Monthly Archives: February 2013

Wait, I Thought Marxism was “Scientific”

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Die Linke, the German party also known as the Party That Dare Not Speak Its Name (or Its Antecedents . . . Sozialistische Einheitspartei Deutschlands, anyone?) has announced among its other platform planks in the coming national elections its position that managers’ pay ought to be limited — capped, in fact — to €480,000 per year.  At $1.37/Euro that works out to be $657,600, which by any reasonable standard is a boat-load of money.

Yet to ask the obvious question:  Who the hell are the former DDR-functionaries, fellow-travellers, and mourners for the Stasi to determine what any person’s services are worth?  I freely admit that some folks have absolutely absurd compensation packages.  Some folks have so far Fallen Into It that the standard of living they enjoy is utterly uncoupled from any measurable usefulness they bring to their fellow humans (which would include me, of course, and Gentle Reader as well).  But what do I know about what someone else’s efforts, talent, and time are worth?  What do I know about what they have or have not sacrificed to obtain their current levels of compensation?  According to the Stasi Party, it doesn’t matter whether it’s Daddy’s Company and he’s hired you as his successor and you’ve got 15 employees or whether you’re CEO of Exxon or Siemens or Oracle or Mannesman, and your decisions can make or break the fortunes (by which I mean neither less nor more than their ability to make next month’s house payment, or keep their daughter in college one more semester) of tens of thousands of people:  You and what you bring to the table aren’t worth more than €480,000 per year.

The assertion that any politician is sufficiently informed as to stick a maximum value on human enterprise and talent is so comically asinine as to be self-refuting.  Of course, the party hacks who have cooked up this silly number most likely fall into that category of People Who Have Never Held a Goddam Job, in which respect they mirror exactly the current president of the U.S.  They’ve never made payroll from their own pockets; they’ve never had to worry whether if they make a mistake and blow Decision X, their children will or will not lose the only house they’ve ever known as home; they’ve never been in the position of having to look in the eye the 30 or so people who were hired by their grandfather back when the company was itsy-bitsy, and decide which seven are going to have to be let go so that the remaining 23 can continue to have a job, any job at all (while you as the owner haven’t had a “paycheck” in nine months).  There are in fact so many inputs into the answer to the (deceptively complicated) question, “What is Person X worth to this enterprise?” that there is no possible way to gather that information into one place.  Even the person who actually has to make that decision and hire or not hire, at this, that or any other price, any particular person cannot know all the relevant information.  The importance of the market is that it matches the risk of the incorrect answer with the reward of the correct answer.  Politicized decisions, such as the communists (and Die Linke aren’t just leftists; they’re commies and don’t believe any different: the only difference is they’re ashamed to admit they’re commies) propose, sever the connection and so produce routinely and predictably incorrect decisions.

Die Linke’s position is worrisome for a bigger reason, though.  Once I concede that managers’ pay ought to be capped, which is to say once I agree that politicians may determine the maximum value of any particular manager to any particular enterprise, irrespective of the size and nature of the enterprise, the challenges facing it, the opportunities it finds before it, and the consequences of the decisions this hypothetical manager will be making . . . once I do that, where is the limiting principle?  If I can say that Jack Welch is worth no more than $657,600 per year to General Electric, what is there to keep me from saying that Joe Bloggs the Shelf Stocker is worth no more than $2.73 per hour to Bill’s Widgets on Main Street? 

Some weeks ago there was an article — I think it was on the Puffington Host — about what a Wonderful Dude the CEO of Costco was, because with his customer base of soccer moms and yuppies, and his business model of shit stacked on pallets by forklifts, he paid his hourly drudges an average of $17.00 or so per hour, versus Wal-Mart’s whatever-it-was.  OK, maybe he in fact does walk on water and part it for those who can’t.  But if you admit that I can cap Costco’s CEO’s pay at $657,600 per annum in order to reduce “social injustice” (excuse me while I wipe the snot off my face from laughing), then you also necessarily admit that I can cram down all those Costco workers’ $17.00/hour pay to whatever Wal-Mart pays its people . . . and by the way, the folks working at Wal-Mart do a helluva lot more in terms of serving the store’s customers than Costco’s do.

And there you have the whole fallacy of the lefty world vision.  They assume that they’re always going to be the ones in charge, and so all decisions of course will all be made according to truth, justice, and light, and the truly deserving will always be made better by what the government decides.  And so forth.  The market supporter, however, assumes that more often than not the guys running the show will be knaves, charlatans, and cretins.  The only way you protect yourself in that situation is by chopping down (with a broadaxe, if necessary) the scope of the decisions the People in Charge are permitted to make.  And you arm everyone else to make damned good and sure the People in Charge don’t get above themselves.

How about this, for capping compensation packages?  Everyone holding any elective office, of any nature whatsoever, or having any non-clerical position in any political party, PAC, or affiliate of either may not receive more than, say, $35,000 annually in income from all sources.  None at all.  Because given what a lousy job our elected officials and political party operatives have done, I can tell you right now that’s well in excess of anything they’re worth.  And in fact let’s just go ahead and cap their lifetime incomes at $35,000 per year, for as long as they live, because we have to live for generations with the consequences of their bad decisions.  Unfair, you say?  I have no earthly idea whereof I speak?  Well coach, you’re exactly right.  On all counts.  But I have no less an idea about those peoples’ worth than they do about mine.  In fact, given the public nature of their screw-ups, I’m going to go right ahead and say I have more of a notion of their intrinsic worthlessness than they ever can have of mine.

Sauce for the gander, anyone?

 

Unfortunately, Aleksandr Solzhenitsyn was Unavailable for Comment

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The Boston Globe has a piece inspired by the recent suicide of Aaron Swartz, the chap who gave us RSS and Reddit.  He had tapped (literally, he plugged into the system itself, as opposing to hacking his way in remotely) into a database — JSTOR — owned by MIT and which contains millions of academic journal articles.  Hardly surprisingly, MIT does not make that database available to the general public for free (although I understand that free access is granted to some subset of its faculty and/or students; I can’t say I’m certain of the details).  Swartz’s laptop downloaded something like 4.8 million of them before he was caught.  He was charged with 13 federal felonies carrying up to 35 years in Club Fed.  The prosecutor offered him a plea bargain:  he’d cop a plea to all 13 charges, serve six months, and presumably some further period on probation.  He hanged himself instead.

I don’t carry a brief for thieves.  In fact, I don’t even practice criminal law.  In truth, our firm represents, among other clients, lenders.  From time to time those lenders will make construction loans to borrowers who then take the money and use it for everything from their other projects to chasing women to paying off their own credit cards.  Our state legislature defines those sorts of monkey-shines as “theft,” and stipulates that it they are criminally punishable as such.  Over the years we’ve got used to our local district attorney’s office staring blandly at us and informing us, “That’s a civil matter.”  So my initial reaction to the specifics of the Aaron Swartz story is that someone that brilliant should have asked himself, up front, whether and if so to what extent he was willing to accept the risks of what he was doing.  He sure as hell could have afforded a lawyer to ask what were some of the consequences; he was anything but indigent.

On the other hand, we do have the disturbing question of how it was that the prosecutor was willing to take six months when she’d cobbled together a 13-count indictment.  I mean, any act that merits 13 felony counts ought to carry a stiffer tariff than six months, and any act which is adequately expiated by six months in Club Fed (and he’d have got credit for any time served, by the way) ought not merit 13 separate felony charges.  On a more prosaic level, either this prosecutor feels confident enough of her 13 felony counts and her ability to make them stick that she thinks 35 years is within the realm of the possible, or she’s really concerned that she’s going to come away with little to nothing of that and so is willing to take less than the 11/29 that some drunk driver gets for his second offense.  No matter whether you look at it from the perspective of morality or competence there is a yawning chasm in this story which requires explaining, and which suggests many of the questions raised by the Globe article.

For purposes of this post, I’m less interested in the nostrums examined by the article than I am in the dynamic exposed by Swartz’s story, and its alarming resemblance to a system of “justice” which just about everyone outside Dear Leader’s administration would condemn.  The article quotes the Blogfather Glenn Reynolds from his article (linked to previously), “Ham Sandwich Nation: Due Process When Everything is a Crime“:  “What we really have is a plea bargain system with a thin froth of showy trials floating on top.”

You know what that system resembles uncomfortably closely?  The system described by Solzhenitsyn in The Gulag Archipelago.  Under the Stalinist system, the best evidence of wrong-doing was the confession.  Thus the entire system was designed to elicit the most confessions, and the interrogators were ranked, promoted, demoted, or run through the system themselves based upon how many confessions they extracted and how quickly.  It was part of prison lore when one should confess, and to what, and in what order, and how.  If one wished to avoid being shot, when/how/to what should one confess?  Whom else should one implicate?  Was there any difference in sentence based upon one’s confession?  [Zek joke:  Two prisoners are discussing their convictions and sentences.  One allows that he’s been sentenced to a “quarter,” i.e. 25 years.  The other asks him for what.  He answers, “Nothing at all.”  Response:  “You lie!! The sentence for nothing at all is ten years!”]  If one deprived one’s interrogator of a proper confession, one got cycled upward through the system.  One got a more senior, more experienced interrogator.  One got shifted to a punishment cell.  One got moved to Sukhanovka, whence only one person is known to have emerged both alive and sane (proud to say he was a 20 year-old American boy, Alexander Dolgun).

And what, exactly, is the plea bargain system other than a system for the extraction of confessions?  How do the motivations of the NKVD officers who beat Alexander Dolgun on his genitals, or who beat him until his pants legs stuck to his body from the dried blood, differ from those of your typical ink-seeking missile a.k.a. the American prosecutor?  Stalin rewarded his most prolific interrogators with promotion and privilege (at least if he did not have them shot; the NKVD itself was purged in 1937-38).  American prosecutors who most visibly show themselves “tough on” crime X are rewarded with job tenure, advancement, and political influence.  I will admit that there is the not-unimportant distinction that the “crimes” the NKVD was “investigating” were entirely made-up except in the rarest of cases, even on their own terms.  For example, pointing out how crappy a Soviet-made article was, especially in contrast to a Western counterpart, was a crime (Alexander Dolgun called out his interrogator for speaking highly of an American-made Parker pen . . . and was beaten nearly unconscious for it).  But the NKVD even dispensed with the fact of whether the prisoner had in fact done it.  On the other hand, how many people here have pleaded to a crime which they either did not do at all, or to which they have a valid defense, only because they’re looking at 29 years in hard-time if the jury doesn’t believe them or credit their evidence?  In our system the down-side risk of taking a position that one doesn’t believe in good faith is all, all on one side.

It’s that mis-match between the defendant’s calculus and the prosecutor’s which is at the heart of America’s systemic problem.  Acknowledging that the suggestions mentioned in the Globe article may somewhat mitigate the objectionable portions of the dynamic, I don’t think genuine reform is possible without giving the prosecutor’s office some substantive down-side risk.  I mean, who hears about the acquittals, except in the very prominent defendant’s case?  The prosecutor really doesn’t care how many cases are tried and lost outright, or how many times a charge of Really Bad/Serious/Awful Felony X is tried and what the jury comes back with is a conviction for Slap on the Wrist Misdemeanor Y.  What gets the ink, and the votes, and therefore the prosecutor’s attention, are the convictions.

What will get the prosecutors’ attention is losing money.  Which suggests that (i) some portion or all of the defense costs on an acquittal, or a conviction only of a lesser included offense, should be paid by the prosecution, and (ii) the funds to pay those should come from and out of the specific prosecutor’s office.  You could implement all sorts of sliding scales, from number of counts charged versus counts convicted, to whether a Class A felony is charged but only a Class C felony is convicted, or whatever.  The scale could even be adjusted so that the more times a specific prosecutor’s office gets popped, the greater the percentage of the defense costs they have to absorb.  It doesn’t have to be black-and-white, all-or-nothing.  But the prosecutor needs to have a powerful incentive, an incentive to ask himself each time he decides to charge someone, whether his decision is or is not going to affect his ability to put food in front of his children.  Because that’s sure as hell the kind of questions the defendant faces when he’s figuring out whether and to what he is going to plead guilty.