much of the country's charter.

In almost all civil law jurisdictions - including Germany - neither the judicial system nor the members of the judiciary personally enjoy the respect or authority they receive in the United States. In France, the Constitutional Council can examine the constitutionality of a proposed statute only before it becomes law and citizens have no right to petition. I recall sharing martinis many years ago with Antonin Scalia, who had then recently given up his position as a professor at the University of Chicago to take a spot on the United States Court of Appeals for the District of Columbia. Then-judge Scalia confided that his daughter had recently been an exchange student in Germany, and her German family had over dinner one evening enquired about her father's work. When the daughter explained that Nino had been a university professor, but had just become a federal judge, a silence fell over the dinner table until somebody asked the daughter the question on everyone's mind: "What went wrong?" Such is the status of a judge compared to a professor in Germany.

In contrast, the Indian Supreme Court has the power to declare a law or governmental practice unconstitutional - and has used that power in a manner arguably much more aggressive and overtly "activist" and partisan than anything attempted in the United States. Would Mr. Olson wish American courts to follow the Indian lead? India's Supreme Curt, if anything, seems to enjoy far too much "independence" for American tastes.

Recent developments in Russia drive home that there, as in most of the former Soviet bloc, the transition to an independent judiciary (whatever definition one chooses) remains at very best highly incomplete. Such countries inherited systems that had a totally different view as to the purpose of law than exists in the West. The law is supposedly seen in the United States and throughout the West as having faith in constitutionalism and a belief that government is limited by law. Soviet style governments sought to control society through law, which was a mere instrument of infinite government discretion with nothing to do with the defense of human rights or on placing other limits on the power of the state. Courts were controlled of the Communist Party, prosecutors and the executive. The law and the justice system were the tools of the state, used to advance state powers and control the citizenry - and that attitude has not been fully shed.

Perhaps other countries should value or envy an American style independent judiciary more than they do. But I think it is a fact that most jurisdictions given the chance have not chosen to adopt an American style system. In fact, to judge by the actual choices made by almost every other country, even highly democratic countries whose constitutions have recently been reworked or rewritten, it is hard to read Mr. Olson's postulate "We might start by getting a firm grip on the reality that our independent judiciary is the most respected branch of our government, and the envy of the world," and not chuckle. The fact is that the judiciary of almost every other nation occupies a much smaller quarter of the legal structure of that nation than is the case in the United States - and that seems to be by deliberate, informed choice of those other nations.

Would importing principles from constitutional structures with such shrunken judicial quarters lead to a shrinking of the authority of the Supreme Court and the rest of the American judiciary, perhaps in unexpected ways? Some American Justices - such as Breyer and Kennedy - seem determined to find out. One wonders if the Supreme Court Justices who recently have expressed such interest in importing elements of foreign law into American federal constitutional precedent keep in mind the old saying that "the law is a seamless web." Indeed, Mr. Olson lists a good many devices that could be used to shrink the judiciary in this country, even within the current constitutional framework. For example, there is no clear constitutional reason why a prosecutor or Congress could not put a judge under oath and obtain his or her testimony about a controversial decision - leading to a possible perjury prosecution. The governments of many other countries wouldn't think twice about doing such a thing. It is unlikely that these are the kinds of things Justices Breyer and Kennedy would like to see imported to this country. But such results may follow anyway. For the most part only extra-constitutional respect for the American judiciary keeps such things from happening here. And it is possible, even likely, that such extra-constitutional respect exists here largely because of how American judges have acted in the past, what kind of things they do (civil law judges, for example, can and do initiate and conduct prosecutions), and what principles they have employed in their decision making. If American judges start acting more like judges from jurisdictions in which there is less respect for the judiciary and start employing principles imported from such jurisdictions, will the American respect for the judiciary that Mr. Olson so values remain high?

In a similar vein, one might also wonder a bit at Mr. Olson's observation that "corruption in the judiciary ... is astonishingly rare in this country." Presumably he means that it is astonishingly rare in this country compared to other, comparable countries. Isn't it possible that that corruption of American judges is rare because of how American judges act, what they do, and what principles they employ in their decision making? If American judges start acting more like judges from jurisdictions in which corruption is not so rare, and start employing principles imported from such jurisdictions, will American judicial corruption remain so rare?

Do people like Justices Breyer and Kennedy know likely answers to the above questions? Has either of them has even seriously tried to ask such questions? Their public statements make that very unlikely. That could become a very big problem for all of us - including Mr. Olson.

Posted 9:03 AM by Robert

9-To-0 Against The 9th, Again

Defenders of the often almost inconceivably incompetent and willful United States Ninth Circuit Court of Appeals are loathe to acknowledge the now huge collection of cases in which the Supreme Court reverses the Ninth Circuit without a single Supreme Court Justice in dissent. But that collection is there, and it is rapidly expanding all the time - and not just in cases dominated by an apparent "political" element. Today brings another such example: Dura Pharmaceuticals, Inc. V. Broudo reverses (without dissent) a unanimous Ninth Circuit panel opinion. The Ninth Circuit panel included two usual class clowns - Harry Pregerson and Stephen Reinhardt - but left the actual decision writing to Glenn L. Archer, Jr. who was placed on the obscure Federal Circuit (not the D.C. Circuit, but the other lower US Appeals Court that sits in Washington D.C.) by President Reagan. The now-overturned Ninth Circuit decision had held that an accusation that a company's misrepresentations caused an inflated share price was itself sufficient to maintain a lawsuit alleging fraud under federal securities law - without any need for a plaintiff to provide a defendant with some indication of the loss and the causal connection between the misrepresentation and loss that the plaintiff has in mind. Put another way: where a plaintiff buys stock in a "stock bubble" in which all or many stock pricess are inflated, the Ninth Circuit decision would have allowed a plaintiff to (1) maintain an action against the issuer merely by alleging that the price of the plaintiff's stock was "inflated" (a formality, since by assumption all or many stock prices satisfy this condition) and that the plaintiff relied on some misrepresentation made by the issuer, even if that misrepresentation played no material role in creating the "inflated" price, and (2) obtain damages from the issuing company equal to the entire difference between the inflated and non-inflated price, if any material misrepresentation were shown, even if the misrepresentation on which the plaintiff relied had nothing to do with the inflated price. In other words, the Ninth Circuit decision would have been "stock bubble insurance" for plaintiffs. Of course, the other investors in the issuer - including its other shareholders - would have been left holding the insurance bag. This decision would have all but restored the old Lerach trick of suing every newly-public company whose stock price dipped - a trick Congress expressly and unambiguously legislated against with the Private Securities Litigation Reform Act of 1995 (the PSLRA). In fact, the Ninth Circuit decision would have hugely exacerbated and expanded the Lerach trick with the very statute Congress passed to shut that trick down.

The Dura district court understood that Congress had foreclosed the old Lerach trick, and tossed the suit out under the PSLRA. Every federal appeals court that had considered the issue agreed with the district court, indeed one can almost feel the Supreme Court exasperation with the Ninth Circuit as Clinton appointee Breyer deadpans:

Because the Ninth Circuit's views about loss causation differ from those of other Circuits that have considered this issue, we granted Dura's petition for certiorari. Compare [the Ninth Circuit decision] with, e.g., Emergent Capital Investment Management, LLC v. Stonepath Group, Inc., 343 F. 3d 189, 198 (CA2 2003); Semerenko v. Cendant Corp., 223 F. 3d 165, 185 (CA3 2000); Robbins v. Koger Properties, Inc., 116 F. 3d 1441, 1447-1448 (CA11 1997); cf. Bastian v. Petren Resources Corp., 892 F. 2d 680, 685 (CA7 1990). We now reverse.

What Justice Breyer does not mention is that the Ninth Circuit makes no attempt whatsoever to distinguish or explain why its opinion should diverge so wildly from those of the other federal appeals courts, other than to note that the Ninth understands that it is off on its own frolic, and doesn't give a hoot when it says (in footnote 4): By contrast, other circuits are less favorable to plaintiffs and do require demonstration of a corrective disclosure followed by a stock price drop to be alleged in the complaint.

But Justice Breyer is scathing once he gets into the opinion itself:

For one thing, ... [t]he most logic alone permits us to say is that the higher purchase price will sometimes play a role in bringing about a future loss. It may prove to be a necessary condition of any such loss, and in that sense one might say that the inflated purchase price suggests that the misrepresentation (using language the Ninth Circuit used) "touches upon" a later economic loss. Ibid. But, even if that is so, it is insufficient. To "touch upon" a loss is not to cause a loss, and it is the latter that the law requires. 15 U. S. C. §78u-4(b)(4).

For another thing, the Ninth Circuit's holding lacks support in precedent. ... Given the common-law roots of the securities fraud action (and the common-law requirement that a plaintiff show actual damages), it is not surprising that other courts of appeals have rejected the Ninth Circuit's "inflated purchase price" approach to proving causation and loss. ... We cannot reconcile the Ninth Circuit's "inflated purchase price" approach with these views of other courts. And the uniqueness of its perspective argues against the validity of its approach in a case like this one where we consider the contours of a judicially implied cause of action with roots in the common law.

Finally, the Ninth Circuit's approach overlooks an important securities law objective. The securities statutes seek to maintain public confidence in the marketplace. ... But the statutes make these latter actions available, not to provide investors with broad insurance against market losses, but to protect them against those economic losses that misrepresentations actually cause. ... The statute thereby makes clear Congress' intent to permit private securities fraud actions for recovery where, but only where, plaintiffs adequately allege and prove the traditional elements of causation and loss. By way of contrast, the Ninth Circuit's approach would allow recovery where a misrepresentation leads to an inflated purchase price but nonetheless does not proximately cause any economic loss. That is to say, it would permit recovery where these two traditional elements in fact are missing.

So there you have it: Justice Breyer, a Clinton appointee and expert in regulation, says that the Ninth Circuit (1) overturned a correct district court opinion, (2) pointlessly broke with every other federal appeals court considering the issues, (3) defies logic, (4) is unsupported by precedent, (5) gets the objectives of the federal securities laws so wrong that the Ninth Circuit misconstrues those laws to be a huge social insurance system against stock market losses and (6) would allow suits without causation and loss in clear violation of controlling statutory language. And every single Supreme Court Justice agrees with him.

This is quite an accomplishment on the part of the Ninth Circuit! A reasonably bright student after the first three weeks of law school couldn't have done any worse. And let's not forget that the PSLRA was enacted because Congress thought that law suits of the type the Ninth Circuit would again authorize (and expand) were gnawing at the most important supports for the economy of the West Coast and other technology centers. Yet the Ninth Circuit did not even bother to give this ludicrous 3-judge decision an en banc review by a larger panel of that court. In other words, the Ninth Circuit thought it had bigger fish to fry than enforcing Congress's will to protect the most important supports for the economy of the West Coast.

Don Luskin hilariously notes that Paul Krugman and Brad DeLong were shillers of overpriced internet stocks back in 2000. So those two "economists" should be very happy with the new Supreme Court decision. Which all goes to show that every silver lining has a little cloud.

UPDATE: The Wall Street Journal scribes an interesting editorial today linking Dura with some of the excesses of the post-Enron "reform" and enforcement actions:

Which brings us to tomorrow's sentencing in a federal court in Houston of Daniel Bayly, the one-time Merrill Lynch investment banking chief convicted last year of fraud for his role in an energy deal with Enron. ... The more immediate issue is the Enron prosecutors' demands that Mr. Bayly receive a more severe sentence based on a bogus theory of "shareholder loss" long rejected in civil court. Whatever the sins of Enron and the others, this does not justify making bad law. ... The Enron prosecutors are ... taking the novel position that the simple fact that some shareholders bought Enron stock at an "inflated price" equals a loss. ... Nor is there much support for this leap across established law in the rest of the system. Just yesterday, the Supreme Court unanimously ruled in Dura Pharmaceuticals v. Broudo that plaintiffs who claim securities fraud must prove a connection between a misrepresentation and an investment's subsequent decline in price. As it happens, the Department of Justice and the Securities and Exchange Commission filed a joint brief in the Dura civil case in support of the proof-of-causation position.

For good reason. Blowing apart well-established, reasonable limits on corporate liability is a sure way to suppress legitimate risk-taking.

So the madness doesn't stop with the Ninth Circuit. Over reaching prosecutors are also apt to catch the fever. Of course, one function of courts is to contain fevered prosecutors. The Ninth Circuit doesn't seem able to fulfill that role wthout strict Supreme Court supervision.

Thanks to Don Luskin for drawing my attention to the WSJ editorial.

Posted 8:51 PM by Robert

German Pope?

Joseph Cardinal Ratzinger of Germany became Pope Benedict XVI today (Tuesday). It has been widely reported in the English-speaking world that he is the first German pope since Victor II (1055-1057).

But is he?

Whether Victor II was the last German pope depends on how one interprets nationality - a curious issue since "Germany" as we know it did not exist in the middle ages. What did exist was the German Empire. The last non-Italian pope was Hadrian VI (1522-1523), born in Utrecht which was then part of the German Empire. In Germany, he is generally considered German, in Holland, Dutch. And, as Taranto has pointed out, according to this list, Joseph Ratzinger is the first pope since Adrian Dedal (Adrian VI's pre-pope name) whose surname ends with a consonant. (Interestingly, the list also reveals that Benedict XIV's (Nov 12, 1425-?) pre-pope surname, Bernard Garnier, also ended in a consonant - but he was an anti-pope!)

Hadrian VI's predecessor and namesake, Hadrian IV, was the only "English" pope. His pre-pope surname (he was origially named Nicholas Breakspear) also ended in a consonant - just for the record.

Posted 9:57 AM by Robert

Legislate In Haste And Hysteria, Repent At Leisure

From the Wall Street Journal:

[W]e already know is that [Sarbanes Oxley (Sox)] is more burdensome than its critics imagined. The most notorious part of the law is Section 404... Section 404 demands that companies demonstrate that their "internal controls" -- from computer facilities to their chain of command -- are sound enough to prevent fraud. ... Section 404 makes no distinction between internal controls that matter and those that don't. ... Worst of all, 404 forces companies to re-document their efforts every year, regardless of circumstances. No surprise, then, that the number of companies missing financial filing deadlines has at least doubled compared with a year ago. ... One conservative estimate puts the national 404 tab at $35 billion, or some 20 times what the SEC predicted. ... The American Electronics Association estimates that while Section 404 costs the average multibillion-dollar company about 0.05% of revenue, the figure can approach 3% for small companies.

One result is that many companies are rethinking their decision to tap the public equity markets -- 21% of all those surveyed in a 2004 Foley and Lardner study. Foreign companies are threatening to delist from U.S. stock exchanges...

The greatest Sox irony is that its main beneficiaries are the same big accounting firms. ... The feds killed Arthur Andersen... but its offending partners simply scooted to one of the other firms and are laughing all the way to their new vacation homes. The tort bar also stands to gain ... securities lawsuits seeking class-action status was up 16% in 2004 ... Internal controls accounted for only 8% of fraud detection, or less than half of the 18% detected "by accident."

The larger issue here is balancing shareholder confidence against the business risk-taking that creates jobs and wealth. ... Turnover among Fortune 500 chief financial officers -- who may incur steep fines and even criminal penalties if even the slightest thing goes wrong -- was up 23% in 2004, a sign that the smartest executives may realize they don't need the Sox hassle. ...

Posted 6:47 PM by Robert

Apples ... Oranges ...

From the Timbro, June 2004 study EU versus USA by Fredrik Bergström and Robert Gidehag:

IF THE EU WERE A PART of the United States of America, would it belong to the richest or the poorest group of states?

At the beginning of the 1990s, there was no need to ask. Europe’s economic future was a subject of growing optimism. Productivity growth had for some decades been higher than in other countries of similar standing, and that growth was now going to be hugely accelerated by the elimination of trade barriers and the closer economic integration resulting from the Single Market. The EU as an institution was – and was undoubtedly seen as – a vehicle for growth and economic liberalisation. In other words, the EU was able to do what politicians in several member countries had wished for but had failed to achieve: to increase economic openness, to strengthen the process of competition, and harness the political process behind a liberal reform agenda.

Today, the perspectives on the EU, and the outlook on its future, are radically different. Economic growth during the 1990s never became what many had wished for. Some countries performed reasonably well, most notably Ireland, but on the whole the EU was lagging far behind other countries during the whole decade. Productivity growth decreased and by mid-decade the EU was running behind the US in this respect. The process of convergence in productivity, a much talked-about process since the 1970s, had once again become a process of divergence.

The Timbro study begins with comparisons of per capita GDP, which the study correctly notes is probably the best measure of comparative wealth - although it is not a perfect measure. While per capita GDP does not include some aspects of what some people might consider to be included in overall "wealth," such as political freedoms, environmental quality and government-enforced leisure - GDP does include the value of government services - including welfar spending. For some reason, it is curiously common for skeptics of such trans-border studies to deny that GDP includes the value of European-style welfare state programs.

Posted 4:13 PM by Robert

Academic Ju Jitsu?

From the perspective of my faculty contacts at Harvard, the overall approach of this Washington Post survey of Harvard President Larry Summers' troubles is utterly out of focus. The Post article gives far too much emphasis to the various public Summers/Harvard crises (sex-in-science, Cornell West, gays in the military and military on campus, etc), and pays far to little attention to the particulars of Mr. Summers' management style, preferring to stick to almost contentless generalities. Is he a "strong leader" or is he a "unilateralist?" Who cares! The real question is: has he been trying to shift the basic faculty/administration power structure at Harvard and, if so, is that a good or a bad thing? This is not something that can be decided without looking at actual incidents - and the Post provides none at all.

But the Post article does, apparently almost unwittingly, provide some glimpses of the Harvard/Summers show - glimpses that may have a significance quite other than the significance assigned to them by the Post. Consider these passages:

Last week, Summers (who is addressing the Harvard Club in Washington this evening) struck a very different tone.

"You know, universities like ours were structured in their basic structure many years ago, and it's probably an exaggeration but not too much of one to say that they were designed by men for men," he said. ....

There is a strange disconnect, however, between many of the alumni and the faculty of arts and sciences. ... Harvard's ... faculty voted by a decisive margin a lack of confidence in Summers's leadership. ... The vote was widely seen as reflecting long-simmering discontent with Summers's leadership, with what many view as an authoritarian streak, and a general dislike for [this] man ....

Summers is called "unilateralist" and "arrogant" by his critics; his supporters argue that only a strong leader, like Summers, can break down age-old barriers at the university -- make it more competitive, increase the flow of knowledge across departmental lines and among the many different schools and institutes that make up the unwieldy beast known as Harvard University. ....

Judith Hope, a former member of the Harvard Corporation -- a seven-member group that includes the president and tends to act with unanimity -- says Summers was chosen because he's a visionary. Harvard has huge challenges in front of it, which only a man of Summers's skills can handle, she says. Those include a massive expansion plan, across the Charles River, into the Allston neighborhood, where Harvard has been quietly buying up land for at least a decade; a major overhaul of the undergraduate curriculum; and the creation of a more centralized university, where the various schools and institutes and departments and faculties work together for mutual benefit. ....

It's not about academic freedom, [some critics of Summers on the faculty]argue. Or about political correctness. Or Lawrence Summers's right to speak his mind. The idea that Summers is simply getting the flak that comes to any strong leader, any change agent, any visionary, rankles..."

Perhaps the most striking disclosure in this article is the comment of Judith Hope, a former member of the Harvard Corporation -- a seven-member group that includes the president and is the ultimate authority at the University: Summers was chosen to facilitate the creation of a more centralized university. In other words: Mr. Summers was hired to reduce faculty authority - which is exactly what my Harvard contacts have been telling me he has been doing, and exactly what the faculty is up in arms over. Whether Harvard should or should not be more "centralized" and have less faculty input is a separate question. But Ms. Hope's admission strongly suggests that the ongoing brouhaha on the Charles is not just between Harvard's President and its faculty - the real fight is between the faculty and the Harvard corporation.

The Post article also suggests that Mr. Summers may have hit upon the beginnings of a nice counter strategy to the faculty's actions: turning against the faculty the very same public disputes that the faculty have to some extent been using as a flashy pretext for their actions - especially the sex-in-science imbroglio that the media finds so riveting. Mr. Summers (and the Harvard corporation) wish to restructure the University, and what better reason to restructure a university than to "admit" that universities like ours were structured in their basic structure many years ago, and it's probably an exaggeration but not too much of one to say that they were designed by men for men? Starting from that premise, Harvard has a positive obligation - especially to women - to junk its existing structure and meet the needs of the 21st Century! (Which just happens to be what Mr. Summers and the Harvard corporation want to do.)

Academic Ju Jitsu. Will it work? Mr. Summers and the Harvard corporation are very clever people. But so is the Harvard faculty - and just about any one of them can leave Harvard for just about any other academic institution in the world.

In the mean time, everybody involved may want to pay especial attention to what is happening to Morgan Stanley right now. It might help to concentrate the minds in Cambridge to see what it looks like for an apparently dominant and unassailable institution to blow itself up from within.

Posted 2:10 PM by Robert

The Amazing Shrinking Enron Scandal II: Even The Goat (Mostly) Escapes?

The Economist has also reviewed Kurt Eichenwald's book on the Enron scandal, CONSPIRACY OF FOOLS - A True Story, and (along with the New York Times) construes that book as absolving Messrs. Lay and Skilling of crimes - although not of gross negligence and incompetence - as in this passage:

If Mr Eichenwald is broadly correct, it will make depressing reading for the prosecutors who have accused Enron's former top bosses, Kenneth Lay and Jeffrey Skilling, of being the brains behind this massive fraud. Mr Eichenwald's criminal mastermind is Andrew Fastow, Enron's chief financial officer, who has already admitted numerous offences and is likely to be the main witness against Messrs Lay and Skilling. Mr Eichenwald describes how Mr Fastow and his henchmen, principally Michael Kopper, created a series of investment vehicles - such as LJM, the Raptors and Chewco - that bought assets from Enron, supposedly to reduce the firm's risk but in reality to generate huge fees and profits for Mr Fastow and his chums. Mr Eichenwald leaves the reader with the strong impression that Mr Fastow lacked even a basic understanding of the risks involved in this off-balance-sheet strategy.

As for Mr Lay, he seems to have known presidents George Bush senior and junior far better than he knew what was going on within Enron. Right to the end, he is described as failing to grasp the severity of the problems facing the company he built. Mr Skilling, too, seems entirely unaware of the crimes being orchestrated just below him in the corporate hierarchy - drinking too much, and swinging manically between jovial over-optimism and deep depression. His decision to quit suddenly as Enron's chief executive soon after taking the job (and just weeks before the company's problems started to become clear) comes across as entirely in character and unrelated to the fraud.

The Enron financial statements supposedly misrepresented the risks to which the company was exposed - it is the failure to describe those risks that caused the financial statements to not fairly reflect the financial condition of Enron. But if, as the Economist construes Mr. Eichenwald's presentation, it is true that Mr Fastow lacked even a basic understanding of the risks involved in this off-balance-sheet strategy how true can it be that Mr. Fastow committed intentional fraud in doctoring the Enron financial statements with those very off-balance sheet devices? Doesn't Mr. Eichenwald's approach (as summarized by the Economist) lead to the conclusion that the misrepresentations in Enron's financial statements were the work of a man who simply didn't understand the risks he was misrepresenting? If Mr. Fastow didn't understand those risks, then even his actions would amount to at most gross negligence - which is not a basis of "actual fraud." And by now-common agreement Mr. Fastow was the worst of the bunch and the center of the "conspiracy."

And so it would be that the entire Enron scandal would be exposed as the result of mere gross negligence and incompetence - in effect, a very expensive "O, never mind?" Mr. Eichenwald doesn't actually reach any such conclusion, and actually seems to castigate Mr. Fastow as the master-criminal. But it's hard to see how one becomes a master criminal by misrepresenting risks about which one "lacked even a basic understanding."

Posted 9:53 AM by Robert

Vuja De IV

One of the more remarkable aspects of the preposterous over reaction to the Enron scandal is that most of the adverse consequences to the various "reforms" enacted in the wake of the scandal and government enforcement actions taken in response to the scandal were well foreseen and publicly articulated at the time such "reforms" were enacted and such actions were taken. Fallout from the absurd Sabanes-Oxley legislation has already begun in earnest - and it all has exactly the qualities predicted when Sarbanes-Oxley was perpetrated. One could write for many pages on how Sarbanes-Oxley defies cost-benefit analysis and is especially harsh for smaller companies ("The costs, and practical and financial consequences, appear disproportionately harsh to smaller issuers. While the actual costs of legal and outside accounting fees may be the same, the fiscal consequences are more significant for micro, small, and mid-cap issuers as a percentage of their revenues and net income.").

The federal legislative action coincided with the amazing federal persecution and annihilation of Arthur Andersen, about which the Man Without Qualities noted at the time:

Now, whatever else the accounting industry may lack, it does not lack for political activism and sophistication, and it has plenty of "political power to utilize the state." Indeed, with the obliging annihilation of Andersen by the Department of Justice, the accounting industry is now positioned as something approximating a good old fashioned oligopoly - complete with the new "independent oversight board" to serve as its monopolistic, rent seeking coordinator. Indeed, once the dust from the Andersen demolition job settles, it will be interesting to calculate the Herfindahl-Hirschman Index of the accounting market. Would the anti-trust division at the Department of Justice have allowed the big accounting firms to achieve by merger the same level of market concentration that the Department has itself imposed through prosecution of Andersen? A concentrated national oligopoly of a key industry with its own, private, independent regulator! How comfy cozy for the regulated.Wasn't it nice of the Congress - and especially the Democrats in Congress - to do this for the big accounting firms, even as those firms pleaded with the Congress "please do not fling me in that briar patch."? Brer Rabbit hollered out, "Born and bred in the briar patch. I was born and bred in the briar patch!" And with that he skipped out just as lively as a cricket in the embers of a fire.

Now the consequences of the market concentration and restrictive regulatory environment have started to come in, and there seem to be no surprises whatsoever. Indeed, an astute and helpful reader has forwarded to me the following announcement:

"A Clash of Policies: Arthur Andersen vs. the Department of
Justice"
BY: EMILIE R. FELDMAN
Harvard University
Harvard Business School
Date: March 25, 2005
Contact: EMILIE R. FELDMAN
Email: Mailto:efeldman@hbs.edu
Postal: Harvard University
Harvard Business School
Soldiers Field
Boston, MA 02163 UNITED STATES
ABSTRACT:
Andersen's demise in an already concentrated market for the provision of auditing services to large public firms is expected to increase market power and the prices of auditing services. This paper first documents the increase in concentration. Since Andersen's exit was driven by a choice of public policy, an appropriate reference point for appraising the concentration changes is the Department of Justice's 1992 Merger Guidelines' delineation of acceptable concentration levels and changes. These suggest that Andersen's disappearance, viewed as if it were a horizontal merger, would have violated those Guidelines. Consistent with this prediction, we find evidence of anticompetitive price changes for auditing services. Percent changes in audit fees are found to be significantly correlated with percent changes in market concentration, and former Andersen clients are shown to have faced significantly larger increases in their audit fees than other firms that changed auditors within the same time period. The paper concludes that the policy of putting Andersen out of business has foreclosed future policy options for the government in its dealings with the accounting industry, the structure of which is now more vulnerable to both criminal and catastrophic civil litigation.

On the other hand, the prosecution and annihilation of Arthur Andersen did help to create a sense that the Bush Administration was "doing something" about the Enron scandal and thereby helped to neutralize the Administration's critics (including many Democrats and sundry writers for the New York Times, including Paul Krugman and Maureen Dowd) who were screaming that the President was in cahoots with the Enron devils.

Nobody can legitimately say that such consequences were not expected or predicted (although many will likely say exactly that). Too bad every investor in a public company, and every single consumer, has to pay for such hysterical decisions every single day ... forever.

Posted 9:57 AM by Robert

The Amazing Shrinking Enron Scandal: Getting The Goat

Kurt Eichenwald, a financial reporter for the New York Times, covered the Enron scandal extensively (as noted here and here), committing some of the more condemnatory and accusatory articles that appeared on the subject. Now Mr. Eichenwald has written a book on the subject, CONSPIRACY OF FOOLS - A True Story, which has duly been reviewed in the Times. But, judging by this review, the tenor of Mr. Eichenwald's book has subtly shifted from that of his articles, for the review includes this passage:

Eichenwald argues that the Enron story is less an account of criminality than of gross incompetence, a ''conspiracy of fools'' in a corporate environment grown so complicated and so given over to the imperative of enhancing share values that no one really understood what was going on. In this telling, complexity itself becomes exculpatory. Thus Kenneth Lay, Enron's chief executive officer, and Jeffrey Skilling, Lay's handpicked successor, come across as unwitting dupes of the nefarious machinations of the company's chief financial officer, Andrew Fastow, and his accomplices.

Curiously, Mr. Eichenwald seems to have been preceded in his belief that Enron management (other than Mr. Fastow) may not have actually broken any laws by none other than Paul Krugman, as I have noted:

Paul Krugman writes that "Enron executives may have deluded and defrauded their shareholders without actually breaking the law." ... Mr. Krugman wants his readers to believe that Enron executives may not have broken the fraud laws at all. Fancy that. This, after the New York Times and countless other media outlets and liberal blogs long ago convicted the entire Enron management team and its board of directors of obvious and egregious fraud. Perhaps Mr. Krugman now also wants his readers to believe that the Enron people may, under current law, be guilty of at most negligence or gross negligence. Where could he have read that? ... Mr. Krugman does not share with us his analysis of the law and economics of the Enron matter that has led him to want to lead his readers into believing that the law may not have been broken after all.

Could it be that all of the officers and directors at Enron except for Mr. Fastow and a few "accomplices" were guilty of at most gross negligence? Would such an outcome be consistent with the huge media and political hoopla this business failure occasioned? No. That coverage requires that a great many people have been up to their eyeballs in fraud, as I noted early on:

Oliver Stone's movie, JFK, competes with Plan Nine From Outer Space to be considered the most incoherent and witless creation ever committed to celluloid - but a movie based on the New York Times coverage of the Enron matter would surely threaten both of those trash classics. As the Stone movie swells to maculate giraffe, a mysterious and wholly-invented "Mr. X" - played with appealing spooky goofiness by Donald Sutherland - "explains" the Kennedy assassination by rattling off a series of unconnected activities that eventually appear to implicate all the United States armed forces, its intelligence services, most foreign governments, the ever-complacent media, Congress, the Vice President, perhaps every male in the Dallas white pages, The Man Who Could, the Woman Who Wouldn't, Moses, Christopher Columbus! It is a conspiracy so vast that it keeps its secrets by the simple expedient of leaving virtually no one outside the conspiracy to whom the conspirators could spill the beans!

Not to be outdone, Patrick McGeehan of the New York Times has today discovered in his breathless excitement that Enron's Deals Were Marketed to Companies by Wall Street! Imagine that.

But Citibank and Chase Morgan - the banks that created and marketed those "shady" products for Enron - entered into settlement agreements with the federal authorities in which those financial institutions admitted no wrong. And the British High Court has held that some of what were supposedly the more "fraudulent" special purpose structures were not fraudulent at all - and were properly accounted for. The Enron scandal just keeps getting smaller.

But what of Mr. Fastow, the Great Satan himself? We are now apparently to believe he did it all with the help of a few "accomplices." He has pled guilty to intentional fraud and received a jail sentence for it. If his plea is true, that pretty much implies that Enron's finanical statements were also fraudulent. But how much confidence does one have in Mr. Fastow's plea? It was obtained under (legally permitted) duress: the threat of imprisoning his wife and depriving their young children of any parental contact for many years. Why was that duress necessary if Mr. Fastow was the epicenter and virtual sole perpetrator of so many gigantic public evils?

Mr. Fastow apparently committed crimes other than fraud - such as bribing bankers. But when it comes to Enron's financial statements and public disclosure, doesn't Mr. Fastow look a lot like a garden variety scapegoat?

Posted 1:14 PM by Robert

Where The Special Prosecutor Is?

From Opinion Journal:

Where's the special prosecutor? A bipartisan cabal of U.S. senators (a k a John Kerry and Richard Lugar) spilled in open hearings yesterday the name of a supposedly undercover U.S. intelligence agent in Latin America as they pursued their Constitutional duty to belabor UN nominee John Bolton over past arguments with WMD analysts. ... Mr. Kerry began reading from transcripts of closed-door questioning with committee staffers, incautiously babbling the name that others were trying to keep out of the public record. Anybody can consult the AP story or the committee hearing transcript from yesterday, available from news services and Congress's own website, to find the name. He's also been mentioned dozens of times in the press over the years, which is hardly surprising given a succession of jobs with high public profiles, like, say, press spokesman for a U.S. congressman and White House national security official.

I make no excuses for what seems to have been perfectly dreadful and irresponsible acts on the part of some Senators. But the special prosecutor was probably smothered by Article I, Section 6 of the United States Constitution, which absolutely protects even the most inane Senate committee statements:

The Senators and Representatives shall receive a Compensation for their Services, to be ascertained by Law, and paid out of the Treasury of the United States. They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.

Posted 8:37 AM by Robert

Safe For Brains


From the BBC:

Using a mobile phone does not increase the risk of developing a brain tumour, the latest research suggests. The Danish study, which appears in the journal Neurology, involved more than 1,000 people. ... A Swedish study published in 2002 claimed to have found a link between analogue mobile phones and brain tumours, but experts have questioned the validity of the findings because of the way the research was carried out.

Danes versus Swedes? It's largely a Scandinavian family affair - with Finland - home of Nokia - perhaps having the most at stake?

Yet, Nokia's stock price has not been soaring.

Posted 9:01 PM by Robert

Thar She Blows! (But Should She?)

The Washington Post provides an update on the story of the man-in-black who faced the Capitol with two black suitcases by his sides earlier today, demanding to speak to the President:

With hundreds of people watching from First Street and near the Capitol Reflecting Pool, bomb squad technicians X-rayed the bags. The results revealed that one suitcase might contain an explosive device because it contained wires, batteries and what appeared to be a timer, [Chief Terrance W. Gainer of U.S. Capitol Police] said.

After "disrupting" the bags with an explosive blast about 3:15 p.m., police determined that the bag contained nothing more than a CD player, batteries and a "watch or something," Gainer said.

Gainer and other Capitol officials said officers acted appropriately.

The Post story seems to state that the Capitol Police didn't know exactly what was in the bag they blew up. Personally, I wonder what the consequences of "disrupting" the bags with an explosive blast would have been if the "disrupted" bag had contained a "dirty" nuclear device or chemical or biological agents. If the bag had contained any of these, wouldn't "disrupting" the bag with an explosive device have actually released deadly nuclear, biological and/ or chemical contaminants into the air just a few feet from the Capitol? Contaminants that might otherwise have remained contained? How could an X-Ray have determined whether or not the bag contained a substantial cache of weapons-grade anthrax, for example?

Other news reports indicate the the Senate was actually in session nearby when the bag was "disrupted" just a few feet from the Capitol, and that tourists had been readmitted to the area adjacent to the "disruption."

Chief Gainer must have his reasons for concluding that his officers officers acted appropriately. I don't see those reasons at the moment. But neither am I willing to pass judgment at the moment.

Posted 9:02 AM by Robert

It's All About ME (But I'm Not Responsible)

It's no big deal, but I continue to be amazed at how narcissism and intellectual dishonesty continually (perhaps continuously) flows from Bill Clinton. Right now, he is supposedly focused representing the US at the Pope's
funeral - an activity that wouldn't on the surface seem to lead to considering his own feckless term in office. But don't underestimate Bill's ability to think about Bill! From DRUDGE:

En route to Rome, Clinton told reporters the pope "centralized authority in the papacy again and enforced a very conservative theological doctrine. There will be debates about that. The number of Catholics increased by 250 million on his watch. But the numbers of priests didn't. He's like all of us - he may have a mixed legacy."

"All of us?" Who's in that "us" Mr. Clinton groups with this Pope besides Mr. Clinton himself? Don't stop thinking about your "legacy" Bill! Of course, one must feel the ex-president's pain at the huge throngs he is now witnessing in Rome, in comparison to which attendance at the temple to his own tiny legacy - his Presidential library - would hardly be a rounding error.

Well, one can't really have much of a legacy if one doesn't stand up for much while in office and take personal responsibility. That's an essential ingredient in why this Pope was - and is - such a big deal. Mr. Clinton drops this pearl:

Clinton was also asked about his first flight aboard Air Force One since the end of his presidency: "I never thought I'd be on this plane again - I had a good time. They have turkey burgers too, which they didn't have when I was here. If they'd been serving me turkey burgers, I might not have heart surgery."

Got that? Perhaps you thought that Bill Clinton placed all those Big Macs, fries and the cholesterol-laden like into his own body. Perhaps you thought that because he made those burgers and fries standard populist props that ultimately may have caused him some dire health consequences. But no, no - Bill Clinton wasn't responsible at all! If they'd been serving him turkey burgers, he might not have heart surgery. Naughty, naughty "they!"

Where does that go in his "legacy?" Bill Clinton, our "First President Cholesterol-Poisoned by White House and AF-I Staff?"

I wish Mr. Clinton many years of future good health. But every time he opens his mouth I'm reminded why I'm so glad this man is no longer President.

THIS JUST IN: President Bush, determined not to upstage the funeral of Pope John Paul II, kept an unusually low profile in Rome yesterday, although former President Bill Clinton gave a television interview watched by millions. ... It was the second day in a row that Mr. Clinton made headlines as he accompanied the Bushes on a three-day visit to Rome for the pope's funeral.

Of course, this raises the question of whether Mr. Clinton will play the saxophone in Saint Peter's Square during the actual service. Of course he won't - he'll be inside the basilica at that time and the Order of Service doesn't include a saxophone cadenza. So he'll have to wait until a little later when the service has ended but he still has a nice crowd that he doesn't want to go to waste. He likely feels that after they have traveled so far, it would be an offense to the multitude if Mr. Clinton didn't entertain them - he has an obligation and no choice, and he's not responsible.

Posted 4:14 PM by Robert

Christopher Hitchens Loses It

Christopher Hitchens says in his recent Slate article:

(1) [The Pope] is chosen for life, by God himself ... That would be news to the College of Cardinals, who waste a lot of time and effort thinking they are actually choosing Popes. It has always been my understanding that the Pope is chosen by the men in the College of Cardinals as much as they choose anything else. Isn't the Catholic Church pretty big on the consequences of free will? Could Mr. Hitchens be confusing Catholic doctrine with something of his own invention, but akin to the protestant doctrine of "double predestination?"

(2) [Being Catholic] means that you have to believe that the public agony and humiliation endured by the pontiff was ... part of some divine design - a belief which Mr. Hitchens presents as patently absurd. Of course, that belief is not nearly as absurd as the notion that the public agony and humiliation endured by the second person of the Christian God himself was also part of some divine design. Is that just picking?

(3) The next vicar of Christ could hardly be expected to perform his sacred duties knowing that there was a still-living vicar of Christ, however decrepit, on the scene. Mr. Hitchens is entitled to his opinion, but the Catholic Church clearly does not agree. It's rules specifically permit and provide for the resignation of a Pope - and Popes have resigned in the past (although not in a long time).

(4) John Paul II ... exerted enormous force to change the politics of Poland. ... He behaved much better on that occasion than he did when welcoming Tariq Aziz, one of Saddam Hussein's most blood-spattered henchmen, to an audience at the Vatican and then for a private visit to Assisi. In a stunning conclusion to his parable in Matthew 21:28-32, Jesus tells the chief priests and elders that "tax collectors and prostitutes will get into the kingdom of God before you" - and stirred up quite a big fuss by speaking and meeting more than a bit with the worst elements of society. Of course, Jesus never condones or excuses the immoral behavior of tax collectors, prostitutes or anyone else - but he certainly didn't deny people face time (or "audiences") just because those people had lived a sinful life and not repented. Jesus even spent considerable time speaking with some thoroughly unrepentant chief priests, elders, Scribes and Pharisees. Here again, Mr. Hitchens is entitled to his own beliefs that one is ill-advised to follow Jesus' example. But the Pope may not think that his job description gives him as much leeway as Mr. Hitchens grants to himself.

(5) Terri Schiavo's parents were in court ... instructing their lawyer to ask a judge to consider the church's teaching on purgatory and hell, and the state of the late Ms. Schiavo's soul. The Vatican is actually a foreign government, recognized as such by an exchange of ambassadors. Are we expected to be complacent when its clerical supporters try to short-circuit the U.S. Constitution with pleas of this kind? Mr. Hitchens is suggesting that "we" (who's in that "we", anyway?) may safely be complacent when the "clerical supporters" of a sect not dominated by something that is "actually a foreign government" (say, Baptists or Muslims) ask American courts to take their beliefs into account. Is that right? Can "we" be "complacent" when some "clerical supporter" of the Anglican Communion - which is led by the Archbishop of Canterbury, who is appointed and paid by the British Parliament - speaks up in this way? What about "clerical supporters" of the various officially state-established Lutheran churches of Scandinavian countries? And if Mr. Hitchens is really determined to resurrect the old "divided loyalty" canards, why stop with Vatican-paranoia? - where does the State of Israel figure in Mr. Hitchens' considerations?

(6) [I]t seemed quite probable that Cardinal Bernard Law of Boston would have to face trial for his appalling collusion in the child-rape racket that his diocese had been running. ... [But] Cardinal Law isn't going to face a court, now. He has fled the jurisdiction and lives in Rome ...

Mr. Hitchens is at liberty to believe what his language suggests: that Cardinal Law ran a "child-rape racket" as organized crime syndicates run prostitution rackets. But even the Cardinal's most severe critics (of whom I was aware before Mr. Hitchens escalated the rhetoric) argue that the Cardinal was guilty of horribly bad judgment, intellectual dishonesty and gross negligence. The Cardinal counters that he believed that known pederastic priests could and would reform - yet another tragic triumph of hope over experience.

Gross negligence can be criminal in some cases, of course. But "negligence" is generally defined in terms of a serious disregard of a proper balancing of costs and benefits. In a criminal context that would likely require a court or jury to itself review the value of the spiritual benefits the Cardinal says he thought he was advancing. Mr. Hitchens seems to believe that some court or jury should do exactly that: determine the value of the church's goal's that Cardinal Law says he included in his calculations, including, presumably, those concerning purgatory and hell. Or perhaps I am mistaken, perhaps Mr. Hitchens believes that American criminal law should assign a simple value of zero to all of those religious goals, and just refuse to allow this cleric to "try to short-circuit the U.S. Constitution with pleas of this kind." Such a position on Mr. Hitchens' part at least would be consistent with his posture of outraged pre-trial conviction of this hapless cleric and his approach to the Schiavo matter. Of course, reading the First Amendment as imposing a mandatory zero value to religious goals in cost-benefit calculations relating to charges of criminal negligence, therefore all but outlawing organized religion, would not be most people's reading of that provision.

I am unaware of any theory under which Cardinal Law (or anyone else) can avoid indictment because he has "fled the jurisdiction." In fact, people outside this country are frequently indicted. Remember Marc Rich? His indictment specifically notes that he fled the country and did not return. In fact, people who have never set foot in this country can be, and have been, indicted in the United States. Mr. Hitchens is free to believe what he suggests: that Cardinal Law would (a la Mr. Rich) refuse to return to the United States if he were indicted, and that the Vatican would refuse to order Cardinal Law to return to the United States if he were indicted. But, personally, I wouldn't bank on either such eventuality.

(7) Maureen Dowd ... put it best of all. No comment necessary. But Mr. Hitchens should know by now that if one is advancing a position - any position on any topic - that one finds Maureen Dowd to have put best of all, one should understand that one's position is almost certainly wildly off track.

(8) Actually, the Kennedy brothers were part of a Catholic cabal which imposed another Catholic cabal on the luckless people of South Vietnam. It's impossible to read the history of that calamity without noticing the filiation between the detested Diem dynasty in Saigon and the Kennedys, Cardinal Spellman, and various Catholic Cold-War propagandists from Luce to Buckley. However, there's no proof that the Vatican ordered this ... I will take Mr. Hitchens at his word that it's impossible for him to read the history of the Vietnam War without "noticing" that it was all about nested Catholic cabals. But it is an odd kind of "impossibility" to be sure, since not a single serious account of that war has made such an allegation and neither of the presidents most involved, Lyndon Johnson and Richard Nixon, were Catholics. (Here's one such history that the miracle of Amazon technology allows one to search online. For some reason no occurrence of "Vietnam" in Modern Times seems to correlate with an accusation of the recursive Catholic perfidy Mr. Hitchens finds so impossible to miss. On the other hand, Mr. Hitchens may want to read some rather unflattering mention in this book of Lytton Strachey and his misdirected assault on various Emminent Victorians, including Cardinal Manning.) This "impossibility" seems to say more about Mr. Hitchens' mental state than it does about the history of Southeast Asia. And, yes, there is no proof that the Pope ordered the Kennedys to wage the Vietnam War, just as there is no proof that Mr. Hitchens is actually from Pluto - is any needed? In a somewhat different vein, there is no proof that Mr. Hitchens dropped a large dose of LSD before writing this article for Slate. This Slate article is evidence, yes. But not conclusive proof.

By the way, the term "cabal," of course, originally derives from Kabbalah, the mystical interpretation of the Hebrew scripture - but took on its present insidious meaning from a group of ministers chosen in 1667 by King Charles II of England (including Clifford, Arlington, Buckingham, Ashley, and Lauderdale), whose initial letters coincidentally spelled Cabal! Now there's a "coincidence" people like Maureen Dowd and the version of Mr. Hitchens on display in this Slate article would no doubt find of unbounded meaning and interest.