Why Crazy Might Be Best – 2016 Edition

Over three years ago we wrote “Why Crazy Might Be Best in 2012” in which we made the case that nominating the most bat-shit crazy Republican would open up a window for a rational, reasonable and moderate independent to fill the rather large middle ground and win the presidency. 

As we know, Governor Romney won the nomination, and as one of the least bat-shit crazy candidates, the space for a viable independent candidate never materialized. 

However, in 2016 we’ve hit the bat-shit crazy jackpot.  If current polls hold (they won’t but humor us for a minute) we could have TWO bat-shit crazy nominees, one on each side!  This would almost certainly leave an enormous void in the middle for a reasonable and rational candidate to step into the race and finally break the two-party stranglehold on government. 

The old adage is that you have to bottom-out before you can change your ways.  We can’t think of a worse bottoming-out than a presidential election pitting an arrogant and brash right-wing reality TV star against a self-identified socialist who had to run for the Senate as an Independent because he was too far to the left to win the Democratic nomination.

As of August 2015, Gallop cites that 41% of Americans identify themselves as Independents.  41%!  That leaves 27% as Republicans and 31% as Democrats.  On the right, even if we assume Donald Trump has the undying support of 50% of Republicans (he doesn’t and never will) that’s only 13.5% of the population as a whole.  Similarly, even if 50% of Democrats provide full-throated support for Bernie Sanders, that’s only 15.5% of the population.  This leaves 71% of the population up for grabs.  71%!  Even if half of these Independents feel like they need to vote Republican or Democrat, 35% would be a plurality and a path to the White House.  

Independents have struggled to gain traction in presidential races against the big, bad and well funded political parties.  But with 71% of the vote up for grabs, and two bat-shit crazy and therefore highly vulnerable opponents, someone would step in to fill the void. 

Nothing would make us happier.  

What if after the next idiotic comment from Mr. Trump or any of the other old, white males vying for the Republican nomination, Carly Fiorina stepped to the stage and said:

“I’d like to respond directly to the comments made by Mr. Trump and Mr. X (fill in the blank for idiotic white male) on gay marriage, abortion, and immigration.  I’ve had enough.  The American people have had enough.  The Republican Party is stuck in the past, unwilling to move forward and embrace our evolving cultural realities.  If the definition of a Republican includes denying a loving gay couple the right to marriage, a woman the right to choose, or a path to citizenship for a 12 year old girl brought to the US by her parents for a better life, it’s not my Party.  Which is a shame, because I am a firm believer in Republican principles with regards to fiscal and economic matters, but I can no longer overlook the party’s pathetic record and progress on social issues.  As of this moment, I’m announcing my candidacy for President of the United States as an Independent.  The President should not be beholden to the rigid orthodoxies of any single political party.  The President should be free to make the best decisions for the country and its citizens, not the one the best fits the Party platform.  So to all of the Republican’s who are embarrassed to identify as such at cocktail parties because of the Party’s out-dated social views, I’d like your vote.  To all of the Democrats excited about the progress towards equality in our society, but worried about passing along a fiscal disaster to your kids and grandkids, I’d like your vote.  To anyone who believes in a government run by facts and unbiased analysis, rather than rigid Party politics, I’d like your vote.  To anyone wanting to focus on our bright future rather than lamenting about years past, I’d like your vote.  I’m Carly Fiorina and I’m running for President of the United States.”

In a contest between Ms. Fiorina, Mr. Trump and Senator Sanders, a Ms. Fiorina free from the Republican stench would win in a landslide.

Let's Deregulate The NFL

The NFL is riding high as America’s Game, but it has a problem.
 

Most criticism of the NFL has been aimed at player safety, concussions in particular, and player behavior off the field, highlighted by some high profile domestic abuse cases.  Both are issues that require attention, but neither issue impacts the experience of watching an NFL game.
 

The real problem facing the NFL and its ability to keep its stadiums full and TV ratings strong, is the rulebook.  For a game built around watching enormous human beings pushing themselves to their physical limits of strength, agility and aggressiveness, it’s too often the old men in pinstripes with the most influence over the result of a game.  Ticky-tack penalties and obscure rule infractions often overshadow the incredible athleticism of the players on the field.

 

NFL viewers tune in to see Dez Bryant make acrobatic catches at the goal line with a trip to the conference finals hanging in the balance.  We tune in to watch JJ Watt burst through offensive lines for a huge sack on a key third down.  We tune in to watch Richard Sherman scratch and claw to keep the ball out of Calvin Johnson’s hands.
 

Unfortunately, the first question we ask after these plays is “was there a flag?”  And far too often, the answer is yes, erasing that play from history.
 

When these penalties occur, it kills the flow of the game, negates the skill and athleticism of the players and fills the aggrieved team and its fans with rage, and rightfully so.   Andrew Sharp does an excellent job dissecting this outrage on Grantland.com using the Dez Bryant catch (or non-catch as the case may be) as an example. 
 

After Bryant’s acrobatic catch, the opposing coach challenges the call and we’re forced to sit through 538 replays in a feeble attempt to apply nonsensical rules to a bang-bang play on a frame-by-frame basis.  Then the referee comes back and negates the play using rules devoid of logic.  That huge sack is overturned because Watt, after getting pushed, shoved and otherwise harassed by a 300-lbs lineman, happens to graze the QB’s helmet with his pinky, drawing a 15-yard personal foul penalty.  Sherman’s incredible coverage of Johnson draws a penalty because Matthew Stafford horrendously under-throws a pass, making it look like Sherman stops Johnson from coming back to the ball, drawing a 40-yard pass interference penalty. 
 

In a well played and officiated game, you don’t even notice the referees.  Can you remember watching an NFL game where you didn’t notice the referees?  We can’t.  Between the booth reviews, the incessant defensive holding and illegal contact penalties, the over-calling of pass interference and the over protection of quarterback and wide receivers, the referees control an ever growing proportion of the game.  The average Dad in the stands didn’t pay $500 to take his kid to watch referees throw yellow hankies all over the place or sit through long reviews, and the 7 year old watching at home and wondering why his team scored a touchdown, but isn’t allowed to keep the points, might give up and just go back to his Clash of Clans village. 
  

So what should the NFL do about it?
 

Our thoughts:
 

1.       Instant replay should be limited to 40 seconds and run out of NFL headquarters (like baseball and hockey).  If coaches and quarterbacks have to make decisions within the confines of a 40 second play clock, so should the referees.  If the seasoned referees in the replay booth can’t overturn the play based on a couple of replays, the call on the field stands.  The purpose of replay is not to dissect each play on a frame-by-frame basis, it’s to ensure that egregious mistakes are remedied.  40 seconds is plenty of time to determine if an obvious mistake has been made.
 

2.       A catch equals control and two feet (or one elbow, knee, rear end) in bounds.  That’s it.  The entire rule about controlling through the process is thrown out.  The idea that if the ball touches the ground at any point during the catch it’s not a catch is also thrown out.  If a player has control of the ball, and is in bounds, it’s a catch.  That’s it. All fumble rules apply after that point.
 

3.       The pass interference rules need to be radically overhauled.  First, pass interference should only be a spot foul if it’s egregious enough to be considered unsportsmanlike conduct.  If the defender is beat and their only chance to prevent a touchdown is to tackle the receiver before the ball arrives, that’s unsportsmanlike conduct and a spot foul.  If the foul is just a bit of sloppy defending or poor timing, it’s a 15 yard penalty and an automatic first down.  This works in college, no reason it can’t work in the NFL.  Lastly, pass interference cannot be called on an underthrown ball.  The controversial non-call against the Dallas Cowboys in the wild card round is a perfect example of this rule.  Under this proposal, the non-call would have been correct and uncontroversial because the ball was badly underthrown, forcing the tight end to try and stop his forward motion and reach back downfield to try and catch the ball.  A quarterback’s bad throw shouldn’t be rewarded with a pass interference call.

4.       We’re all for player safety, but the ticky-tack personal foul calls need to stop, particularly on plays involving quarterbacks and wide receivers.  I don’t think this requires a rule change, but the commissioner should issue an Obama-like executive order instructing the referees to only enforce in obviously dangerous and intentional hits, not every glance of the helmet.  As an offset, players are no longer just fined for dangerous hits, they should also be suspended more liberally - even if its just for a quarter, a half or multiple games.  A player is much more sensitive to missing game time as he is to missing Benjamin's.  The NHL model would work well here - i.e. player can appeal, and all decisions are announced promptly and publically with a full explanation.   
 

5.       Coaches should be able to challenge an announced personal foul penalty (i.e. you cannot challenge anything that was not called) or for/against the unsportsmanlike conduct version of pass interference on any pass play (i.e. you can either challenge the penalty, or challenge the non-call).  These are currently the only two game changing plays that are not reviewable, but they should be.
 

6.       Illegal shift, illegal formation, illegal motion, ineligible man down field, and ineligible receivers – all of these random rules are revoked – except illegal forward motion – that can stay in the CFL and Arena league.  Who cares how many players are lined up on the line of scrimmage?  Who cares if the left tackle catches a pass?  Who cares if two players are in motion during the snap?  What’s the harm in the center sprinting down the field before a pass is thrown?
 

These changes put the game back in the hands of the players and coaches, exactly where it belongs.

It's Not Cowardly to Protect Employees

We need to stop calling the leaders of media outlets who decide not to republish the Charlie Hebdo cartoons "cowards.”

Any reasonable person knows that free speech is a right to be celebrated and defended. Unfortunately, we live in a world filled with unreasonable people, who do unreasonable things for unreasonable reasons.  Wednesday’s demented exercise of religious vigilantism in Paris is an example of such an action. 

For those that beat their chest from the comfort of their twitter account and call a media outlet cowardly for deciding not to publish a cartoon, I urge you to put yourself in their shoes.  If you’re in charge of a newsroom full of tens, if not hundreds of mothers, fathers, sisters, brothers, sons and daughters, is the publication of a certain cartoon worth endangering the well-being of even a single employee or the viability of a business that employs tens, hundreds or thousands of people?   

This is not a crisis of free speech.  This is a question of making choices that are best for specific organizations and their employees.  In fact, deciding not to publish the cartoons is an equally reasonable exercise in free speech as is the decision to publish the cartoons.     

Is it horrible and tragic that an editor needs to worry about religious fanatics storming his newsroom and executing his staff over a published cartoon?  Absolutely.  But if your mother, father, son or daughter were in that newsroom, what would you want that editor to do? 

For us, it’s a no-brainer.  We cover the story in depth but let our readers find the cartoon elsewhere if they so choose – something that anyone with a remote control or an internet connection and the ability to spell Google and Charlie Hebdo can accomplish in about 5 seconds.  Would we feel good about our decision?  No, but would we feel worse if a single employee was injured in part because of our decision to publish the cartoon?  Yes.   

For clarity, this is how we would exercise or right to free speech in this situation, it does not mean we think reprinting the cartoon is wrong.  Publishing the cartoons is an equally reasonable exercise free speech.  To suggest that either decision is right/wrong or courageous/cowardly is the real attack on free speech.    

We find criticizing free speech on the grounds that it’s not the right kind of free speech problematic, and the reactions to those who decide not to reprint Charlie Hebdo cartoons are just the latest example in this growing and disturbing phenomenon.

It's Hall of Fame Time Again

Last year we shamed Jayson Stark of ESPN for admitting that Barry Bonds and Roger Clemens are two of the greatest players of all time, but leaving them off his 2014 Hall of Fame ballot.  He cited the broken voting system with many critiques that we share, but our point was that if you're not part of the solution, you're part of the problem.

So this year, it's only fair that we commend Stark for his full throated support for the games best players, full stop.  We only hope that more members of the BBWAA take the same approach and start to clear out the backlog of historically great players that, to date, have not been enshrined into the games Hall of Fame. 

With that, we present our 2015 ballot and predictions.  Remember, due to the asinine rules imposed by the Hall of Fame (which Stark does a great job criticizing), a ballot can only have 10 players, regardless of how many are worthy of induction.   

1. Barry Bonds
2. Roger Clemens
3. Randy Johnson*
4. Pedro Martinez*
5. John Smoltz* 
6. Jeff Bagwell
7. Mike Piazza 
8. Curt Schilling
9. Mark McGwire
10. Craig Biggio*

* Who we think will get inducted - Smoltz and Biggio will be very close to 75%, but we think/hope they both get there. 

Our ballot has changed from last year - we gain three spots given the induction of Maddux, Glavine and Thomas, which are taken by first timers Big Unit, Pedro and Smoltz.  Our only other change was selecting Biggio instead of Sammy Sosa.  This change is partly due to our realization that we were under-appreciating the breadth of Biggio accomplishments and partly due to finally taking off our Cubbie Blue tinted glasses and realizing that Sosa's role in bringing the game back from it's devastating strike year was important, but not a reason for Hall induction under the current rules.  It's also clear that a vote for Sosa would be wasted as he only received 7% last year and is likely to fall below the 5% threshold in 2015, forever removing him from the ballot.   

Concussions Help USA Win First World Cup Trophy

July 24, 2026 – NEW YORK

Over one million people packed the Canyon of Heroes on Friday for a ticker tape parade in honor of the United States Men’s National Soccer team and their hard fought 2026 FIFA World Cup Championship. 

After failing to reach the knock-out stage of the world’s most popular tournament in 2014 and back-to-back heartbreaking losses in the quarterfinals to Germany in 2018 and Argentina in 2022, Jurgen Klinsmann’s squad notched a 3-2 victory over a heavily favored Brazil squad to secure the first World Cup Championship for the United States, and a ticker tape parade down Broadway.   

When asked what changed in the 12 years since the US was unceremoniously ousted from the 2014 tournament after three straight losses, Klinsmann took a few seconds to think and responded with one simple word - “concussions.” 

Klinsmann followed up, “obviously our guys worked incredibly hard, played as a cohesive unit, peaked at the right time, and performed beautifully when it mattered most.  But without the concern about concussions in the 2010’s, I’m confident you would instead be watching many of our best players in pads and a helmet on Sunday’s in the NFL instead of on my squad in the FIFA World Cup.”

Starting in the early 2010’s parents started steering their kids away from sports with a high risk of head injury, American football in particular.  Parents have always been concerned with injuries in football, but the risk of concussions and their long term impact, was just too high to bear.  By the end of the 2010’s a large majority of parents and even some local governments banned full contact football until high school. 

Soccer was the primary beneficiary of this movement away from football.  As Klinsmann explains, “12 years ago, many, if not most, of the elite American soccer talents would have never even known they were elite soccer talents.  At a young age, these boys would have been gobbled up by the sexier and better funded fall sport of football and never again touched a soccer ball.”

The 2010’s was the height of the NFL’s popularity, but with that popularity came an increased scrutiny of head injuries, particularly the cumulative effect of multiple head injuries long after a players career was over.  Multiple ex-NFL players had committed suicide due to the lingering effects of years of football related head injuries, and many more were diagnosed with various brain afflictions that drastically reduced their quality of life.  Studies even came out showing the negative developmental effects of hits to the head as early as pee-wee football.    

As a result of the increased focus on concussions in football, parents started to ban their children from football.  The decline in football participation, coupled with the surge in popularity of a vastly improved and better funded professional soccer league in the US (Major League Soccer), created the perfect environment for US Soccer to thrive.    

And thrive it has, culminating in this year’s World Cup triumph.  The past 12 to 15 years has proven that the concern over concussions has been football’s loss and soccer’s gain, and with it, America’s standing as an international soccer powerhouse. 

US Men’s National Team Captain, and the winner of the 2026 Golden Boot, Joe Smith echoed his managers remarks, “despite my temper tantrums, my mom would not allow me to play football as a kid.  As a 10 year old, I was distraught, but looking back, I’m forever indebted to my mother for not letting me play football as a kid.  The other fall sport of interest was soccer, so I poured my time and effort into soccer and became the world-class player I am today.  To be the captain of the first US Men’s National Team to win the World Cup is an incredible feeling and I owe it all to my mother, and in a weird way, to the concussion controversies.  A Super Bowl victory could never mean this much to me, my family or my country.” 

The Income Inequality Boogeyman: Compound Interest

We can’t seem to make it through a single opinion page or White House press conference without hearing about the terrible and destructive problem of income inequality.   Post after post, tweet after tweet, highlight the income gains achieved by the top 1% versus those gained or lost by other income percentiles. 

Today, Paul Krugman lectures us on “Why We Talk About the One Percent” noting that the top 1% achieved a 182.4% increase in their inflation adjusted income from 1979 to 2012.  A gain he infers as “spectacular.”  He also notes that the top 2-5% gained 51.9% over the same period, a gain he generalizes as “good.” 

For some much needed context, these figures equate to an annual, inflation-adjusted, growth rate of 3.2% for the top 1% and 1.3% for the next 4%.   These figures don’t strike us “spectacular”, nor would it suggest something evil or destructive.  After all, that income isn’t just buried in backyards; it’s spent and invested in the economy, providing new business with capital, creating jobs, etc.. 

These “spectacular” income gains are always provided as evidence of a problem – i.e. the incomes of the top 1% are growing faster than those of the next 4%, or more worrisome, the next 95%.  In a logic and information vacuum, that could seem like a reasonable problem - why do incomes at the top grow faster than those not at the top? 

However, we’d hope that Krugman, et al are not operating in a logic and information vacuum (although sometimes we wonder) and would answer one simple question:  

How much of the “income inequality problem” is a result of the simple compounding of interest? 

Those in the top 1% of incomes not only rely on their labor for income, but a large percentage of their income is likely to have been earned by large piles of cash.  These piles of cash dwarf anything seen in the lower percentile of earners.  Some of this cash is spent (i.e. income for someone else), but for the vast majority of 1%ers, this cash is deployed into the economy in the form of savings, stocks, bonds, property, new businesses, etc.  These investments generate interest, dividends and capital gain income, which in turn generates more cash, which in turn generates even more interest, dividends and capital gain income.  Rinse and repeat.  Over thirty years, compound interest is a very powerful force.  In fact, it’s said that Albert Einstein himself noted that “the most powerful force in the universe is compound interest.” 

Therefore, isn’t compound interest the most logical and innocuous explanation for why the top 1% have experienced “spectacular” income gains over the last 30 or so years?  Doesn’t this also explain why incomes of people with piles of money are growing faster than those with smaller or nonexistent piles money?

If so, is this really a problem?  Is there a need for a “solution”?  Do we ban compound interest?  For the last few years, the Feds actions have been trying just that with a Fed Funds rate of roughly zero.  Or should we just back an IRS semi up to the 1%’s houses and just start confiscating those piles of cash?  In many states we’re already half way there with combined federal and state tax rates above 50%. 

The focus should be on why incomes are flat for those outside the top 10%, and what policies and attitudes can be adopted to create income gains across the board.  Hint: denigrating or confiscating success does not create more success.  Bellowing about the “spectacular” income gains of the top 1%, or 5% or 10% over the last 30+ years generates clicks and populist outrage, but does nothing to help the flat (or falling) incomes of everyone else.  

Defending Clark the Cub

We've spent almost 40 years defending our beloved Chicago Cubs, so it a natural instinct to defend them once again.  

Luckily the Cubs news this week doesn't require us to defend a decision to let a perennial Cy Young contender, once-in-a-generation, first ballot hall of famer leave as a free agent out of spite.  Nor did they just sign an 8-year, $136 million free agent second baseman-turned-historically-bad-free-swinging left fielder on the down slope of his career.

Nope, today we’re forced to defend the creation of Clark the Cub.  

That’s right, a mascot.

We first heard about Clark by a friend posting the following on Facebook:

“hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha”

It’s one thing to brush off an obnoxious Dodgers fan on Facebook, but now I see a Bloomberg View columnist pointing out that Clark the Cub won’t end the Cubs jinx.  Apparently it's a full fledged controversy.  Over a mascot.

It’s easy to ridicule the Chicago Cubs given their ludicrous 105-year Championship drought, but Clark the Cub is a smart move.  
   
The Cubs, and Major League Baseball in general, can see the writing on the wall.  In a world where many different sports, shows and devices vie for the attention of children, baseball is losing out to soccer, Disney Jr., and Candy Crush.     

If Clark the Cub convinces a young Chicagoan (and his family) to buy a ticket to watch a baseball game, that's a good thing for the Cubs, their fans and their owners.  To those worried about “history and mystique” we invite you to spend a beautiful summer afternoon in the bleachers, Old Style in hand.  We doubt the existence of Clark the Cub (or a jumbotron for that matter) detracts from that experience.

While the haters take to the internet to pontificate on the Cubs perceived bad judgment, Clark's first task was to visit children in the hospital in the hopes that they crack a smile during a tough time.  It worked.  Mission accomplished.

(Credit: Steve Green/Chicago Cubs)

 

More Baseball Hall of Fame Nonsense

It’s exactly one year since we last provided our thoughts on the Major League Baseball Hall of Fame and the holier-than-thou Baseball Writers’ Association of America who hold the keys to enshrinement.

Our views have not changed, but our rage was reignited after reading a Jayson Stark column explaining why his hall of fame ballot excludes names like Barry Bonds and Roger Clemens.  Does Jayson Stark believe that players associated with PEDs should be excluded from the Hall?  Nope.  He seems to hold views similar to ours.  It’s the Hall of Fame, not the Hall of Morally Infallible Baseball Players.

Yet two of the greatest baseball players of all time are not on his ballot.  Why?  Because he doesn’t think others will vote for them, so he doesn’t want to “waste” a vote. 

Are you kidding me?  If you think Barry Bonds should be in the Hall of Fame, how can you possibly submit a ballot that selects Jeff Kent and not Barry Bonds? 

Stark at least admits that the process of broken, but as the old adage goes, “if you’re not part of the solution, you’re part of the problem.” 

Stark, and any other BWAA voter who employs the same flawed logic, is part of the problem.  A BWAA member who cared about the Hall of Fame would vote for who he believes should be in the Hall of Fame and provide a full-throated defense of those selections.  Not change his votes based on how he thinks others might vote.  THAT is a “wasted” vote.   

Anyway, with a very strong group of superstars eligible for election in 2014 for the first time, we present our ballot (if we had one):

Barry Bonds
Roger Clemens
Greg Maddux
Mark McGwire
Sammy Sosa
Mike Piazza
Jeff Bagwell
Curt Schilling
Frank Thomas
Tom Glavine

Maddux is a slam-dunk first timer, and Thomas and Glavine were great enough to displace Tim Raines, Lee Smith and Rafael Palmeiro on our ballot.

Our prediction is that Maddux is the only player who makes the cut this year, with Craig Biggio, Jack Morris (unless he gets extra support on his last year on the ballot – another farcical BWAA phenomenon), Bagwell, Piazza and Glavine all painfully close to the 75% required for induction.  PEDs are likely to cost Palmeiro and perhaps Sosa further consideration as they will be very close to the 5% total that keeps you on the ballot for next year.    

The popular complaint by the writers is that they system is broken.  The system has worked just fine for decades, it’s the BWAA that is broken.  It’s a travesty that the all-time home run leader, one of the top 5 pitchers of all time, and for that matter, the all-time hits leader are not enshrined in the sports Hall of Fame.    

I’d rather the judgment be placed at the feet of the visitors to the Hall, not in the pens of the BWAA.    

An Antipopulist at Bloomberg.com!

We were a bit rough on Bloomberg.com's opinion pages in our last post, but they are back on the right track with with Clive Crook's latest piece. 

"But modern voters are offended by too much populism. As they should be, because it insults their intelligence." 

Bingo. 

The Government Subsidy Fallacy - McDonald's Edition

Can you believe the government subsidizes McDonalds, Wal-Mart and the Big Bad Banks?

The Bloomberg opinion pages are filled with this nonsense and we’d like to cut through the click-beckoning populist outrage to present the issue fully and logically.

The Bloomberg thesis is that government policies are providing scandalous subsidies to unpopular businesses.  Bloomberg kicked off this movement by noting that subsidies for the Big Bad Banks are vaguely estimated, yet reported as fact, at $83 billion a year.  The takedown of this fallacy has already been provided, and the fact that Bloomberg wrote no fewer than three editorials and two blog posts to defend their stance speaks volumes about its credibility. 

Bloomberg newcomer Barry Ritholtz is the most recent columnist to get drunk on the Bloomberg subsidy Kool-Aid, extending it to McDonalds’s and Wal-Mart, calling them “America’s biggest welfare queens.”  His logic is as follows:  Wages at McD’s are low, and a large percentage of their employees qualify for public welfare programs so it's McD's fault these individuals require public assistance.  When the government steps in with welfare assistance - voila - a “government subsidy” for McD's is created.  The solution?  Raise the minimum wage by 56%.

Let’s unpack this faulty logic, starting with the definition of a subsidy.

Merriam-Webster defines subsidy as “money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function.”  The government does not pay McD’s, and in fact, the cash flow is reversed as McD’s pays the government 35% of it's taxable income.  Claiming McD’s is the beneficiary of a government subsidy is just fraudulent.

Secondly, McD’s does not force people to work for the minimum wage.  Last we checked we still live in a capitalist society where the market forces of supply and demand determine wages (floored at the minimum wage set by Congress).  Low skill, low experience workers are provided employment at a wage set by the market for low skill, low experience labor.  In fact, if you want to play the subsidy game, you could make a strong argument that anyone paying minimum wage for skills worth less than $7.25 an hour is subsidizing the taxpayer. 

The unspoken assertion is that it’s corporate America’s responsibility to provide all its workers with a living standard equal to the living standards provided for by public welfare programs, regardless of the real market value of that workers labor.  If that is your argument, make it.  Don’t hide behind the populist curtain of “government subsidies” for easy targets like McD's, Wal-Mart and Big Bad Banks.  

Let’s assume for a minute that we agreed with that unspoken assumption (we don’t), and the minimum wage should be set high enough that an employee earning it had no need for public welfare programs.  Yea, happy days, right?  Wrong. 

Let’s peel back the populist rhetoric one layer and think logically about the consequences of a significant rise in the minimum wage.

McD’s is not an employment program, it’s a business.  As distasteful as this might be to some people, a corporation exists to make money for its shareholders.  A rational entity will respond to a mandated increase in the minimum wage, and the impact on its cost base, by either reducing the number of employees or increasing prices to offset the rise in costs.  To suggest otherwise - a popular, if misguided, trend in today’s opinion pages - flies in the face of logic.  

“But corporate profits are at an all-time high!!!”  Perhaps, but margins remain tight, particularly in highly competitive industries like fast food and discount retail.  For example, Wal-Mart's margins are a paltry 5.93%, compared to Apple's margins of 37%.  When the costs of inputs rise, to continue to remain profitable, prices must rise in tandem.

To Ritholtz credit, he accepts this reality in his final sentence – “Raising the minimum wage … effectively shifts the cost of eating greasy French fries and overcooked burgers from taxpayers to fast food consumers -- where they belong.”  

Now we’re getting somewhere…but we're afraid it’s a cul-de-sac.

Ritholtz's solution is to shift the costs of welfare programs from the taxpayer to McD’s through a higher minimum wage.  However, Ritholtz concedes that McD’s will act rationally and just shift the costs back to its customers, who by the way, are also taxpayers.  In fact, it’s circular in the worst possible way.  It transfers this phantom subsidy from the backs of the wealthiest 53% of the population (i.e. those that pay income taxes) to the backs of the population who frequent McD’s (or Wal-Mart, or any other target du jour).  So, the same taxpayers who are supposedly benefiting from the higher minimum wage will give that benefit right back by paying higher prices for goods and services.  Add in the devastating side effects of lower employment, particularly among younger workers, and it's clear that any benefits from a significant increase in the minimum wage do not outweight the costs.  

Fantasy Football + Congress = Compromise

The two hobbies taking up most of our free time these days are keeping up with 1) the political dysfunction in Washington and 2) our fantasy football teams.  

The confluence of the two sparked an idea.

What if we applied the best part fantasy football to help solve the gridlock and lack of compromise in Washington.  What if we held Fantasy Congress drafts? 

Sound ridiculous?  Well, at first glance it might be, but hear us out… 

There are many ways our Fantasy Congress drafts could be organized, but here’s our step by step instructions on how we would implement the Fantasy Congress drafts:

Step 1:  Legislation is written as it is today.  Any legislation that can gain sponsorship from a certain percentage of the members (say 5-10%?) is automatically put to the floor for debate and a vote – i.e. no Hastert Rule.  If it cannot be passed with a 66% supermajority, the bill enters the Fantasy Congress phase. 

Step 2:  The legislation is sent to its respective committee and that bipartisan committee is charged with identifying the contentious items in the legislation, and providing alternative views.  For example, in the Affordable Care Act, one of the contentious items was, and remains, the medical device tax.  Using this example, the committee might develop three alternatives:  1) keep it, 2) remove it, 3) modify as a tax on profits rather than revenue.

Step 3: The contentious items and their alternatives are provided to the members, who then caucus within their own parties to prioritize which issues it deems most important.  After a reasonable timeframe, the Fantasy Congress draft is scheduled, and television rights auctioned to the highest bidder – think Wednesday Night Fantasy Congress Draft, live on CBS! 

Step 4: Hold a Fantasy Congress draft to decide which alternatives make it into the final bill.  The draft will work with the following rules:

1. The number of picks and the draft order is determined by chamber representation, with the majority party drafting first and all other parties drafting in order of representation until their picks are exhausted.  For example, let’s assume the Senate is made up of 60 Democrats, 30 Republicans and 10 independents.  If the Fantasy Congress draft had 10 issues, the Democrats get six picks, and first draft position, Republicans get three pick, and second draft position and Independents get one pick, and third draft position.  The order would therefore be: D, R, I, D, R, D, R, D, D, D. 
2. Each party leader, in the order determined above, selects a single alternative to be included (or excluded if removing the clause is an alternative) in the final bill.  

Step 5: The final bill is drafted in committee according to the results of the draft.

Step 6: The final bill is sent back to the floor for an up or down vote.  A bill is passed with a straight majority vote.  If a vote fails, it’s back to the drawing board.    

With this process, everybody gets something they like and everyone is forced to live with something they dislike.  The majority party can’t steamroll the minority party (Obamacare) and a fringe minority can’t frustrate the majority with filibusters or irrational demands (debt ceiling).  This would maintain the representative democracy that we cherish while also serving as an efficient governing mechanism. 

Not as crazy as it sounds, is it?   

We Blame Primary Elections

Now that the non-essential portions of government are officially shutdown, every pundit is contractually obligated to apportion blame.  As expected, all liberal pundits blame John Boehner, all conservatives blame both President Obama and Harry Reid, and all other "independent" outlets blame everyone. 

We know the real culprit.

Primary elections.

We've discussed this before, but primaries promote extremism and punish moderates.  There is not a single Republican worried about their next general election, but they are very worried about proving their right wing bona fides in order to garner votes from primary voters. 

Throw out the primary system, permit all candidates, regardless of party, to participate in an open primary election and bring the top three back for the general election. 

This will fix Washington.

An Alternative GOP Strategy

We have a better continuing resolution/debt ceiling strategy for House Republicans:

Pass a bill with two features:

1) Pass a budget and increase the debt ceiling.  In fact, as a gesture of goodwill, increase it more than required so to avoid possibility of another faux-default crisis in the short term. 

2) Require a full and clean implementation of the Affordable Care Act, as written and passed in 2010. The legislation would rescind all waivers and delays provided to businesses, Congress and others by the White House.   

Democrats get the debt ceiling increase they want, and with it, Obamacare in all its glory. 

Republicans avoid a government shutdown, and force Democrats to live with their flawed bill.  It’s a harsh strategy, but it is likely to force the President to reconsider his anti-negotiation stance.  The President and Democrats in Congress would be forced to either double down on a flawed law, or cast a vote of no confidence on their signature piece of legislation.

Democrats voted for Obamacare, and refuse to consider a repeal or delay.  If it’s Obamcare that they want, it’s Obamacare that they'll get. 

There would be no credible way to blame the Republicans for a government shut down if Democrats were unwilling to accept the full impact of their own legislation.     

I’m constantly reminding my children that their decisions have consequences; perhaps Democrats need the same lecture.  

Syria: There Are No Half-Measures

Full disclaimer:  We have no business commenting on complex foreign policy matters; it could not be further from our core competence or experience.  That said, we have a tidy solution that's not been discussed in the mainstream.

The prevailing wisdom is that we should either 1) drop a few bombs on a few obvious targets or 2) continue to lecture Assad, "in the strongest way possible" until he’s just too tired of hearing our voice.  Two terrible options that achieve nothing.

The first would be a risky and expensive dog and pony show.  Sure, CNN will show all the bombs exploding and the anti-aircraft gun shooting into the sky, President Obama can come on TV from the Oval Office and puff out his chest, but it’s ultimately a futile exercise.  After all, we've already told Assad what’s going to happen, at some point, maybe.  Any evil mastermind worth the title has already sheltered anything of value in the basements of of Syria’s housing complexes, schools or religious buildings knowing that we wouldn't dare drop bombs anywhere near those sites.

Continuing to use strong language urging Assad to stop is just as bad, if not worse.  It emboldens Assad and others to misbehave knowing that they will get stern lecture, but nothing more.  It’s like asking a kid to go to sleep after a visit to Dairy Queen.  Without proving that you will follow through with serious consequences, there are no words that will make them go to sleep.  Maybe we should take away Assad’s iPad?

So what’s the solution?

Jack Bauer.

OK, in reality it wouldn't be a 5’6” CTU agent with a famous dad, but why can’t we assemble the top SEAL’s and CIA operatives and pull Assad and his lieutenants out of bed and straight to Guantanamo?  What would be a better deterrent to future evil masterminds than pictures of Assad in his florescent orange jumpsuit, nibbling on a cracker in a 5 x 5 cell in a US military base in Cuba?

Perhaps we've watched too many episodes of 24, or installments of the Bourne movies, but isn't this why we have SEALs and the CIA?  If our military and intelligence departments are worth the billions we spend on them every year, shouldn’t we be able to get this done?

It’s risky, no doubt, but if Obama pulled this off he’d be a legend.  He and our bravest soldiers would have saved the lives of countless Syrian’s by taking decisive action, all without dropping a single bomb (although we'd probably need to take out some radar installations, etc).  Sure it would involve “boots on the ground”, but not an army, and for hopefully for only a few hours.

We know this is fantasy - not because we don’t have the troops and intelligence to pull it off, but because we don’t have the political courage to authorize it.  There is no way Obama’s political advisers would sign off on the Jack Bauer plan.  The optics of a failed extraction and a handful of captured or dead soldiers would be too risky for the President.  It would be much safer, politically, to authorize some indiscriminate bomb dropping, or blame Congress for doing nothing at all. If we’re serious about helping the Syrian’s, and we should be, it will require courage and resolve.  There are no half-measures.

The Problem with Leverage Ratio Requirements

Nothing panders to the masses better than apocalyptic prophecies that banks are on the verge of kick-starting another global financial crisis. 

Anat R. Admati, a career professor of finance and economics at the Stanford Graduate School of Business, and co-author of “The Bankers’ New Clothes: What’s Wrong With Banking and What to Do About It” is at it again in the New York Times suggesting that “we’re all still hostages to the big banks.”

No.  We’re not.

The opening paragraph suggests that banks have “blocked essential reforms at every turn” and that “our leaders have caved in.”  The facts suggest otherwise.  Sure, the banking industry, just like all industries, lobbies rule makers to ensure that new proposals achieve the intended goal without negative unintended consequences.  But to suggest that banks have somehow skirted new rules is comical. 

In fact, the Dodd-Frank legislation alone adds over 400 new rules that all financial entities must follow.  185 of those rules have been written to date, totaling over 5,300 pages.  It has been estimated that these 185 rules will cost the private sector more than 24 million man hours each year to comply.  24 million man hours equates to roughly 12,000 full time employees, and given the complexity of the rules, many will need to be highly paid lawyers, accountants, consultants and IT resources.  Assuming a conservative $100,000/yr annual cost (compensation, benefits, office space, etc.) of these additional employees, the 185 new rules alone could sap well over $1 billion a year from the capital bases of the financial industry in direct costs, and multiples of that in opportunity cost.  Extrapolate that out to 400 rules and we’re north of $2.5 billion per year. 

This doesn’t sound like “banking lobbyists have blocked essential reforms at every turn.”

After this whopper of misdirection, the article starts on the predicable trope of suggesting magical regulatory reforms that will save the world from the big, bad banks.  The reform du jour is punitive leverage ratio requirements.  A leverage ratio is simply total equity divided by total assets. 

We’re provided with scary sounding facts like "JPMorgan Chase’s $2.2 trillion in debt represented some 91 percent of its $2.4 trillion in assets” and “healthy corporations rarely carry debts totaling more than 70 percent of their assets” and “the six largest American banks collectively owe about $8.7 trillion.”  

Based on these scary sounding facts, Admati notes that “nothing suggests that banks couldn’t do what they do if they financed, for example, 30 percent of their assets with equity (unborrowed funds) – a level considered perfectly normal, or even low, for healthy corporations.”

We beg to differ. 

The biggest flaw in this solution is that simple leverage ratios (the percentages quoted by Admati) reveal almost nothing useful to assess the risk inherent in an institution.  A bank with $1 billion in equity and $10 billion in assets can achieve the same simple leverage ratio regardless whether those assets are the nothing but the safest US Treasury Bonds or all risky subprime mortgages.  To ignore the riskiness of the assets is nonsensical and renders a simple leverage ratio ineffective in assessing the danger a bank poses to the financial system.

Let's assume it’s possible to convert large portions of the banks debt financing into equity financing.  To meet a 30 percent leverage ratio requirement, the six largest banks alone would need to raise $2.3 trillion of equity capital.  This is roughly equal to 25% of the total market capitalization of the S&P 500, and roughly the size of 150 Facebook IPOs. 

Where is this money coming from?

Could the big banks raise enough equity financing to meet a 30 percent leverage requirement?  Doubtful, but even if they could we need to understand the consequences of this requirement.  Is the “safety” of meeting a draconian leverage ratio requirement worth the costs?  No.

Investors demand a higher rate of return on equity financing (owning a piece of the entity and a claim on future earnings) than they do for debt financing (contractual right to future payments), and rightfully so.  In a world where leverage ratios need to increase by a factor of six, margins must also increase proportionally to maintain shareholder value and remain competitive against investments in other industries.  How can a bank increase its equity base while also maintaining its return on equity? 

Higher margins. 

How can banks increase margins?  They can 1) reduce expenses, mostly by avoiding loan losses –best accomplished by restricting lending to the only the most creditworthy individuals and businesses and/or 2) increase revenues by charging more for services and credit. 

Remember fees on checking accounts?  Fees to use an ATM?  14% mortgage rates?  20% down payment minimums and other strict qualification criteria? 

Given that the health of our banking system is consistently underestimated, and our faith in government regulatory bodies is consistently overestimated, we posit that taxpayers would be hurt more by increased fees, elevated interest rates and decreased credit availability then they would be by the possibility of a repeat financial crisis caused by overleveraged banks.

Once again, half-baked op-ed’s continue to misinform readers by providing populist opinions that fail to consider the real life consequences (often unintended and counterproductive) of such opinions.  

Clear-Eyed Facts on School Shootings

Editors Note:  The following was written in the aftermath of the Newtown shootings.  We didn't post this right away as we wanted to ensure we had clear eyes ourselves.  In the meantime, our real, non-blogging life got in the way.  We post this now as we feel it's an important, albiet slightly out-dated, opinion to share.    

If you want to see the results of mass hysteria resulting from a horrible tragedy and fueled by the media and politicians, look no further than a PTA meeting when school security is on the agenda. 

We recently sat through such a meeting and were amazed by how much fear has engulfed parents in the wake of Newtown.  The fear is understandable and can be justified in the abstract – our job is to protect our children, and they spend as much time at school as anywhere else, so school security is paramount.  But at what price?

The two extreme approaches to school security could be:

1. Using existing safety and security budgets, maintain and steadily improve a schools current safety and security standards.  School security is not a new issue and has been an area of focus in all schools since Columbine in 1999 (and probably long before that).  
2. Spare no expense and install the latest and greatest in modern security turning each school into a highly controlled and monitored area no different than a minimum security prison.  No bars on the windows, but locks on all doors, gated roadways, Mexican border-style fencing around the entire property, identification and key cards for all students, faculty and parents, security cameras covering every last inch of school property, facial and license plate recognition software, and of course an armed ex-Marine at each entrance.      

After events like Newtown, our media and political forces have created a supercharged movement towards the prison-school extreme by spending enormous amounts of time and effort pointing fingers and proposing “solutions” to avoid another tragedy.  The NRA even suggested that every school have an armed guard at the front door.

We can’t blame any parent for wanting to protect their children at all costs, but we need to understand the real threat and deploy our limited recourses to accordingly.  For older schools not built with the modern day security measures in place, upgrading to the latest and greatest security systems could cost millions of dollars...per school.  That’s a lot of money being diverted away from educating our children to "protecting" our children.  It's not just a monetary cost either, there is a very real and expensive cultural cost to implementing invasive security measures on school campuses.  Do you feel more or less comfortable when you arrive at Grand Central Terminal and see 25 FBI agents in camoflage flack jackets holding assult rifles? 

What’s missing in the public debate is a true reflection of the risk and incident rates for school shootings.  One school shooting is too many, and Newtown and Columbine were unspeakable tragedies, however, such tragedies are rare.  Incredibly rare. 

Another missing piece to the discussion is whether the hundreds of billions required to update security at our schools would even reduce the likelihood of these rare events recurring.  Newtown had a locked front door and a buzzer and intercom system in place.  Columbine had an armed security guard on campus.     

Our schools need to be safe, and many will require additional measures to protect our children.  All we ask is that the security debates, and the ultimate solutions and expenditures, are informed with clear-eyed facts and not inappropriately swayed by the understandable emotional haze produced by a recent and horrific tragedy. 
To help clear our eyes, let’s look at some facts pulled from some quick research on K-12 school shootings in the US since, and including, Columbine in 1999 – a span of almost 14 years:

• 35 – Total number of school shooting events
• 63 – Total number of student deaths (another 22 adults were also killed)
• 26 – Total number of elementary school students killed 
• 3 – Total number of middle school students killed
• 34 – Total number of high school students killed
• 130,000 – Number of K-12 schools, public and private, in the US
• 180 – Average number of school days in a single year
• 327,600,000 – Total number of school days since Columbine (130,000 schools x 180 school days per year x 14years)
• 327,599,965 – Total number of school days where no students were killed by a gun
• 0.0000001% - Historical probability of a school shooting at your school on any given school day over a 14 year period
• 0.0000000005% - Historic probability of a single student being killed by a gun on any given school day over a 14 year period
• 0.000000005% – Mathematical chance that a single Mega Millions lottery ticket wins the jackpot. 

Therefore, statistically speaking, if you buy a Mega Millions ticket on every day you send your child to school, you are 10 times more likely to hit the cash jackpot than to have your child killed by a gun at school.  In fact, you should be much more worried about your child playing on the playground, driving in a car, swimming, or drinking something they shouldn't.  A couple more facts: 

• Between 1990 and 2000 (a period four years shorter than our study above), 147 children ages 14 and younger died from playground-related injuries.  Said another way, for every student killed by a gunman at school, 3.25 students were killed by a playground.     
• In 2010 alone, 890 children ages 5-14 were killed in car accidents, 251 drown and 54 died from poisoning.  Each of these single year totals are significantly higher than our studies 14-year totals.  Said another way, for every student killed by a gunman at school, almost 200 died in a car crash, 55 drown, and 12 died from poison.     

School shootings, while incredibly tragic and highly publicized, are incredibly rare.

Should we do everything in our power to prevent tragedy?  Of course.  Should we be spending millions of dollars per school, and hundreds of billions nationwide in an attempt to prevent a tragedy that’s happened on 35 of the last 327,600,000 school days?  Even if we should, would these expensive and invasive measures even stop these tragedies from occurring?  One more interesting fact to consider when thinking about the miniscule numbers above: 

• 32 – Total number of K-12 students killed by a non-student (i.e. someone who does not attend the school), 25 of which occurred in two events (Newtown and West Nickel Mines Amish School)

Therefore, absent metal detectors and Homeland Security type pat-downs for each student, most of these tragedies would not have been stopped by even the most sophisticated security measures as it was a student shooting the gun.   As for the handful of other incidents, could they have been stopped by not allowing a stranger on campus?  Perhaps, but Newtown had better than average security procedures in place, including a locked front door with intercom and buzzer capabilities.  Would an armed guard have reacted in the split second required to stop the shooter, or would we just have one more fatality to list in our study?  

Let’s consider some less violent, but equally disturbing, statistics:

• Of all 4^th graders in the US, 33% scored “below basic” on the 2009 National Assessment of Education Progress Reading Test.
• On that same test, 26% of eighth graders and 27% of twelfth graders scored below the “basic” level, and only 32% and 38%, respectively, are at or above grade level. 
• Our 15-year-olds placed 25^th out of 30 countries in math performance and 21^st in science performance. 

Can we afford to divert our limited resources from educating our children to trying to "protect" our children?  Do we want to deploy resources that help the 38% of seniors who can’t read at or above their grade level, or do we want to deploy resources in an attempt to reduce the percentage of school days with a student shooting fatality from 0.0000001% to 0.00000005%?

The choice is ours, let’s have clear-eyed facts, not heavy hearts, lead the way.  

Defending the NSA

The outrage over the collection of Verizon client data by the National Security Agency is dangerously misplaced. 

In the abstract, it’s reasonable that this activity gives American’s an uneasy feeling.  Nobody should accept government programs that track our every move and listen to our private conversations without probable cause and a warrant. 

Luckily, that’s not happening (at least not that we’re aware of - who knows with this administration). 

The NSA has conceded that it has a huge database with billions of phone call records (only numbers and the duration of calls) and a computer program that sifts through this information looking for very specific patterns or relationships.

This is not a policing or “Big Brother” activity; this is a national security activity with the sole purpose of saving American lives.  The NSA is not worried about building admissible evidence to convict the local pot dealer or even nab a big time white collar criminal; they are focused on preventing the next terrorist attack.  We agree with President Obama when he said "In the abstract, you can complain about Big Brother . . . but when you actually look at the details, I think we've struck the right balance."

In the real world, we have to make real choices, and simple questions should settle this debate.

Is your right to keep your phone records between you and your phone provider more important than our ability to prevent terrorist attacks?  What if this type of intelligence could have prevented  9/11?  How would you explain to a 6 year old who just lost her parents in a terrorist attack that your desire to keep your phone records private was more important than protecting her parents?  Are your pious views regarding the balance between liberty and security more important than the lives of her parents?         

Remember, we’re just talking about phone records – a bunch of numbers on a sheet.  We’re not talking about listening in on conversations or advocating for increased security and surveillance.  We absolutely need constraints on the government’s power, and from what we know, those constraints have held firm.  This program has a very narrow objective – stop terrorist attacks.  If you’re not planning terrorist attack, then you should have absolutely no fear that the government cares about your phone calls.  They don’t.  99.999999% of the time, a phone number will get logged and never get a second glance.   Do we really think the NSA and its relatively light budget has the time, manpower, or desire to listen in to Joe Public’s phone call to his mom?

Spare us the “slippery slope” arguments.  They’re lazy, irrational and unproductive. 

Until such a time that an individual can prove that their life, liberty and pursuit of happiness has been unreasonably limited because their phone number shows up alongside of billions of other NSA data points, we support the NSA’s efforts.   

The IRS scandal and even the AP/Fox News scandal are much worse, both in their chilling effects on liberty, and on their potential illegality.  As far as we’re aware, the NSA has followed every legal construct and has obtained these records in accordance with the law of the land.  One can argue that the law should be different, but based on the above we would disagree.  Knee-jerk responses to the NSA’s necessary efforts to keep us safe is nothing more than populist theatre and ultimately damages our national security. 

New Math: B minus C+ = $1.3 million!?!?

It’s not often that our alma mater makes national headlines, but Lehigh University was back in the news today, not because they beat Duke in the NCAA Tournament again, but because a fellow graduate has sued our fine institution for $1.3 million.

Lehigh’s crime is allegedly having the audacity to give Megan Thode a C+ in a counseling and human services fieldwork class when she needed a B.  How dare Lehigh expect its students to meet rigorous academic standards!

Under this premise, theantipopulist.com should be sunbathing on their own Lehigh-funded island in the Caribbean…

Not only did we receive an “unfair” grade or two (…or ten) in our day, but Lehigh took away our dream of becoming a major league baseball player.  After a respectable freshmen season, Lehigh ignored our potential and cut us from the baseball team.  Lehigh's action made it all but impossible for us to pursue our desired occupation as second baseman for the Chicago Cubs.  In 2012, the average major league second basemen made $3.2 million per year.  Had Lehigh not cut us, we would have continued our baseball career all the way to the major leagues, playing for 8-12 years, plus lucrative coaching and broadcasting opportunities after our playing days were over.  We’re getting lawyered up as we speak, but we think we’re owed at least 20 million bucks.

Damn you Lehigh!!

Seriously, Ms. Thode is a surefire contender for 2013’s most ridiculous lawsuits list.  Add this to the never-ending, and far-to-often frivolous, patent, copyright, medical malpractice and discrimination lawsuits, and it’s clear that our legal system is broken.  Not only do these lawsuits overwhelm our courts and judges, they are killing our economy by siphoning billions out of our pockets through higher prices (legal costs passed along to customers) and reduced productivity (spending time and money on legal proceedings rather than research and development).

Luckily, we have a very simple and elegant solution.  In fact, it’s a tried and tested solution that just about every other legal jurisdiction in the world already has in place.

Loser pays.

Here’s our proposed legislation – the “Fix Our Legal System in One Sentence Act”:

“In criminal or civil legal proceedings, any Defendant who is not convicted of a crime or is not found liable for monetary damages, shall be reimbursed for all reasonable legal costs incurred to defend themselves by the Plaintiff.”

Done.  In one simple sentence, it’s estimated that each American family would benefit to the tune of $3,500 per year.  No new taxes, no increased regulation, no deficit spending required.

For a detailed illustration of these costs, a survey of 36 Fortune 200 companies administered by Northwestern Law School shows that those 36 companies spent over $4 billion in 2008 on litigation costs. This $4 billion is just the cost of litigation – it does not include any settlements or damages awards. Extrapolate this out to the entire Fortune 200 and that’s over $20 billion in litigation costs funneled away from research and development and into lawyers pockets.  Some of these costs will be legitimate legal expenses incurred during the normal course of business, but too much of it will be spent fighting frivolous lawsuits.

How many of these frivolous lawsuits would be avoided if the Plaintiff faced the possibility of paying a significant penalty if they lost (i.e. the Defendants legal costs), and their lawyers faced the possibility of not collecting their fees?  Most, if not all.

But won’t this scare away Plaintiffs who have a legitimate legal gripe?  No.  This proposal does not take away anyone’s right to sue.  If you have a strong case, you shouldn’t be concerned about losing and can expect to settle or win outright on the merits of their case.  Similarly, no lawyer would turn down a pro-bono case that was virtually certain to result in a windfall of fees.

Loser pays takes away the lottery ticket mentality of the legal system as we know it, and it’s about time.  What are the chances that Ms. Thode sues Lehigh University if she’d have to pay their legal bills when her case is thrown out?  Nil.  And that’s the way it should be.  Lehigh should be spending its money on need-based scholarship to eager and accomplished students, not on defending itself from immature and entitled freeloaders.

The NCAA Has Issues, But It's Not Amateurism

Who’s more valuable - the performer, or the owner of the stage on which the performer performs? 

It’s an age old question, but has been at the forefront of the sports world after the recent NBA and NHL lockouts.  It’s also the underlying issue in the professional commentariats ongoing outrage towards the NCAA it's principle of amateurism.  The NCAA doesn’t pay its athletes but makes billions from their efforts.  Isn’t that just terrible?

No, not really.

Did Andrew Luck and Derrick Rose generate megabucks for their respective schools and the NCAA?  Absolutely.  Did Andrew Luck and Derrick Rose get a cut of that revenue during their combined four years “working” for the NCAA and their schools?  Other than free education, no.  Did Andrew Luck and Derrick Rose benefit financially because of their involvement in NCAA events?  Immensely.  

Let’s not cry for Andrew or Derrick, or any other NCAA superstar (the case for paying college athletes can only be made for the elite basketball or football players at a handful of schools – there is no justification for paying a baseball player, a cross-country runner or a field hockey player). 

First and foremost, these superstars, and thousands of non-superstars across all NCAA sports, are compensated for their efforts by receiving a free college education.  What they choose to do with that opportunity is irrelevant - it’s an opportunity nonetheless.  Against the backdrop of the billions being made by the NCAA and big time athletic programs, a scholarship may seem inconsequential, but for the vast majority of NCAA athletes, this represents a huge benefit, and a benefit commensurate with the effort and revenue produced (if any).  

The cost to attend Stanford - all covered by a full scholarship - is almost $60,000 per year.  Therefore, a 19 or 20 year old athlete with a full ride to Stanford is “making” almost $60,000 a year in exchange for their athletic talents.  Sure, it’s paid-in-kind with credits toward a college degree, but it’s still $60,000 less than what their classmate, who is not a star athlete, has to pay (or borrow) for those same credits.  It’s bothersome when some people disregard this fact when complaining about the lack of compensation for NCAA athletes.  What did you make when you were 19?  
   
Secondly, and much more importantly, these star athletes are given a huge stage from which to advertise their value to future employers.  It’s no different than an intern at a production company, music studio or bank, except that those interns would never make anywhere close to $60,000 per year. They are happy to work for free because they benefit by making themselves more marketable to paying employers.  NCAA athletes should feel the same way.    

Without the exposure generated by starting for Stanford for three years, does anyone think Andrew Luck would have been picked first in the NFL draft, reaping the rewards that come along with that selection – $22 million over four years?  

Without electrifying performances on the huge stage that is the Final Four, does anyone think that a few months after his freshman year Derrick Rose would be the first pick in the NBA draft and would sign a $10 million two-year contract?   

For the sake of argument, let’s assume Rose was allowed to enter the NBA straight out of high school.  Let’s also assume that his amazing year at Memphis and electrifying run to the National Championship game only increase his draft slot 5 spots (Rose was considered the 5th best prospect in the country his senior year at Simone High School in Chicago).  The 5th pick in that draft, Kevin Love, signed a two-year $6.5 million contract.  Essentially, the NCAA, and the exposure it provided Rose, made him $3.5 million dollars richer.  Even if we think he might have been the #2 pick straight out of high school, he still "earned" $1.1 million dollars by playing just a single season for the University of Memphis (the #2 pick, Michael Beasley, signed a two-year $8.9 million contract).

The same logic works all the way down the talent chain, and we would argue that the biggest beneficiaries are actually those who's college careers open the door for a professional contract.  A minimum salary in the NFL or NBA is 10-20 times larger than the starting salary of an average college graduate.  

Amateurism in the NCAA isn't going away, and it shouldn't.  In addition to the principled points above, the practical (who gets paid, how much, and where does it come from) and legal (Title IX) issues make any discussion around paying athletes a waste of time.    

The NCAA is dysfunctional, no doubt, particularly their draconian efforts to enforce amateurism, but this dysfunction is a result of incompetence and arrogance, not the principle of amateurism.

A Scene from the Oval Office

THE EVIL GENIUS

by

theantipopulist.com

Act II, Scene III

INT. THE OVAL OFFICE     NIGHT

THE PRESIDENT welcomes POLITICAL OPERATIVE and they take a seat on a couch.

POLITICAL OPERATIVE:  Mr. President – what if I told you I had a fool proof way of losing fewer independent votes than expected?

THE PRESIDENT:  I’m listening.

POLITICAL OPERATIVE:  We crushed this demographic in 2008 because you were a rock star...that star has faded and we’re going to lose some of those votes.  The key is limiting those losses. 

THE PRESIDENT:  Star has faded?  Really?  

THE PRESIDENT grabs and opens a White House micro brew off the coffee table and gestures to the POLITICAL OPERATIVE offering him one, the POLITICAL OPERATIVE shakes his head and continues.

POLITICAL OPERATIVE:  Yes, and yes.  The truth will set you free, Mr. President.  Current circumstances make it difficult for us to brighten your star, so in order to keep the equation in our favor, we need to dim the Republican star.  You know, cut down their legs to make us look taller?

THE PRESIDENT:  Uh…OK, but how do we do that?

POLITICAL OPERATIVE:  A Republican “War on Women.”

THE PRESIDENT:  A "War on Iran" or a "War on Immigrants"...maybe, but a "War on Women"?  Why would they wage war on half the electorate!

POLITICAL OPERATIVE:  They would never voluntarily start a "War on Women" - so we have to create the illusion that they have.  If you’re an independent voter, what’s the one thing that makes you most concerned with voting for a Republican?

THE PRESIDENT stands up and walks over to the window, and gazes into the dark night, beer in hand.

THE PRESIDENT:  Other than having to lie at cocktail parties?  

POLITICAL OPERATIVE:  Exactly, the root of that shame is voting for someone with out-dated social beliefs.  Scores of independents are fiscally conservative and have a big problem with our progressive economic policies, but they are not registered as Republicans because they are allergic to the highly religious and uber-conservative social views of the Republican Party. 

THE PRESIDENT:  Me too...remember that one time when Boehner was...

POLITICAL OPERATIVE:  I'm sorry Mr. President, but the taxpayers are on the clock and I'm very expensive.  The question is how do we best exploit that tension?

THE PRESIDENT:  Yes, sorry, that is most certainly the question.

POLITICAL OPERATIVE:  The answer is a two prong attack.  First, we pick a fight with religion, specifically the Catholic Church, by issuing a seemingly banal requirement out of HHS that all insurance policies must cover items like birth control pills, abortions, the day after pill - all for free.

THE PRESIDENT:  But doesn't everyone like free stuff?

POLITICAL OPERATIVE:  Yes, but the Church and the far right will object to paying for things that for which they have moral objections.  They will say it’s an attack on their religious freedom.  Fox News will be apoplectic about our "over-reaching attack on religious freedom."  All of this will play right into our hands.  We let the fervor reach a boil and then characterize their objection as a “War on Women.”  It will have no basis in reality, but will sell like hotcakes to the public, particularly those independents who are already weary of the Republican social agenda.   We get women’s groups to shout “How dare a group of old white guys try and control my body!”  It will be beautiful.

THE PRESIDENT:  But I need the Catholic vote, I can’t alienate them!

POLITICAL OPERATIVE:  If the heat gets too hot, you can offer Cardinal Dolan some meaningless compromise that puts the Catholic Church back in line, yet only serves to stoke the fire on the far right.  It’s a win/win.  Then once you’re re-elected, you can just pull back the HHS ruling or provide a blanket exception to not-for-profits.  No harm, no foul.

THE PRESIDENT:  You’re a genius, an evil, evil genius. 

POLITICAL OPERATIVE:  That’s not all, the second prong of the attack is to get our media allies to ask questions about abortion ad nauseam with every far right candidate from the middle America.

THE PRESIDENT:  But hasn’t this been settled law for decades?

POLITICAL OPERATIVE:  Yes, but that won't stop Republicans from talking nonsense on the issue.  With the proper monitoring, we’re sure to find one or two candidates going off script and saying something incredibly stupid.  We can then use those comments as more evidence of the Republican “War on Women” - adding more shame to any independent thinking about voting Republican. 

THE PRESIDENT:  Wow.  I'm impressed.  Done and done.  

THE PRESIDENT stands up and walks over to his phone and dials a number.

THE PRESIDENT:  I'm sending over a friend, do what he says and write him a blank check.