Friday’s political round-up

November 23, 2007

Today’s shorter-than-usual installment of campaign-related news items that wouldn’t generate a post of their own, but may be of interest to political observers:

* The AP noted today that Rudy Giuliani prefers restaurants to town-hall meetings: “The diner tour lets Giuliani play to his popularity and celebrity. It also lets him avoid tough questions in favor of sandwiches, omelets and fried fare. Giuliani’s restaurant drop-bys are designed largely to get his much-recognized face on local television, especially in early voting states such as Iowa, New Hampshire and South Carolina.”

* Paul Krugman discovered that, during the debate over Sarbanes-Oxley Act, the sweeping corporate governance legislation passed a few years ago, Ron Paul took a firm stand — against accountability. A section of the legislation “requires companies and their auditors to assess the companies’ internal controls, which are the practices or systems for keeping records and preventing abuse or fraud.” Paul targeted the measure, saying accountability controls have “raised the costs of doing business.” Paul is a friend of corporate fraud?

* Mitt Romney’s investment in New Hampshire advertising remains staggering: “Mitt was spending $100,000 a week through October, and he’s now upped the ante to $200,000 a week, according to a report from GraniteProf that the Romney camp has not disputed. He notes that this level of spending translates into some 200 ads per week. It’s yet more confirmation of the extent to which the Romney camp is putting all its chips on big wins in New Hampshire (where he’s widening his lead) and in Iowa (where the race is rapidly tightening) in advance of Rudy’s predicted success on super-primary day, Feb. 5.”

* Despite having led in Iowa consistently for the last six months, Hillary Clinton’s presidential campaign sounds like it’s trying to lower expectations. “Our definition of success doesn’t necessarily mean coming in first,” explains Clinton spokesman Mark Daley. “As long as we have a strong showing on caucus night.” He added that Barack Obama has an added advantage in Iowa because he ran for the Senate in 2004 in a “neighboring state who shares media markets with the state.” Hmm.

…Ron Paul took a firm stand — against accountability.

uh…oh…barrage of pro-Paul comments coming in 5, 4, 3, 2…

And $1 says they’ll defend him by invoking the supreme power of the invisible hand, “the marketplace provides all the accountability that’s necessary for businesses.” blah blah blah.

  • Romney should be considered the front-runner. I don’t see how Guiliani expects to compete after losing in both Iowa and NH. It’ll be Romney and Huckabee as the two candidates emerging from the pile.

  • Invisible hand VS the heavy hand of government.
    What we have right now in this country is the heavy hand of government. We have had it for the last 94 years since 1913. This heavy hand has caused the destruction of many lives. Think about the great depression.

    Sarbanes-Oxley Act significantly increases cost for doing business large or small.
    I am also of the opinion that was a knee-jerk reaction to Enron. Enron was bad business but where in the stock market does it say that you are guaranteed a profit if you invest?

    Should we have regulation on accounting standards? Sure. Should it cost a significant amount of money for small and large business to implement? No.

    On the invisible hand. None of us alive in the US have seen the invisible hand work because we are not old enough. We have nothing to compare to on it. I would much rather give that a try than the crap we have right now that does not work at all.

  • 200 ads per week. At what point do diminishing returns kick in? At what point do tv viewers see the candidate’s face and become angry? I know I would stomp the gekko if I saw it on the sidewalk.

  • Journalist Robert Novak, in his column of April 7, said that, “[f]or more than a year, CEOs and CFOs have been telling me that 404 is a costly nightmare” and “ask nearly any business executive to name the biggest menace facing corporate America, and the answer is apt to be number 404…a dagger aimed at the heart of the economy.”

  • Where is it written that the federal government is responsible for protecting us against corporate incompetence or greed?
    People who work for, invest in or in anyway maintain an association with a corporation should be solely responsible for that.
    What about the other corporations that manage to run a tight ship? Easy says Krugman, throw more bureaucratic regulatory ballast on their ship until their keel cracks from the weight. I would expect nothing less from the “conscience of a liberal”.
    And people wonder why so many corporations flee the US for friendlier ports.
    Keep up the good work guys and thanks for advocating that my hard earned, rapidly depreciating, tax dollars be spent on something that benefits me not!

  • yeah, Paulites, corporate deregulation is working so well in all of the instances it is being tried. like consumer product safety. airlines (don’t even get me started about my travels last week). /aside

    Romney will be the true test of whether the Presidency can be bought. His spending is staggering – more than all of the other R’s combined, more than Clinton, Obama and Edwards combined.

    As for Clinton and lowering Iowa expectations, that is just the sensible thing that all candidates will try and do in the next 6 weeks. The caucus process is rather unpredictable, Edwards came out of nowhere 4 years ago, so everyone knows it is unpredictable, and all of the next-morning headlines will be on who outperformed expectations. Clinton runs a very real risk of having peaked too soon here; early in 2007 she trailed both Edwards and Obama in some polls and in some ways it would have been better for her had the polls continued in that fashion.

  • This nonesense about Ron Paul and Sarbanes Oxley is just that. NONESENSE. That piece of legislation is hideous and has driven a number of US companies overseas. Startup companies now list overwheliming on foreign stock exchanges due to the high cost of the US market. It is utterly insane. It also prevents US investors from investing in certain foreign traded securities which has cost me money personally. Ron Paul has been correct on this issue and many other issues. The author needs to educate himself before blabbering about stuff he is largely ignorant about.

  • Well, I note with joyful abandon that “the comedy of fools” commonly known as the Paulophiles have arrived. You mealy-mouthed mush-heads need an example of what happens when corporations put profit ahead of regulations? Fine.

    One word, Paul poodles: CHINA.

    Lack of controls at the manufacturing end delivers to the shores of this continent such “miniscule” problems as antifreeze-tainted toothpaste, lead-soaked children’s toys, infant clothing made from highly-flammable materials, food additives that contain rat poison—the list goes on and on.

    Let’s visit just one incidence of “domestic” oversight breakdown. Ever hear of a tire named the Firestone 500? An American corporation put profit ahead of their customers, and would have gotten away with it, if it hadn’t been for one teensie-weensie little thing: a Federal agency that took the time to salvage and conduct testing on thousands of individual tires that failed, in-use—with some resulting in fatalities.

    Or is “a few meager deaths here and there” your idea of “the cost of doing business?

    Doofuses….

  • Victor said: “Sarbanes Oxley…has driven a number of US companies overseas…which has cost me money personally…”

    There you go, Victor. Sarbanes Oxley is responsible for US companies going overseas and it’s cost you money. A true Ron Paul supporter.

  • hmm…it only took 35 minutes. Guess the paul-auto-bot-spider is still recovering from Thanksgiving.

    We have nothing to compare to on it. I would much rather give that a try than the crap we have right now that does not work at all.

    Try reading some history. Specifically look at the 1890s-1900s. The invisible hand was pretty much running the show and our country was worse off for it.

    And frankly, I find your assertion that our economy is terrible and has been since 1913 to be laughable. And ignorant. Try looking at the economy since the reforms of the 1930s. Despite some needed regulation and oversight enacted then and a massive diversion of the economy to support WWII, the US ecomony has performed better than any economy in history over the same time period.

    The notion that our “ecomony doesn’t work’ is laughable.

  • Being that a corporation is a totally artificial construct of the government, brought into being though laws and regulations, the least we should ask is that it is regulated in such a way that society is benefitted rather than harmed by its existence. I don’t want to own a dog that would turn on me, and a democracy shouldn’t create institutions through law that cheat and defraud them. Seems pretty simple to me.

  • CNBC is a big critic of Sarbanes-Oxley where Paul Krugman is regular guest. How come Paul Krugman has not declared Larry Kudlow to be an enemy of the people yet?

  • How many of you pro Sarbanes-Oxley folks have any idea what it does or means? How many of you have spent 5 minutes talking to someone who works on SOX (Sarbanes-Oxley) conformance or 30 minute researching it on the internet?

    I have several friends who are involved in SOX conformance, and they all agree it is a nightmare. Large corporations are able to handle it OK, since they already have armies of accountants and lawyers. Medium and especially small companies are hurting big time, many withdrawing from public markets or moving over seas. SOX was poorly written and shoved through for political reasons. Ask any accountant who deals with it. It’s a trash heap of indecipherable regulations with drastic consequences for failure (like the Tax code, only much worse).

    Notice how all the fast new internet companies are focused on being purchased by the big slow ones instead of having an IPO? Thank SOX. SOX has simply resulted in the further centralization of corporate America. If that is something that appeals to you, I understand your support for it. Otherwise, PLEASE do some research on it!

  • Ron Paul supporters,

    Tens of thousands of America’s bravest are suffering brain damage they received in Iraq and Afghanistan, and aren’t even counted in the tally of US troops wounded. CB has a whole post on this, if you care to look.

    But please, continue on with your defense of those poor corporate execs.

    I thought maybe you just might be interested to know that.

  • Paul targeted the measure, saying accountability controls have “raised the costs of doing business.” Paul is a friend of corporate fraud?

    As conclusions go, I wouldn’t necessarily jump quite that far. As an IT minion for a multinational corporation, I’ve witnessed the implementation of Sarbanes-Oxley (SOX) creep far beyond its intended scope of thwarting malfeasance.

    The claim of SOX-compliance has become the weapon of choice when it comes to that great corporate pastime known as Interdepartmental Turf Warfare. Its use normally has far less to do with the potential for fraud and much more to do with the instinct for self-preservation. Department A can’t point-out the deficiencies of Department B (and thus trigger any degree of process-improvement) if Department B shrouds its data/processes behind the veil of SOX-compliance… Department B simply gets to remain a model of inefficiency, and the organization as a whole responds that much less nimbly to changing business conditions.

    Granted I can only speak with regard to one company, but when problems which used to take mere hours to resolve now have to be weighed against the costs associated with weeks/months of navigating mindless SOX-related bureaucracy, it’s hard to see how that wouldn’t equate to increased business costs.

  • 2Manchu, I’m not sure if you’re aware, but Ron Paul’s opposition to the Iraq war and desire for immediate withdrawl is pretty common knowledge. Lesser known is his support for helping veterans, as he considers that one of the valid functions of the Federal Government. You’re kinda preaching to the choir, there.

  • To Steve of post #9:

    You use China as an example of lack of controls by the government; What planet have you been living on? China is a prime example where the state over regulates virtually every aspect of corporate and personal decision making and you point to it as an example for non-regulation. Do you realize that conviction for embezzlement and fraud in China is punishable by death? Let’s see, if Skilling and Fastow (of Enron fame) were convicted under Chinese law they both would have received a bullet to the back of the head instead of the 24 and 6 years they got respectively. Even the most draconian government measures will not prevent corruption by the truly greedy and disingenuous, and neither will SOX.

    With respect to the NHTSA’s investigation of the Firestone 500 in 1978, it is useful to point out that concerns were voiced about the tire as early as 1970 and that Firestone had already recalled some 400,000 tires on their own accord in 1977. Kinda makes one wonder about the overall effectiveness of the role that NHTSA played in the whole affair.

    As for SOX section 404, it does impose a rather significant cost to corporations for compliance, that disproportionally effects smaller companies (see The High Cost of Compliance for a breakdown).

    You shouldn’t resort to name calling while brandishing your own ignorance in public.

  • John,

    Not to sound too critical, but it seems that Ron Paul supporters post almost all their comments on stuff that seems critical of the candidate. I almost never see any of them post comments on Iraq, or on the treatment of troops and veterans.

    Still, I’m glad to see that we have common ground on this important issue.

  • Did someone really bring up deregulation and the airlines? This is the most highly government controlled industry…and see how f***ed up it is! Please tell me you were being sarcastic and are not a complete fool.

  • More federal regulation is rarely the answer to anything. Most corporate law exists on a state level and that is the proper place for it. That gives people the opportunity to pick and choose what kind of law they want for their business. After all, a great deal of the burden of responsibility lies on the investor. Some fraud will occur regardless of how much regulation exists, but it is the responsibility of the investor to investigate his investments, the responsibility of the agents and others in the company who have fiduciary responsibilities to watchdog, and no amount of government will allow those who have such responsibilities to abrogate them safely.

    The economy has not been doing well since 1913 and to the extent that it has been doing well it has been in spite of FDR’s new deal and the Federal Reserve. The dollar is worth approximately 3 cents of its worth in 1913 and we’ve racked up a huge amount of debt. Contrast that with the period known as the Gilded Age where the US enjoyed 4% growth rates with no inflation for a period of over thirty years while on the gold standard. During that period all borrowing was done against savings, unlike today where no one saves and everyone borrows, which means there is no delayed consumption, just inflation, to drive loans.

    Finally, for all the people who seem to be in love with the Sarbanes-Oxley Act, please go and actually read the act. Maybe call an attorney and get him to explain it to you. I doubt you’ll love it quite so much afterwards.

  • Jeff Roark (@ #6) said:

    “Where is it written that the federal government is responsible for protecting us against corporate incompetence or greed?”

    Jeff, that would be in the Constitution of the United States of America. Perhaps you’ve heard of it? Specifically, Article I, Section 8, clause 3.

    Corporations are “persons” created by a governmental entity, usually a state government. Through a series of misguided or corrupt Supreme Court decisions, a gradual expansion of the “rights” of corporations as persons has been taking place from last half of the nineteenth century through the present day. Those of you with libertarian tendencies would probably agree that the rights of natural persons has eroded at the same time, particularly in the last seven years.

    It is incongruous to put natural persons and corporations on equal footing under the law because, by definition, for-profit corporations are amoral entities. The officers and directors of a corporation have a fiduciary duty to maximize shareholder value – period. To do otherwise would violate their contract with the shareholders. The idea of a “socially responsible corporation” therefore is complete nonsense, an oxymoron.

    If you libertarians believe that government has no role to play in regulating the acts of its creatures (who now have rights equal to, or greater than, natural persons), who should do so? Who else even has the power to keep something as large and moneyed as Exxon-Mobil or Wal-Mart (or Enron or WorldCom) within reasonable boundaries?

    I for one would like for the toys I buy at Wal-Mart for my grandkids to be free of lead paint. I would appreciate it if some governmental entity would keep poisons out of what I buy to feed my dog. Greedy corporations won’t do it. (Don’t forget – they are all greedy by definition!) I can’t do it by myself. An organization like Consumers Union (to which I belong) can do something, but it can’t watch everything. Jeff apparently has no grandkids and no dog, so government regulation “benefits him not.” There’s a role for government here, Jeff, although most libertarians like yourself see no role for government anywhere. It’s crazy!

    Sheesh! Libertarians in general, and Ron Paul in particular, are just f***ing nuts!

  • China, Rolland, is a prima facie example of deregulation-for-a-price. Pay an official a nice fat bundle of yuan, and he looks the other way. And if things go south, it’s the same government official who sends the “client” to the firing squad. I don’t recall seeing that happen here.

    That same “official” will blame a million tainted toys on the American company who bought them—because it was the American company who chose to do business with the Chinese manufacturer who screwed up. You call that “regulation?”

    Also, since when did SOX apply to all of these privately-held companies that you Paul-o-whacks claim are leaving the country in droves? It applies to public-held corporations. Try and read the blasted law before you go out and bash it as an example of “over-regulation.”

    Furthermore, it isn’t SOX that’s driving these multinationals overseas—it’s raw profit. A company can manufacture a truckload of toys in China for the price of a week’s worth of groceries here Stateside—and that truckload of toys will sell for more than the price of a new house. That fact has existed for a lot longer than SOX or any other regulatory act ever written on US soil.

    You really need to stop hiding your ineptitude behind shallow ignorance. I can Google the damned law and find several dozen companies that exist—right now—that are in the sole business of walking these public companies you’re so worried about right through SOX—from start to finish. And—it’s a cakewalk, Rolland.

    So sell your hate-the-state crap elsewhere….

  • Oh, and Rolland…about Firestone:

    Firestone tried to build radial tires on bias-ply tirebuilding machines. Trust me—I did my blue-collar teething in Akron’s “gum mines” (tire factories)—look up Mohawk and General. Firestone tried a cheap short-cut that everyone else knew wouldn’t work, and it blew up in their faces. The coverup started right after the tire hit the market in ’71; things fell abart for them so badly that they finally recalled those 400,000 “Decatur-plant tires” in ’77. They tried to blame the defect on labor problems in Decatur. The coverup fell apart in ’78, and the final government-mandated recall came to over 7 million tires.

    Firestone knew they were building a bad tire. They didn’t have a market replacement for the 500—so they kept right on building bad tires.

    And a Paul-o-phile like you thinks that’s okay?

  • Small business owners all over America are standing up and cheering for Ron Paul, now that they know he opposed Sarbanes-Oxley. It’s just one more sign that he has a far better understanding of our economy than any of the other candidates.

  • Doug, doug, doug….
    How many of those “small busines owners” are publicly-held corporations? Or is the “far better understanding” that you’re pushing just another smokescreen for your “Fringe-Churian Candidate?”

  • Libertarians are so adorable when they try to talk economics. You’d almost swear they actually believe none of their hair-brained ideas have ever been tried.

  • Rolland, almost every pro-Paul comment in the blogosphere relating to SOX—including some in this very thread—complains about the exhorbitant cost to “small” companies. How many “small” companies are publicly-held? Even most small/midsized corporations are privately held.

    Also—note that SOX applies solely to publicly-held “corporations”—that excludes all sole-proprietorships and partnerships.

    Again, there is a plethora of accounting firms in existence today that know the complete beginning-to-end operation of SOX, and how a company can be fully compliant. Perhaps it’s just that “all these small companies” have been doing something on the shady side of the business realm—and an outside accounting/auditing firm is “the last thing they need right now….”

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