Monday, July 4, 2011

Handbook for Misconduct

Today, … the Court invalidates Arizonans' efforts to ensure that in their State, "the people possess the ultimate sovereignty." No precedent compels the Court to take this step; to the contrary, today's decision is in tension with broad swaths of our First Amendment doctrine. No fundamental principle of our Constitution backs the Court's ruling; to the contrary, it is the law struck down today that fostered both the vigorous competition of ideas and its ultimate object -- a government responsive to the will of the people. Arizonans deserve better.

-- Justice Elena Kagan
dissenting opinion in Arizona Free Enterprise Club v. Bennett (2011)

In this week's Sift:

  • Not the People's Court. Across the board, this was a great Supreme Court term for corporations. For humans, it sucked.
  • Gaffes Won't Beat Bachmann. The voters she's going for value heart over head, so a few misquoted facts won't bother them. To beat Bachmann, you need to argue that her heart is in the wrong place -- which is true.
  • The Logic of Worker Abuse. A 21st-century monopoly focuses more on abusing its suppliers than on abusing the consumer. And the ultimate supplier is the worker.
  • Short Notes. Glenn Beck slithers into the sunset. A CIA interrogator talks. Judge Prosser's anger management problem. Krugman and Yglesias sum up the debt-ceiling issue -- and I start to panic a little.
  • This Week's Challenge. This Independence Day, pay attention to the difference between independence and freedom.

Not the People's Court

Unlike a typical journalist, I'm happy to be scooped. Last week I promised I would summarize "a very pro-corporate Supreme Court term". Friday, Slate's Dahlia Lithwick did it for me, and did a darn good job:

The measure of success here isn't just the win-loss record of the Chamber of Commerce, although that's certainly part of the story. Nor is it news that—in keeping with a recent trend—the court is systematically closing the courthouse doors to everyday litigants, though that's a tale that always bears retelling. The reason the Roberts Court has proven to be Christmas in July for big business is this: Slowly but surely, the Supreme Court is giving corporate America a handbook on how to engage in misconduct.

No more class actions. A big piece of that handbook is how to avoid class-action lawsuits. This is a big deal, because in many situations the threat of a class action is the only discipline a company has. Think about it: Suppose you're MegaCorp and you want to screw a million customers out of $1,000 each. That's a billion dollars -- real money, even for you.

And what are they going to do about it? No matter how valid their claims are, nobody is going to beat the MegaCorp Legal Department without spending years in court and tens (or hundreds) of thousands of dollars. Who is going to do that just to get their thousand back?

The only thing that concerns you is that your victims might all get together in a class action, hire a top-flight law firm, and get their billion back in one case. Not to worry, the Roberts Court has you covered.

Screw your workers. If it's workers you're worried about, Justice Scalia gives you the blueprint in Wal-Mart v. Dukes (court opinionScotusBlog summary, cartoon that sums up even better). Because Wal-Mart's official policy said it didn't discriminate against women, it didn't matter that the company gave its (mostly male) managers enough leeway to discriminate, and that companywide statistics proved that they in fact did discriminate. The female workers couldn't prove that they all suffered identically -- somewhere in the Wal-Mart system there might have been a store whose manager treated women fairly -- so they aren't a class. LIthwick summarizes:

The greatest impact of the Wal-Mart decision isn't the blow dealt to class-action suits. It's the guidance it provides employers: Immunize yourself from claims of gender discrimination with a written policy that says "we don't discriminate" and a system of decentralized decision-making. The decision doesn't discourage future corporate discrimination. It just makes it harder to identify and prove it. 

Screw your customers. Don't worry about your customers ganging up on you, either. AT&T Mobility v Concepcion (court opinionprevious Lithwick article), lets corporations stick clauses into their standard contracts (which you have to sign to do business with them) where you sign away your class-action rights -- or any rights they find inconvenient.

In this case, AT&T offered a "free" cellphone, and then charged customers $30.22 in sales tax that they had no reason to expect they would owe. A California court ruled that the cellphone contract's arbitration clause (which prevented a class action) was unenforceable. But the Supremes disagreed. Justice Breyer dissented, writing:

What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim? The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.

Nan Aron of Alliance for Justice points out that this is about more than just $30, or even $30 times 17 million:

The upshot is that corporations will now be able to decide on their own which civil rights and consumer protections they want to obey, knowing that there will be no effective means available to their victims to find redress. Even worse, … [the Court] has effectively removed any incentive for corporations to behave within the law in the first place. Why act lawfully if your victims are helpless, especially in cases like this when the harm to each individual is small but the potential for profit is huge?

Screw your investors. In Janus Capital Group v. First Derivative Traders (court opinion), as ThinkProgress' Ian Millhiser sums up: "the Supreme Court has now given much of Wall Street a license to lie."

Basically, Janus wrote a false prospectus to mislead investors about an investment it was selling. But the Court let Janus get away with claiming that the responsibility lies with a dummy company Janus set up -- which can't be sued because it has no assets. Lithwick draws the lesson: "[Set] up a dummy corporation to make your false statements for you."

Lithwick's conclusion:

When you obliterate the very possibility of civil litigation, you are, by definition, helping big business screw over the little guy. But when you teach big business precisely how to screw over the little guy, and how to do it faster, cheaper, and without detection … well, that's not even an illusion of justice anymore. It's enabling.

Screw democracy. OK, maybe you can't fight corporations in court any more. But we still out-number them, right? So we should be able to control them through our elected representatives.

Well, the Court is working on that too. Last year's Citizens United decision opened the spigots of corporate cash for electioneering -- one reason why the 2010 election cycle went so well for the Republicans. This year, in Arizona Free Enterprise Club v. Bennett (opinion, ThinkProgress commentary), the Court did its best to knock out the main alternative to bought-and-paid-for elected officials -- public financing of campaigns.

For years now, the Court has accepted the dubious idea that "money equals speech". (That is, you can't limit campaign spending without limiting free speech.) It makes sense up to a point: If I have an idea I want to promote, and I have the money to promote it, then why should anybody be able to tell me to stop?

Obviously, it stops making sense when we talk about corporate money, because corporations shouldn't have First-Amendment rights to begin with. (Were they "endowed by their Creator with inalienable rights"? On which of the six days of Creation?)

Money = speech also starts to fail when we get into the horse-race aspect of politics: Why should a candidate supported by rich people be able to out-shout candidates supported by poor people?

But that's precisely the principle that decided Bennett. Arizona, in response to a long history of corruption, established a public financing system in which the amount of public money would increase if candidates who opted out of the system started outspending the publicly financed candidates.

So privately-funded candidates were free to opt out of the system and free to spend as much as they wanted to promote themselves and their ideas. But what they couldn't do is out-shout the publicly funded candidates; if they spent more, the publicly financed candidates got to spend more.

That won't do, says the Court. Arizona's system is unconstitutional, because money shouldn't just allow you to get your ideas out, it should allow you to out-shout candidates with less money. The Court's conservative majority is moving past the simple money = speech equation, in the direction of money = votes.

Put it all together. Don't just look at one case, look at the pattern. The Court is pushing a vision of society in which corporations can make us sign away our rights in order to participate in the economy, can screw us out of our money without fear of consequences, and can then use that ill-gotten money to elect officials who will guard the advantages they have over mere humans.

Lest you think this term was an anomaly, check out a speech Al Franken gave last summer, in which he summarized the pro-corporate rulings the Roberts Court had made up to that point.

Legally, here's what's going on with abortion: For the last few years, pro-choice groups have been reluctant to challenge relatively minor infringements of the right to an abortion, for fear that the Roberts Court will overturn Roe v Wade completely. Predictably, anti-abortion forces have upped the ante. With their 2010-election majorities, Republican legislatures have passed laws that harass women (South Dakota) and/or doctors (Kansas) to the point that abortion would become impractical, if still technically legal. Lawsuits have been filed and injunctions granted delaying the implementation of the challenged laws in those two states. The cases will eventually make it to the Supremes, and then we'll see if they want to overturn Roe.

John Dean was in the Nixon Justice Department when they were pushing Abe Fortas off the Supreme Court -- in a case that closely resembles Clarence Thomas'. He explains the game plan, which may involve being more ruthless than liberals are up for.

Speaking of corporations funding elections, this still seems to be illegal: Wisconsin's new Senator Ron Johnson spent $9 million of his own money beating Russ Feingold last year. After the election, the corporation he runs wrote him a $10 million check for "deferred compensation".

Up until now, Republican-appointed judges have ruled against the constitutionality of ObamaCare and Democrat-appointed judges for it. This week, a Bush-appointed judge broke ranks and upheld the law.

Gaffes Won't Beat Bachmann

In Waterloo, Iowa, Michele Bachmann began her official presidential campaign with a gaffe: She said John Wayne was from Waterloo, when actually mass murder John Wayne Gacy is. (The Duke is from Winterset, on the other side of the state.) This is another in a long series of mistakes and missteps, like when she thought that the Revolutionary War started in Concord, NH instead of Concord, MA.

A lot of liberals seem to think that things like this will make a difference. And in the general election they may be right, but in the Republican primaries Bachmann's numerous gaffes will make no difference at all. Ronald Reagan used to screw up his facts and so did George W. Bush. It made no difference for them, and it won't for Bachmann either.

The reason why is simple, and I touched on it in 2005 when President Bush nominated qualification-free Harriet Miers to the Supreme Court, saying that "I know her heart." The voters Bachmann is courting have a very different idea of what governing requires.

Most liberals (and some conservatives) think that a good leader needs to know and understand things. At the very least, a president needs a solid background education, so that experts can fill him/her in on the details when a decision needs to be made. And above all, s/he should be free from misinformation: If you don't know something, you can ask; but if you're sure something is true when it's not, you can do a lot of damage.

Bachmann's base -- like Reagan's and Bush's -- doesn't look at things that way. Leadership, to them, is not about doing the smart thing, it's about doing the right thing. All problems are simple at their root, and what a leader really needs is common sense and moral courage. It's a heart thing, not a head thing.

Closely related to this worldview is a resentment against the people who don't share it -- the people who think they're better than you because they knew what mendacity meant when they took the SATs. Bachmann voters resent the way that eggheads look down on them, and if eggheads are looking down on Bachmann the same way, that just proves that she's on the right side.

So while we should never let Bachmann get away with quoting false facts, that's not going to defeat her. An effective anti-Bachmann campaign needs to attack her strength by arguing that her heart is in the wrong place. She's on the side of the Wall Street swindlers, the polluters, and the people who moved your job to India. If you make minimum wage, she thinks you're overpaid. If you're unemployed, she thinks you're lazy.

She's not one of you. She's one of them dressed up to look like one of you. And she thinks you'll fall for it, because she thinks you're stupid.

Bachmann's InTrade shares (which will pay $10 if she's the Republican nominee) are at $1.70, up from $0.70 when I recommended them in April.

The Logic of Worker Abuse

Never doubt that a corporation will kill you if it thinks it can make a profit and not get caught. First case in point, from Wednesday's Salon:

Federal investigators say they have proof that Massey Energy kept fake safety records to throw off inspectors at a West Virginia coal mine where 29 men died last year, the deadliest U.S. coal field disaster in four decades.

Second, look at The Spam Factory's Dirty Secret by Ted Genoways in the current issue of Mother Jones: Hormel created a shell company to maneuver out of its agreements with its meat-packing union. The shell company hired a bunch of illegal immigrants for low wages, worked them in conditions that gave them a rare neurological disorder, and (when their medical bills started adding up) fired them.

Mother Jones' Tom Philpott goes on to explain the deeper economic/political reasons why companies are abusing their workers like this: In the old version of monopoly, corporations got bigger and bigger so that they could impose exorbitant price increases on the consumer. But voters hated that, so they encouraged politicians to enforce antitrust laws.

In the Reagan years, the strategy changed. Now companies get big so that they can impose price cuts on their suppliers, as Wal-Mart does. The result is relentless pressure to cut costs, which ultimately pushes companies to abuse their workers, either here or overseas. This abuse is largely invisible to anybody but the workers involved (particularly since the corporate media doesn't cover it), so it doesn't raise political pressure.

That shines a different light on the recent efforts to break public-sector unions in places like Wisconsin and Ohio: Government has largely been left out of the worker-abuse game, and (as this Wisconsin commercial by the Club for Growth makes explicit) the Right wants to convince abused private-sector workers that it's not fair.

Northeastern University report: Corporate profits have captured 88% of the financial recovery, wages 1%. Nothing like that has ever happened before.

Which leads to this Paul Krugman question:

If corporations already have plenty of cash they’re not using, why would giving them a tax break that adds to this pile of cash do anything to accelerate recovery?

Short Notes

Buh-bye, Glenn.

Wired interviews the author of the new book The Interrogator, which takes us inside the CIA's black prisons. Says the author, a former CIA interrogator: "Enhanced interrogation does not work, and is wrong. End of story."

Investigating the allegations that Wisconsin Supreme Court Justice Prosser choked Justice Bradley, the Milwaukee Fox affiliate tries to get comments from four of the seven justices. None of them say anything meaningful, but only Prosser lost his cool.

Paul Krugman asks another good question:

The federal debt limit is a strange quirk of U.S. budget law: since debt is the consequence of decisions about taxing and spending, and Congress already makes those taxing and spending decisions, why require an additional vote on debt?

Matt Yglesias boils it down even further:

The issue, after all, is that congress has passed contradictory laws. The tax code raises so much revenue, but legally authorized expenditures require so much money, and legally authorized borrowing doesn’t cover the gap. So what’s a president to do?

Hold a bake sale, I guess. Or ignore the debt ceiling and provoke a constitutional crisis.

I'm not qualified to offer investment advice, so I usually don't. This week, though, I made an important personal investment decision, and I feel like I'm keeping a secret if I don't tell you: I'm selling.

I don't think the market is taking seriously the possibility that the debt-ceiling talks will fail, with major bad financial consequences. I do take that possibility seriously, so I'm cutting my risks until I see what happens.

I regard this as a not-unreasonaable scenario: Republicans don't budge on demands that Social Security and Medicare be slashed with zero sacrifice-sharing by the wealthy. Democrats refuse that deal, and the Treasury has to stop paying the government's bills. The market crashes (as it did when TARP failed the first time), and then Obama invokes the 14th Amendment to ignore the debt ceiling. The House starts impeachment proceedings.

It's bad for the country, but it's win/win for the Republicans. They get to impeach Obama while accepting no responsibility for increasing the debt limit. And if we go back into recession, that's Obama's fault too.

This Week's Challenge

This Independence Day, try to pay attention to the difference between independence and freedom. In American history, the two go hand-in-hand: Declaring independence from England was how we got freedom.

But when we intervene in other countries, we offer freedom in exchange for independence. Saddam's Iraq was not free, but its decisions were made in Baghdad, not Washington. Iran today lacks freedom, but has its independence after centuries of Ottoman, British, and American domination. Protesters in Tehran want freedom, but not at the cost of independence.

So don't be fooled today when patriotic speakers or writers use freedom and independence interchangeably. It's a distinction we need to keep in mind.

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Collette said...

Re: Freedom v.s. independence. I always liked the essay topic I had to write on to get into a school I went to: "The wise restraints that make one free." (In other words, do you really have what it takes to grow up?) In order to be free, one must use one's independence wisely, or as people say, make the right choices. How does that relate to Iran, Iraq, etc.? In both situations, independence is a means to achieve freedom, which we struggle for our whole lives on some level or other.

Collette said...

BTW, Collette is Irene Gravina.

Ken Novak said...

About worker abuse, and the pressure on costs: I think anti-trust was not a big factor in restraining price increases. (They were not a restraint in 1960-1980.) The big change was globalization. Imports put a lid on prices for many goods, and offshoring provided a lid on many items in the supply chain. This took hold in 1980-2000, when the Asian tigers and China and Mexico became serious exporters.