Isaac Laquedem

Is William Baxter (1929-1998) the culprit behind today's shortage of baby formula? History and economics say "yes"

On May 12 Heather Cox Richardson published this incisive essay, one of her "Letters from an American" series.  She starts her essay with a short discussion of the involvement of members of the Trump administration in the planning of the January 6 attack on the Capitol, and then moves into a report from the House Select Committee on the Coronavirus Crisis.  The committee's name doesn't describe its full ambit, which is to look into anything related to the federal government's response to the pandemic, including waste and fraud.  Professor Richardson then describes Tyson Foods pushing Secretary of Agriculture Sonny Perdue, and through him Vice President Pence and President Trump, to keep meatpacking workers on the job.  As she reports, "Industry leaders wrote a proposed executive order for Trump to issue, declaring a meat shortage and invoking the Defense Production Act to ensure that the plants continued to operate.  Less than a week later, Trump issued a similar executive order." 

Professor Richardson then ties the consolidation of meat production into the hands of a few gigantic businesses to the shortage of infant formula in the United States that resulted when one producer, Abbott, recalled its production from one factory after test samples were found to be contaminated, and describes the situation as the "larger problem of the consolidation of food production."

The "larger problem of the consolidation of food production" that Professor Richardson describes is significant, but it's only one facet of the very large problem of the consolidation of American and transnational industries in general, which started in the early years of the Reagan Administration.  Having successfully broken up American Telephone & Telegraph on antitrust grounds, the Reagan Administration and its chief antitrust enforcer, William Baxter, declared victory and went home, leaving the rest of American industry to merge and consolidate as it wished on the modest condition of paying a small toll to the government pursuant to the Hart-Scott-Rodino Act of 1976, but unfettered by Section 2 of the Sherman Act of 1890.  Benign neglect remained the policy of the enforcers (the "enablers"?) until 1998 when the Clinton Administration sought to fracture Microsoft - a case that the government won at trial and then ignominiously settled in the second year of the Bush (43) administration.

Since then antitrust enforcement in the context of corporate mergers has ceased to play an important part in corporate America.  By 2017 business professors Gustavo Grullon, Yelena Larkin, and Roni Michaely could write that market concentration as measured by the Herfindahl-Hirschman index (the one the Justice Department uses, when it's on the job) "has systematically increased in over 75% of U.S. industries, and the average increase in concentration levels has reached 90%" measured since about 2000. They also found that in real-dollar terms the average and median size of public corporations ("the largest players in the economy," they wrote) had tripled.  As they demurely put it, "Profit margins and shareholders' wealth gains have increased in proportion to the increase in industry concentration... Increased profit margins are mainly driven by wider operating margins rather than higher operational efficiency."

Translation: as the big got bigger, they used their concentrated market power not to be more efficient, nor to innovate, but to charge higher prices and make more money.  Food production is just one of the industries where the increase in concentration has brought new opportunities for the poor to subsidize the rich.

New fence installed to protect nation from Samuel Alito

That's what I wish the reason was for fencing in the Supreme Court.  Instead, I'm taking the fence as having a deeper symbolism.  It's a striking visual image of how far the Court has gone to distance itself from the rest of the nation.

Justice Alito's draft opinion will hand the Ninth Circuit a powerful tool, if it dares to wield it

Justice Samuel Alito's draft opinion in Dobbs v. Jackson Women's Health Organization, recently leaked to Politico, proposes to overrule Roe v. Wade and Planned Parenthood v. Casey altogether.  The opinion contains some gems of legal thought that the good Justice may not have thought completely through before committing his view to paper.  Here's one of them.

On page 5, Justice Alito states flatly: "We hold that Roe and Casey must be overruled."  He then explains why:  "The Constitution makes no reference to abortion [true], and no such right is implicitly protected by any constitutional provision, including the one on which the defenders of Roe and Casey now chiefly rely - the Due Process Clause of the Fourteenth Amendment.  That provision has been held to guarantee some rights that are not mentioned in the Constitution, but any such right must be 'deeply rooted in this Nation's history and tradition' and 'implicit in the concept of ordered liberty.'"  His quotations are from a 1997 case, Washington v. Glucksberg, in which the Supreme Court held that the Fourteenth Amendment does not bar a state from prohibiting physician-assisted suicide.

Let's talk about whether one current constitutional right is "deeply rooted in this Nation's history and tradition."  I have in mind the right of corporations to enjoy the same constitutional rights as people, upheld most notably in 2009 in Citizens United v. Federal Election Commission, the case that gave corporations the constitutional right of free speech, which they could express through unlimited political spending, unfettered by the FEC.  The right of free speech is certainly deeply rooted in our history and tradition, as it predates the adoption of the First Amendment in 1791.  We can trace the right of free speech, or at least the tradition, back to the libel trial of John Peter Zenger in New York in 1734.

But the rights of corporations are not deeply rooted in our history and tradition.  In fact, when the states came together to form the United States, corporations existed only by the grace and favor of the state legislatures, and before that, by royal charter.  To form a corporation, you needed to petition your state legislators, and possibly to subsidize some of them.  It was not until the 1840s that states began to adopt laws that allowed ordinary people to form corporations. In fact, at the end of 1791 the United States had only 41 corporations.  Thus, if you follow the reasoning of Justice Alito, the constitutional rights of corporations are not deeply rooted in the nation's history and tradition, and thus are not protected by the Due Process Clause of the Fourteenth Amendment.  The court has said that corporations have a constitutional right of free speech under the First Amendment, but the originalists on the bench have to twitch a little when they say that, because the Framers weren't thinking of corporations when they wrote the First Amendment any more than they were thinking of semiautomatic weapons when they drafted the Second Amendment.

Justice Alito's draft opinion overruling Roe v. Wade has been more than ten years in the making - you can see it foreshadowed in the opinion in Citizens United.  If the Supreme Court's final opinion adopts the logic and conclusion of his draft opinion, when the initial shock wears off, look for some of the federal appellate courts, the Ninth Circuit especially, to apply Alito's test for overruling Roe v. Wade as an excuse to disregard or very narrowly interpret other decisions of the Supreme Court that aren't supported by sound reasoning.

The Russian oligarchs ...

... should be looking in the Kremlin, not in Ukraine, for the Donbass that is costing them their fortunes.

An old Boomer's "delete" button

Last week former president Donald Trump denied the claim of reporter Maggie Haberman that he had flushed documents down a White House toilet.  Ms. Haberman makes the claim in her forthcoming book, Confidence Man, according to a report from Axios.

Mr. Trump is famous for not using e-mail and avoiding computers, both of which have more modern means of deleting unwanted information - hence the thought that inspired today's caption.

Women, children, and CPAs first!

As the S.S. Trumptanic takes on water, the former president's outside accountants have headed to the lifeboats.

The Port of Portland is still bigger than it thinks

Back in 2008, I wrote this post about how The Port of Portland (the "The" is part of its official name) was bigger than it thought.  When the legislature first established the Port nearly 60 years ago to absorb the Portland Dock Commission and run as a state agency, the legislature defined "Portland metropolitan area" in ORS 778.005 to be "the Oregon portion of a standard metropolitan statistical area as designated and published by the United States Bureau of the Budget with an Oregon population of more than 750,000.  The area that qualified consisted of Multnomah, Washington, and Clackamas Counties.  ORS 778.010 then defined the Port district to be the Portland metropolitan area, resulting in the Port district being those three counties.

A funny thing happened in the 1980s.  The federal government did away with the term "standard metropolitan statistical area," replacing it with "metropolitan statistical area."  The federal government also redefined the Portland MSA to include Columbia and Yamhill Counties.

The Port took no notice that the federal government had given it two additional counties, and in 2008 continued to believe that its district included only three counties.  It believes that even today, saying on its website that "at least two commissioners must each live in one of the three counties in the Port district."  Could the federal government add two counties to the Port district by changing the SMSA/MSA definition?  Perhaps not - a Port lawyer might argue that the definition of "Portland metropolitan area" must be read as it was in the 1960s when the legislature created the Port.

However, in 2009 the legislature amended ORS 778.005 to say that "Portland metropolitan area" means "the Oregon portion of a metropolitan statistical area as designated by the United States Office of Management and Budget with an Oregon population of more than 750,000."  In 2009 that sentence described Multnomah, Washington, and Clackamas Counties -- and Columbia and Yamhill Counties also, all of which were in the only metropolitan statistical area with more than 750,000 Oregon residents. 

Whether or not Columbia and Yamhill Counties were in the Port district before the 2009 amendment, the legislature unambiguously brought them into the Port district in 2009.  The legislature may have meant to leave the boundaries unchanged, but when legislation is plain and clear, the intent of the legislators isn't relevant.  As A.P. Herbert famously said about another legislature, "If Parliament does not mean what it says then it should say so."

Is this odd fact significant?  Maybe.  ORS 778.210(1) requires the Governor to appoint two Port commissioners from each county in the district.  Neither the  current governor nor any prior governor has ever appointed the required two commissioners from Columbia County and Yamhill County.  Someone in a battle with the Port might argue that as the Port's commission has not been properly constituted since 2009, perhaps the commission doesn't have the authority to do anything. 

I have no dog in that prospective fight, but if I lived in Yamhill County I might write to the Governor and ask to be appointed to the Port board.

This is the CAPTCHA that I'd like to see

Another story of government thrift with information

An odd story has been developing in Clark County, where an off-duty Vancouver police officer, Donald Sahota, was shot and killed in his home after Clark County sheriff's officers responded to an armed robbery in Orchards. The suspect left the store in a stolen vehicle, officers followed the suspect to the policeman's house, an isolated building at the end of a long private driveway. Something happened, and Officer Sahota was shot and killed.

But what was the something that happened? KPTV reported it as "The suspect attempted to break into the home of Officer Sahota. In a scuffle with the armed robbery suspect, Sahota was shot. He was provided medical aid but eventually died." A later report by KGW said "During the pursuit, the suspect ditched the vehicle in the Battle Ground area and fled on foot. Citing an unidentified source, the Oregonian/OregonLive reported that the suspect broke into Ofc. Sahota's Battle Ground home and the two got into a scuffle. At some point, the Clark County deputy opened fire and shot Sahota. He died at the scene." KOIN reported that "Deputies said they found the suspect and pursued him to a home, which KOIN 6 News revealed through property records to belong to Vancouver police officer Donald Sahota. It is unclear how the suspect ended up at Sahota's home near Battle Ground. [The Sheriff's Office] said the robbery suspect contacted someone at the house, and a deputy fired their gun."

Curiously, none of the stories so far state whether the deputies captured the suspect. The only common thread to the reports is that the Clark County sheriff's office is releasing information very slowly.

Three stories on transparency in government become clearer if you read them together

Three stories in today's Oregonian deserve to be linked together.  First is this piece by Shane Dixon Kavanaugh, appearing on page A6.  He reports that the Portland City Council has agreed to pay $250,000 to attorney Jeff Merrick and the Dunn Carney law firm for the attorney fees they incurred to challenge the city's refusal to comply with Mr. Merrick's request for public records of telephone and e-mail complaints about homeless camps.  When the district attorney ruled in 2018 that the records Mr. Merrick wanted were indeed public, he asked for $52,000 to cover his attorney fees incurred in pursuing the request.  The city objected, and the trial court denied his request.  Last year the court of appeals reversed the trial court and directed that the city pay his fees, which had by then mounted to $375,000.  They settled on the city paying $250,000. 

Almost as stunning as the news that the city council's commitment to secrecy had dug a $250,000 hole for the city was the reaction of Commissioners Jo Ann Hardesty and Mingus Mapps.  Mr. Kavanaugh reported that Commissioner Hardesty "praised city attorneys for their 'steadfast commitment' [her words] to withholding information that could place 'public servants in harm's way' and said the city should lobby state lawmakers to add new public disclosure exemptions."  Nothing in the story, however, suggests that Mr. Merrick sought the home addresses of any city employees.  Commissioner Mapps's stance was more nuanced than Commissioner Hardesty's pro-secrecy view; the article quoted him as saying "I understand the need for transparency and I value transparency.  But, at the same time, I also feel like this rule that the courts have imposed on us is a violation of the public trust."  

The second story, on page A9, is by Noelle Crombie, who reports that Governor Brown's office "demanded the Oregon Department of Corrections find out if an employee revealed the governor's controversial plan to commute the sentences of hundreds of juveniles serving time for violent crimes."  Governor Brown herself confirmed to the newspaper that her office wanted to know how the Oregonian got a copy of her September 28 letter to the Director of Corrections that laid out the governor's plan.  The Director of Corrections, Colette Peters, then had staff go through the e-mail accounts of "about two dozen employees" to find the leaker.  Nothing turned up.  The irony is that the governor's letter was a public record.  Amber Campbell, speaking for the Department of Corrections, said "this document being referenced is a public record, so even if the search concluded that an employee distributed from a DOC server to the Oregonian, we would not and could not discipline that employee."

I don't know Noelle Crombie.  I suspect that she has an engaging sense of humor, for four paragraphs later she cheekily writes, "Brown campaigned on transparency and criticized her predecessor, Gov. John Kitzhaber, for failing to make it a priority."  Ms. Crombie also mentions that a paralegal at the Oregon Justice Resource Center also wanted information about the letter, because he "suspected it was intended to undermine the governor's 'internal communications' with the agency."

That brings me to the third story, written by Maxine Bernstein and printed on page A12.  You may have read a few weeks back that the Department of Corrections put Mark Wilson, a state prisoner convicted of murder, into 120 days of solitary confinement because a prison librarian (a state employee) as a joke had put a toy telephone on the library desk where Mr. Wilson often worked, which the department considered to be contraband.  (Never mind that a state employee put it in front of him.)  He is suing the state for damages.  The state's defense?  The state asserts that Mr. Wilson was collaborating with the Oregon Justice Resource Center (see previous story!) to give OJRC "access to prison affairs," and Mr. Wilson's lawsuit is a put-up job with OJRC.  Ms. Bernstein also reports that the Director of Corrections, Colette Peters (see previous story again!) "staunchly defended her department's actions [in putting Mr. Wilson into solitary confinement] before a legislative committee earlier this month.  'While bringing in a [toy] phone might seem like child's play, it is something that's very serious, and both the employee and the AIC (adult in custody) must be held responsible."

A cynic (who, me?) might say that the city council should be spending money to make records public, not to hide them; that in her final year in office our governor should be honoring her pledge to keep government open, instead of emulating Richard Nixon's plumbers; and that instead of inventing a silly reason to throw an inmate into solitary confinement for four months to cut off contact with an outside watchdog, the Department of Corrections should be fixing the problems that the watchdog has been barking about.  I am not that cynic; I'm merely a taxpayer who's bemused by how open our elected officials are about their efforts to keep government secret.

What will New York's indictment of Donald Trump look like? The attorney general has released a draft

Amidst the news of the past week is the news that Letitia James, the attorney general of the State of New York, filed in state court a 115-page document with the unassuming name "Supplemental Verified Petition."  The case in which she filed it, however, is entitled "State of New York v. The Trump Organization, Inc." and includes as defendants three companies controlled by the Trump family, the law firm Morgan, Lewis & Bockius and one of its partners, his accounting firm, his New York land use lawyer, his children Donald Jr. and Ivanka, and the former president himself.

Some months ago it was reported that Mr. Trump was being investigated for inflating the value of his assets for tax purposes that the stories only vaguely described.  I read the initial report as being in insignificant sort of flexible valuation where a property owner might claim one value of the property when refinancing and a lower value when appealing its property tax assessment.

Ms. James didn't spend the 115 pages of her petition to talk about property taxes.  Rather, she laid out in painful detail (painful, if you're one of the defendants) the changes in value that Mr. Trump's organization indulged in, not to save a few dollars its property tax bills but to mislead banks into financing his enterprises.  She asks the court to compel Donald Trump, Donald Trump, Jr., and Ivanka Trump to testify under oath before the office of the state attorney general, and in the case of the elder Mr. Trump, to produce documents and certify that he has produced all the responsive documents, subject, as Ms. James demurely notes on page 112 of her petition, to their right "to invoke the Fifth Amendment Privilege on the record in response to any specific question." 

Ms. James laid out her reasons to compel the Trump family to testify in much the same form as the government does in an indictment.  For example, she notes on page 37 that in 2011 Ivanka Trump rented a penthouse apartment in Trump Park Avenue and was given the option to buy the unit for $8,500,000.  In financial statements from 2011 and 2012, however, the Trump Organization valued the apartment at $20,820,000 and did not disclose that it had granted Ms. Trump the right to buy it for $8,500,000.  In 2013 the Trump Organization upped the unit's value to $25,000,000.

On the same page, the state asserts that in October 2015 Ivanka Trump acquired an option to buy a different Trump Park Avenue unit for $14,264,000 - a unit whose value the Trump Organization had reported as $45,000,000 the year before.  The petition cites to documents that New York obtained from Mr. Trump's accountants.

Why is it important that the Trump Organization made these allegedly false statements to banks with the intent to borrow money?  It's because of 18 USC §1344, the provision of federal law that makes it a crime to "knowingly execute a scheme or artifice to defraud a financial institution" or to obtain credit from a financial institution "by means of false or fraudulent pretenses, representations, or promises."  The penalty is a fine of up to $1 million, or up to 30 years at Club Fed, or both.  The statute of limitations on federal bank fraud is 10 years.

The New York attorney general isn't in charge of enforcing federal statutes.  She can, however, prosecute violation of §175.45 of the New York penal code, under which a person who "knowingly makes or utters a written instrument which purports to describe the financial condition or ability to pay of some person and which is inaccurate in some material respect" commits a class A misdemeanor.  Class A misdemeanors are punishable by up to 364 days in prison and a fine of up to $1000.  The attorney general also has the authority to bring a civil action, such as this one, against persons who "engage in repeated fraudulent or illegal acts or otherwise demonstrate persistent fraud or illegality in the carrying on, conduction, or transaction of business."  (Pages 5-6, citing New York Executive Law §63(12).

A New York Class A misdemeanor is small potatoes compared to the federal punishment, but New York's laws don't stop with §175.45.  Section 190.65 of the New York penal code defines the crime of "scheme to defraud in the first degree" to include "a scheme constituting a systematic ongoing course of conduct with intent to defraud more than one person or to obtain property from more than one person [think 'from more than one lender'] by false or fraudulent pretenses, representations or promises," if the defendant obtains property worth more than $1,000 from the victims.  Committing a scheme to defraud in the first degree is a Class E felony, punishable by up to 4 years in prison and by a fine of up to the greater of $5,000 and "double the amount of the defendant's gain from the commission of the crime."  The petition helpfully describes or identifies the "more than one person" at whom the Trump Organization directed its misrepresentations: "counterparties, including financial institutions, other lenders, and insurers" (page 8); Capital One, a lender (pages 41-42); Deutsche Bank (pages 46-49); and Zurich North American, an insurance company (pages 51-53).

The attorney general's petition is not an indictment, but it does read as if it's fairly close to being one.  If I were any of the persons it names, other than Donald Trump himself, I'd be talking with my lawyers about getting a plea bargain and some immunity in exchange for testifying.

The failed promise of Donald Trump

            Even before Willis Carrier invented the electric air conditioner in 1902 and made it possible for the government to sit in the District of Columbia through the summer, our nation’s capital fostered ideal conditions for political inbreeding.  Bright young people took posts staffing Congressional offices and committees, got to know one another, and then either went to work for federal agencies on their way to becoming lobbyists, or moved back home to enter elective politics for themselves, keeping the insular system in action for another generation.

            Much like a refrigerator, every now and then the system needs a deep cleaning.  About every 30 to 40 years America’s voters bring out the Electrolux and point it at the capital.  I'd buy American and say that they bring out the Hoover, but for what happened in 1928.

            The Carter Administration (1977-1981) was the voting public’s most recent attempt at invigoration, when the president brought in a large team of Washington outsiders to leaven the Potomac party.  Earlier housecleanings occurred, not so extensively, under Dwight Eisenhower (1953-1961), Theodore Roosevelt (1901-1909), James Garfield (1881), and Andrew Jackson (1829-1837).    

            The first revolutionary president was Andrew Jackson, a frontiersman who followed the six aristocrats who had started the country off, and who espoused the interests of the common man (women did not then vote) against those of the ruling classes.  He viewed the Second Bank of the United States, a federally-chartered creation directed by Philadelphia aristocrat Nicholas Biddle, as the political plaything of the powerful, and in 1832 he vetoed a measure to extend its charter.  He stated in his veto message that the bank was “unauthorized by the Constitution, subversive to the rights of States, and dangerous to the liberties of the people.”  (I’m going to need a separate post to unpack everything in Jackson's message.)

            James Garfield, the second of our reformers, did not even want the job – he went to the Republican convention to nominate John Sherman, and in the middle of his speech someone shouted out, “We want Garfield!”  He was nominated on the 36^th ballot, defeating among others the war hero and past president Ulysses Grant.

            President Garfield chose three graduates of Harvard or Yale for his cabinet of seven.  Unusually for his time, he also picked three men who came from humble circumstances.  One was an autodidact, and another ceased his schooling at 15.  He opened the top ranks of government to people outside the usual American ruling classes, and would likely have been even more reforming had he not been assassinated in 1881.

            Theodore Roosevelt was not elected as a reformer.  The New York political machine got him chosen as William McKinley’s vice president for the 1900 election to get him out of his position as the governor of New York.  When McKinley was assassinated in 1901, Roosevelt owed his presidency to no one.  He quickly set about breaking up large business combinations and promoting the rights of labor.

            Let’s look at the 40 years since the Carter Administration ended.  Our ballots included George H.W. Bush or his son George W. Bush in 1980, 1984, 1988, 1992, 2000, and 2004.  Our ballots included Bill Clinton or his wife Hillary Clinton in 1992, 1996, and 2016.  Our ballots might reasonably have included Hillary Clinton or Jeb Bush in 2008 and 2016.  The election of 2020 was only the second since 1976 that had neither a Clinton nor a Bush on a primary or general ballot.  It’s hard to say that the system changed much during a period when two families supplied the candidates for forty years of elections.

            Across First Street NE from the Capitol, the Supreme Court has been busy defending the sinecures of the inside-the-Beltway establishment, most notably in its 2010 decision in the Citizens United dark money case.  The court held that the government could not limit the amounts that corporations, labor unions, and independent political groups could spend on political speech, regardless of the ultimate source of the money, on the basis that corporations and labor unions were “people” entitled to the protection of the free speech clause of the First Amendment.  Funds from shadowy sources have come to play a large part in national politics ever since.

            Returning to 2016: among the 17 serious Republican candidates were three who had never held any government position, either elective or appointive: Carly Fiorina, Ben Carson, and Donald Trump.  Each portrayed his or her inexperience in government as a virtue, Mr. Trump most successfully.  In his campaign speech of August 18, 2016 in Charlotte, North Carolina, after listing some specific campaign promises, he said:

As you know, I am not a politician. I have worked in business, creating jobs and rebuilding neighborhoods my entire adult life.  I’ve never wanted to use the language of the insiders, and I’ve never been politically correct – it takes far too much time, and can often make more difficult.

Sometimes, in the heat of debate and speaking on a multitude of issues, you don’t choose the right words or you say the wrong thing. I have done that, and I regret it, particularly where it may have caused personal pain. Too much is at stake for us to be consumed with these issues.

But one thing I can promise you is this: I will always tell you the truth.

I speak the truth for all of you, and for everyone in this country who doesn’t have a voice.

I speak the truth on behalf of the factory worker who lost his or her job.

I speak the truth on behalf of the veteran who has been denied the medical care they need – and so many are not making it. They are dying.

I speak the truth on behalf of the family living near the border that deserves to be safe in their own country but is instead living with no security at all.

Our campaign is about representing the great majority of Americans – Republicans, Democrats, Independents, conservatives and liberals – who read the newspaper, or turn on the TV, and don’t hear anyone speaking for them. All they hear are insiders fighting for insiders.

These are the forgotten men and women in our society, and they are angry at so much on so many levels.  The poverty, the unemployment, the failing schools, the jobs moving to other countries.

I am fighting for these forgotten Americans.

            His specific campaign promises, which I did not quote here, are unremarkable.  President Trump failed at some and broke others, as is the wont of politicians.  His peroration, however, recalled the language of Andrew Jackson, of Theodore Roosevelt, of Franklin Roosevelt.  He cast his appeal to Americans in the heartland (if you live there) or the flyover states (if you don’t) who believed, with some reason, that the elites of both parties sought their votes but not their welfare.  And it is that aspect of his presidency that I describe as his failed promise, not “promise” in the sense of his commitment to his voters, but “promise” in the sense of the hope that they thought he was offering.  In the end Mr. Trump turned out to be a purveyor of both failed promise and broken promises, rather as if Andrew Jackson had committed to the public that he would close down the Second Bank of the United States to protect farmers and small businesses from its rapacity, and then upon being elected had bought bank stock and put his son-in-law on the board of directors.