2016 closes out apparently as the year of death. For many it will be remembered as the year that saw Prince, Princess Leia, and many other royalty of Hollywood and music die. It was the year that aging icons of the Baby Boom generation died and when all the sex, drugs, and rock ‘n’ roll did in many of the Baby Boomers themselves. But another death occurred this year–the death of ethics.
For many 2016 was the year of the death of democracy in the USA and across the world. Yes and no is the answer. For good or bad Brexit and Trump point to the strength of populist of democracy and a sign that main stream politics cannot ignore certain voices. For many, Brexit and Trump are only the tip of an iceberg at something more fundamentally wrong across the world
If one can define ethics to include terms such as justice, fairness, compassion, toleration, dignity, and fair play, ethics to a large extent took a major hit in 2016. It is easy to point globally and in the United States to how Trump unleashed an ugly side of American politics. He may not have caused it but he certainly helped enable, resurrect, and personify the ugly side of America that has been here since the days when we burned women as witches in Salem, Massachusetts in 1692-93. It is that sense of fear and prejudice, ignorance, misogyny, that has always been part of the ugly underside of America that became perhaps mainstream and acceptable again. It reared itself in the sexism confronting Hillary Clinton’s campaign, and of course in Trump’s where his comments about women, immigrants, Muslims, and just about everyone else not WASP failed to doom his campaign but instead seemed to strengthen himself at every juncture. It’s not clear what is worse–what Trump dared to say and got away with it–or the fact for so many they said he had the courage to say what they had been thinking for so long. Trumpism simply captured the underbelly prejudice and a lack of toleration and respect that still existed in our society.
But Trumpism is merely the name for a similar way sweeping the world that features Brexit in the UK, LePen in France, and Orban in Hungary, just to name a few countries. It is about a intolerance for difference, for immigrants, and for outsiders of any shape. But these political movements are also again about the lack of human compassion for the plight of Syrian refugees and others who seek a better life elsewhere. But all of these movements are also about other forms of indifference. In the USA and across much of the world people starve, the gap between the rich and poor grows, and many are marginalized.
In the US we have an opioid addiction problem which is merely a symptom for deeper issues of poverty, yet there seems to be little interest or will in addressing these issues by either party. As some of my Democrat friends say, why should I care about these people, they voted Republican, whereas as some of my Republicans friends say, why should I care about gays, lesbians, the poor, and people of color, they vote Democrat. We cannot agree whether Black Lives Matter, Police Lives Matter, or All Lives Matter. I saw too many people I know take leave of their political and ethical senses, intolerant of political disagreement and basic facts, guilty of confirmation bias and cognitive dissonance. I never knew human misery and compassion wore partisan clothes, but in a polarized world they seem to now.
The death of ethics is also about political ethics. This was the year that the final vestiges of the post-Watergate reforms died. Campaign finance reform and the efforts to limit the impact of money in politics are gone. Obama helped kill it off in 2008 when he opted out of the presidential public financing system and this year neither Clinton nor Trump participated. It was also about the power lack of candor if not sometimes lying by presidential candidates this year where it became clear we have entered a post-truth, post-fact, political world dominated by fake news and by a mainstream news so anxious to survive in a for-profit journalist world that it was willing to cover anything so long as it made a dollar. Both the New York Times and the Wall Street Journal seem shrill in both their editorials and political coverage.
Yes there is a structural component to the collapse of political ethics in terms of how money biases the political system, but it is individualistic too. Trump displays barely a modicum of respect for political ethics. His conflicts of interest test the limits of American politics. For the Democrats, the collusion of Deborah Wasserman-Schultz, the DNC, the state parties, and the Clinton campaign raise questions about fairness. Donna Brazile, working for CNN, leaked debate questions to Clinton, and displayed no remorse for her actions. And in Minnesota, members of the Sports Facilities Authority and their partisan friends and guests were clueless regarding how the allocation of tickets to the new Vikings stadium was wrong. I
If fact, no one seems to want to say that the bad behavior in 2016 was bad behavior. For those who still believe in truth, goodness, and beauty, that facts matter, and that ethics are important, 2016 was an awful year. Ethics seemed as if it were located long time ago in a galaxy far, far away.
One can only hope we learn something from a horrible year and that 2017 is better.
Saturday, December 31, 2016
Saturday, December 17, 2016
Trump’s Conflicts of Interest: The Problem of Securities Fraud and Insider Trading
A ton of ink and air time has been spent speculating on Donald Trump’s conflicts of interest as
president of the United States and how either the law may not address his unique circumstances or how Trump’s refusal to honor ethical precedents is troubling. All of this may be true. But while all this chatter has been going on almost everyone has missed how a recent Supreme Court decision may have dealt a significant below to the Trump presidency with an interpretation of a securities law that goes back to the New Deal–the prohibition on insider trading.
Donald Trump is probably the richest person every elected president of the United States. He has a vast empire of business holdings that cover the world. These holdings could potentially create conflicts of interest for him. Much in the same way that conservatives criticized Hillary Clinton for possible conflicts of interest growing out of her role as Secretary of State and the Clinton Foundation, Trump will face the same as president. He will be able, for example, to appoint members of the National Labor Relations Board (the agency that oversees private sector union rules) or issue executive orders regarding workplace safety issues that could impact his businesses. Or there are issues regarding how his foreign business holdings might influence decisions he renders in international affairs.
Past precedent dating back to Jimmy Carter has been to place one’s business holdings in a blind trust so that the president has no control over his business nor knowledge regarding who is running his affairs. Dating back to Richard Nixon presidents have released tax returns to offer the public a clearer picture of their financial affairs. Neither of these precedents are law–they are good ethical practices that presidents has followed as a matter of good government.
Trump has essentially rejected both practices. He has yet to release his tax returns and has indicated that he will not place his business holdings in a blind trust. At various times his transition team has declared either it will soon address the conflicts of interest issue, but most recently a press conference scheduled to be held on the topic was cancelled. Trump has also said that he might turn over day-to-day decision making of his business to his children, assuming that this would be enough to cover his ethical problems. Unfortunately, that too will be insufficient.
The core of the problem is the powerful risk of insider trading. Back in the 1930s when Congress and President Roosevelt were trying to clean up the mess on Wall Street after the stock market crash in 1928, they passed the Securities Exchange Act of 1934. Among the major provisions of the law was a provision to regulate securities fraud. Section 10(b) of the Securities Exchange Act of 1934 and the Securities and Exchange Commission's Rule 10b–5.
Securities fraud can encompass many practices, but one of them is insider trading. Specifically, it is when those in corporations or businesses in trusted positions trade on information before it becomes public. Classic examples are when officers of a corporation knows that their business is going to have a very good or bad first quarter earnings report and then before telling the public buys or sells stock in their company.
Such insider trading is considered fraud in several ways. One is how it allows some the chance to take advantage of privileged informed before the public can use it–this is an abuse of one’s trust or special position. But it also allows for some individuals to potentially use this information or position to manipulate stocks to their personal advantage. Many of the Enron executives did that back many years ago when they sold stock based on insider information that revealed their company was tanking even though the public did not know that, or when they manipulated balance sheets of the company to facilitate their own personal stock holdings. All this is illegal, a felony security violation.
Part of what is also prohibited under insider trading law is not simply a corporate officer trading on privileged or confidential information, but also passing it on to someone else. Here both the tipper and the tippee may be guilty of insider trading. Various Supreme Court decisions have sought to define what constitutes insider trading and what has to be proved to show guilt, but on December 6, 2016, in Salman v United States, the Supreme Court issued a decision that significantly impacts President Donald Trump, his family, and perhaps many business insiders in his administration.
At issue in this case, Salman was indicted for federal securities fraud for trading on inside information he received from a friend and relative-by-marriage, Michael Kara, who, in turn, received the information from his brother, Maher Kara, a former investment banker at Citigroup. Salman was convicted of securities fraud but argued on appeal that 10b and 10b-5 did not apply to gifts of confidential information and that the law requires the tipper to acquire some material benefit from the tip. The Supreme Court rejected this argument.
Writing for a unanimous Court, Justice Alito declared:
Section 10(b) of the Securities Exchange Act of 1934 and the Securities and Exchange Commission's Rule 10b–5 prohibit undisclosed trading on inside corporate information by individuals who are under a duty of trust and confidence that prohibits them from secretly using such information for their personal advantage...These persons also may not tip inside information to others for trading. The tippee acquires the tipper's duty to disclose or abstain from trading if the tippee knows the information was disclosed in breach of the tipper's duty, and the tippee may commit securities fraud by trading in disregard of that knowledge. In Dirks v. SEC, this Court explained that a tippee's liability for trading on inside information hinges on whether the tipper breached a fiduciary duty by disclosing the information. A tipper breaches such a fiduciary duty, we held, when the tipper discloses the inside information for a personal benefit. And, we went on to say, a jury can infer a personal benefit—and thus a breach of the tipper's duty—where the tipper receives something of value in exchange for the tip or “makes a gift of confidential information to a trading relative or friend.”
The critical holding in Salman is that liability for insider trading can be established through simply giving te gift of confidential information to a friend, family, member, or others. The gift alone may be enough to establish liability for both the tipper and tippee. According to Alito:
[A] tipper breaches a fiduciary duty by making a gift of confidential information to “a trading relative,” and that rule is sufficient to resolve the case at hand. As Salman's counsel acknowledged at oral argument, Maher would have breached his duty had he personally traded on the information here himself then given the proceeds as a gift to his brother. It is obvious that Maher would personally benefit in that situation. But Maher effectively achieved the same result by disclosing the information to Michael, and allowing him to trade on it.
Salman in many ways builds upon a 1997 decision United States v. O’Hagen where the Supreme Court articulated the “misappropriation theory” for securities fraud. Under this theory it is still insider trading if a person trades in securities for personal profit using material, confidential information without disclosing such use to source of information. In addition, the 2012 STOCK Act, which made it illegal insider trading for members of Congress to use confidential information to trade on stock, arguably if not definitely applies to members of the executive branch, including the president.
So how does all this apply to Trump? Lacking a blind trust for his business holdings and where his children or he are still closely involved in the running of his business empire, use of any confidential information for business purposes could be a form of insider trading prohibited under 10b and 10b-5. For example, President Trump passes on information about imposing a tariff on a company contemplating shifting jobs overseas. He or his family now have this information which they then use to buy or sells stock in that company or otherwise use in ways to make securities trades. Once this government information is given to a corporate officer it becomes insider information and any trading on it before it is made public would be insider trading, securities fraud.
O’Hagen and Salman give the government broad leeway to prosecute for securities fraud when individuals–both tippers and tippees–use confidential information that they have for personal benefit. And just as important, under a series of other Supreme Court decisions private parties are not barred from bringing suits raising securities fraud in some cases. Thus, even it one worries that a Trump Justice Department would not prosecute or investigate the president or his family, other private parties are not barred from bringing legal challenges.
Trump, his family, and his network of business holdings implicate many traps for insider trading. The same is true for his rich friends he is appointing to many of his cabinet and other positions. The conflicts of interest that may ensue raise not just ethical issues but significant securities fraud issues that could create numerous criminal and civil problems.
president of the United States and how either the law may not address his unique circumstances or how Trump’s refusal to honor ethical precedents is troubling. All of this may be true. But while all this chatter has been going on almost everyone has missed how a recent Supreme Court decision may have dealt a significant below to the Trump presidency with an interpretation of a securities law that goes back to the New Deal–the prohibition on insider trading.
Donald Trump is probably the richest person every elected president of the United States. He has a vast empire of business holdings that cover the world. These holdings could potentially create conflicts of interest for him. Much in the same way that conservatives criticized Hillary Clinton for possible conflicts of interest growing out of her role as Secretary of State and the Clinton Foundation, Trump will face the same as president. He will be able, for example, to appoint members of the National Labor Relations Board (the agency that oversees private sector union rules) or issue executive orders regarding workplace safety issues that could impact his businesses. Or there are issues regarding how his foreign business holdings might influence decisions he renders in international affairs.
Past precedent dating back to Jimmy Carter has been to place one’s business holdings in a blind trust so that the president has no control over his business nor knowledge regarding who is running his affairs. Dating back to Richard Nixon presidents have released tax returns to offer the public a clearer picture of their financial affairs. Neither of these precedents are law–they are good ethical practices that presidents has followed as a matter of good government.
Trump has essentially rejected both practices. He has yet to release his tax returns and has indicated that he will not place his business holdings in a blind trust. At various times his transition team has declared either it will soon address the conflicts of interest issue, but most recently a press conference scheduled to be held on the topic was cancelled. Trump has also said that he might turn over day-to-day decision making of his business to his children, assuming that this would be enough to cover his ethical problems. Unfortunately, that too will be insufficient.
The core of the problem is the powerful risk of insider trading. Back in the 1930s when Congress and President Roosevelt were trying to clean up the mess on Wall Street after the stock market crash in 1928, they passed the Securities Exchange Act of 1934. Among the major provisions of the law was a provision to regulate securities fraud. Section 10(b) of the Securities Exchange Act of 1934 and the Securities and Exchange Commission's Rule 10b–5.
Securities fraud can encompass many practices, but one of them is insider trading. Specifically, it is when those in corporations or businesses in trusted positions trade on information before it becomes public. Classic examples are when officers of a corporation knows that their business is going to have a very good or bad first quarter earnings report and then before telling the public buys or sells stock in their company.
Such insider trading is considered fraud in several ways. One is how it allows some the chance to take advantage of privileged informed before the public can use it–this is an abuse of one’s trust or special position. But it also allows for some individuals to potentially use this information or position to manipulate stocks to their personal advantage. Many of the Enron executives did that back many years ago when they sold stock based on insider information that revealed their company was tanking even though the public did not know that, or when they manipulated balance sheets of the company to facilitate their own personal stock holdings. All this is illegal, a felony security violation.
Part of what is also prohibited under insider trading law is not simply a corporate officer trading on privileged or confidential information, but also passing it on to someone else. Here both the tipper and the tippee may be guilty of insider trading. Various Supreme Court decisions have sought to define what constitutes insider trading and what has to be proved to show guilt, but on December 6, 2016, in Salman v United States, the Supreme Court issued a decision that significantly impacts President Donald Trump, his family, and perhaps many business insiders in his administration.
At issue in this case, Salman was indicted for federal securities fraud for trading on inside information he received from a friend and relative-by-marriage, Michael Kara, who, in turn, received the information from his brother, Maher Kara, a former investment banker at Citigroup. Salman was convicted of securities fraud but argued on appeal that 10b and 10b-5 did not apply to gifts of confidential information and that the law requires the tipper to acquire some material benefit from the tip. The Supreme Court rejected this argument.
Writing for a unanimous Court, Justice Alito declared:
Section 10(b) of the Securities Exchange Act of 1934 and the Securities and Exchange Commission's Rule 10b–5 prohibit undisclosed trading on inside corporate information by individuals who are under a duty of trust and confidence that prohibits them from secretly using such information for their personal advantage...These persons also may not tip inside information to others for trading. The tippee acquires the tipper's duty to disclose or abstain from trading if the tippee knows the information was disclosed in breach of the tipper's duty, and the tippee may commit securities fraud by trading in disregard of that knowledge. In Dirks v. SEC, this Court explained that a tippee's liability for trading on inside information hinges on whether the tipper breached a fiduciary duty by disclosing the information. A tipper breaches such a fiduciary duty, we held, when the tipper discloses the inside information for a personal benefit. And, we went on to say, a jury can infer a personal benefit—and thus a breach of the tipper's duty—where the tipper receives something of value in exchange for the tip or “makes a gift of confidential information to a trading relative or friend.”
The critical holding in Salman is that liability for insider trading can be established through simply giving te gift of confidential information to a friend, family, member, or others. The gift alone may be enough to establish liability for both the tipper and tippee. According to Alito:
[A] tipper breaches a fiduciary duty by making a gift of confidential information to “a trading relative,” and that rule is sufficient to resolve the case at hand. As Salman's counsel acknowledged at oral argument, Maher would have breached his duty had he personally traded on the information here himself then given the proceeds as a gift to his brother. It is obvious that Maher would personally benefit in that situation. But Maher effectively achieved the same result by disclosing the information to Michael, and allowing him to trade on it.
Salman in many ways builds upon a 1997 decision United States v. O’Hagen where the Supreme Court articulated the “misappropriation theory” for securities fraud. Under this theory it is still insider trading if a person trades in securities for personal profit using material, confidential information without disclosing such use to source of information. In addition, the 2012 STOCK Act, which made it illegal insider trading for members of Congress to use confidential information to trade on stock, arguably if not definitely applies to members of the executive branch, including the president.
So how does all this apply to Trump? Lacking a blind trust for his business holdings and where his children or he are still closely involved in the running of his business empire, use of any confidential information for business purposes could be a form of insider trading prohibited under 10b and 10b-5. For example, President Trump passes on information about imposing a tariff on a company contemplating shifting jobs overseas. He or his family now have this information which they then use to buy or sells stock in that company or otherwise use in ways to make securities trades. Once this government information is given to a corporate officer it becomes insider information and any trading on it before it is made public would be insider trading, securities fraud.
O’Hagen and Salman give the government broad leeway to prosecute for securities fraud when individuals–both tippers and tippees–use confidential information that they have for personal benefit. And just as important, under a series of other Supreme Court decisions private parties are not barred from bringing suits raising securities fraud in some cases. Thus, even it one worries that a Trump Justice Department would not prosecute or investigate the president or his family, other private parties are not barred from bringing legal challenges.
Trump, his family, and his network of business holdings implicate many traps for insider trading. The same is true for his rich friends he is appointing to many of his cabinet and other positions. The conflicts of interest that may ensue raise not just ethical issues but significant securities fraud issues that could create numerous criminal and civil problems.
Saturday, December 10, 2016
Civil Rights in a Trump Era: Why Telescope Media Should Not Win In Minnesota
The latest battle line for LGBTQ rights in Minnesota is over wedding pictures and movies and it is
being fought between Telescope Media Group and the State Human Rights Department Telescope is a business claiming a First Amendment free speech or free exercise of religion in its refusal to serve same-sex couples. Telescope should lose because no business has a First Amendment right to discriminate against individuals. Freedom of speech and religion grant you as an individual a right to believe what you want, but it does not give a business a right to discriminate.
Recently owners of the Telescope Media Group did an op-ed in the Star Tribune telling their story as a Christian-based business wanting to tell stories about traditional marriages between one man and one woman. They claim that the Human Rights Department is forcing them to also promote same-sex marriages, drawing an analogy to a government which would have told Alfred Hitchcock to make musicals and not suspense stories. This analogy is inapt. But to understand why, one needs to be clear about the structure of the First Amendment and civil rights law.
First remember that the First Amendment originally applied and only limited the federal government but over time it too now limits state and local governments. What does this mean? The First Amendment is a limit on the government–the government may not abridge or limit freedom of speech or religion. Private individuals and businesses are free to do what they want. If you choose in your private life–as too many people do–to only associate with those who think the same way as you or who hold the same beliefs as you–that is your right. No government in the US can tell you who you can invite to your house or tell what books to read or websites to visit. Conversely, private businesses can do what they want. The First Amendment does not apply to Facebook, a private business. It can censor whatever it wants and it is free to do so because it is a private business and the government cannot tell it what content to carry. In addition, your private employer can fire you because it does not endorse or support your political views. Private schools and colleges can impose speech codes. Overall, we are free to think or believe what we want, including in our artistic expression, and private entities have a similar right.
Second, until the passage of the 1964 Civil Rights Act private businesses were allowed to discriminate in whom they employed or served. Yes the Fourteenth Amendment Equal Protection clause prohibited discrimination, but again it only applied to the government. The 1964 Civil Rights Act made it illegal for businesses engaged in interstate commerce (the term actually used is “public accommodations” to discriminate in their employment and customer service policies. The Act was upheld as constitutional by the US Supreme Court and its constitutionality validity is not in doubt.
Yet the 1964 Civil Rights Act has three important exemptions for our purposes here. First, there is an artistic exemption. By that, the law says that if in filming a movie about racial discrimination it wanted to employ white only actors it could do so. This is among a category of exemptions known as a bonifide occupational requirement. Second, and closely related to BFOQs, religious organizations receive an exemption too on some matters. By that, the Catholic Church is allowed to stipulate that in the hiring of a priest he must be Roman Catholic and, for good or bad, he must be a he. You cannot sue the Church for gender discrimination for refusing to hire a female priest. Third, the original 1964 Act covers sex discrimination but not discrimination based on sexual preference or identity. To this day the Act still does not cover this type of discrimination, even though the Minnesota Human Rights Act does prohibit this type of discrimination.
The Supreme Court’s 2015 Obergefell v. Hodges decision legalizing same-sex marriage addressed one form of discrimination which involved government action but it did not address other issues of civil rights involving businesses. Absent state laws otherwise prohibiting it, federal law still does not make it illegal to discriminate against members of the LGBTQ community in areas of housing, employment, or customer service. Soon after Obergefell one saw a rash of “wedding cake” controversies, businesses claiming a religious exemption from having to bake wedding cakes for same-sex couples. It also encouraged states like North Carolina to pass bathroom laws targeted against transgender individuals. Telescope Media’s case is a variant of these cases, except adding to it an apparent artistic creativity or perhaps freedom of association claim. There are several flaws legally and even ethically with this claim.
Back in the 1980s the Minnesota Jaycees wanted to admit women to their organization in defiance of the national Jaycees which opposed it. The State of Minnesota sided with the Minnesota chapter, invoking the State Human Rights Amendment which banned se discrimination. The national Jaycees argued that forcing them to accept women would violate their right to freedom of association and expression. In Roberts v. United States Jaycees, 468 U.S. 609 (1984), the Supreme Court rejected that claim and upheld the Minnesota Human Rights Law. This case alone ought to settle the dispute here, but for Boy Scouts of America et al. v. Dale, 530 U.S. 640 (2000). In Dale a closely divided Supreme Court permitted the Scouts to ban gays from their organization by arguing that the Scouts had a protected expressive message against homosexuality that was core to the identity of their organization and that to then allow for a gay scout master would force it to endorse a message it did not support. The logic of Dale is what is also behind Hobby Lobby and its refusal to provide birth control coverage to women, and it is a similar logic behind Telescope Media’s arguments.
Some careful distinctions must be made. There is a difference between artistic expression and conducting a business that serves the public. Telescope Media is trying to hide its discrimination behind the former. If it wants to make bigoted anti-same sex marriage movies it may do so. No one can or should tell them they have to do that. But if they are operating a business they do not have a right to refuse to serve someone based on their gender preference or orientation. Allowing a private business to invoke religious or artistic expression as an exemption to anti-discrimination law is not about being politically correct, it is about promoting a fair and just society. It is creating a level playing field for all. Telescope Media’s arguments taken to their logical terminus allows them a free pass to discriminate against serving mixed racial or mixed religious couples (Perhaps in their view Jesus would have opposed a Catholic marrying a Jew).
Moreover, reliance on Dale is not good. First, Dale is a much disputed legal precedent that some equate to the same anti-gay animus found in the 1986 Bowers v Hardwick decision which declared consensual adult same-sex sexual activity as not protected under a right to privacy. That decision was repudiated and overtured in the 2003 Lawrence v. Texas. Additionally, Dale seemed to blur the line between religious (churches or temples) and non-church entities. Many already think that religious organizations are given too much freedom to discriminate in ways that violate the Establishment Clause. Allowing Telescope Media to prevail opens up a bad precedent in simply letting any business to invoke a religious claim as a way around anti-discrimination law. This is what the flaw in the Hobby Lobby decision was, and the viability of that precedent too is questionable.
The concern of course in a political and legal world defined by a Trump presidency Telescope Media might prevail. It could but should not. The current anti-discrimination law is well grounded and would not be easily dismantled or overturned. But the fact that this is even entertained is a product an era that the Trump presidency may be ushering in. One where equal protection under the law are viewed is as political correctness and not as w hat is demanded in a society that respects fairness, justice, and civility. People legitimately voted for Trump for many reasons that should be respected. But what one hopes is that it was not an endorsement for a return to bigoted behavior where people felt like they can say the must hurtful things they wanted to one another, or that businesses can hide their prejudice by invoking claims of artistic or religious expression.
being fought between Telescope Media Group and the State Human Rights Department Telescope is a business claiming a First Amendment free speech or free exercise of religion in its refusal to serve same-sex couples. Telescope should lose because no business has a First Amendment right to discriminate against individuals. Freedom of speech and religion grant you as an individual a right to believe what you want, but it does not give a business a right to discriminate.
Recently owners of the Telescope Media Group did an op-ed in the Star Tribune telling their story as a Christian-based business wanting to tell stories about traditional marriages between one man and one woman. They claim that the Human Rights Department is forcing them to also promote same-sex marriages, drawing an analogy to a government which would have told Alfred Hitchcock to make musicals and not suspense stories. This analogy is inapt. But to understand why, one needs to be clear about the structure of the First Amendment and civil rights law.
First remember that the First Amendment originally applied and only limited the federal government but over time it too now limits state and local governments. What does this mean? The First Amendment is a limit on the government–the government may not abridge or limit freedom of speech or religion. Private individuals and businesses are free to do what they want. If you choose in your private life–as too many people do–to only associate with those who think the same way as you or who hold the same beliefs as you–that is your right. No government in the US can tell you who you can invite to your house or tell what books to read or websites to visit. Conversely, private businesses can do what they want. The First Amendment does not apply to Facebook, a private business. It can censor whatever it wants and it is free to do so because it is a private business and the government cannot tell it what content to carry. In addition, your private employer can fire you because it does not endorse or support your political views. Private schools and colleges can impose speech codes. Overall, we are free to think or believe what we want, including in our artistic expression, and private entities have a similar right.
Second, until the passage of the 1964 Civil Rights Act private businesses were allowed to discriminate in whom they employed or served. Yes the Fourteenth Amendment Equal Protection clause prohibited discrimination, but again it only applied to the government. The 1964 Civil Rights Act made it illegal for businesses engaged in interstate commerce (the term actually used is “public accommodations” to discriminate in their employment and customer service policies. The Act was upheld as constitutional by the US Supreme Court and its constitutionality validity is not in doubt.
Yet the 1964 Civil Rights Act has three important exemptions for our purposes here. First, there is an artistic exemption. By that, the law says that if in filming a movie about racial discrimination it wanted to employ white only actors it could do so. This is among a category of exemptions known as a bonifide occupational requirement. Second, and closely related to BFOQs, religious organizations receive an exemption too on some matters. By that, the Catholic Church is allowed to stipulate that in the hiring of a priest he must be Roman Catholic and, for good or bad, he must be a he. You cannot sue the Church for gender discrimination for refusing to hire a female priest. Third, the original 1964 Act covers sex discrimination but not discrimination based on sexual preference or identity. To this day the Act still does not cover this type of discrimination, even though the Minnesota Human Rights Act does prohibit this type of discrimination.
The Supreme Court’s 2015 Obergefell v. Hodges decision legalizing same-sex marriage addressed one form of discrimination which involved government action but it did not address other issues of civil rights involving businesses. Absent state laws otherwise prohibiting it, federal law still does not make it illegal to discriminate against members of the LGBTQ community in areas of housing, employment, or customer service. Soon after Obergefell one saw a rash of “wedding cake” controversies, businesses claiming a religious exemption from having to bake wedding cakes for same-sex couples. It also encouraged states like North Carolina to pass bathroom laws targeted against transgender individuals. Telescope Media’s case is a variant of these cases, except adding to it an apparent artistic creativity or perhaps freedom of association claim. There are several flaws legally and even ethically with this claim.
Back in the 1980s the Minnesota Jaycees wanted to admit women to their organization in defiance of the national Jaycees which opposed it. The State of Minnesota sided with the Minnesota chapter, invoking the State Human Rights Amendment which banned se discrimination. The national Jaycees argued that forcing them to accept women would violate their right to freedom of association and expression. In Roberts v. United States Jaycees, 468 U.S. 609 (1984), the Supreme Court rejected that claim and upheld the Minnesota Human Rights Law. This case alone ought to settle the dispute here, but for Boy Scouts of America et al. v. Dale, 530 U.S. 640 (2000). In Dale a closely divided Supreme Court permitted the Scouts to ban gays from their organization by arguing that the Scouts had a protected expressive message against homosexuality that was core to the identity of their organization and that to then allow for a gay scout master would force it to endorse a message it did not support. The logic of Dale is what is also behind Hobby Lobby and its refusal to provide birth control coverage to women, and it is a similar logic behind Telescope Media’s arguments.
Some careful distinctions must be made. There is a difference between artistic expression and conducting a business that serves the public. Telescope Media is trying to hide its discrimination behind the former. If it wants to make bigoted anti-same sex marriage movies it may do so. No one can or should tell them they have to do that. But if they are operating a business they do not have a right to refuse to serve someone based on their gender preference or orientation. Allowing a private business to invoke religious or artistic expression as an exemption to anti-discrimination law is not about being politically correct, it is about promoting a fair and just society. It is creating a level playing field for all. Telescope Media’s arguments taken to their logical terminus allows them a free pass to discriminate against serving mixed racial or mixed religious couples (Perhaps in their view Jesus would have opposed a Catholic marrying a Jew).
Moreover, reliance on Dale is not good. First, Dale is a much disputed legal precedent that some equate to the same anti-gay animus found in the 1986 Bowers v Hardwick decision which declared consensual adult same-sex sexual activity as not protected under a right to privacy. That decision was repudiated and overtured in the 2003 Lawrence v. Texas. Additionally, Dale seemed to blur the line between religious (churches or temples) and non-church entities. Many already think that religious organizations are given too much freedom to discriminate in ways that violate the Establishment Clause. Allowing Telescope Media to prevail opens up a bad precedent in simply letting any business to invoke a religious claim as a way around anti-discrimination law. This is what the flaw in the Hobby Lobby decision was, and the viability of that precedent too is questionable.
The concern of course in a political and legal world defined by a Trump presidency Telescope Media might prevail. It could but should not. The current anti-discrimination law is well grounded and would not be easily dismantled or overturned. But the fact that this is even entertained is a product an era that the Trump presidency may be ushering in. One where equal protection under the law are viewed is as political correctness and not as w hat is demanded in a society that respects fairness, justice, and civility. People legitimately voted for Trump for many reasons that should be respected. But what one hopes is that it was not an endorsement for a return to bigoted behavior where people felt like they can say the must hurtful things they wanted to one another, or that businesses can hide their prejudice by invoking claims of artistic or religious expression.
Sunday, December 4, 2016
Lessons Learned or Not from the 2016 Election
Perhaps the only thing more dreary and misinformed than the commentaries and emoting leading up
to the 2016 election are the commentaries and emoting that have taken place since. It has been approximately one month since November 8, I have given more than a dozen talks to various groups about the election and have listened to more than my fair share of partisan analysis and general emoting about what happened. Nate Silver once did a book discussing the need to separate the signal from the noise if we want to make good predictions. What are some of the lessons learned or not since then? In effect, what was and is still now the signal and noise regarding the election?
The Pollsters did not blow it. Everyone wants to argue that the pollsters blew the election. No, they did not. The last national aggregate polls said Clinton had about a 2-3 point lead in the national popular vote. Guess what? The near final vote totals are showing her with a 2 or so point lead in the national popular vote. But remember two things about polls. First, polls are never pin-point accurate and will be expressed in terms of margins of error of +/- three or so points. Clinton was within that margin or error. Second, and more importantly, as I have repeatedly told people, national aggregate polls are worthless when it comes to presidential elections because we do not elect people by the popular vote–it is the electoral college that matters. What was more critical to examine were the tracking polls in critical swing states and there we saw clear evidence in the last 72 hours or so that the undecided voters were tracking toward Trump.
But the pundits did blow it. The NY Times at one point gave Clinton nearly a 92% chance of victory and Nate Silver had it up to the high 70s or 80s. Almost every major media pundit and outlet was convinced Clinton would win and simply could not see how she could lose to Trump. ( For the record, I generally placed Clinton’s chances most of the election at about 55% but consistently saw many reasons why Trump would win and apparently I have been told by many people who attended many of my talks in the last year said that I predicted Trump would win). There are many reasons why they blew it, much having to do with the intellectual or cultural bubbles they lived in, laziness, or again accepting the same received wisdom of 2008 that said that Clinton was inevitable.
This election was typical in many ways. In many ways this was a normal election that came down to some fundamentals and basics. It was an election that was decided by a handful of swing voters n a few swing counties in a few swing states. These were the same states I wrote about in my book, plus Pennsylvania and Michigan. No surprises here. In addition, elections come down to candidates and their narratives–Clinton lacked a clear and consistent reason to why she should be president, Trump had a narrative. Despite all the hand wringing and speculation of a divided Republican Party, Trump did a better job mobilizing the GOP base and holding it than did Clinton. Trump moved more of the swings in the critical swing states. And true to form as with the most recent elections, it was a polarized election that was very close. Finally, Tip O’Neill once said never assume people will vote for you–everyone wants to be asked. Clinton lost in Michigan and Wisconsin because she did not campaign there ask for votes, Trump did. The same almost happened in Minnesota.
The election was atypical in many ways. There were many ways this was an unusual election. First both candidates were tremendously unpopular and that created volatility among some in the electorate undecided regarding whether to vote and for whom. Perversely, both candidates did better in the polls when they did not talk or were not covered by the media. Second, this was the first presidential campaign in American history with a major party candidate featuring a woman. Before the election I estimated that approximately 30% of the electoral would never vote for a woman regardless of who she was. My point was that sexism was a central problem in this election that most pundits and people largely ignored. It played out in terms the preoccupation with Clinton’s pantsuits, speech patterns, demeanor, and Trump’s language, both verbal and body during the debates and campaign season. Other factors that made the election unique were how the Democrats seem to have largely lost working class voters, the impact of the FBI director Comey letter, and the near complete void in terms of issues as a factor in the race. We should also not forget about the transformation of the made for television election and presidency into the made for social media election and presidency. Finally, we should not ignore the important role fake news played and how bots and trolls potentially drove much of the election in the social media.
Politainment lives! I have written extensively about the rise of politainment, or the convergence of the politics and entertainment (and pop culture) where candidates who master the art of generating clicks and views in a 24/7 for profit media cycle will do well. Trump understood this, Clinton did not. The mainstream media was so heavily dependent on Trump for dollars and viewers that it could never figure out how to cover him. The same is true post-election. Trump essentially owns the news establishment, preventing the media from being able to cover him in any way that is objective or reasonable.
But even beyond the aforementioned themes, there are several post-election reactions or statements that need to be addressed.
Trump will be the president. Barring the unforeseen Trump will be president. A lot of people are saying that “Trump is not my president.” Like it or not he is. Some see him as a sexist pig or worse and cannot believe Clinton lost to him. The reality is she did lose the electoral college to him. Moreover, yes the sexism in our culture stinks and one can complain about it forever but that sexism is a reality and female candidates unfortunately have to learn how to campaign facing it.
Don’t blame the voters. I have seen way too many articles or people blame Millennials, or third party voters, or women, or others for why Clinton lost. Stop blaming the voters! The fault is with Clinton. Ralph Nader once said that no one owns a voter and as Tip O’Neill said, you have to ask and earn votes. Clinton was not entitled to anyone’s vote and she had to earn it. If people did not vote for her the fault rests with her so blame her and her campaign instead.
Demographics is not Destiny. This was the Democratic Party mantra and Clinton strategy leading into this campaign. Demographics matter but so does candidate quality and message. Moreover, in many ways demographics did matter in this election–white working class are still a majority of the electorate and they still matter and they show up to vote. Oh, and the electoral college still matters.
The election was not rigged. There is little evidence to support this a currently understood. We do not have much information regarding voter suppression yet. There is little evidence of Russian hacking or the general hackability of US elections. Moreover, there is no evidence that millions of illegal votes, especially in patterns that would have only voted for Clinton. No party has a monopoly on virtue and there is also no reason to think that the paltry cheating that occurred took place to the benefit of one party or candidate alone. If we are talking about rigging in terms of the role of money in politics, election rules that hurt third party candidates, and the media bias, then yes it may have been rigged.
This may or may not have been a critical election. There is some evidence that traditional voting patterns shifted in this election but it is not clear how much and how permanent. The best explanatory variable predicting election returns this year seems to be educational level. Areas on balance with people with more college degrees voted for Clinton and Democrats. No this does not mean stupid people voted for Trump. It instead suggests a new cultural divide that needs to be understood better in terms of how American elections move forward.
There are no tanks in the streets. Calm down everyone. Yes the campaign was awful in tone and we saw an unleashing of a lot of bigotry. Yet it started way before Trump and he may simply be the face of a new ugly era already emerging in politics. Stories from the Southern Poverty Law Center report hundreds of hate incidents since the election but we have no idea how this fits into an existing trend line or in comparison to comparable recent periods. There is constant hysteria about what will or will not happen with Trump as president. Calm down. For the same reason that the rigidity and stability of our political institutions (checks and balances, separation of powers, bicameralism, and federalism) make political change difficult, the same will also prevent any excesses over the next four years. We should also simply ignore or shrugged off (as David Brooks recently said) the most recent tweets of Trump.
Overall, understand there is a lot of noise out there. Ignore most of it.
to the 2016 election are the commentaries and emoting that have taken place since. It has been approximately one month since November 8, I have given more than a dozen talks to various groups about the election and have listened to more than my fair share of partisan analysis and general emoting about what happened. Nate Silver once did a book discussing the need to separate the signal from the noise if we want to make good predictions. What are some of the lessons learned or not since then? In effect, what was and is still now the signal and noise regarding the election?
The Pollsters did not blow it. Everyone wants to argue that the pollsters blew the election. No, they did not. The last national aggregate polls said Clinton had about a 2-3 point lead in the national popular vote. Guess what? The near final vote totals are showing her with a 2 or so point lead in the national popular vote. But remember two things about polls. First, polls are never pin-point accurate and will be expressed in terms of margins of error of +/- three or so points. Clinton was within that margin or error. Second, and more importantly, as I have repeatedly told people, national aggregate polls are worthless when it comes to presidential elections because we do not elect people by the popular vote–it is the electoral college that matters. What was more critical to examine were the tracking polls in critical swing states and there we saw clear evidence in the last 72 hours or so that the undecided voters were tracking toward Trump.
But the pundits did blow it. The NY Times at one point gave Clinton nearly a 92% chance of victory and Nate Silver had it up to the high 70s or 80s. Almost every major media pundit and outlet was convinced Clinton would win and simply could not see how she could lose to Trump. ( For the record, I generally placed Clinton’s chances most of the election at about 55% but consistently saw many reasons why Trump would win and apparently I have been told by many people who attended many of my talks in the last year said that I predicted Trump would win). There are many reasons why they blew it, much having to do with the intellectual or cultural bubbles they lived in, laziness, or again accepting the same received wisdom of 2008 that said that Clinton was inevitable.
This election was typical in many ways. In many ways this was a normal election that came down to some fundamentals and basics. It was an election that was decided by a handful of swing voters n a few swing counties in a few swing states. These were the same states I wrote about in my book, plus Pennsylvania and Michigan. No surprises here. In addition, elections come down to candidates and their narratives–Clinton lacked a clear and consistent reason to why she should be president, Trump had a narrative. Despite all the hand wringing and speculation of a divided Republican Party, Trump did a better job mobilizing the GOP base and holding it than did Clinton. Trump moved more of the swings in the critical swing states. And true to form as with the most recent elections, it was a polarized election that was very close. Finally, Tip O’Neill once said never assume people will vote for you–everyone wants to be asked. Clinton lost in Michigan and Wisconsin because she did not campaign there ask for votes, Trump did. The same almost happened in Minnesota.
The election was atypical in many ways. There were many ways this was an unusual election. First both candidates were tremendously unpopular and that created volatility among some in the electorate undecided regarding whether to vote and for whom. Perversely, both candidates did better in the polls when they did not talk or were not covered by the media. Second, this was the first presidential campaign in American history with a major party candidate featuring a woman. Before the election I estimated that approximately 30% of the electoral would never vote for a woman regardless of who she was. My point was that sexism was a central problem in this election that most pundits and people largely ignored. It played out in terms the preoccupation with Clinton’s pantsuits, speech patterns, demeanor, and Trump’s language, both verbal and body during the debates and campaign season. Other factors that made the election unique were how the Democrats seem to have largely lost working class voters, the impact of the FBI director Comey letter, and the near complete void in terms of issues as a factor in the race. We should also not forget about the transformation of the made for television election and presidency into the made for social media election and presidency. Finally, we should not ignore the important role fake news played and how bots and trolls potentially drove much of the election in the social media.
Politainment lives! I have written extensively about the rise of politainment, or the convergence of the politics and entertainment (and pop culture) where candidates who master the art of generating clicks and views in a 24/7 for profit media cycle will do well. Trump understood this, Clinton did not. The mainstream media was so heavily dependent on Trump for dollars and viewers that it could never figure out how to cover him. The same is true post-election. Trump essentially owns the news establishment, preventing the media from being able to cover him in any way that is objective or reasonable.
But even beyond the aforementioned themes, there are several post-election reactions or statements that need to be addressed.
Trump will be the president. Barring the unforeseen Trump will be president. A lot of people are saying that “Trump is not my president.” Like it or not he is. Some see him as a sexist pig or worse and cannot believe Clinton lost to him. The reality is she did lose the electoral college to him. Moreover, yes the sexism in our culture stinks and one can complain about it forever but that sexism is a reality and female candidates unfortunately have to learn how to campaign facing it.
Don’t blame the voters. I have seen way too many articles or people blame Millennials, or third party voters, or women, or others for why Clinton lost. Stop blaming the voters! The fault is with Clinton. Ralph Nader once said that no one owns a voter and as Tip O’Neill said, you have to ask and earn votes. Clinton was not entitled to anyone’s vote and she had to earn it. If people did not vote for her the fault rests with her so blame her and her campaign instead.
Demographics is not Destiny. This was the Democratic Party mantra and Clinton strategy leading into this campaign. Demographics matter but so does candidate quality and message. Moreover, in many ways demographics did matter in this election–white working class are still a majority of the electorate and they still matter and they show up to vote. Oh, and the electoral college still matters.
The election was not rigged. There is little evidence to support this a currently understood. We do not have much information regarding voter suppression yet. There is little evidence of Russian hacking or the general hackability of US elections. Moreover, there is no evidence that millions of illegal votes, especially in patterns that would have only voted for Clinton. No party has a monopoly on virtue and there is also no reason to think that the paltry cheating that occurred took place to the benefit of one party or candidate alone. If we are talking about rigging in terms of the role of money in politics, election rules that hurt third party candidates, and the media bias, then yes it may have been rigged.
This may or may not have been a critical election. There is some evidence that traditional voting patterns shifted in this election but it is not clear how much and how permanent. The best explanatory variable predicting election returns this year seems to be educational level. Areas on balance with people with more college degrees voted for Clinton and Democrats. No this does not mean stupid people voted for Trump. It instead suggests a new cultural divide that needs to be understood better in terms of how American elections move forward.
There are no tanks in the streets. Calm down everyone. Yes the campaign was awful in tone and we saw an unleashing of a lot of bigotry. Yet it started way before Trump and he may simply be the face of a new ugly era already emerging in politics. Stories from the Southern Poverty Law Center report hundreds of hate incidents since the election but we have no idea how this fits into an existing trend line or in comparison to comparable recent periods. There is constant hysteria about what will or will not happen with Trump as president. Calm down. For the same reason that the rigidity and stability of our political institutions (checks and balances, separation of powers, bicameralism, and federalism) make political change difficult, the same will also prevent any excesses over the next four years. We should also simply ignore or shrugged off (as David Brooks recently said) the most recent tweets of Trump.
Overall, understand there is a lot of noise out there. Ignore most of it.
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