Arafat’s fatal flaw

As noted in these previous posts, Richard Chesnoff is one of America’s foremost commentators on Middle East affairs. He is also one of the relatively few American journalists to have interviewed and spent time with Palestinian leader, Yasser Arafat.
With Arafat near death, Mr. Chesnoff writes this NY Daily News op-ed in which he notes what could have been:

If anyone had the ability to forge a Palestinian state then, it was Arafat. He had the political power, the money and the military force.
Tragically, like other Palestinian leaders before him, he wasted his chance. He used his political power to gain more power and the money to corrupt and control. Worst of all, instead of using his military force to squelch terrorism, he financed it, bringing more destruction to his people as well as to Israelis.

Then, Mr. Chesnoff zeros in on Arafat’s fatal leadership flaw:

Why did a man who had both the opportunity and the intellect to deliver his people a state of their own fail to do so?
He lacked the realism, the vision and, most important, the courage to make the shift from terrorist to statesman. He spoke (in Arabic) not of peace with Israel but of a truce, something he could always break. And he refused to tell his people that Israel never would commit demographic suicide by letting millions of Palestinians return.
He also feared that if he ever told his people to accept a state that was less than what he had promised, he would lose stature, popularity and the place he believed he deserved in Arab history.
False pride is often a fatal error in the Arab world – a character flaw born not of heroism but of cowardice.

Read the entire piece. Would not it be ironic if Arafat’s legacy is a new generation of Palestinian leadership that understands the destructive futility of Arafat’s strategy towards Israel and embarks on a new, realistic path toward a Palestinian state?
Meanwhile, Max Boot writes of Arafat in this L.A. Times piece:

There has been no more successful terrorist in the modern age. Yet his biggest victims were not Israelis. It was his own people who suffered the most. If Arafat had displayed the wisdom of a Gandhi or Mandela, he would long ago have presided over the establishment of a fully independent Palestine comprising all of the Gaza Strip, part of Jerusalem and at least 95% of the West Bank. In fact, he seemed well on his way toward this goal when I met him in 1998 as part of a delegation of American scholars and journalists.
The place was his Ramallah compound, the time after midnight (Arafat was a night owl). He was wearing his trademark fatigues, and his hands and lips were shaking uncontrollably. Much of the session was conducted via translator, but Arafat broke into English when asked a question about Palestinian violations of the Oslo accords. It was the kind of query a democratic statesman would have batted away without a second thought.
Arafat, however, grew visibly agitated and stammered: “Be careful when you are speaking to me! Be careful, you are speaking to Arafat!” The threat of violence hung in the air as we left. Clearly Arafat had not quite mastered the art of being a politician or, rather, he was a politician in the mold of Mugabe or Mao.

VC’s fight AG disclosure opinion

An interesting fight is brewing in Austin over investment policy for public funds in Texas.
Venture capitalists are opposing Greg Abbott, the Texas Attorney General, in regard to his opinion that they must publicly disclose information about their investments on behalf of public institutions.
Austin Ventures, a prominent Texas venture firm, has threatened to end its relationship with two limited partners — the Teacher Retirement System of Texas and University of Texas Management Corp. (Utimco) — if they do not join a lawsuit that is contesting the attorney general’s opinion that would require release of fund-performance data and other information about venture-backed companies.
The dispute stems from requests filed under state open-records laws by several newspapers seeking information about private-equity investments by the teacher-retirement fund and the Texas Growth Fund, which is a state-run investment trust. The funds denied the requests, and asked Attorney General Abbott to back them up. The funds argued that the information was confidential under the terms of their partnership agreements and that releasing the proprietary information could put venture-backed companies and their investors at a competitive disadvantage.
Nevertheless, in a June, 2004 opinion, Mr. Abbott said the funds had failed to show how releasing the information “would bring about specific harm to their marketplace interests.” In a subsequent letter to Utimco and the teachers’ fund, Austin Ventures said that the disclosures could “sabotage under-performing companies” and force start-ups to raise additional capital on unattractive terms. Moreover, Austin Ventures claimed that entrepreneurs would spurn investments from Austin Ventures or any other VC fund that could not maintain the privacy of their confidential information.
Sequoia Capital, one of Silicon Valley’s top venture-capital firms, last year terminated two longstanding investors — the universities of Michigan and California — from its latest fund because it did not want information about the performance of its closely held investments to be disclosed under those states open-records laws. The Texas case potentially has bigger stakes because the information that would be disclosed includes data about the performance of individual portfolio companies and the value that venture backers place on them.
Texas Growth Fund filed the Texas case in state court and requests that the court overturn the attorney general’s opinion. The teachers’ retirement fund joined the suit after receiving the August letter from Austin Ventures. Utimco, which already releases performance data for the fund but not for its underlying investments, wrote to the attorney general objecting to his ruling, but has not decided whether to join the suit.
As of May 31, Utimco had $76 million committed to Austin Ventures, less than 1% of its $16.2 billion portfolio. On the other hand, Austin Ventures has $2.4 billion under management, so the Utimco investment is a larger percentage of that portfolio, but still not a substantial portion of it. TRS currently has committed $55.3 million of its $84.4 billion endowment to Austin Ventures. Consequently, we are talking about very small parts of the public funds’ portfolios here.
Quare: Should trustees and investment management of Texas public and quasi-public funds be restricted from diversifying the investment portfolio of such funds by legislation that effectively denies such funds from investing in potentially profitable venture capital funds that limit information about their investments? If so, why should public funds be restricted from investing an appropriate amount of their portfolios in potentially the most profitable investments?

The intangible value of professional sports franchises

These prior posts have been following Jerry Jones‘ efforts throughout this year to obtain lucrative public financing for a new stadium in the Dallas area, which resulted in Arlington voters approving a financing deal for Jones and the Cowboys this past eletion day.
Economist Craig Depken has done a good job of criticizing the dubious economic arguments in favor of the stadium deal, and has compiled a good list of articles regarding the pros and cons of the transaction. Professor Sauer over at the Sports Economist has also chimed in often on the questionable basis of claimed economic benefits derived from public financing of such stadium deals.
Nevertheless, despite the evidence of relatively nominal economic value, publicly-financed stadium deals continue to be popular. Noting this, economists Jerry Carlino and Ed Coulson claim in this recent paper that opponents of such stadium deals have tended to underestimate the intangible value that people derive from their sports teams:

We found that once quality of life benefits are included in the calculus, the seemingly large public expenditure on new stadiums appears to be a good investment for cities and their residents.

The authors go on to compare an NFL team to an old-growth forest for a city, which is another way of saying that the stadium is something that people enjoy even if they never visit it. In addition, citizens enjoy a certain amount of civic comraderie that results from supporting and discussing the team.
I will leave a review of the authors’ methodology to those more qualified than I in such matters, but my sense is that reasoned opponents of publicly-financed stadium deals will not really quibble much with the conclusions contained in this paper. Rather, most economists who oppose publicly-financed stadium deals do so because of the way such deals are pitched, not because they are necessarily critical of the public’s love of their professional sports team.
If proponents of a stadium deal admitted in campaigning for the deal that the economic benefits of the deal were questionable, but that the intangible benefits to the community overrode the financial risk of the deal, then most reasoned opponents of such deals would be satisfied. They might not be persuaded to support the deal on that basis, but at least they would have the comfort that voter assessment of the deal would be based upon an honest presentation of the issues. As it stands now, the presentation of the economic issues in most stadium campaigns is muddled by well-financed and highly questionable assertions of direct economic benefits derived from such deals.
In short, let’s just have truth in advertising in regard to such deals.
Meanwhile, Daniel Akst over at Marginal Revolution also makes an interesting observation about the intangible value of a sports team in relation to the size of a city:

. . . my guess is that the intangible value of an NFL team would be inversely proportionate to the importance of a city. You can’t take the Packers out of Green Bay, but Los Angeles doesn’t seem to mind having no team at all. Then again, maybe it’s just the weather.

Update: Professor Sauer’s typically insightful post is here on the Carlino and Coulson piece, with cites to other resources on the issues relating to public financing of stadiums.

The new Dallas sheriff

Lupe Valdez is a woman, a Hispanic, a Democrat and a lesbian. She is also the new sheriff of Dallas County. Read about here here in this Washington Post profile.

Paying more for pain relief than necessary

Holman W. Jenkins’ WSJ ($) Business World column this week explores how the miplaced incentives of America’s health care finance system contributed to Merck over-marketing — and doctors over-prescribing — Vioxx despite its well known side-effects:

[Vioxx was never supposed to be] a better pain reliever. Its unique selling proposition was simply a lower incidence of stomach bleeding, a real benefit but one mainly relevant to the 15% of arthritis sufferers who can’t safely take conventional pain relievers.
Merck pulled the drug two weeks ago based on a study showing that, after 18 months of daily use, Vioxx subjects began experiencing heart attacks and strokes at twice the rate of a placebo group. Yet, on balance, this might have seemed mildly less alarming than the 2000 study that kicked off the Vioxx controversy. Also done by Merck, it showed that Vioxx users, from day one, suffered two or three times as many cardiovascular “events” as a control group using naproxen (the ingredient in Aleve).
. . . [But] Merck is in hot water now not because Vioxx was excessively risky but because the wrong people were taking it — a problem for which doctors and the insurance system are also to blame.
. . . Marketing alone doesn’t cause patients to shell out $2 for a pill that doesn’t work any better than a five-cent aspirin. Bruce Stuart of the University of Maryland has showed that the biggest determinant of whether a patient takes a Cox-2 or a cheaper drug is whether an insurance company is paying.
Likewise, we’ve heard two schools of complaint from patients since Vioxx was yanked. Some patients are irate at Merck for depriving them of a drug they found genuinely useful, but others are mainly irate at their doctors for never mentioning that Advil or Tylenol work just as well.
The Vioxx debacle is symptomatic of a system that shields consumers from price signals and sometimes actually discourages them from making the right health-care choices. Forget pain relievers. In certain common breast cancers, women opt for expensive, risky, miserable chemotherapy even though it doesn’t significantly improve an already high survival rate. They have a hard time waving it off, though, precisely because an insurer is picking up the tab.
In any case, Big Pharma is well along in being corrupted by third-party payership, just like the rest of the health-care industry. Drug makers increasingly aim their development efforts at the aches, pains, insecurities, heartburn and erectile dysfunction of price-insensitive, over-insured baby boomers because that’s where the money is.

Read the entire piece.