Saturday, June 29, 2002

In the wake of the WorldCom debacle, much ink is being spilled on the topic of "corporate greed". One might think, reading the fulminations of politicians and pundits, that the hapless stockholders taken in by WorldCom's accounting shenanigans had innocently invested in the company out of naive patriotism, or perhaps a selfless desire to help a poor, struggling telecom giant down on its luck. But who, exactly, were the victims of WorldCom's alleged accounting fraud?

WorldCom executives now admit that they had overstated earnings through 2001 and early 2002. But WorldCom stock peaked in early 2000, and has been sliding pretty much unremittingly ever since; had their accounting been honest, the stock would only have plummeted faster. That means that anybody who held WorldCom stock in 2000 or earlier actually benefited from the scam, having been given extra time to unload their worthless equity before the roof caved in. The losers? Short-term speculators picking up a tanking tech stock in the hopes of a bounce, and short-sellers squeezed by inflated profit reports. Real people, to be sure, but not exactly the widows and orphans conjured up by the rhetoricians of "corporate greed". The latter had most likely bought into WCOM on the way up, cheered all the way as their portfolios skyrocketed, and were being pandered to, not ripped off, by the company's stock-price-preserving earnings sleight-of-hand. If only they'd known to take advantage of the gift they were given.....

Sadly, their naivete wasn't merely confined to believing in the technical precision of WorldCom's auditors. The great crash of 1929 taught Americans an important lesson: Wall Street is a gigantic shark tank, and holiday swimmers donning their snorkels and diving in had better be prepared to lose a limb or two. Over the subsequent seventy years, casual investors slowly forgot that lesson, and in the last decade or so an astonishing number honestly thought that blind "momentum" investing in empty shells like WorldCom was a sure ticket to Millionaires' Row. Slowly, the lesson is being relearned.

Back in the days of the Enron scandal, I suggested that Americans had progressed from "denial" to "anger" in their passage through the five stages of grief over the collapse of the stock market (and their dreams of universal tycoonhood). Today we seem to have reached the "bargaining" stage, with public figures earnestly debating the strict new regulatory measures that must be put into place to guard against future cases of corporate accounting fraud--as though tighter controls on earnings reporting would have prevented all those thousands of investors from running up the prices of hollow tech stocks like WCOM to utterly absurd levels, and then losing their shirts in the subsequent crash.

The next stage, in case you've forgotten: "depression".

Monday, June 24, 2002

Western reactions to the Palestinian suicide bombing campaign, and to the strong support it receives from Palestinian society at large, fall into roughly two categories: some view it as a pathological phenomenon, an insane, self-destructive "death cult"; others see it as a legitimate, rational and morally defensible response to oppression coupled with military weakness. Both views are deeply mistaken; the Palestinian suicide bombing campaign, far from being an outburst of insanity, is a perfectly normal, human response to circumstances. But the normal, human response is not always the moral one; at times, in fact, it can be deeply immoral, even downright evil. This is one of those times.

As Matthew Parris, an unabashed apologist for the suicide bombers, points out, the ideal of self-sacrifice for the sake of country in wartime is ancient and venerated; it exists in the West as much as in the Middle East. Attacks on civilians are a different matter; but as recently as World War II the Western powers were bombing Hamburg, Dresden, Tokyo and of course Hiroshima and Nagasaki, more to demoralize the enemy than to achieve concrete military objectives. Today, although similar attacks against purely or overwhelmingly civilian targets would generally be considered unconscionable, the historical attacks themselves are viewed with considerable ambivalence, and serious arguments are mounted in their defense.

In fact, it's not difficult to imagine a scenario in which most observers would concede the legitimacy of attacks on civilian targets. Suppose that an entire population (Palestinians, say)--men, women and children--were being rounded up and slaughtered en masse, and that suicide bombings stood a reasonable chance of slowing or even ending the killing. Couldn't a case be made for them, under those circumstances? Mightn't sacrificing the genocidal population's civilians in order to save many more of the victim population's civilians be a defensible tactic?

Of course, Palestinians are not being rounded up and slaughtered en masse. (Indeed, if they were, then those doing the killing would be unlikely to be deterred by a few civilian deaths on their own side. Palestinian terrorists, for example, are, as the suicide bombings themselves make clear, no more reluctant to sacrifice their own than they are to kill Israelis for the sake of their cause.) As Parris himself admits, "the dispute is about the ownership of land", not survival. Now, murdering civilians in tribal disputes over land is not irrational or insane behavior; it is how human beings have conducted their affairs for countless millenia. It is also the essence of barbarism, primitive savagery, amoral brutality. If civilization means anything, it is the end of such lawlessness and the advent of less bloodthirsty ways of resolving disputes over territory. Most of the ideas and ideals of domestic and international law are founded on the desire to prevent exactly the kind of butchery that Palestinian terrorists are perpetrating, and their apologists defending.

But the defenses always restrict themselves to Palestinian behavior alone--and for good reason. As Laurence Grafstein points out, Palestinian terrorists are "relying on the superior morality of their enemies"; if Israel were suddenly to accept Parris' gruesomely callous exoneration of murder for the sake of land ownership, then their subsequent conflict with the Palestinians would be short, extremely bloody, and a complete, virtually painless victory for Israel, resulting in the effective total annihilation of the Palestinian population. It would be no worse than than what thousands of nations have inflicted upon much more innocent enemies in their day, over the centuries. But that wouldn't make it morally justifiable. Perhaps the defenders of Palestinian terrorism should ask themselves why.

Tuesday, June 18, 2002

To those of us naively inclined to apply common sense when considering issues of Constitutional law and civil liberties, the answer to Eugene Volokh's question, posed in Slate--whether it's permissible to use geiger counters to detect a radioactive "dirty bomb" believed hidden in a residential neighborhood--is blindingly, staggeringly obvious (no nuclear pun intended). And Volokh the human being is compelled to concede that any constitution that prohibits such an obviously necessary, unobjectionable security measure is deserving of scorn, not reverence. But Volokh the Constitutionalist theologian has a problem: the high priesthood of the Supreme Court pronounced last year (and Volokh apparently agrees) that the infrared imagers sometimes used by police to detect signs of marijuana cultivation violate civil libertarian dogma. And if scanning for one form of radiation has been expelled from the Catechism, how can scanning for another form be permitted?

Again, common sense would dictate that the original decision--declaring infrared policing to be an unconscionable infringement on personal freedom--must have been ludicrously misguided, given its absurd consequences. But for the true believer, abandoning a holy decree for the sake of mere consistency is simply not an option, and Volokh has chosen instead to construct a Jesuitical distinction between the two rulings: searching for a dirty bomb with geiger counters is "reasonable", whereas searching for marijuana with infrared scanners is not. Hence, the Fourth Amendment, which forbids only "unreasonable searches and seizures", does not apply in the former case.

Note that Volokh clearly does not take the word "unreasonable" to mean "considered unreasonable by the people of the United States"; such an interpretation would, after all, leave the decision in the hands of the democratically accountable branches of government, eliminating any need for the Supreme Court to stick its collective nose into the issue in the first place. No, Volokh's interpretation of the meaning of the term "unreasonable" is crystal clear: a search is "unreasonable" if the community of the civil libertarian faithful (including himself) believe that it is, and the Supreme Court is fully justified in imposing his sect's cultic beliefs on an unwilling populace in direct contravention of their democratically expressed wishes. (Similarly, Dahlia Lithwick argued a few months ago for a Constitutional ban on high school urine tests for recreational drugs--but not necessarily for steroids--based on her sincere civil libertarian conviction that the former were "unreasonable", whatever the broader public might think. And just the other day, the Supreme Court sprang to the defense of a polemicist's absolute First Amendment right to go door-to-door unimpeded, marching right up the front steps of family homes--raising the burning question: what if your home contains an abortion clinic?)

Now, I'm not generally opposed to religiosity, and if Volokh wishes to adhere to his rather arcane creed of hairsplitting constitutionalism, then I wish him well. Theocracies are another matter, though, and if recent events haven't demonstrated to enough people's satisfaction the dangers of allowing fundamentalist fanatics to override the will of the majority in setting the law of the land, then I fear the grand project of Volokh and his correligionists--the wholesale replacement of representative democracy with Constitutional Shari'a--may well continue to advance at its current alarming pace.

Tuesday, June 11, 2002

Let's say I'm the national law enforcement arm of a superpower government, and I discover that an operative of the world's largest, most dangerous terrorist organization is arriving by air for a mission that is unclear, but includes reconaissance and possibly participation in a major attack. My course of action would seem obvious: I would keep him under round-the-clock surveillance, monitoring all his travels and communications--meetings, telephone calls, Internet traffic--hoping to learn everything I could about his colleagues and their activities. I would only arrest him on arrival--jeopardizing a potential future intelligence bonanza on the off-chance he might have been supplied with a lot of advance information, and that he might actually reveal it before legal chaos ensued--under two circumstances: desperate need for a P.R. victory, even at the expense of future successful investigations, or lack of confidence in my ability to prevent him from slipping underground, disappearing to pursue his mission undetected.

It's hard to say which circumstance would be more appalling.

Wednesday, June 05, 2002

Both E.J. Dionne and George Will have now expressed their reservations about the way that Title IX of the Civil Rights Act is being used to equalize male and female participation in college sports--typically by gutting men's programs. Will considers the whole business a travesty, whereas Dionne sympathizes with the goal, but advocates that additional funds be raised to support the newly threatened "marginal" men's sports like wrestling.

I have noted before that political correctness in universities is largely a function of the decline in the value and utility of a liberal arts education, and that academia's more substantial, socially esteemed functions, such as medical, scientific and legal training, have been less seriously affected by it in direct proportion to their perceived fulfillment of a goal too important to undermine. Well, if the liberal arts have decayed into triviality, then college athletics are (and always were, really) downright frivolous. With the exception of big-ticket sports like football and basketball--which are essentially unaffected by Title IX, because universities prize the scads of money they bring in more than they value their own educational mission, let alone some abstract ideal of gender equality--college sports are so obviously and readily expendable that remolding them in the image of some feminist fantasy of gender equivalence seems hardly more foolish than letting them adhere to the old traditionalist fantasy of the "scholar-athlete". Personally, though, I'd treat them as I'd treat the liberal arts faculties: let them find themselves a legitimate educational purpose, and start serving it--or let them perish altogether.
In the New York Times, Diane Ravitch--normally a rare voice for sanity in the largely insane world of the education academy--has attacked the bowdlerization of famous texts in the New York Regents Examination, in the name of "sensitivity". (The practice has apparently now been abolished.) I understand her motivation; it's unfortunate that students are deemed too delicate to read various quite harmless passages from great works of literature because somebody, somewhere, lodged a far-fetched complaint of "offensiveness". But the problem with today's schools--as Ravitch herself would probably admit--is not that students are exposed only to sanitized versions of classic writings; it's that too few students are exposed to such writings at all, because they're crowded out by meaningless, mind-numbing or play-like "activities" and crass political propagandizing masquerading as education. Even after the censor's scissors have done their work, there is still a great deal of learning to be had from the masterpieces in question, and teaching them in that form would, for most students, be a massive improvement over the pap they're currently getting. Moreover, the precedent is a valuable one; if politically correct sensitivities must be respected when choosing materials to present to students, then perhaps more respect will be given as well to the sensitivities of those who oppose pseudoscience, or creationism, or political propaganda of the right or left (or the center, for that matter), or any of a host of other, more immediate threats to education that are constantly being insinuated into the modern classroom.

It is true that if nearly everyone has a veto over what is taught in the schools, then the curriculum will be more limited than it might otherwise be. But it most likely will continue to include the basics, at least, while excluding a lot of the junk that gets in today. And if what's left doesn't even reach the level of a rudimentary, bare-bones curriculum, then at least we'll know that there lacks a solid social consensus in favor of one--and if that's the case, then public education is probably doomed in any event.
Timothy Noah, in Slate, points out some interesting parallels between the FBI and CIA failures leading up to September 11th, and the alleged New York Times failures catalogued by Ken Auletta in the New Yorker. One parallel he didn't note, though, is that press coverage of both controversies focuses inordinately on process, rather than substance, in explaining the claimed failures. This may be a quirk of journalism; in the business world, "process-oriented", when used to describe a manager, is a euphemism for "clueless", but many journalists (including, apparently, Noah) have swallowed the fiction that management is an elaborate art/craft/science in its own right, and can be improved through technical adjustments in methodology.

For example, both the Times and the Feds are accused of operating too centralized an organization, and giving insufficient leeway to agents in the field. The infamous "Rowley memo", in which a Minneapolis agent complains that pre-September 11th investigation of Zacarias Moussaoui was blocked by FBI headquarters, is cited as evidence of too much central control at the FBI. Similarly, Auletta invokes the threatened departure of Jill Abramson, Times Washington bureau chief, as proof that editor Howell Raines is too heavy-handed with his subordinates. But highly centralized organizations are sometimes more effective than decentralized ones, and there are certainly plausible reasons for exercising considerable central control in a visible, politically sensitive institution like the FBI (or a newspaper of record like the Times). If the D.C. headquarters of the FBI was staffed with incompetents (or, for that matter, with highly competent leaders who happened to have made a single very bad call), then that says nothing about whether field agents should in general defer to their superiors or be granted more leeway. (Similarly, Jill Abramson, for all I know, might be a primadonna who could use a little "bigfooting" from Raines.)

The finger-pointing and apparent lack of coordination between the FBI and the CIA is also less clearly problematic than it might appear. Rivalries--even bitter ones--between allied organizations can be spurs to industriousness and innovation. (They can also, of course, be merely petty and destructive; what matters most is how effective each organization is, not how many rivalries it nurses.) And the FBI and CIA are, to some extent, supposed to be at odds; one mission of the FBI, after all, is hunting for moles within the CIA.

By no means am I suggesting that either the FBI or the CIA (or the Times) is a healthy organization. Their problems, though, are unlikely to be a matter of management science. Rather, large organizations fail mostly due to incompetent leaders, low-quality rank-and-file, or an obsolete, ill-chosen or ill-defined mission. With respect to the CIA and the FBI, September 11th took care of the last problem, and will likely solve the second one over time, as the agencies in question become attractive career paths for top-notch people with a patriotic bent. Whether the first problem has been solved remains to be seen; but I can predict with confidence that degree of centralization, intragovernmental rivalry, or some other pet issue of "process-oriented" managers will not determine the ultimate answer.

Sunday, June 02, 2002

A federal court has ruled that the Children's Internet Protection Act (CIPA), requiring public libraries to install pornography-filtering software on their Internet kiosks, is unconstitutional. This ruling is of a piece with a lower court's Brooklyn Museum v. Giuliani decision, which invoked the First Amendment to prevent the mayor of New York from cutting off funding to a museum showing an exhibit he judged offensive. In NEA v. Finley, the Supreme Court ruled that decency considerations could be taken into account by "diverse advisory panels" deciding government funding of art, but in language that implied that any more specific provision would be unconstitutional. The Brooklyn decision then demonstrated that the government's prerogative to determine what art to fund had indeed--as Scalia and Thomas wrote in a scathing concurrence--been "gutted" by the Finley ruling. The CIPA ruling simply extends the same principle, preventing taxpayers from deciding, through their representatives, to exclude from their subsidies of expressive media certain forms of expression they find offensive.

Of course, these rulings have nothing to do with any broad, overarching notion of free speech; there is in fact any number of classes of speech that the Supreme Court is willing to see restricted, or even to restrict itself. Suppose, for example, that the Internet filters in question had blocked lists of names and addresses of known sex offenders. A Federal Appeals Court has already ruled that publishing such lists on the Internet violates the rights of those offenders; the Supreme Court will thus decide, later this year, in effect, not whether such filters would be permissible, but rather whether they would be mandatory. Whole classes of speech--commercial speech, for example--are routinely excluded from the courts' First Amendment protections; even political speech is narrowly circumscribed with respect to subsidy: religious organizations, for example, receive a tax exemption only if they refrain from explicitly endorsing political candidates for office, and the Supreme Court nods. And then there are the myriad ways in which the government--through public service advertisements, for example--directly funds speech that embraces a particular point of view (such as "just say 'no' to drugs").

No, this sequence of First Amendment rulings, like the Fourth Amendment shenanigans I discussed previously, is a transparent effort to impose the judicial community's collective public policy preferences on Americans in direct contradiction to the latter's democratically expressed will. Just as the courts, by declaring high-school urine tests for recreational drugs (but not steroids) unconstitutional under the Fourth Amendment, effectively vetoed a specific democratic decision to discourage recreational drug use among teenagers, so has it now vetoed a specific democratic decision against subsidies for pornography-viewing at public libraries (but not for campaigning in churches). Even those who agree with the courts' political views on these particular issues ought to be concerned with the breathtaking sweep of the courts' arrogation of political power through judicial diktat. At this rate, after all, it's probably only a matter of time before they start, say, meddling with the presidential election process....