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Few people get more self-satisfaction out of redistributing wealth than state attorneys general:
Attorney General Charlie Crist today presented a $50,000 check to Broward Children's Center, using proceeds from the state's settlement of an antitrust case against two major hospital corporations.
The nonprofit Broward Children's Center in Pompano Beach helps more than 360 children with various handicaps and their families throughout South Florida and around the state. The center also provides residential programs for medically fragile youngsters at three group homes and two preschools.
The settlement between the attorney general's office and Hospital Corporation of America and Cleveland Clinic Florida came in April. The two companies were accused of secretly agreeing to reduce competition by dividing up certain medical services. That's a violation of state and federal antitrust laws.
Each corporation was required to make restitution payments of $100,000 for medical and social services to under-served populations in Broward and Collier counties.
Presentations to several other South Florida charities will be announced later.
This reporter's account makes you question whether Crist's motive was to protect consumers or to hold press conferences presenting giant checks. The latter certainly makes you appear more popular in the eyes of voters.
Crist is also involved in another high-profile "competition" dispute, the Big East schools' lawsuit against the University of Miami and the ACC. Crist intervened in support of Miami, and last week filed a motion to dismiss the case, in which the lead plaintiff is the University of Connecticut, represented by the King of states attorneys general, Richard Blumenthal. In the opening of Crist's motion, he makes the following observations:
Vigorous competition underlies much of what we value as a society, forming the foundation of our economic and political system. It is a principle the parties to this action are intimately familiar with - they compete in lecture halls and laboratories, on their playing fields, to recruit new students and faculty members, to establish alumni bragging rights, and for public and private funds. Underlying competition are the freedom to contract and to freely associate, and fundamental to those freedoms are the abilities to both join and leave the voluntary relationships so created. These principles inure to the benefit of us all, helping to create a dynamic society whose members are motivated to strive for the best, and the Attorney General of Florida has intervened in support of the jurisdictional motions to dismiss because of his concern that Plaintiffs' action could cause long-term harm to these principles.
Crist makes a good point, but he fails to properly emphasize individual rights - the freedom to contract, et al. - as the true moral basis of society. He does say this, but only after lavishing praise on "competition" as the prime virtue. This, of course, is how most antitrust advocates think: competition first, then individual rights a distant second. It's that hiearchy of values that makes Crist able to go after hospitals for exercising their freedom to contract, while simultaneously defending Miami's right to engage in identical behavior without antitrust penalty.
::: posted by Skip Oliva
at 2:08 PM | link
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Creighton Watch: USA Today Asks No Questions
USA Today offers its usual non-critical reporting, this time in a profile of new FTC antitrust chief Susan Creighton:
Mergers that need reviewing have fallen 75% since 2000 because of the sluggish economy and a policy change that raised the value of mergers that must be reported to the government. But that means the 250-lawyer staff that Creighton heads can focus on anti-competitive behavior that costs consumers money.
Since the start of the Bush administration, the FTC has opened more than 100 investigations and taken enforcement action in 25, a 30% jump over any two-year period since the mid-1980s.
While some expect a lighter touch with business from Republicans, Bush-appointed FTC Chairman Tim Muris and former antitrust chief Joseph Simons brought a series of cases against brand-name and generic drug firms whose deals were believed to be keeping low-cost drugs off store shelves. Creighton, a Republican who was Simons' deputy for two years, is said to have been a driving force behind the cases.
Those who know Creighton have only high praise. "She's very, very bright with an intellectual quietness," says William Baer, who had Creighton's job for much of the Clinton administration. Adds former FTC mergers chief George Cary: "She's extremely bright, very thoughtful and understands the legitimate purpose of antitrust enforcement without being at all reflexive."
Not a single critical word of Creighton—or the FTC—is spoken in the article. I'm particularly amused at the article's conclusion that the lack of mergers leaves the Bureau's 250 lawyers with more time to "focus on anti-competitive behavior." A more interested journalist's eye would probably view the expansion of non-merger enforcement as a sign that 250 lawyers are looking for something to do lest Congress figure out they can spend less money on antitrust activities.
And while the article quotes a former FTC official as saying Creighton "understands the legitimate purpose of antitrust enforcement," USA Today never thought to share with its readers what that purpose is. Talk to the several thousand physicians that the Muris FTC has prosecuted in the past two years and see if they think Creighton & Company aren't being "reflexive" or anti-consumer in their thinking.
Even when discussing Creighton's record, USA Today never thinks to look at the other side of the discussion:
Creighton is widely considered to be the behind-the-scenes brains that launched the Justice Department probe-turned-lawsuit against Microsoft. Her law partner in a Silicon Valley law firm, Gary Reback, was the public pitchman for their client, Netscape. But it was Creighton who wrote the report laying out the complaints about Microsoft's tactics that helped antitrust enforcers make their case.
Creighton is a loyal member of the government team now but once fought the FTC in court. Creighton represented VISX, maker of laser-eye-surgery equipment, against charges that it broke antitrust laws when it formed a joint venture with Summit Technology, the only other laser maker, and fraudulently obtained the patent. Creighton successfully defended VISX against some of the FTC charges. She also helped negotiate a settlement of the rest of the case.
Creighton says that even though she was working against the government, the VISX position was defensible for consumers because if the companies had not teamed up, there's a good chance neither would have entered the market, leaving consumers without any source for the surgery.
One of Creighton's major projects now is an ongoing review of some hospital mergers approved during the Clinton administration. People familiar with the agency's work say the FTC is expected to challenge some of those mergers because they ultimately led to higher prices for health care.
It's interesting that a nominally "pro-business" Bush administration would have the leader of the Microsoft antitrust mugging running its antitrust shop. Then again, Creighton's an FTC bureaucrat, and since the Commission is an "independent agency," the White House gets no formal imput on these types of appointments. The White House does, however, appoint the FTC commissioners who supervise Creighton, and when President Bush made his first FTC appointment last month, he picked a career antitrust lawyer with no outside business experience. Antitrust thus remains a governmental function without any accountability mechanism—just antitrust lawyers "supervising" other antitrust lawyers.
Finally, consider Creighton's agenda on issues like hospitals. Since taking over, the Muris FTC has made it abundantly clear that no merger is safe—even those that the FTC previously approved or that are outside the Commission's normal jurisdiction. This is nothing but a naked power grab, one that abandons the traditional American view of the law as objective. A business's actions can be deemed illegal by the FTC even if the FTC itself previously found it legal. Tyranny doesn't get much more obvious than that.
::: posted by Skip Oliva
at 1:59 PM | link
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Confusion about the wording of a resolution caused the Episcopal House of Deputies to reject "blessing gay unions" yesterday.
The resolution was returned to committee for more research to determine exactly which unions are 'gay'.
While members of the United Auto Workers, for example, earn relatively high wages, frequent labor disputes lead many Episcopalians to believe that they're not really gay.
"How could you be happy with so much labor strife," said one unnamed church deputy. "We're not opposed to blessing these unions, but we just want to make sure we have agreement on what we mean by 'gay unions'."
In other action, the Episcopal church approved allowing local churches to "celebrate and bless" pairs of homosexuals who pledge mutual sexual fidelity for life.
::: posted by Nicholas Provenzo
at 12:55 PM | link
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Rights and Reason: SCOTUS refuses adult comic book case
Sometimes I just don't get the Supreme Court. This time, it refused to hear the case of Jesus Castillo, who was convicted under Texas law for selling an adult comic book to an adult. This from the Comic Book Legal Defense Fund:
The CBLDF has been providing counsel for Castillo since his arrest in 2000 when he was charged with two counts of obscenity for selling adult comic books to adults. The Fund's lawyers persuaded the court to try the two counts separately and waged a fierce courtroom battle that included expert testimony from Scott McCloud and Professor Susan Napier. The State prosecutor did not offer contradictory testimony, but secured a guilty verdict with a closing argument stating, "I don't care what type of evidence or what type of testimony is out there, use your rationality, use your common sense. Comic books, traditionally what we think of, are for kids. This is in a store directly across from an elementary school and it is put in a medium, in a forum, to directly appeal to kids. That is why we are here, ladies and gentlemen. … We're here to get this off the shelf." Castillo was found guilty and sentenced to 180 days in jail, a year probation, and a $4,000 fine.
Immediately following the first trial, the State dropped the second obscenity count while the Fund prepared its appeal. In 2002 the Appeals court rendered a 2-1 split decision upholding the conviction. Justice Tom James, writing in dissent, would have reversed the conviction on the ground that the State did not provide sufficient evidence that Castillo had knowledge of the content and character of the offending comic book. On the strength of James' dissent, the Fund filed a Petition for Discretionary Review to the Texas Court of Criminal Appeals, which was denied. At the end of the road for Texas Justice, the Fund took the case to the U.S. Supreme Court.
Fund Legal Counsel Burton Joseph explains, "It is rare that the Supreme Court accepts individual criminal cases for consideration. In the Castillo case, in spite of the odds, CBLDF appealed to the Supreme Court on the chance that they would reverse what appeared to be an unjust and unconstitutional decision in the Texas courts. The principle was important, but we knew the odds were long."
I haven't read the arguments, but I wish the odds weren't so long and that the court would have taken this case. "Convict for the kids" is about as asinine an argument as the day is long.
::: posted by Nicholas Provenzo
at 12:38 PM | link
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Antitrust News: Model Injustice
Thanks to 'John Galt' for pointing us to a Collin Levey's WSJ editorial on the models' antitrust suit.
A final philosophical question: Whose business is it really what modeling agencies charge for their services? They don't own an "essential facility" necessary for life and well-being. The investigators should think hard about what public purpose is served by chasing down people who've entered into voluntary contractual relationships in a business that is beyond the Justice Department (or anyone else) to make economic sense of.
I think the final philosophical question should be why antitrust should apply to any voluntary contractual relationship.
"Those who create," Coco Chanel said, "are rare. Those who cannot are numerous. Therefore, the latter are stronger." That is the bureaucrat's ode, illustrated again by the antitrust division's attempt to force another industry into a facile economic mold.
Coco Chanel said that? I might just take back my dig against the modeling agencies from the other day.
::: posted by Nicholas Provenzo
at 10:23 AM | link
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Rights and Reason: Critics Blast Delays in Arming Pilots
Leslie Miller of the AP reports that the Transportation Security Administration program to arm airline pilots is under fire for inordinate delays.
Fewer than 100 pilots have been trained to carry guns in the cockpit in the eight months since Congress approved the idea, and hundreds more are waiting, but pilots and members of Congress say the program is not moving fast enough.
Pilots say it's more important than ever to get weapons in the cockpit because the Transportation Security Administration froze hiring in the air marshal program in May and the government is warning al-Qaida may try more suicide hijackings.
"Between the air marshals and the federal flight deck officer force, we should cover a vast majority of the domestic flights," said Capt. Bob Lambert, president of the Airline Pilots' Security Alliance. "It just seems like we haven't learned very much from Sept. 11."
There should be minimal hassle to carry a firearm in order to defend your life and the lives of your passengers and crew. Remind me—are we living under a Republican administration?
::: posted by Nicholas Provenzo
at 10:09 AM | link
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Politics: The making of an egoist
This quote from Arnold Schwarzenegger appeared in an AP story detailing how he would psych out his bodybuilding opponents:
"I knew I was a winner. I knew I was destined for great things. People will say that kind of thinking is totally immodest. I agree. Modesty is not a word that applies to me in any way."
Interesting.
::: posted by Nicholas Provenzo
at 9:54 AM | link
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Thursday, August 07, 2003 :::
Rights and Reason: West Nile Virus Cases Triple in One Week
In one week, the number of West Nile virus cases has tripled, and a U.S. health official warned Thursday that this year's outbreak may top last year's record.
The numbers are starting to change very, very quickly," said Dr. Julie Gerberding, head of the Centers for Disease Control and Prevention (news - web sites). "That is very concerning."
So far there are more than 153 cases in 16 states, an explosion of the mosquito-borne virus in just a week, she said. That doesn't include 39 new cases Colorado officials reported Thursday.
A week ago, there were 59 cases nationwide. Health officials had expected the disease to spread this year, invading Western states previously unscathed. But they appeared somewhat surprised at its speed.
The new numbers compare with 112 cases in four states for this date last year.
"It indicates we are starting the epidemic with more cases than last year," the CDC director said. She warned of "a great number of infected people."
Last year, 4,156 people caught the virus, and 284 died. The United States also suffered the biggest reported outbreak of West Nile encephalitis in the world in 2002.
Funny thing is, West Nile virus is controllable, if only a certain pesticide known as DDT was legal to use . . .
It’s horrific to know that every death caused by West Nile was preventable. I wonder just what the body count will have to reach before the DDT ban is lifted.
::: posted by Nicholas Provenzo
at 4:46 PM | link
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The European Union intends to fine Microsoft for past antitrust abuses regardless of how the software giant changes its future business practices, an EU spokesman said Thursday.
"We are minded to impose a fine for the past and minded to impose remedies for the future, and we will adopt a final decision which does exactly that," said Tilman Lueder, a spokesman for the EU's antitrust office, the European Commission.
The EU can fine violators up to 10 percent of their worldwide sales — which would be more than $3 billion in Microsoft's case. In practice, fines have never exceeded 1 percent, which would still be an EU record but easily managed by a company with cash reserves of $49 billion.
The EU sent Microsoft a statement of objections Wednesday accusing it of trying to monopolize new markets, namely servers, which tie desktop computers together, and audiovisual players, which allow users to play music and video on their computers.
Arguing that new market surveys found the abuses continuing despite the settlement last year of the landmark antitrust case against Microsoft in the United States, the EU spelled out steps it wanted Microsoft to take to address those complaints.
I think what’s most amusing about this current round in the Microsoft antitrust saga is the degree that the Computer and Communications Industry Association has lobbied the EU to attack Microsoft. If first you can’t succeed in America, there is always Europe’s more regulatory pastures.
According to CCIA’s website, Microsoft is a big meany in:
audio/video streaming and playback software (including digital rights management software); e-mail client software; instant messaging software and services; server operating system software; authentication services; consumer Internet portals; web services; handheld computing device operating systems and applications software; smart phone operating systems and applications software; server applications (notably, mail server and media server software).
I know, I was shocked too. What business does Microsoft have in technology, after all?
::: posted by Nicholas Provenzo
at 4:35 PM | link
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Politics: Bush support cracking on the right?
Bruce Bartlett wonders if President Bush's leftward turn hurts Republicans:
Conservative dismay over Taft's liberal agenda led directly to massive Democratic gains in Congress in 1910 and his own loss in 1912. The same dismay over Nixon's liberal agenda led to massive Democratic gains and his ouster from office in 1974.
I am sorry to say that I see Bush traveling the same path. He has concluded that the Democrats are very likely to nominate a candidate so far to the left as to be unelectable. Howard Dean's ascension to the head of the Democratic pack supports this conclusion. But ironically, rather than making Bush feel more comfortable pursuing a conservative agenda, he continues to move left on domestic issues -- especially the budget-busting prescription drug subsidy bill.
Bush has also signed into law a campaign finance reform bill that most conservatives view as blatantly unconstitutional, endorsed an education bill written by Ted Kennedy and initiated more trade protectionism by any president since Nixon. But against these, Bush continually plays his trump card: the war against terrorism. And just as Nixon played the anticommunist card in terms of the Vietnam War, it has been enough to keep most Republican voters under control -- so far.
Bartlett continues:
[I] think Bush is a "lock" for re-election, regardless of whom the Democrats nominate. Yale economist Ray Fair predicts he will get 56.7 percent of the vote based on economic data already in hand. If the economy does better than expected, his vote total will only rise.
But conservatives still need to ask themselves: to what end? Do we want another Taft or Nixon, who imposed liberal policies no Democratic president could achieve as the price for keeping a Republican in the White House? It is a question worth asking.
What we really need to ask is, "to what end the conservatives?" Republicans control the Congress and the Executive. Yet what should be a crowning achievement leaves one feeling under-whelmed.
Conservatives stand for tradition and tradition can mean literally anything. In the primary, President Bush ran on Christian “compassion” and there is nothing in the conservative lexicon that would see that as dangerous. Bush got through in the first place because the conservatives could offer no alternative. Only now do some conservatives scratch their heads.
I produce a rational advocacy of individual rights. I wonder, as I contemplate my career and its future, just what steps it will take to impact thinking in America for the better.
::: posted by Nicholas Provenzo
at 3:21 PM | link
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Antitrust News: Another End-run
The FTC doesn't like the fact Congress raised the threshold for reporting mergers a few years ago. This means that unless a proposed merger is worth a certain dollar-value, the FTC is not entitled to receive a Hart-Scott-Rodino (HSR) filing in advance of the merger's consummation. As a result, the FTC under Tim Muris has moved to undo a number of HSR-exempt mergers after the fact. Today the Commission filed a complaint to do just that in the case of a software company:
Alleging that Aspen Technology, Inc’s (AspenTech) $106.1 million acquisition of Hyprotech, Ltd. (Hyprotech) in 2002 was anticompetitive and led to the elimination of a significant competitor in the provision of process engineering simulation software for industry, the Federal Trade Commission today authorized its staff to file an administrative complaint challenging the transaction, which was exempt from the reporting obligations of the Hart-Scott-Rodino (HSR) Premerger Notification Act.
“AspenTech’s purchase of Hyprotech directly led to the combination of two of the three largest firms in the development and sale of certain process engineering simulation software,” said Susan Creighton, Director of the FTC’s Bureau of Competition. “Although the fact that a merger has been consummated increases the complexity of the Commission’s decision to seek relief, that hurdle is not sufficient for the agency to forgo a challenge to a transaction that is likely to lead to anticompetitive effects.”
It's no accident that Susan Creighton, who took over the Bureau of Competition on Monday, is behind this prosecution. Before joining the FTC in 2001, Creighton was a top lawyer for Netscape in their antitrust puruit of Microsoft. She was a principal author of the antitrust theory used to unjustly convict Microsoft of "illegal monoplization" in the web browser market. Also not surprisingly, her appointment as Bureau director was welcomed by antitrust advocates in the technology industry:
Tech lobbyists welcomed Creighton's appointment, saying her depth of knowledge about the industry is a good sign for enforcement of fair competition in the industry.
"She's a very smart, very savvy player,'' said Computer and Communications Industry Association President Ed Black.
She is one of the few people who was able to combine her understanding of technology, antitrust law, and the economics of the industry to articulate the competitive problems associated with Microsoft, Black said.
CCIA, the group Black heads, is one of the two industry groups pursuing an appeal of the federal antitrust settlement with Microsoft. No doubt CCIA will enjoy special access to Creighton as she assumes her new role of deciding how the tech industry should be governed.
::: posted by Skip Oliva
at 11:29 AM | link
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Clear Channel Communications Inc. said a district court Wednesday denied a motion by Spanish Broadcasting System Inc. for reconsideration of an antitrust lawsuit filed against Clear Channel and Hispanic Broadcasting Corp.
According to Clear Channel's quarterly report filed Wednesday with the Securities and Exchange Commission, the court's ruling concludes the case in the district court.
Spanish Broadcasting filed a lawsuit against the company and Hispanic Broadcasting in June 2002 alleging that Clear Channel was in violation of the Sherman Antitrust Act. Miami-based Spanish Broadcasting also made various other claims such as unfair trade practices and defamation.
The lawsuit, filed in the U.S. District Court for the Southern District of Florida, was dismissed on Jan. 31.
On Feb. 14, Spanish Broadcasting filed a motion for reconsideration of the court's order.
Meanwhile, the FCC continues to delay approval of the Clear Channel-Hispanic Broadcasting deal. No doubt FCC chairman Powell is looking for some way to appease Clear Channel's opponents—a coalition of Democrats and Telemundo-owner NBC—before ending his agency's antitrust review, which has now taken more than six months.
::: posted by Skip Oliva
at 11:18 AM | link
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Rights and Reason: The future of gay marriage
Consider this gem from conservative writer Maggie Gallagher:
America is disfigured by high rates of sexual disorders, including unnecessary divorce, unmarried childbearing, sexually transmitted diseases, a pornographic culture, and the progressive normalization of alternative sexual lifestyles, along with the sudden real threat that courts will impose gay marriage. A Vatican statement simply repeating a 2,000-year-old ethical tradition about marriage and sex has prompted a flurry of threats, overt and implicit, around what we used to call the Free World.
Impose gay marriage? I just love how conservatives think that by recognizing gay relationships before the law the whole world will come to an end. Gallagher calls gay marrage a threat, but just who does it threaten? It would seem to me the only people gay marriage is a problem for are those who detest that our sexual capacity can be used for our own gratification. And that, of course would be Maggie Gallagher.
The present may look bleak, but the future belongs to those people and cultures that deeply commit to ideas grounded in human nature: Men and women are not interchangeable units, sex has a meaning beyond immediate pleasure, society needs babies, children need mothers and fathers, marriage is a word for the way we join men and women to make the future happen.
Yet the desire for the recognition of gay marriage speaks to long term—the long term relationship and happiness of consenting adults. So much for individual rights—as long as gays don’t procreate, in Gallagher’s eyes, they are less that full humans. I wonder how Gallagher feels about those who can’t have children, or chose not to get married. Hell, I wonder how she feels about priests and nuns, who renounce their sexual capacity outright.
Human beings are free to adopt self-destructive ideas, but we are not free to make them work. Ideas based on a faulty view of human nature can grip the imagination of the powerful for decades, wreak havoc and suffering on untold millions, but they cannot triumph in the end. What is contrary to nature, including human nature, cannot ultimately survive.
I agree. It's too bad Gallagher doesn’t see that it's her own views that are destructive and don’t work.
::: posted by Nicholas Provenzo
at 10:44 AM | link
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Wednesday, August 06, 2003 :::
The Agencies: Free Internet Access
FCC Chairman Michael Powell is a "service-first" kind of regulator:
The Federal Communications Commission (FCC) announced today that it would provide free wireless Internet access to visitors at its Washington, D.C. office.
“When you come to the FCC, leave the cords at home,” said FCC Chairman Michael K. Powell. “We’re embracing the power of WiFi and the freedom and convenience of wireless Internet access it gives to consumers.”
Last year, Powell directed his staff to take the steps needed to make the FCC one of the first federal agencies to provide public WiFi access. Visitors bringing their own hardware and software can use the service on the Twelfth Street, Courtyard, and Eighth Floor levels of the headquarters located at 445 12th Street, SW in Washington, D.C.
No word yet on whether the FCC will open a coffee bar...
::: posted by Skip Oliva
at 8:39 PM | link
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The Courts: Where's Your Amicus Now?
Seventh Circuit Judge Richard Posner, the nation's self-appointed chief intellectual, issued an in-chambers opinion today denying leave for various parties to file amicus briefs in a case pending before his court. Certainly it's within Judge Posner's discretion to deny leave, but the good judge couldn't let things slide without lecturing the movants:
In my experience in two decades as an appellate judge, however, it is very rare for an amicus curiae brief to do more than repeat in somewhat different language the arguments in the brief of the party whom the amicus is supporting. Those who pay lawyers to prepare such briefs are not getting their money's worth.
Funny, I always thought those who pay to read Posner's books aren't getting their money's worth.
::: posted by Skip Oliva
at 8:26 PM | link
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The Law: The OYEZ Project
The AP reports on the OYEZ Project, a multimedia database with abstracts of key constitutional cases and digital audio of oral arguments before the US Supreme Court.
Getting audio recordings of landmark legal arguments is becoming as easy as downloading the latest Snoop Dogg single. For the first time, Internet users can download, edit and swap many of the U.S. Supreme Court's greatest hits.
Oral arguments available include those for the Roe v. Wade abortion-rights case and the disputed 2000 presidential election.
The audio files come from the OYEZ Project, a multimedia archive that gets its name from the synonymous phrase "Hear ye, Hear ye."
"There's so much more information and emotion in the human voice that a transcript can't do it justice," said Jerry Goldman, the project's director and a professor at Northwestern University.
Goldman said the bitterness in Justice Thurgood Marshall's voice is apparent when he explains his views in Regents v. Bakke, a 1978 affirmative action case. And the silence is deadening in Roe v. Wade when Jay Floyd, representing Texas, makes a joke but no one laughs.
Since 1994, the OYEZ Project, run out of Northwestern, has made audio of the cases available in a "streaming" format that requires a continuous Internet connection. Available were some 2,000 hours of audio dating to 1955, when taping of oral arguments began.
The project is converting the files to the MP3 format, which permits offline listening, use of portable devices and sharing through the same peer-to-peer networks used to swap music and movies. The first batch of MP3 files was released in late June.
Goldman said he ultimately wants to make available in MP3 every bit of Supreme Court recordings, about 6,000 hours in all. He also wants them easily searchable.
Hehe. Sounds interesting. I'm sure Skip has already listened to it all. . .
::: posted by Nicholas Provenzo
at 5:40 PM | link
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Antitrust News: EU Alleges Microsoft Abuses 'Ongoing'
The AP Reports about Microsoft's EU antitrust woes:
Backed by new evidence, the European Union on Wednesday accused Microsoft Corp. of trying to monopolize markets for server software and audiovisual players and gave the U.S. giant a last chance to defend itself before demanding changes in its Windows operating system.
The EU's executive Commission, which has been investigating Microsoft for four years, said recently collected information from businesses across Europe and the United States confirmed that abuses were "still ongoing."
Specifically, it charges Microsoft with unfairly leveraging the "overwhelmingly dominant position" Windows has in personal computers into the market for servers, which tie those desktop computers together.
It also alleges that Microsoft's inclusion of Windows Media Player in the Windows operating system hurts competing audiovisual software such as Apple QuickTime and Real Networks.
"In light of this evidence, the Commission's preliminary conclusion is that Microsoft's abuses are still ongoing," it said in a statement.
EU Competition Commissioner Mario Monti said the charge sheet sent to Microsoft also identifies "appropriate remedies," including additional code Microsoft would have to disclose to competitors in the low-end server market to ensure interoperability.
It also would have to either offer a version of Windows without the Media Player, or agree to carry rival players with Windows.
You know what's interesting about the EU's antitrust prosecution of Microsoft: unlike in the US, I have not seen any grassroots support of Microsoft in the EU. No petitions like we had. No protests. Just silence.
What's up with that? Where are the European Objectivists?
::: posted by Nicholas Provenzo
at 4:24 PM | link
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Tuesday, August 05, 2003 :::
Antitrust News: Feds Eye Top Modeling Agencies Conspiracy
Peter Kaplan of Reuters reports that the DOJ is joining the investigation of fashion modeling agencies for allegedly charging inflated commissions and expenses.
Lawyers with the Justice Department antitrust division have conducted interviews in connection with antitrust complaints leveled in a civil class action lawsuit against the agencies, the sources said.
A spokeswoman for the department declined to comment on the case or whether department was investigating.
Last month a federal judge granted class action status to a complaint against several modeling agencies, including Elite Model Management and Ford Models Inc.
The class is expected to be made up of thousands of models. The judge appointed the law firm of Boies, Schiller & Flexner as lead counsel.
Elite and Ford are both top modeling agencies. Elite models include actress Lara Flynn Boyle as well as Lauren Bush, niece of President Bush. Ford represents supermodels like Christie Brinkley, Jerry Hall, Frederique, and Rachel Hunter.
The suit, filed in Manhattan federal court, alleges the agencies fixed models' commission rates at 20 percent, twice the 10 percent allowed by state law for employment agencies. The models alleged that the defendants conspired to evade state pricing regulations by calling themselves model management companies.
In the lawsuit, the plaintiffs say price-fixing in the industry stretches back to the 1970s. They contend the agencies used a trade association called the International Model Management Association as a clearinghouse to discuss rates and other competitive terms.
What a grand scheme. The modeling agencies are being sued under antitrust because they did not follow a state price fixing law. Then, they are being hammered for an alleged conspiracy 30 years old.
It will be interesting to see how the modeling agencies choose to defend themselves, if at all. I suspect that these agencies are home to capitalism-like money, but are devoid of capitalism-like principles.
::: posted by Nicholas Provenzo
at 1:13 PM | link
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Monday, August 04, 2003 :::
Letters, Letters, Letters
This e-mail came in the the other day from Richard Smith:
I am completely for capitalism and individual rights. However, my complaints are with consumerism in America. I see so many overweight, greedy Americans. So many of them risk their lives to be two yards ahead of someone else while driving in an oversized unnecessarily large S.U.V. . I can see the difference between excessive consumerism and capitalism, but is one not an inevitability of the other. I'm just completely disenchanted with American excess. Maybe I have a point maybe you will not even read this email. However If you do then I would like some sort of feed back of any kind about contemporary society, consumerism, and capitalism.
Mr. Smith says that he's for capitalism, but that he opposes consumerism. Let's define our terms. In his letter, Mr. Smith sees that capitalism is connected to individual rights. Capitalism is the principles of the Declaration of Independence applied to our social and economic relationships. That, Mr. Smith says, he supports.
At the same time, Mr. Smith says he opposes consumerism, which I’ll define as preoccupation with and an inclination toward the buying of consumer goods. Mr. Smith sites two examples, the SUV, and the trend toward obesity, as symbols of American excess.
Let’s deal with overweight Americans first. For most of human existence, food was a hard-won commodity. Biologically, the only way humans could survive was through the ability to store energy as fat and live off those fat stores in times of deprivation. Now, as a result of political freedom and mankind’s productive genius, much of the world enjoys an abundance of food. For many of us, over-indulging in this abundance runs counter to our biological programming. I, for one, can say that it is very easy for me to put on weight. Thankfully, I finally have learned that it’s pretty easy to take it off. I lift weights to put on muscle and I have lost 40 lbs in since April. I wish I could tell you that it was hard, but it wasn’t—it just required some time, and it will require a little more time to reach my ultimate goal.
Was I living a life of avarice before I dedicated myself to getting in shape? I don’t think so. I certainly wasn’t happy being overweight, but I wasn’t making the intelligent choices given my biological programming and desires. Once I figured out what I needed to do, I just did it.
It’s solving the problem opposite of food abundance that ought to concern us. The world that starves today starves because it lives in war, tyranny, and oppression. I’d rather wrangle with my waste line under capitalism then wrangle with war and tyranny any day.
As far as the SUV goes, John Bragg deals with that topic in fine fashion here. I can add that I recently was with a friend as they bought one of BMW’s latest. Why shouldn’t they put themselves in a vehicle that is built to fit their body like a glove and transport them in comfort and safety if they can afford it? As John observes in his essay, “the SUV is an example of people using the best technology available to enhance their lives.” Life, liberty and the pursuit of happiness, this time expressed in a car and an open road. And to that, this capitalist says, “Amen.”
Mr. Smith’s ultimate question is whether capitalism inevitability leads to avarice. The answer is of course, no. Abundance is not a threat; it is the fruit of hard work and intelligence. If Mr. Smith still questions capitalism, I would urge him to ask himself if he really understands capitalism’s moral basis.
::: posted by Nicholas Provenzo
at 12:31 PM | link
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PALO ALTO, Calif. (Reuters) - Attorneys general from about 30 U.S. states are cooperating in federal antitrust enforcers' review of Oracle Corp.'s ORCL.O $7.3 billion hostile bid for PeopleSoft Inc. PSFT.O, sources familiar with the matter said on Friday.
"This is purely procedural and a matter of course," Oracle spokeswoman Jennifer Glass told Reuters on Friday.
Glass said all of the information Oracle provides for the Department of Justice's antitrust review is also available to the state attorneys general, who are also invited to attend the company's ongoing meetings with regulators.
The attorneys general, including those from New York, Texas and California, have already spent more than a month reviewing the deal. They have agreed to share information and costs associated with their investigations, and to divide up tasks related to the probe, according to a report in the Wall Street Journal.
One attorney general not part of this group is Connecticut's Richard Blumenthal, who already filed suit to block the potential merger on antitrust grounds. The group-of-about-30, however, may or may not take action at some later date. My guess is the AGs will defer to the Justice Department, which almost certainly will take action for political reasons.
The interest of the state AGs can be attributed to the importance of database software to state governments. Most states are customers of Oracle or PeopleSoft, and thus the AGs are likely most interested in protecting their own financial butts. Nothing wrong with that per se, but that still doesn't excuse contemplating the use of force to prevent a possible merger between two private businesses.
::: posted by Skip Oliva
at 1:52 PM | link
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Rights & Reason: Defining Corporate Liability
MCI faces a bumpy road, to its planned emergence from bankruptcy court, due to continued attacks by the company's competitors. Leading the charge are AT&T and Verizon--whose general counsel is a former U.S. attorney general--who seek to have MCI liquidated rather than reorganized. Among the reasons cited are allegations that MCI illegally routed long-distance calls to shift its costs from MCI (then WorldCom) to rivals like AT&T and Verizon. Because calls often cross networks owned by different providers, there is a complex system in place to determine which firm is responsible for the charges. MCI allegedly manipulated the system by, among other things, routing U.S. calls through Canada, thus leaving Verizon and AT&T to pick up the tab when the calls re-entered this country.
There is, of course, something unseemly about AT&T and Verizon asking the government to forcibly liquidate MCI rather than proceed with the reorganization approved by MCI's creditors. A liquidation would almost certainly result in some MCI assets and business being acquired by AT&T and Verizon (unless antitrust regulators stick their thumbs in the dyke, which they almost certainly would). Thus, while I respect the two telecom giants' selfish motivations, a federal bankruptcy judge must consider other factors in deciding MCI's eventual fate.
In the early aftermath of the various corporate scandals, I found myself vigorously opposed to the Justice Department's criminal prosecution of the Arthur Andersen firm, which resulted in a conviction that effectively shut down the company. In my view, a company can never be criminally liable. This is not a statement of blind pro-business arrogance, but of simple reason. A criminal act requires intent, and a corporation--an artificial person--cannot form or act upon intent. Individuals within a corporation, however, can form such intent, and thus only the specific individuals involved for a criminal act should be held liable.
Civil liability is obviously a different matter. One can commit a civil tort without specific intent. More importantly, civil actions arise from contractual obligations, and such duties are at the heart of a corporation's existence. A corporation itself is nothing more than an agreement among individuals to work together for a specific purpose (such as the pursuit of profit). Within the framework of this agreement, the group as a whole assumes certain risks and liabilities, including potential damages for civil wrongs committed. This can be the case even where individuals within a company act outside the bounds of their fiduciary duty to other members of the company.
Now in the case of MCI, we're faced with determining the proper role of the bankruptcy court. Verizon and AT&T seek liquidation because, among other reasons, they believe allowing MCI to emerge from bankruptcy largely intact will give it an unfair competitive advantage--why should MCI, after all, be allowed to shed its debt while remaining a viable competitor? This is a valid point, and the court should give it some weight. But the principal job of a bankruptcy court is not to protect the "competitiveness" of a marketplace; it is to protect the interests of MCI's creditors, whose property rights are directly at stake. If the creditors believe their interests are better served by reorganization than liquidation, the court should give that far greater weight than the objections of MCI's competitors.
Unfortunately, one of the consequences of modern legal theory is that private contractual rights--such as the creditors' interests in MCI--are often rendered subservient to invented legal interests, such as "promoting competition" and "protecting the public interest," and other wonderful socialist euphemisms. Bankruptcy, however, has generally remained above this fray, and hopefully the judge supervising MCI's case will do so as well. And remember, there is nothing preventing AT&T and Verizon from filing suit against MCI if they believe they are victims of the latter's fraud. Such is the wonder of a civil court system.
::: posted by Skip Oliva
at 1:47 PM | link
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The Culture: Inflationary Politics
When all is said and done, I suspect the campaign to recall California Gov. Gray Davis will have been a waste of time and money. It's not that the case has not been made for booting Davis to the curb, but the entire recall process reveals the true source of California's political problems, and it's not the incumbent governor.
Davis may be the purest form of bottomfeeder to ever win a major political office in the United States. The governor's long political career is noteworthy for its absence of ideological principle and the near-total reliance on personality politics--i.e. negative attacks--to win and hold office. In a perverted way, you have to almost respect Davis' ability to win five statewide elections in a large, diverse state like California, a place one would figure would have awakended long before now to repudiate a political cockroach like Davis.
The larger trend seen in Davis' career and looming recall is what I call "inflationary politics." Like most Objectivists and libertarians, I favor a gold standard in monetary policy. The principle is simple: gold provides an objective control to determine the value of money, thus securing the money supply itself from political manipulation. In America today, of course, we no longer have the gold standard but fiat currency, where the Federal Reserve decides the size of the money supply and the subjective value of the dollar.
In politics, there is a "gold standard" as well: ideology. Ideas are the objective currency of politics. Ideas can be objectively assessed using reason and the branches of philosophy (epistemology, metaphysics, etc.) An idea can ultimately be proved true or false. A political system that is based on ideas can thus flourish even in the face of bad ideas, for they can be disproven and considered by the electorate for what they are.
Modern politics, such as that personified by Gov. Davis, is not idea-based, but personality-based. The currency of personality-based politics is the personal attack, such as calling your opponent a "right-wing extremist." Unlike objective ideas, personality attacks cannot be rationally proven or disproven, since they are inherently arbitrary assertions. How does one disprove that he's an "extremist"? By renouncing his views, of course, and subjecting his judgment to that of the mob. This is precisely the point: win the argument without having to weather fact-based inquiry or debate.
Like fiat currency, personality attacks can be manufactured at will, and their supply can be expanded in times of great need, such as elections. Ideas, on the other hand, require a substantial intellectual investment that politicians--and many voters--disdain as too abstract or complex.
The result of this is inflationary politics: an artificially expanded supply of political personalities without a corresponding increase in ideas. This is not something that one can solely lay at the feet of politicians like Gray Davis--he's only a skilled beneficiary. Ultimately, it is the voters who must look in the mirror and accept their own responsibility for today's political culture.
Of course, that's not something you're likely to hear from Gray Davis or any of the other potential candidates for his job. One key to personality-based politics is blame assessment. If there is a problem, if people are unhappy, then someone must be at fault--someone other than the person himself, that is. Government leaders have perfected the art of using others--largely private businesses--as scapegoats for the misconduct of public officials. For example, Davis will spend much of his recall campaign blaming Republicans, energy companies, and "special interest" groups for his failures as governor.
And that's just the tip of the iceberg. Almost all politicians, especially regulatory agencies, assign blame as a substitute for intellectual inquiry. Here at CAC, we see that constantly from antitrust regulators, who blame private businesses when "consumers" are made to suffer such indignities as a possible 40-cent increase in the cost of ice cream.
::: posted by Skip Oliva
at 1:21 PM | link
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