Reason's Weekly
Dispatch
By Jeff A. Taylor and the Reason staff
Back Issues
Subscribe
Send Feedback
Visit http://www.reason.com/re/rextext.txt for the plain text version of Reason Express.
Visit http://www.reason.com/re/current.shtml for the html version.
March 12, 2002
Vol. 5 No. 11
In this issue:
1. Bush's recipe for good corporate behavior
2. Roving around aimlessly
3. Hollings on the Fritz
4. Quick Hits
5. Unreality TV - and other highlights from Reason Online
6. Reason's print edition
7. Reason News
Reason Express is made possible by a grant from The DBT Group, manufacturers of affordable, high-performance mainframe systems and productivity software.
1. Bush's recipe for good corporate behavior
Both the carrot and the stick of the Bush administration's corporatist tilt were on full display last week. The carrot was the sweetheart bailout of U.S. steelmakers in the form of a 30 percent tariff on foreign steel. And there's a whole bundle of sticks in Bush's recipe for good corporate behavior in the post-Enron world.
If you behave, delivering praise and at least the implication of votes, you are eligible for federal fixes. If you become an embarrassment or deviate from the "good citizen" model as defined by the state, you could be punished.
Bush's suggestion that executives should not be allowed to profit from erroneous financial statements sounds harmless enough at first pass. But with an army of trial lawyers already trying to prove that all profit by corporate officers is fraudulent, federal cheerleading here is not helpful.
There are good reasons to look at ushering corporate financial reporting requirements into the 21st century by making the reports public in days rather than weeks. But it makes little sense to obsess over when corporate leaders disclose their purchases or sales of company stock.
Executives sell company stock first and foremost because it is part of their annual compensation. Individual investors, including employees who might hold the stock in retirement funds, should not take those transactions as definitive proof of a company's long-term, or even short-term, direction. In fact, mindlessly mirroring insider trades is a great way to lose a lot of money.
The White House focus on insider trades and the general assumption of malfeasance in the tone of its "suggestions" elevate what should just one part of investment decisions to primary importance. Those trial lawyers should be plenty busy as the Bush team helps to convert stock owners to a conspiratorial worldview.
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3CK31DNYC&live=true&tagid=IXLYK5HZ8CC
http://www.whitehouse.gov/infocus/corporategovernance/
The brain behind the steel tariff move, which was based on the assumption that votes from a handful of steelmaking states will outweigh those of steel users (i.e., the rest of the nation), was White House adviser Karl Rove. But Rove didn't look so bright when his pick for governor of California, former Los Angeles Mayor Richard Riordan, was waxed by conservative businessman Bill Simon in the Republican gubernatorial primary.
Riordan acted embarrassed to associate with GOPers, a sure ticket to defeat in a primary. The minor detail of how to get Riordan into the general election never seemed to bother Rove.
Elizabeth Dole is another of Rove's handpicked candidates, and her bid to take over Jesse Helms' North Carolina Senate seat does not look to be the victory lap some envisioned. Democratic nominee Erskine Bowles, despite a stint as Bill Clinton's chief of staff, is popular in the business community and is running so far to the right that he uses Senate Minority Leader Trent Lott in his TV ads.
Dole also has to overcome another Rove masterstroke, the end of U.S. naval exercises off of Puerto Rico. Concocted as a way to play to "Hispanic" voters-never mind that those not from Puerto Rico couldn't care less about the issue-this wholly political decision has the Pentagon scrambling to find someplace else to sling lead and drop bombs.
Eastern North Carolina is a leading contender, with one proposal involving lobbing naval shells over a two-lane highway. Local residents are understandably perturbed.
Meanwhile down in Georgia, Rove has thrown White House support behind Saxby Chambliss, indefatigable supporter of peanut subsidies during his time in the House, in a bid to unseat Democratic Senator Max Cleland. Suffice it to say if there is an opportunity to look backward and think small, Rove seizes it.
Best of all, going the protectionist route has not stopped Democrats from criticizing the new steel tariffs as inadequate. So even those steelmaking votes may turn out not to be a sure thing.
http://www.cnn.com/2002/ALLPOLITICS/03/06/california.governor/index.html
http://www.cnn.com/2002/ALLPOLITICS/03/09/dem.radio/index.html
Sen. Fritz Hollings (D-S.C.), chairman of the Senate Commerce Committee, is angry about plans for the Department of Justice to review proposed telecom/media mergers instead of the Federal Trade Commission.
The FTC traditionally has been Congress' agent for uncovering real or imagined harms to consumers from mergers. The DOJ mainly cares about the antitrust angle, which seems like a lower hurdle. (But with the ongoing Microsoft case, who knows?)
Hollings has threatened to go after the budgets of the DOJ and the FTC if they don't sort out merger review responsibilities to his liking.
The chairman is also miffed with the Federal Communications Commission, which has signaled it doesn't see anything ipso facto wrong with media consolidation. In effect, the FCC has shifted the burden of proof from assuming mergers cause harm to asking for evidence of harm.
In sum, all three agencies and countless business decisions could be tied up while one senator strives for his vision of the public good.
http://www.mediaweek.com/mediaweek/headlines/article_display.jsp?vnu_content_id=1391339
Quote of the Week
"The reason for changing the classification of cannabis...is to send a clear message about priorities. It says to young people that we recognize all drugs aren't the same." -- Scotland's drug minister, Dr. Richard Simpson, on the move by England's Home Office to reclassify simple marijuana possession as a nonarrestable offense.
http://www.norml.org/news/archives/02-3-07.shtml#story3
Fur Flies
Government scientists knew they should not have submitted falsely labeled samples to a national lynx survey and talked about the action among themselves, the General Accounting Office reports. Forest Service and Fish and Wildlife Service biologists have maintained that the faux fur reports where a coincidental confusion and not an attempt to influence survey results.
http://www.washingtontimes.com/national/20020307-374201.htm
Hemp Help
A federal appeals court has stopped the Drug Enforcement Administration from outlawing food made with hemp. In October the DEA ruled that food products with trace amounts of tetrahydrocannabinol-the high-inducing compound in marijuana-were illegal under the Controlled Substances Act.
http://www.foxnews.com/story/0,2933,47514,00.html
Get your personal copy of the latest issue of Reason's print edition each month -- before it hits the newsstands and before it's posted on the Web! Subscribe Today!
Click here for the latest on media appearances by Reason writers.
Employment Opportunity! Reason is looking for a Circulation Director. Click here for more information.Want even more Reason? Sign up for Reason Alert to get regular news from Reason Magazine and Reason Public Policy Instiute, as well as advance notice about media appearances and events.
We encourage you to forward Reason Express! If you received this issue from a forward, please subscribe. It's Free!