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Friday, July 2, 2010

Supreme Court and Maher Arar

I share your outrage that the Supreme Court has refused to take on the case of Mr Maher Arar (New York Times, June 15, 2010), a Canadian who was wrongly accused of terrorist links, and who was arrested in New York, rendered to Syria where he was tortured, before returned to Canada.

This refusal was, in part, based on arguments by the Justice Department that "the court should not investigate the communications between the United States and other countries because it might damage diplomatic relations and affect national security."

It is difficult to see what further harm could be done. The case was extensively studied by a Canadian Royal Commission and Mr. Arar was cleared of wrongdoing and given a large financial settlement. The trouble is that the refusal to open this case is based upon the docrine of "the States Secrets Privilege." This allows the State to be its own judge in deciding what is or is not a State Secret. The privilege was born of a lie in the 1950's and should not be allowed to continue in its present form.

The Justice Department in this case and others is continuing to follow the policies of the Bush Administration. It should not. Rather it should give strong support to The States Secret Protection Act of 2009[H.R. 984/ S417] which will allow for checks and balances in the use of the privilege. This law still languishes somewhere on the Congressional Calendar.

We should note that in this case, the Supreme Court has followed the doctrine of stare decisis; quite a contrast to its overturning one hundred years of precedent for campaign financing.


Sent to New York Times

Rating Agencies

Andrew Ross Sorkin fails to explicitly offer the simple answer to how to avoid conflict of interest by the rating agencies (Answers On Ratings Are Overdue, New York Times (Business Day), June 1, 2010: B1, B2).

Let the agencies' paymasters be the investors. Each financial transaction should have a small fee attached to it, like a Tobin tax. These fees would be used to pay the rating agencies; to keep them honest, a portion of the pay would be tied to achievement, that is the medium and long term accuracy of their ratings.

Such a system would eliminate the current conflict of interest faced by the rating agencies who are paid by the very firms/issuers they rate.

It is a great shame that Congress does not yet seem to be moving in a direction to correct this situation.

Sent to New York Times


More on the Euro

The constraints that the Euro places on European policy described and decried by your editorial writer yesterday (Greece's troubles reveal fatal flaws in the Euro, Boston Globe, May 6, 2010)are exactly the same as the constraints placed upon the regions and states of the United States by our acceptance of the US dollar as a common currency.

Without the dollar, Massachusetts could try to solve it's budget problems by devaluing its currency thereby reducing imports from other states and increasing exports to those states.

Alas, other states would probably reciprocate or add tariff barriers thereby making both Massachusetts and the rest of the country less well off. This is what would happen in Europe absent the Euro's constraints.

We should be glad that the Euro provides those constraints and hope that the unified currency will survive the current stresses and strains and survive, like the dollar, for many centuries.


Sent to the Boston Globe

Greek Wealth Is Everywhere But Tax Forms

Before we sneer too much at those Greeks who, to avoid taxes, failed to report that their homes had swimming pools, we should look at our own behavior (New York Times, May 2, 2010: A1).

I do not volunteer to pay the Massachusetts Tax at the 5.85% instead of 5.3%. Many companies have moved their headquarters as well as their production facilities offshore in order to reduce their taxes.

I almost wrote "tax burden" because that is the way we see taxes rather than, what they really are, the cost of civilization.

Sent to New York Times

The Data Driven Life

In his piece on "The Data Driven Life," Gary Wolf claims (pp. 40-41) to have written a long article (New York Times Magazine, May 2, 2010: 38-45).

How long?


Sent to New York Times Magazine


The Euro Trap

The constraints that the Euro places on European policy described and decried by Paul Krugman (The Euro Trap, New York Times, April 30, 2010) are exactly the same as the constraints placed upon the regions and states of the United States by our acceptance of the US dollar as a common currency.

Without the dollar, Massachusetts could solve it's budget problems by devaluing its currency thereby reducing imports from other states and increasing exports to those states.

Alas other states would probably reciprocate or add tariff barriers thereby making both Massachusetts and the rest of the country less well off.

We should be glad that the Euro provides those constraints and hope that the unified currency will survive the current stresses and strains and survive, like the dollar, for many centuries.

Sent to New York Times


The coming catastrophe

Neither Scot Lehigh, nor Penner and Reischauer whose work he reports, seem aware of the most sensible form for future taxation: a Tobin tax on financial transactions (The coming catastrophe, Boston Globe, April 30, 2010: A9).

This has many advantages:

It can be harmonized with similar taxes at the international level, to avoid firms' jurisdiction shopping.

It taxes activities that represent the bulk of the US economy: 61% at the latest count.

By increasing transaction costs it will reduce the kind of speculative activity that brought our economy to its knees, but if set at a low rate will not inhibit normal business transactions.

Part of the proceeds from the tax can be used to pay the Credit Rating Agencies and thus remove the horrendous conflicts of interest they currently experience.

Multiple wins, I'd have thought.


Sent to Boston Globe