Monthly Archives: January 2008

China Road

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china_road_cover_inside.jpgClear Thinkers favorite James Fallows, who is currently working in China for The Atlantic, posts a recommendation for China Road (Random House 2007), a new book about China by NPR’s long-time China correspondent Rob Gifford. Inasmuch as one of the best books that I read last year was Adrian Goldsworthy’s extraordinary biography of Julius Caesar, Caesar: Life of a Colossus (Yale 2006), one passage from Gifford’s book that Fallows includes in his blog post intrigued me, particularly given the West’s difficulties over the centuries in maintaining normalized political relations with various Chinese governments:

Chairman Mao was just the most recent of a long line of re-unifiers, and if Emperor Qin were to return to China today, he would recognize the mode of government used by the Communist Party. I have to say that I find this idea rather scary, that two thousand years of history might have done nothing to change the political system of a country. Imagine a Europe today where the Roman Empire had never fallen, that still covered an area from England to North Africa and the Middle East and was run by one man based in Rome, backed by a large army. There you have, roughly, ancient and modern China. The fact that this setup has not changed, or been able to change, in two thousand years must also have huge implications for the question Can China ever change its political system.

On ham sandwiches and Texas Supreme Court Justices

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david_medina%20011808.jpgThe old saw is that a grand jury would indict a ham sandwich if asked to do so by the district attorney.
However, in Houston, a grand jury will indict a Texas Supreme Court Justice even if the DA doesn’t ask it to do so.
As noted in this earlier post, Texas Supreme Court Justice David Medina, his wife and several family members have been in the cross-hairs of an arson investigation since their house and a couple of others in the neighborhood were damaged in a June 28, 2007 fire. A Harris County grand jury today indicted Justice Medina on a tampering charge and his wife on arson charges in connection with the fire.
However, in an unusual development (to say the least), the grand jury brought the indictment against the recommendation of the DA’s office. Embattled Harris County District Attorney Chuck Rosenthal will request that the indictment be dismissed immediately because the DA’s office has concluded that there is insufficient evidence to make a case that would withstand a defense motion for a directed verdict.
That’s all well and good, but my question is this: If the DA’s office knew going into the grand jury that they did not have sufficient evidence to make a case against Justice Medina, then why on earth did they bring the case before the grand jury at this time? Inquiring minds want to know.

Is the airline industry salvageable?

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airliner%20011808.jpgThe chronically troubled airline industry has been a frequent topic on this blog over the years. Even as savvy an investor as Warren Buffett swore off investing in the airlines long ago. After a particularly distasteful experience in an airline investment back in the late 1980’s, Buffett observed that if you calculated all of the airline industry’s finances since the day the Wright Brothers flew the first plane at Kitty Hawk in 1903, you would discover that the airline industry has cumulatively not made a single penny of profit.
That led Mr. Buffett to suggest famously that, in hindsight, shooting down the Wright Brothers on that beach would have been a reasonable financial, if not moral, move.
However, Buffett’s observations aside, when Larry Ribstein gets to the point where even he cannot figure out the structure of a solution to the mess of the airline industry, my sense is that this is an industry that is in serious trouble.
By the way, Professor Ribstein’s feelings toward air travel these days are the same as mine.

Sizing up the Texans’ needs

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texans_011808.gifAs At the beginning of the past two football seasons (here and here), I noted the trend of the blogosphere replacing the mainstream media as the more reliable and insightful source of information on the Houston Texans.
Now, as the Chronicle’s Texans beat reporter writes about odd people who call into radio talk shows, Stephanie Stradley and Outlaw (see also here) size up the Texans’ main personnel and coaching needs as the team enters the off-season.
As these posts reflect, the blogosphere is definitely rapping the knuckles of the Chronicle right now in the competition of providing meaningful information to the public about the Texans.

Signs of a dying regulatory scheme

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ncaa-logo%20011708.jpgRegular readers of this blog know that I believe the NCAA’s regulation of big-time college sports is hopelessly corrupt, albeit an entertaining form of corruption (see previous posts here, here, here, here, here, here, here, here, and here).
That entertaining form of corruption is pretty valuable, too, as this Forbes List of the 20 Most Valuable College Basketball Programs reflects. And even at a top range of $25 million, the top basketball programs lag well behind the top football programs in value.
But one can only estimate how much these programs would be worth if they were unleashed from the obsolescent NCAA regulatory scheme. Particularly one that not only deprives its main income-generators from being paid their true value, but would open up an administrative investigation into an alleged regulatory violation involving a 97-year old icon:

Just before the start of this college basketball season, UCLA received a letter of inquiry from the NCAA, seeking information about possible illegal contact between a recruit and a person representing the interests of the university.
The recruit was Kevin Love, now the Bruins’ star freshman center.
The person representing the interests of the university was [legendary 97-year old former UCLA coach] John Wooden.
The NCAA has not disclosed who made the complaint.
Love and his family visited Wooden during his recruiting trip. They had a nice chat, Wooden teased the Loves’ young daughter, Emily, for being so quiet, and a nice time was had by all. [. . .]
. . . The NCAA, apparently shrugging off common sense and going with protocol, procedures and robot-ism, actually wrote a letter of inquiry to UCLA, requiring the school to investigate.

The fascinating “Flea”

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Lindeman-759645.jpgEric Turkewitz interviews Dr. Robert Lindeman, the Boston-based pediatrician who caused quite a stir last year when the Boston Globe broke the story that he was the anonymous blogger nicknamed “Flea” who was blogging a medical malpractice trial while participating as a defendant. One of Dr. Lindeman’s answers even has a Houston twist:

A hypothetical question: You’ve been called for jury duty and the case involves a question of medical malpractice. What will you tell the attorneys during the jury selection process about your ability to sit impartially?
Answer: “I will tell them that Roger Clemens will admit to using performance-enhancing drugs before I will able to sit impartially on a malpractice jury.”

Stoneridge redux

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Stoneridge%20011708.jpgThe blawgosphere’s analysis has been extensive and insightful in regard to the Supreme Court’s important decision Tuesday in Stoneridge Investment Partners v. Scientific-Atlanta (previous posts here), which upheld the Central Bank rule against holding third parties secondarily liable for damages for providing financing to a company that is found to have defrauded its investors. The Point of Law.com blog, which has been a leader in providing a forum for discussion of the issues in the case, provides links to many excellent commentators, including Professors Bainbridge and Ribstein, the latter of whom has this follow-up post to his initial one that is well worth reading.
Although the issues and policy implications involved in Stoneridge are easy to understand for those of us involved in business, it’s interesting how many people who are not involved in business on a day-to-day basis have asked me about the case and why I think it’s so important that the Central Bank rule be upheld. Why shouldn’t the banks that facilitated a company defrauding its investors not have to contribute something into the compensation pot for the investors, they inquire?
I have found that directing the folks asking that question to the practical example presented in this earlier post usually does the trick in explaining why erosion of the Central Bank rule is a manifestly bad idea.

Texas’ best golfer of the moment

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Choi%20011708.jpgThere are only four PGA Tour players who have won a tournament in each of the past four seasons. Three of those four are easy picks — Tiger Woods, Phil Mickelson and Vijay Singh. Who is the fourth?
None other than K.J. Choi of The Woodlands (previous post here), who just won his seventh PGA Tour event in the past eight seasons over the weekend. Choi now has over $17 million in career earnings.
Stu Mulligan over at Waggle Room makes the case that Choi has quietly become one of the elite PGA Tour players even though there is not any area of his game that stands out statistically in comparison to other Tour players. The tortoise still does beat the hare sometimes.

Becker on health care finance reform

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medical%20finance%20011608.jpgGary Becker proposes four common sense reforms for the American health care finance system, one of which is unassailable:

Eliminate the link between employment and the tax advantage of private health insurance. Since much of the spending on health are investments in human capital, there is good reason to exempt these expenditures, along with other investments, from income taxes. However, this employment link is inequitable because it does not provide the same tax advantages to families without employment-based insurance. It also encourages expensive employer health plans that have significant consumption components since the government picks up much of the cost of such coverage.

What’s missing in the tax debate

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income%20taxes.jpgWouldn’t it be nice if at least one of the Presidential candidates would embrace the basic reform that is really needed in the U.S. tax system? Simply simplification. Previous posts on tax simplification issues are here. Interestingly, one of my least favored Presidential candidates — Rudy Giuliani — has the best tax simplification proposal that I’ve seen so far during the campaign.