On the Reputational Capital of a Business Leader on a Societal Stage

Is it better that companies be publicly or privately held? Such a question is of such magnitude that glossy, simplistic answers should be eschewed. This is not to say that the answer is situational in nature. Rather, it is more likely that each comes with pluses and minuses from the perspective of an economic system as a whole. As business “leaders” give their advice, it is important to keep in mind whether any personal or institutional conflicts of interest exist and thus could warp the space itself of the advice. Yes, I am intimating Einstein’s theory of general relativity here. Rather than provide an answer without having studied the matter sufficiently, I will provide a way to look at the advice given by Jamie Dimon, CEO of JPMorgan Chase.

The full essay is at "Reputational Capital of a Business Leader."

On the Role of Agribusiness in Global Warming

Agriculture is a major source of carbon and methane emissions, which in turn are responsible for the general trend of the warming of the planet’s atmosphere and oceans. In fact, agriculture emits more than all of the cars on the roads. 10 percent of the emissions carbon dioxide and methane in the U.S. come from the agricultural sector. Livestock is the biggest source of methane. Cows, for example, emit methane. Methane from a number or sources, including the thawing permafrost, accounted for 30 percent of global warming in 2023. As global population has grown exponentially since the early 1900s, herds of livestock at farms have expanded, at least in the U.S., due to the increasing demand.[1] We are biological animals, and we too must eat. More people means that more food is needed, and the agricultural lobby in the U.S. is not about to let the governments require every resident to become a vegetarian. Indeed, the economic and political power of the large agribusinesses in the U.S. have effectively staved off federal and state regulations regarding emissions. It comes down to population, capitalism, and plutocracy warping democracy.

The full essay is at "On the Role of Agribusiness in Global Warming."

---

1. Georgina Gustin, “Climate Change and Agriculture,” Yale University, February 22, 2024.

Exfoliating a Hero: On Lincoln's Unconstitutional Overreaching

Lest we get carried away and inadvertantly enshrine our leaders with mythic laurals, it is worthwhile to peel back our societal "remembering" of past figures, such as Abraham Lincoln, who have become larger than life.

Lincoln was a moderate, promising merely not to spread slavery. In his address after being sworn in, he promised not to go after slavery where it existed. Accordingly, radical abolitionists complained. Even so, the 1860 campaign had been viewed, at least in the south, as a referendum on the southern way of life. Lincoln received only 40% of the vote; he was not even on the ballot in ten states.  There were just 33 states in the union at the time. Lincoln's victory suffered from a deficit of legitimacy in some quarters. In fact,he was burned in effigy at a state capitol in the south. With free Kansas becoming a state, the slave states felt that their respective abilities to defend their way of life in the general councils of the union would become even more truncated or dilute. Berift of a sense of influence on general matters that concerned themselves, the confederating republics felt they had no alternative other than secession.

On Feb 18, 1861, Jefferson Davis became President of the Confederate States of America. At his swearing in, Dixie, which had been composed by a northerner, was played. The two sides in the continental dispute were closer than they perhaps realized. Both Lincoln and Davis, for example, were from Kentucky originally.  According to the Confederate constitution, Davis had a line item veto and would have had a six year term had the confederacy lasted that long. Astonishingly, international slave trading was outlawed. Even so, there were fundamental differences involved in the dispute. Ironically, had the southern states freed the slaves before firing on Fort Sumpter--depriving Lincoln of his motivational tactic midway through the way--perhaps something resembling the southern way of life in a loose confederacy would have prevailed. The United States would have been left to consolidate to its heart's content.

On the way to his inauguration, Lincoln declared that he would rather be assassinated than to see even one star removed from the flag. Such a stance reflects the "all or none" mentality that accompanies political consolidation. In spite of Lincoln's line in the sand, the War between the Confederated States and the United States began at 4:30am on April 12, 1861.  Technically, it was a war between a federated alliance and a federal government. The opening act was bloodless, even as the war to come was the bloodiest in American history. Siloh alone matched the casualties at Waterloo, and there would be 27 more to come. 51,000 men lost their lives in the three days at Gettysburg alone. The contest between the old and new federal forms exacted a heavy toll in human loss and suffering. Who would have thought that contending distinctions in political theory could be so bloody. Of course, might does not in itself make right, although the passion of the unjustly oppressed can bring about victories disproportionate to the relative lack in number. Furthermore, in this particular case, the respective populations in the federations and the industrialization of several of the union's states gave the forces of modern federalism an advantage not necessarily sourced in the nature of the type.

At the time, the union states had a combined population of 21 million while the confederacy had only 9 million, 4 million of which were slaves and thus not in the fight. In spite of the fact that so many southerners volunteered to enlist that a third of them had to be sent back home, the confederacy was perhaps destined to lose the bellum given the tremendous disadvantage in terms of population. That the conflict lasted until 1865 may point to the extent of resentment that had been allowed to build up throughout the slave states against what was viewed there as an “intrusive” federal government. For example, the devisive tarriff that had nearly caused South Carolina to secede in 1832 was reimposed by the U.S. Government in 1858. As in 1832, the tax was to finance northern industrialization. The states producing cotton and/or rice were left not being able to defend their interests in Washington. Accordingly, that distant government was viewed as encroaching and increasingly foreign. The root of the festering dispute went far beyond the issue of slavery.

To the confederate citizens, the cause involved the rights of their republics as well as their property rights. Slaves, being viewed as property by their "masters"--a decadent conception of slavery unknown to ancient understandings--were thus in play as part of the wider and deeper southern concern with self-determination, which the southerners identified with their respective countries and associated ways of life. Even Lincoln's Emancipation Proclamation, which took effect on January 1, 1863 (almost two years into the war), applied only to slaves in the states that had already left the union (rather than to the five slave states that had remained).

The confederate states were not subject to U.S. law as long as they were part of the confederacy rather than the union. Lincoln's proclamation was thus extra-constitutional, and thus without immediate effect other than to motivate an increasingly weary northern citizenry and armed forces. To be sure, Sherman freed slaves as he blazed a trail to the sea. However, even without the proclamation, he would have deprived the confederates of their "property" along with their other means until they surrendered. Slavery was not outlawed in the United States until 1865, when the thirteenth amendment was ratified by the states (the former confederate states excluded even though they had been re-afixed to the union).  There was some duplicity involved in, "Welcome back to the union! But unfortunately your vote doesn't count yet because you don't agree."

Fundamentally, the "north" and "south" interpreted the United States differently. This is what the war was really about, and the issue went all the way back to the contentious debates in the constitutional convention in 1787. The delegates had hotly debated whether the proposed General Government would consolidate power via "general welfare" spending and the potentially unlimited taxation, irrespective of the question of slavery. The people who wanted to secede viewed the U.S. as more like a confederation than a modern federal government. That is, confederates viewed their states as countries and the U.S. more as an alliance having only strictly defined enumerated powers that a national government. Robert E. Lee, for example, was offered command of the union army. He refused and went with Virginia. He could not draw his sword, he said, against his native country. Virginia had to come first; there was never any question about that. Such a view of Virginia and the other republics was to fade even as they still retained residual sovereignty at least into the twenty-first century.

In general, the southerners feared that the federal government would usurp more and more power from their countries; as things turned out, the fear was not without foundation. Even then, Lincoln declared war against the confederated states even though the U.S. constitution clearly stipulates that Congress is the governmental body in the U.S. Government that declares war.  As the president is the commander in chief, there is a conflict of interest in that office also declaring war. So technically speaking, the war was not constitutional, and thus legal.  Lincoln also suspended habeus corpus, though the constitution allows for this in time of rebellion.  To keep the Maryland from seceding, he locked up thirteen of the state's legislators without trial. 

Chief Justice Taney, who had four years earlier concurred with the Dred Scott decision, said that Lincoln had gone too far beyond the constitution in the powers he was exercising. Taney was on firm ground on the declaration of war. Even so, astonishingly, the president simply ignored the chief justice. From the standpoint of an independent judiciary with teeth, Lincoln was laying a precedent very dangerous to the republic.

Because the judiciary has no means of enforcing its decisions by force, the branch depends on the other branches, and, indeed, the people, resisting the temptation to contravene a judicial decision. The basis of the resisted temptation rests on the court's legitimacy, for the judiciary has no troops of its own. In fact, Bickel refers to the court as the “least dangerous branch” for this reason. Lincoln’s precedent in simply ignoring the court put at risk the system of checks and balances that resides in the separation of powers in the federal government. Fortunately for us, Lincoln’s treatment of the Chief Justice's effort to hold the executive branch within its proper constitutional sphere, as though Taney were a mere bystander, has largely been forgotten.  Yet the expediency of an imperial presidency has indeed been on display since Lincoln as Congress has gradually lost power to the commander in chief. The danger is real, and Lincoln's precedent could yet be used by an ambitious commander in chief who has his or her eye on another country to invade. 

Ironically, Lincoln’s unconstitutional actions at the beginning of the war ironically to save the union could be viewed as confirming the charges made by the confederates against the encroaching nature of the federal government.  Lest we miss the lesson as we remember the bloody war 150 years later in 2011-2015 from the standpoint of the victors, we might take note of the susceptibility of power itself to consolidate, ultimately in one person—indeed, even in a hero. The consolidating proclivity is as much a danger in the modern American empire today as it was in ancient Rome.  

Source: Ken Burns’ The Civil War (PBS)

Legislation of the U.S. Government during the Civil War: A Case of Unconstitutional Governance?

Lest history be forgotten, it may come around again to bite us when we least expect it.

During the war between the Confederate States and the United States of America, The Legal Tender Act required debtors to accept “greenbacks,” the U.S. Government’s paper currency. The National Bank Act barred state banks from issuing notes, giving the U.S. Government a monopoly on paper currency. Finally, The Internal Revenue Act imposed a federal income tax and other levies. Henry Brands asks, however, whether “greenbacks” fall under the U.S. Constitution’s wording that the federal government can “coin” money. If money was in coin specie when the constitution was written, the meaning could be widened to include new means without necessarily extending the power of that government beyond what was intended.

Brands also asks, “Did the proscription against state bank notes follow from the [interstate] commerce clause, from the elastic clause, or from Treasury secretary Salmon P. Chase’s imagination?” The fact that state banks had been issuing notes even as the U.S. Government was minting silver and gold coins points to, or illustrates, the dual sovereignty element in the American federal system. Ironically, for nearly the first hundred years of the United States (as alliance, confederation and finally a modern federal system), the states had more currency power than do the state governments that use the euro in the E.U. 

In terms of the interstate commerce justification of barring state banks from issuing notes, that justification does not reach such notes being used within a state’s borders. In terms of interstate commerce, mandating a common currency can be covered by the clause. As per the example of the E.U., it is possible to have both a common currency and currencies particular to certain states. In fact, it is possible, as per the European case, to have the particular currencies displace the common currency in the state of the particular currency. However, if, for example, the euro cannot be used in Britain, this restriction of the common currency in a state would detract from the common market (i.e., out-of-states would be discriminated against).  So while the U.S. commerce clause could be interpreted as allowing for state currencies, any such currencies could not be mutually exclusive with the common currency.

As for the income tax, Brands avers that it “seemed a patent violation of the constitutional ban on ‘direct’ taxes not proportioned to population.”  Indeed, a constitutional amendment was deemed necessary for the purpose in the twentieth century. The unlimited potential of the U.S. Government to raise revenue by taxation was not missed on some of the delegates at the constitutional convention in 1787. They worried that that government would crowd out the governments of the states, which would also depend on revenue. These fears were not without foundation. By the twenty-first century, state governments were under popular pressure not to increase taxes in large part because of the taxes already being taken by the federal government.

In general terms, these federal laws enacted during the Civil War can be interpreted as evincing various degrees of encroachment of the U.S. Government. It was such expansion of power that had been in mind when the confederated states seceded from the United States. Even though Lincoln’s 1860 platform affirmed protecting slavery where it existed at the time, southerners feared that the reach of the federal government would continue unabated. The result, they feared, would be the eventual loss of their self-determination and way of life.  This concern transcended the issue of slavery. Accordingly, the states would have perhaps been wiser to free the slaves then fire on Fort Sumpter—the underlying issue would have been made more transparent thusly. Even in the twenty-first century, the trajectory of the U.S. Government in going beyond its enumerated powers is an issue even if other issues tend to get first play.

Source: Henry W. Brands, American Colossus: The Triumph of Capitalism 1865-1900 (New York: Doubleday, 2010), p. 13.

We the People: Invigorating Popular Sovereignty by Referendi

A republic is characterized by the citizenry electing representatives, who in turn legislate (i.e., make law). As an alternative, the citizenry itself could vote directly on legislative proposals. The latter is called direct democracy. Ancient Athens, for example, practiced it. In the United States, the republic form is the prevalent form of government.  In spite of Wilson’s comment made in the constitutional convention that representation “is made necessary only because it is impossible for the people to act collectively,”[1] direct democracy has typically limited to an occasional “referendum” question even though more vital questions could be put to the body politic directly. 

Typically, referendums have tended to do with elections (and thus with representative rather than direct democracy) or with general taxing or spending limits for a government. The rationale for putting general taxing or spending limits up for referendum is that they apply to a government as a whole—this perspective being from that of popular sovereignty (i.e., the citizenry, whose electoral power transcends their government). Rarely, an “issue” is put up to be decided directly by the voters. By 2024, several of the member-states in the U.S. had had referendi on legalizing marijuana. I contend that many more matters of policy could be decided directly by the voters. 

Since the elected representatives represent the citizenry, the former should not be presumed as having the definitive right of such decision. Deciding on matters of general policy are primarily value-judgements, rather than requiring expertise.  Issues such as abortion, gay marriage, the Bush tax cuts, and the Iraq and Afghanistan wars could—and I would argue should—be decided by the voters directly. Beyond issues, the voters could decide more general governance questions, such as whether federalism should be continued. Such a question could lead to more specific proposals at the next election. 

For example, if the majority of American voters want the US to be of federalism, representatives could work on not only constitutional amendments, but also proposals for the voters on which broad areas of power would be transferred back to the states (or the voters could be asked—assuming a majority still want federalism—whether X or Y areas of power should be transferred back to the States). Should elected representatives counter that we should not trust the people to make such decisions, I would argue that it is nonsensical for an agent to contend that his principal is somehow inferior to himself. In a representative democracy, the representatives are the agents of the people; it is not the other way around.

In short, I contend that popular sovereignty ought to be strengthened rather than vitiated. Elected representatives are best suited to working out the technical details rather than deciding broad questions of policy.  An election campaign is a bricollage of factors; it is rare for a victor to be able to claim a mandate on a particular issue. In fact, a representative may be elected for reasons having nothing to do with his or her positions on “the issues.” 

The midterm election of 2010, for example, could have been informed by a mix of factors; it was not even clear whether people voting Republican, for example, were saying yes to that party’s platform or no to the previous two years of legislation (which was informed by both Democratic and Republican law-makers—neither party being able to enact its platform as given).  Even voters blaming the Democratic Party for the resulting legislation is not strictly speaking accurate, as compromises had to be made with Republicans.  So an election of representatives is a broad brush that cannot be divined as a mandate on particular issues.  

Regarding particular policies—even foreign policy, such as whether the US Government should continue to support Israel—the only way to know if there is a mandate is to put the matters up for decision by the voters. Political parties could have a say on how the questions are worded so they are objective (or two versions could be provided). Courts would still be able to declare the resulting law unconstitutional, but even here constitutional amendment is possible.  Even in terms of amendments, the voters, rather than their constitutional delegates or state or federal representatives, could decide directly.  

For example, the voters could decide whether US Senators should continue to be elected, or whether they should be appointed by the state governments or be the governors themselves (the US Senate being like the European Council of the E.U.). The voters could also decide whether abortion should be decided by the state or U.S. courts, or directly by the voters—by state or US—as an amendment.

At the very least, basic decisions would be made that have been mired in disputes between governmental institutions and/or government officials. We are depending much too much on elected and appointed government officials to “make” policy. Ultimately, the will of the people should be freed up and exercised beyond the confines of simply electing representatives—being subject only to the judiciary protecting individual rights (which can be overruled by constitutional amendment, which can be of the people).  Sadly, those in power—the elected representatives—will naturally and ironically resist efforts to expand the will of the people. 

Because the election of a representative involves many elements, an elected representative could easily get around interpreting his or her victory as a mandate to expand the will of the people.  This is precisely part of the problem, and it maintains the monopoly of power that our elected representatives enjoy.  I suspect this is no accident. Hence I am not optimistic on any expansion of popular sovereignty any time soon.  Even so, I hope my thoughts here are thought-provoking. 

Although not the best person to quote, Richard Nixon pointed in one of his books to the need for political development: “In terms of material progress, the twentieth century has been the best in history, but in terms of political progress the record has been disappointing.”[2]  

What I am suggesting is that our political system is so antiquated that were it to develop as technology has, our use of elections could make quite a leap forward.  In spite of all the technological change, we tend to hold very rigidly to the way things have “always been done” in politics.  It is time for politics to catch up. In fact, the technological progress could facilitate the expansion of popular sovereignty.  For example, voters could surf the internet for information before voting on general policy areas. The challenge may well be in how to enable illiterate voters to be able to take part.  As one possibility, voters could vote at desks (as in a classroom) while a reader reads through the questions on the ballot. My point is that we can begin to think outside the box and shake loose our assumptions.

1. James Madison, Notes in the Federal Convention of 1787. New York: Norton, 1987, p. 74.
2. Richard Nixon, 1999 Victory Without War, New York: Simon and Schuster, 1988, p. 16.

The Israeli Supreme Court’s Conflict of Interest as Unreasonable

Ironically, in making the ruling on New Year’s Day of 2024 striking down Prime Minister Netanyahu’s amendment to the country’s basic law that would have removed the judiciary’s authority of judicial review of laws based on their reasonableness, Israel’s Supreme Court too unreasonably exploited a conflict of interest. Basic Law, which is essentially constitutional law, includes the basic architecture of a government, such as how the executive, legislative, and judicial functions are related. Self-interest being a salient feature of human nature, we can assume that the governmental functionaries in each of those functions naturally seek to expand their respective jurisdictions relative to those of the other two. I contend that to give one or two of those areas the last word in altering the division of authority involves a conflict of interest. This applies to a constitutional court. Therefore, even though democracy is served by a judicial decision striking down an attempt by the executive and/or legislature to eviscerate the authority of the judiciary to act as a check, giving the latter the last word is fraught with entanglements. 

By eight to seven justices, the court ruled “that a government amendment to the so-called reasonableness law should not stand. The bill had stripped the Supreme Court of the power to declare government decisions unreasonable.”[1] That very officials who make government decisions in the Knesset passed the basic law can be seen as problematic. It was essentially a power-grab by the executive/legislative domains at the expense of the judiciary. Although the court “rejected the amendment because it would deal a ‘severe and unprecedented blow to the core characteristics of the State of Israel as a democratic state,’”[2] the naked power-grab could itself be viewed as unreasonable, even taking for granted the element of power-aggrandizing in governing. The court could also have ruled on the basis of there being an institutional and personal conflict of interest, but the court itself could be charged with the same offense in deciding the matter. It is just this conflict of interest that flew below the media’s radar (and got me to writing).

Even though the ruling did not expand the court’s authority, the decision arrested a decrease, and was thus in the personal and institutional interest of the judiciary in terms of power. Just as the majority in the Knesset had acted in its interests, the majority on the court did as well. The matter was thus a power struggle, and thus giving one side the final, definitive say is unfair. The ruling cites the importance of judicial review of laws passed by the Knesset as being in the broader interest of democracy in Israel, but the relatively narrow personal and institutional interests of the justices and their court could be expected to be exploited, and this may be the real reason for the ruling. To be sure, an independent judiciary is indispensable for the executive and legislative functionaries to be held accountable. Although they could argue that the voters could perform that function at election-time, elections do not include sending corrupt officials to jail, and the sitting Prime Minister was charged with corruption judicially at the time that he was steering the bill to passage (which counts as a personal conflict of interest). Even if the court’s democracy argument is solid, the personal and institutional conflicts of interest in the justices resisting a restriction on the purview of their judicial authority are inherently unethical and thus should be obviated if possible. 

The inherency is explained by just how inherent the self-interest to exploit a conflict of interest, whether personal or institutional, is in human nature.[3] Without doubt a conflict of interest that actually has been exploited is unethical because a private or relatively narrow benefit is put before a public or relatively broad benefit or duty.  

In judicial language, strict scrutiny should therefore be applied to unilateral decisions by legislative, executive, or judicial functionaries or “branches,” of government that self-aggrandize authority at the expense of one or two of the other “branches.” I recommend that such conflicts of interest be obviated by putting such matters to the electorate. So this is not merely a rubber-stamp of the majority parties, a 2/3 majority should be required to change Basic Law. Otherwise, we are left with the unsavory alternative of having the contending governmental interests play out their internecine power-struggles on the constitutional stage with one such interest having to have the final word, which is unfair to the other interests. In a democracy, after all, popular sovereignty is more fundamental than governmental sovereignty.

---

1. Rob Picheta, Amir Tal, and Lauren Izso, “Israel’s Top Court Strikes Down Key Part of Judicial Overhaul, Reigniting Divisions as War Rages,” CNN.com, January 2, 2024.
2.  Ibid.

3. Skip Worden, Institutional Conflicts of Interest, available on Amazon.