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Comp-trolling for Power
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Vinny Sidhu
Legal Intern, Manhattan Institute's Center for Legal Policy

It appears as if the 'Sheriff of Wall Street' is back with both six-shooters fully loaded. In true Wyatt Earp fashion, former governor and current NYC comptroller candidate Eliot Spitzer is planning to utilize his entire cadre of resources to strike against the renegade corporate marauders, euphemistically known as the "U.S. Chamber of Commerce." The Washington Examiner has published an op-ed by the Manhattan Institute's and Point of Law's own Isaac Gorodetski detailing Mr. Spitzer's plan to transform this typically administrative position through use of "aggressive" pension investing:

The comptroller serves as the principal auditor of city agencies and acts as the managing trustee and investment adviser of the five pension funds investing city workers' retirement assets -- currently valued at over $130 billion. As comptroller, Spitzer would sit on each of the boards overseeing these funds.

When asked how he envisions his potential role, Spitzer responded candidly. He said the position "is ripe for greater and more exciting use of the office's jurisdiction."

We've seen this play before. As New York attorney general from 1999-2006, Spitzer turned the traditionally behind-the-scenes role into a national media platform by pressuring, investigating, and prosecuting corporations under the little-known Martin Act. Any "underutilized potential" that Spitzer sees in the comptroller's office should alarm both America's corporate boards and New York City's public employees and taxpayers.

We don't have to speculate about how Comptroller Spitzer would use the office's powers. In 2009, he penned an op-ed for the online magazine Slate titled, "Chamber of Horrors: The U.S. Chamber of Commerce must be stopped. Here's how to do it."

After lambasting the U.S. Chamber as an "unabashed voice for the libertarian worldview that caused the most catastrophic meltdown since the Great Depression" and for being on the wrong side of "virtually every major public-policy issue of the past decade," Spitzer explicitly called on city and state comptrollers to "flex their political muscle" in order to combat the Chamber. Presumably, Comptroller Spitzer would target any and all groups or individuals voicing positions he finds distasteful.

Spitzer justified his call for aggressive activism by comptrollers by claiming that the U.S. Chamber spends "our money" on lobbying. By "our money," he meant the financial contributions of the Chamber's corporate members.

The shocking irony here is that Mr. Spitzer seems to be endorsing two fundamental principles opposed to the democratic chord he is trying to strike; namely, 1) that all people invested in a pension fund share the same political viewpoints (Chamber bad, pension activism good) and 2) that those people would wish to see their political ends carried out through the strong-arm tactics of an administrator charged with the singular task of maximizing the value of the funds he oversees.

Using this line of logic, Mr. Spitzer would have to acknowledge that he believes increased shareholder activism would lead to a concomitant increase in pension value. But wait, Isaac writes:

According to research conducted by the Manhattan Institute's Proxy Monitor project, which tracks shareholder activity for the largest 250 U.S. public companies, the New York City pension funds and comptroller's office have historically played an activist role, sponsoring an absolute majority of all shareholder proposals introduced by state and municipal pension funds.

Yet that activism has not added to share value for city workers: New York City's largest pension funds posted dismal 1.9 percent and 1.3 percent returns in the most recent fiscal year and have trailed their benchmarks over three- and five-year windows.

If shareholder activism has not led to increases in pension value in the past, New Yorkers have the right to ask ol' Sheriff Spitzer why he has his guns pointed firmly at the U.S. Chamber of Commerce.

Heather Mac Donald in the Daily News and City Journal on the legal war on the war on crime—and the New York Times' bias in covering the trial.

Colin Hedrick
Legal Intern, Manhattan Institute's Center for Legal Policy

Tuesday, March 4, 2013: the day freedom died in New York City! That was going to be the original title of this post. While it may seem hyperbolic, it would have been true, at least symbolically, for those who like to make their own choices in life without government interference.Those choices were to be limited by Mayor Bloomberg's ban on sugary drinks over 16oz. that was set to go into effect on March 4.

Originally, this post was going to examine both the legal and policy reasons against the ban, but a last minute reprieve from this task and the ban itself came in the form of a decision overruling the ban handed down by Supreme Court Justice Milton Tingling. Justice Tingling's ruling is sweeping in its denunciation of the Mayor's proposal and is based on the very same arguments that would have been articulated in the previously planned posting.

The Justice was specifically concerned that enforcement of the ban would be "fraught with arbitrary and capricious consequences" due to the wide range of businesses exempted from the ban and the ill-justified exceptions for some drinks but not others. In reality, the uneven enforcement and loopholes in the rule would "effectively defeat the stated purpose of the rule."

So many recruits for this year's FDNY Academy class are unfit and flunking the physical fitness test that the department has had to dip to scores as low as 72 on the written test to keep the class full—normally, anyone below 97 doesn't get admitted. Why is the FDNY dropping its standards so? Because the Vulcan Society disparate impact litigation complained that minorities were underrepresented, so the FDNY only permitted applicants from a gerrymandered pool that had a higher minority percentage than the firehouses currently had. The New York post story focuses on the fatness of the class, but the unfit applicants will likely flunk out; the relaxation of intellectual acuity standards, however, has longer-term consequences and the Post gives short shrift to that aspect. [NY Post]

Note that this test was already watered down considerably because of the Vulcan Society litigation. The court found that the ratio of percentage of whites passing to percentage of minorities passing was too high, even though New York City had spent a small fortune on diversity consultants to make the test racially neutral. Solution? Make the test so easy that anybody can pass! And 97% now do, leading FDNY Deputy Chief Paul Mannix to say "I have no confidence in the test and the list that will come of it." [NY Daily News via Sailer] If you're interested in taking the old tests, you can see for yourself how "unfair" and "racially biased" the old tests were.

As Sailer notes, one cannot even blame the Obama administration for this travesty, as the Bush DOJ brought the original lawsuit.

I sincerely hope a qualified aspiring firefighter sues over his or her own exclusion on racial grounds, given that the subpar applicant pool was specifically selected on grounds of race. Meanwhile, New York City residents and firefighters will be less safe because of the dropped standards. But we'll have more diversity!

Related: Mac Donald; POL on Wax on disparate impact; POL Ricci coverage; Olson @ Forbes; Overlawyered.

We complained when "the federal government added cancer to the list of sicknesses covered by the $4.3 billion World Trade Center fund"; now a JAMA study of 55,700 people with Ground Zero exposure finds, not unexpectedly, no link to cancer. [NYT]

The question now becomes whether the fund will waste only $3-4 billion of taxpayer money or whether future Congresses will be bullied into a giveaway of tens of billions of dollars to people based on geographic proximity when the fund is scheduled to close in 2016. I warned precisely against this inevitable waste, but Jon Stewart and Democrats politicized the issue into "Republicans don't care about NYC first responders," media bias failed to tell the other side of the story, and Republicans caved after some minor changes to make the bill a bit less worse.

The Lawsuit Reform Alliance of New York reports that the local lobbying arm of Trial Lawyers Inc. and lawyers and law firms affiliated with it spent $3 million in this year's legislative session. It's a good return on investment that the legislature has blocked much needed civil justice reform in the state, and has even expanded the ability of trial lawyers to extract wealth from taxpayers. More: NY Post.

In what appears to be an attempt to scare wavering voters into supporting the president, New York Times columnist Paul Krugman argues that if Hurricane Sandy had arrived under a Romney administration, the victims would have been left without any government assistance. And by "government," Krugman means the federal government because, of course, only the federal government can respond to emergencies.

After discussing past Republican attempts to devolve disaster relief to the states, Krugman concludes "if Mr. Romney had been president these past four years the federal response to disasters of all kinds would have been far weaker than it was." And to prove the virtue of federal intervention, Krugman evokes "the scene in flooded Hoboken, with the National Guard moving in the day after the storm struck to deliver food and water and rescue stranded residents."

There's just one problem: the National Guard is a unit of state government, not the federal government. Indeed, it is the successor to the state militias. Krugman might have taken a moment to consult the Pentagon's own website discussing post-Sandy relief: "The National Guard takes its missions from the governor, and they're supporting the first responders," reports the DoD, quoting Army General Frank Grass.

Governor Christie called up the New Jersey Guard; Governor Cuomo, the New York Guard. It appears that FEMA played a role in getting other states to contribute guardsmen to the relief effort, but it is preposterous to think that such cooperation would not have occurred without Uncle Sam.

The Constitution empowers the president to summon the state militias "to execute the laws of the union, suppress insurrections, and repel invasions." But none of those conditions applies at present and (to my knowledge) President Obama has not asserted the power to call up the National Guard for post-Sandy relief. But when there are cheap political points to be scored, Krugman is not one to be distracted by the Constitution -- or the facts.

In defense of price-gouging
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The long lines and shortages we're seeing at New York and New Jersey gas stations in the aftermath of Hurricane Sandy are a direct effect of anti-gouging laws that preclude gas stations from charging prices that reflect the disparity between supply and demand. If retailers could charge $12/gallon, people who don't absolutely have to have gasoline would be willing to defer purchases to when supply was back to normal; everyone would buy only what they need; suppliers would be willing to incur exceptional costs to bring in more supply after the storm; suppliers would have an incentive to stock up before the storm and make post-storm shortages less likely; and people would be more likely to carpool, thus reducing congestion on the highways and bridges and reducing enforcement time on the three-per-car rule. Instead, Governor Christie is calling for rationing.

Even if you're concerned about windfall profits to gasoline retailers, then just split it with the government: take advantage of the Pigouvian opportunity and add a $3/gallon tax for post-hurricane emergencies.

More at Reason. Earlier: 2006 Republican posturing; Spitzer overenforcement.

(h/t to J.M. and A.G. for additional advantages of expensive gas)

In 2012, "public housing has accounted for nearly 20 percent of all shootings in the city, 10 percent of felony assaults and 11 percent of rapes -- though less than 5 percent of city residents live in the projects." Police can prevent crime by preventing people who shouldn't be in the housing projects from being there. But Legal Aid attorneys have successfully lobbied to preclude police from easily prosecuting trespass violations through "vertical patrolling" based on bogus allegations of false arrests. And law-abiding residents of New York City public housing are that much more unsafe. [Heather Mac Donald @ [NY Post & City Journal]

Steven Domalewski suffered a freak injury playing Little League baseball when he was struck in the chest by a batted ball, and the family has successfully sued every deep pocket peripherally involved, including the metal bat manufacturer, Little League, and a sporting-good chain. [ESPN]

If there is evidence that the injury was the result of a metal bat rather than the unfortunate timing and placement of where the baseball hit Domalewski, it's absent from the press coverage. The Consumer Product Safety Commission completed a study on this issue and concluded in 2002 that there is no evidence to suggest that non-wood bats pose any greater risk than wood bats; baseball is a hazardous game, and those hazards occur with both wooden and non-wooden bats. [via baseballcoaches.org]

Earlier on aluminum bats: June 2007; Overlawyered.







Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.