There's plenty of blame to go around, but one of the prime culprits is a lack of transparency. If people don't know how public money is being spent, it's hard to ensure that public money is being spent wisely.
One especially troublesome area is public employee pensions, especially for police and firefighters. Legislators who are wary of offending the powerful public safety lobbies, and voters deluged with glossy brochures of burning buildings and police in uniform, have handed public employee retirees pensions which far exceed those in the private sector. In San Francisco alone 709 retirees get pensions of over $100,000 a year. Most private sector workers don't earn that kind of money while still on the job. Other local agencies in the Golden State also have hundreds of workers in the six-figure pension club, and the state's pension fund, CalPERS, has nearly 5,000. This is happening while the state is trying to close a deficit of more than $20 billion.
Making matters worse, some public employee retirees recently fought a legal battle aimed at keeping the public from knowing the amount of their pensions. They unsuccessfully argued that the public which funds their lucrative pensions has no right to know how much they receive.
Several newspapers and a taxpayer group intervened in that case and convinced a judge that the pension payments are public information. Good thing: as public agencies across the country scratch and claw for money and cut services, it's more important than ever to know how public money is spent.
]]>People invested millions in Madoff on the promise of 14 or 15 percent returns, even though they had no idea what he was investing in or how he was pulling it off. Likewise, poorly-regulated and opaque investment vehicles like securitized mortgages and auction-rate securities share a large part of the blame for the financial crisis gripping this country, and the world, over the past year.
One of the more outrageous spectacles of the past year has been banks and other financial institutions resisting disclosure of how they invested or spent federal bailout money. It's bad enough when some bureaucrat won't tell you how much was spent on fixing a pothole. It's worse when a megabank begs for billions and then won't tell you where the money is going.
The nation's largest public pension funds, like CalPERS, may be learning the hard way about the risks associated with secretive investments by self-proclaimed financial geniuses. The value of CalPERS' investments in hedge funds has fallen from $7.6 billion to $5.9 billion. This comes after CalPERS and other public pension funds fought unsuccessfully against public records disclosure of the performance of their investments in venture capital funds and other alternative investments, claiming that if the public found out about investment performance the public pension funds would be chased away from lucrative venture capital funds. Now the New York Times reports that big public pension funds "have grown uneasy over the costs and secrecy" associated with hedge funds. And one hedge fund executive pled guilty and is cooperating with an investigation of corruption at the New York state pension fund.
Transparency and openness aren't just good public policy. They are good investment policy for public pension funds which don't want to get caught doing business with shady people with conflicts of interest who peddle opaque and risky investments..
]]>The so-called Free Flow of Information Act, HR 985, cleared the House Judiciary Committee March 25, and the committee's chairman, Rep. John Conyers, committed to "swift action" on the bill this year. Last year the federal shield law sailed through the House, 398-21, but stalled in the Senate at the end of the session in the face of opposition from the Bush Administration and its Justice Department. The shield law has bipartisan backing, with Senator Arlen Specter (R-Pa.), the ranking member of the Senate Judiciary Committee, having introduced S448, a similar measure.
]]> The shield law will help ensure the survival of investigative reporting in an era when the financial challenges confronting newspapers have made it more difficult for important stories to be told. It will also help protect whistleblowers who may have important stories to tell about corporate wrongdoing which led to financial scandals and imploding stock prices, and about potential government waste in the effort to deal with the recession.Here's hoping that this is the year the federal government enacts a shield law, as virtually all of the 50 states have through legislative or judicial action.
]]>Obama first signaled a shift on his first day in office when he issued a presidential memorandum calling on agencies to "usher in a new era of open government." Attorney General Eric Holder followed up on March 19 with new FOIA guidelines directing all executive branch departments and agencies to apply a presumption of openness when administering FOIA.
The devil will be in the details, of course, but the high-level endorsement of openness -- and the explicit reversal of the so-called Ashcroft Memorandum issued in President Bush's first year in office -- is important. Holder's memo tells federal bureaucrats that FOIA is the responsibility of everyone, and directs Chief FOIA Officers in each agency to report each year to the Department of Justice on their progress in improving FOIA administration.
All have been plaintiffs in high-profile cases testing whether a person's right to profit from celebrity overcomes a First Amendment right to talk about them or do a parody about them.
Joe Montana, the former San Francisco 49er quarterback, was thrown for a loss in a 1990s suit against a San Jose newspaper which reproduced, in poster form, actual newspaper pages containing his picture. Dustin Hoffman, too, lost a lawsuit which parodied the famous photo of him from the movie "Tootside," in which he appeared in drag. But Vanna White had better luck when she sued Samsung Electronics for running an ad using a robot which resembled her as the "Wheel of Fortune" spokesperson.
These cases show that when you use a famous person's likeness, you may get sued and the result of any lawsuit is not entirely predictable. A use which drives home a point, makes editorial comment on a celebrity, is predominantly a parody, or is newsworthy will generally be protected by the First Amendment and/or state law. A purely commercial use, on the other hand, is likely to expose the user to liability.
Bottom line here: you can generally comment on or criticize celebrities, but it's risky to use their name or likeness without permission for purely commercial purposes.
]]>I mentioned that there's a right to anonymous speech in some contexts, but that given the public interest in knowing who contributes to initiative campaigns, I wouldn't bet on the Proposition 8 supporters' lawsuit succeeding.
Neither did the judge. U. S. District Judge Morrison C. England Jr. ruled against the Proposition 8 supporters, writing, "The court finds that the state is not facilitating retaliation by compelling disclosure."
I'm all for free speech, and sometimes anonymity is important to avoid reprisals. But in the case of campaign donors to an initiative measure, I think the interest in knowing who's behind campaign spending is vitally important, especially to avoid stealth deception campaigns. The judge got it right here.
Nearly all states have one, and there was a bill to pass a federal reporter's privilege (or "shield law") in the last Congress. The bill died, though, and even if it had passed President Bush would have vetoed it.
Now, with President Obama in office, there is real reason to hope for action on a federal shield law. Too many subpoenas have been issued recently trying to make reporters disclose confidential sources. Such subpoenas -- which resulted in the high-profile jailing of New York Times reporter Judith Miller --discourage investigative reporting and can keep whistleblowers from coming forward.
The reporter's privilege is vital protection for a free press and has helped the cause of free speech considerably at the state level. It should be enacted, at long last, at the federal level.
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The latest lawsuit was brought by a pediatric dentist in Foster City, California, who took umbrage at negative online comments on the Yelp website which said the dentist gave a boy laughing gas and used fillings containing mercury.
Yelp, and other websites, are generally immune from lawsuits claiming defamatory third-party postings, because of the Communications Decency Act, 47 U.S.C. section 230. That doesn't seem to be discouraging these lawsuits against the people posting the reviews, although the California anti-SLAPP statute (Code of Civil Procedure section 425.16) and similar statutes in other states may enable people to quickly get rid of the lawsuits.
The case I mentioned in a previous blog, involving a San Francisco chiropractor, has since been settled and a semi-apology about the chiropractor is now posted on Yelp's web site.
]]>President Obama didn't waste any time in breaking with the secrecy-first policies of his predecessor.
On his first full day in office, Obama issued a memorandum reversing the policy of the Bush Administration toward Freedom of Information Act requests. The so-called "Ashcroft Memorandum" issued early in the Bush Administration directed federal agencies to deny FOIA requests if there was any defensible argument against disclosing records. Obama's new policy shifts the presumption in favor of disclosing records. The new President made clear that records might still be withheld for reasons of, say, national security, but the new Memorandum is still an important policy shift.
The Bush Administration's penchant for secrecy was revealed early on -- even before the 9/11 attacks gave it a reason for full-throated defense of secrecy -- when former Vice President Cheney refused to reveal the names of oil company executives and others with whom he met to formulate energy policy. Cheney fought a lawsuit designed to pry those records loose all the way to the Supreme Court. Obama's new policy is a welcome change and indicates the new President won't routinely use government money to hide information from citizens.
The lawsuit was filed by supporters of Proposition 8, the California measure passed by voters in November which effectively outlaws gay marriage (and which is now being challenged in the California Supreme Court). The organizations behind Proposition 8 are challenging campaign finance laws which require disclosure of contributors and the amount of their contributions. They contend that their coerced identification ("outing") infringes their First Amendment rights.
It is a difficult issue. On one hand, the U. S. Supreme Court has upheld the right to anonymous speech and in one case held that the NAACP did not have to disclose its membership list. But on the other hand, the entire system of campaign finance reform depends on the public's ability to know who contributes to candidates and initiative measures. In an era when large corporations can spend massive amounts to defeat grassroots initiative measures, "anonymity" could result in defeating the public's right to know who's behind deceptive advertising campaigns.
Putting aside gay marriage, which isn't the primary issue in this latest case, both sides have good arguments. But I wouldn't bet on the plaintiffs being able to toss campaign finance laws out the window in this one.
]]>A San Francisco defamation suit reported today is a good example of this. A local chiropractor, it seems, was unhappy about a negative review of him posted on the website Yelp. He sued the poster, who had complained about the chiropractor's bill.
I don't know how many people read the negative review in the first place, but after the daily newspaper did a front-page article about the lawsuit -- fairly and accurately reporting that the chiropractor had filed the lawsuit, and quoting lawyers on both sides -- a lot more people know about the review. In other words, it might have been better for the chiropractor if he had just ignored the Yelp review. In fact, someone quoted in the article today says people reacted more negatively to the chiropractor filing a lawsuit than they would have to what the Yelp review said in the first place.
The morals of the story are (1) the best remedy for speech is counter-speech, and (2) in the words of the old comic strip, if someone says something about you you don't like, Grin and Bear It.
]]>As we all know, Congress passed a $700 billion bailout bill this past fall, and the Treasury Department immediately doled out multi-billion-dollar "rescue" packages to huge banks and corporations like the Bank of America and AIG which told people things like they wouldn't be able to loan anyone money without a rescue or that they were too big to fail. Thus far, there seems to be precious little to show for the money, as banks are apparently still reluctant to lend money. Cynics might say the banks just, in the words of Woody Allen, took the money and ran.
So the Associated Press contacted 21 banks which received at least $1 billion in government money and asked four questions: How much has been spent? What was it being spent on? How much is being held in savings? And what's the plan for the rest?
AP's request was met with what one might call radio silence. None of the banks provided specific answers, and most even refused to explain why they are keeping the information secret.
If the government had done this, there would have been hell to pay and people could agitate with their elected representatives or maybe vote them out of office. People could make Freedom of Information Act requests. But there's no real way to hold corporations accountable: even shareholders have no real voice in corporate governance.
House Speaker Nancy Pelosi is quoted as saying, "It is outrageous that those institutions cannot -- or will not -- provide information on how they are spending billions of taxpayer dollars."
Congress should turn off the spigot of taxpayer dollars to corporations which won't explain what they are doing with the money. Congress should probably turn off the spigot to these corporations period. The patriots who fought for our freedoms abhorred taxation without representation. We certainly aren't being represented in the boardrooms of the corporations getting bailout money.
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The answer is the need for openness, transparency and watchdogs on powerful institutions. The people who created the First Amendment more than two centuries ago had never heard of hedge funds, but they knew that too much power and wealth concentrated in too few hands would create a huge problem. Sadly, that lesson got lost in the financial markets as greedy hedge funds and investment banks piled up money in opaque investments and a complicit administration ignored the warning signs of financial disaster created by things like the subprime mortgage crisis. Because little information about many investments such as hedge funds is publicly available, neither the press nor public were able to ferret out information and help the government do its job of keeping businesses honest.
Now, a watchdog press is pointing out that there were plenty of warning signs, but the problem was hidden too long by powerful financial institutions and an administration which got enough support from those financiers to make it all too willing to look the other way. We're finding out now -- after stock indexes have dropped 40 percent -- what happened to us. As President-elect Barack Obama said today, agencies like the Securities and Exchange Commission were "asleep at the switch" while people like Bernard Madoff apparently made off with billions of dollars.
What all this means is that transparency, a watchdog press and blogosphere, and an informed citizenry are necessary to protect our rights -- and our pocketbooks -- from those who would take them away.
]]>One thing that differentiates us from the British is the history of robust, uninhibited speech in the United States, protected by the First Amendment, which limits libel laws and makes people much freer to speak and publish here than across the pond.
Some celebrities and other targets of critical speech in an era of instant worldwide access to free speech have figured this out. They've sued for libel in Great Britain, which offers fewer free speech protections, then tried to bring overseas judgments to the United States and enforce them against American citizens and countries.
Now, Congress and some states are considering legislation to protect American citizens from overseas libel judgments which don't comply with American law. That's a good thing. As one member of the British Parliament said, "The practice of libel tourism -- the willingness of British courts to allow wealthy foreigners who do not live here to attack publications that have no connection with Britain -- is now an international scandal." Americans should do what they can to stop it.
No one can question that there is a First Amendment right to anonymous speech. The U.S. Supreme Court affirmed that point in the case of McIntyre v. Ohio. Anonymous speech serves many important purposes: people who are aware of government or corporate wrongdoing can alert the public to wrongdoing anonymously in situations where they can’t use their real name.
Neither the government nor the courts should be in the business of regulating speech, and the marketplace of ideas is big enough to include anonymous speech under certain circumstances. And the Internet is certainly a forum for uninhibited and impassioned speech. But not everything that legally can be said should be said, and in most cases a writer’s credibility is higher when they’re willing to put their name behind what they say. So anonymous speech is alive and well – but anonymous or not, it doesn’t hurt to think before posting.
But a small number of online commentators post racist, homophobic, sexist and mean-spirited comments and hide behind the cloak of anonymity given to them as online commentators, as one editor has said. The editor wrote: “We’re trying to balance people’s right to free speech with the responsibility not to be slanderous, libelous, sexist, racist or just plain mean.”
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