Throwing caution to the wind

Posted on January 30, 2009 in: Current Affairs|Post Comment

The international press has been abuzz with reports of spectacular bonuses awarded on Wall Street, notwithstanding equally spectacular losses at financial services firms and a shaky economic climate. 

The New York Times reported on the numbers and included a nice quote from law professor Lucian Bebchuk, who pointed out, "This was neither the sixth-best year in terms of aggregate profits, nor was it the sixth-most-difficult year in terms of retaining employees."

Merrill Lynch has come under particular scrutiny, with bonuses of perhaps $5 billion paid despite losses so significant that, soon after acquiring Merrill Lynch, Bank of America now seeks additional assistance from the US government.

President Obama is reportedly indignant, as he should be: in the shadow of Lehman Brothers and in the face of staggering losses throughout the industry, the bonuses seem piratical.

I'm indignant too, but uncomfortable making arguments on moral grounds alone or that point towards deciding executive compensation politically.

I cast no stones, but would like to have answers to a couple of questions:
  1. Government support of financial services firms, culminating in last year's bailout, attracted plenty of attention and drew on massive brainpower. Were there any calls to cap bonuses, and if so did they find their way into law or regulations?
  2. Was behavior at Merrill Lynch really a surprise to Bank of America, and if not couldn't it have been anticipated before the acquisition?

Armed robbery in Paris

Posted on January 29, 2009 in: Current Affairs|Post Comment

One holdup per day: in Paris in 2008, there were 364 armed robberies of businesses.

This figure is up 34% from 2007, when 271 Paris businesses were held up.
These figures cover robberies of businesses other than banks. Bank robberies are additional, as are holdups of individuals (muggings).
This data flies in the face of conventional wisdom, which says that violent crime is rare in Paris –in any event, more common in the peripheral towns where riots flared a few years ago– and that criminals prefer property crimes that do not involve violence, like burglarizing apartments when their occupants are away.
Unlike holdups at heavily fortified French banks or jewelers (or a convenience store or gas station holdup in the USA), the Paris robberies involve almost any kind of retail business. They occur anywhere, any time. The robbers are often young and impulsive, putting ordinary people at risk.
Sometimes things go terribly wrong.
planetsushiIn the Latin Quarter, there’s a sushi restaurant on the rue Monge: Planet Sushi. Notwithstanding the name, the restaurant is modest, niched on the ground floor of a residential building. On a Sunday night early this year, two young men, both aged 22, staged a robbery. Diners were present. One robber had a stun gun; the other carried a pistol. The pair made off with the cash in the till.
Then an astonishing thing happened: seven restaurant employees took off in hot pursuit of the robbers. There was a chase. The employees caught up with robbers. A scuffle ensued. One of the employees carried a knife –maybe he was a sushi chef– and he used it, wounding a robber. Sadly, the wound was serious, and the robber later died from his injury. As fate would have it, the nighttime struggle took place next to a neighborhood police station. The police called an ambulance for the wounded robber, and arrested everyone else.
I know that my French friends will disagree with a brazenly American take on this incident, but my sympathies rest with the restaurant employees. I’m concerned about the safety of workers and customers; the fate of robbers troubles me less.

Mystery gunman in Paris

Posted on January 28, 2009 in: Current Affairs|Post Comment
mysterygunmanA mystery gunman has been shooting passersby on the Avenue de l’Opéra is Paris. This has been going on for days. Remarkably, almost no one has noticed or is talking about it.
The avenue de l’Opéra, depicted in Camille Pïsarro’s painting, runs from the Louvre to the Opéra. According to a press report, the shooter has been firing from a building at or near numbers 11 and 13, near the Pyramides metro station (the pyramids in question are in Egypt, the station and an adjacent street sharing a name that commemorates a Napoleonic campaign or battle).
The shooter apparently uses a shotgun, and has been injuring passersby for days: tourists, residents, even a famous singer. Victims, including tourists, have been hospitalized to remove shot. Thankfully, no one has died. Complaints have been made out with the police, which has investigated, recovering shot from the pavement and determining where the gunman was positioned.
I’m surprised, and disappointed, that gunshots in the heart of Paris aren’t considered newsworthy. I, along with hundreds of thousands of other people, have been on this street, going about my business, unaware. Had the shooter not hit a celebrity, perhaps the story would never have been reported. I don’t know what to make of the indifference.

Let there be light

Posted on January 27, 2009 in: Current Affairs, Europe|Post Comment

The French press is abuzz with reports on the imminent ban on incandescent light bulbs, on environmental grounds. Intrigued, I tried to find out more, without much success. In my opinion, this initiative is bad policy, procedurally undemocratic, and environmentally questionable.

What justifies this affront to consumer sovereignty?

Consumers today have a choice between:
  • incandescent bulbs that are cheap to buy but that use large amounts of electricity; and
  • Compact fluorescent or halogen bulbs that are costlier to buy but that use smaller amounts of electricity.

Consumers have been comparing, and choosing; most French households reportedly have several lower-consumption light bulbs.

Why not continue to let consumers choose? Why ban one light bulb family, leaving consumers with less choice? Why outlaw choices that make sense, such as a bulb in the attic or a closet that is put into use once or twice a year, for only a few seconds?

If this measure tracks consumer choices and makes great environmental sense, why is it being decided by backroom technocrats, out of public view?

The interdiction is part of a European Directive that has been in the works for years. The Ecodesign Regulatory Committee, a group of self-proclaimed experts set up under a 2005 EU Directive who seem scared to disclose their identity or to tolerate any public visibility (through a web site, fixed address, or telephone number), proudly announces that it has blessed the interdiction, but relegates the deliberations of the elected European Parliament to a seeming formality before adoption, planned for next March.

French authorities, judging from press reports, seem impatient to interdict incandescent bulbs sooner rather than later. As a policy matter, I'm uncomfortable when producers or distributors meet to organize markets; my discomfort grows when these actions occur with the blessing or presence of public officials. And I'm positively wriggling with discomfort when these decisions seem decided without parliamentary debate or public comment in established rule-making procedures.

Citizens like saving money and profess concern for the environment. If a ban on incandescent bulbs achieves both ends, why not discuss it publicly or shy away from putting it to a vote before elected bodies? And why is a proposal presented in the press as a done deal?

Does science really support a ban on incandescent light bulbs?

The scientific case in favor of an incandescent bulb ban seems to be:
  • incandescent bulbs use more electricity than compact fluorescent or halogen bulbs;
  • the aggregate "extra" electricity that households use on incandescent bulbs requires, in France, electricity producers to use, in addition to nuclear power plants, "dirty" coal- and oil-fired power plants; 
  • the "dirty" power plants generate hundreds of tons of carbon dioxide emissions every year. 

This marginal-demand argument is really weak. Is this the only upside ecological benefit to banning incandescent bulbs?

The question matters, because there are downside ecological costs, especially to compact fluorescent bulbs. These use small amounts of mercury, whose toxicity is well-known. The amount used in a single bulb apparently no danger to human health. But the aggregate amount of mercury that could be dumped is significant. A recycling scheme has been hatched to recover used light bulbs for recycling –in practice, extracting and reusing mercury, among other components– with recycling bins in retail stores. Of course, viewed from the stores' perspective this is a disguised tax, and the stores are less than enthusiastic about joining the recycling team.

Stereotypes are Barriers to be Demolished

Posted on January 23, 2009 in: Current Affairs, Europe|Post Comment

Suddenly, everyone's talking about Europe! The reason: controversy around David Cerny's sculpture Entropa, installed by the Czech EU Council presidency in the Brussels office building that houses the Council.

Ostensibly the work of a pan-European collective (but actually by David Cerny and a couple of collaborators), Entropa plays with and pokes fun at stereotypes about the various EU member states. A militant work, Entropa shows that "stereotypes are barriers to be demolished", and echoes the motto of the Czech presidency, "a Europe without barriers".

Entropa is about more than variety or difference or barriers. It also exemplifies values held throughout Europe. As Cerny wrote in the exhibit's catalogue:

"Self-reflection, critical thinking and capacity to perceive oneself as well as the outside world with a sense of irony are the hallmarks of European thinking."

Entropa has struck a responsive chord among European art lovers: according to a survey by the Cezch presidency, 79% of respondents like the installation. Not bad for a piece of protest art.

Those who don't like Entropa aren't shy about voicing their displeasure. A dust-up over the part of the sculpture representing Bulgaria –as a collection of Turkish toilets– led to the offending part of the work being draped by a black cloak or veil.

This apparently has not calmed some leading Bulgarians. For example, Bulgarian National Bank Governor Ivan Iskov publicly and officially threatened to boycott official EU business:

"In relation to the preposterous and offending to the Bulgarian national dignity depiction of Bulgaria at the Enthropa [sic] exhibition under the auspices of the Czech presidency of the EU, BNB Governor Ivan Iskov asked the Governor of the Czech National Bank, Zdenek Tuma, to use his high personal and professional reputation to support within his powers our request this offensive symbol to be removed […]. Governor Iskrov informed his Czech counterpart that otherwise he would not be able to attend the meeting of the Council of Finance Ministers and Central Bank Governors of EU Member States to take place in Prague on 3-4 April 2009."

Writing in the exhibit's catalogue, such a reaction was precisely what the artist, "Elena Jelebova" (David Cerny?) intended:

"For me, our project is an opportunity to cope with false patriotism and find relief from the destitution of Bulgarian material and spiritual life. Not least, it is sure to upset a lot of people, and that is also what I am aiming for — to create a scandal, especially at home."

Bulgarians generally approach Entropa in Cerny's spirit. I can't read a single word of Bulgarian and have not found much press coverage from Bulgaria in a language I do understand, but I did take note of a summary of in-depth coverage in 24 Chasa reported on the news.bg site:

"According to the daily, the veil creates a higher artistic allegory and the installation has turned into a symbol of Bulgarian corruption."

At the end of the day, I'd place greater stock in Cerny than in certain leaders of Bulgaria, which aims among other things to join the Euro zone.

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