Archive for the ‘Corporations’ Category

Book Review: Powerhouse: The Untold Story of Hollywood’s Creative Artists Agency

May 31, 2017 Leave a comment

IMG_20170530_2354373Along with Tom Shales, James Andrew Miller previously published two book-length oral histories of large American entertainment institutions that originated in the 1970s, ascended to the peaks of their respective spheres of influence, and persist as significant players in the entertainment landscape today. The subjects of those two books, ESPN and Saturday Night Live, also retail their content directly to their public audiences. For the third book in this series of sorts, Miller, now on his own, turns his focus to Creative Artists Agency, an entity that matches all of the same characteristics of ESPN and SNL sketched above save one: it is an insider, a talent agency that works (sometimes barely) behind the scenes to conduct the business of the entertainment industry and, thereby, indirectly influence the entertainment we all consume.

Miller’s Powerhouse: The Untold Story of Hollywood’s Creative Artists Agency follows the same structure he and Shales used in the ESPN and SNL books, which generally track a chronological arc and tell their tales through the words of those involved, directly or tangentially, with the subject, with only brief editorial interludes to organize and move the story along. As an example, a page from the ESPN book illustrates the approach:


For whatever reason, or set of reasons, the CAA book does not work as well as the previous Miller-Shales collaborations. Miller promises to reveal the most powerful man in Hollywood, Michael Ovitz, his philosophically balancing counterpart, Ron Meyer, and the revolutionary agency they built together, CAA, that, at its mid-1990s peak, had the entertainment industry in the palm of its hand and made gobs of money for its owners and employees. That is Miller’s headline, and the sub-lede would explain that Ovitz drew power to himself with a combination of a politician’s natural networking skills and near-unbridled ambition; Meyer countered Ovitz’s cold, calculating approach with heart, emotion, and honesty; and CAA succeeded by developing a “packaging” model that allowed them, for example, to sell a cast of actors they represented to a director they also represented to make a movie written by a screenwriter they also represented– at its best, vertical and horizontal integration– such that CAA could be on all sides of a deal it created and even financed.

It may be because I am not a movie buff and do not track celebrity gossip magazines, but I did not take much from this book beyond the basic summary outlined above and in the interviews I heard with Miller prior to reading it. At a minimum, the book needed at least one more editorial pass before publication to correct what I interpreted as organization problems, including quotations appearing multiple times in the book and editorial interludes that introduced topics unaddressed by the subsequent quotations or merely summarized the ensuing quotations and borrowing the subjects’ same descriptive words.

More broadly, the contents did not do a great job of developing the depth of the main characters. Ovitz understandably is the primary focus, but we learn little of his backroom dealings, for example. There are surprisingly few stories about Meyer, the supposed counterweight to Ovitz, and Bill Haber, the other CAA founder who spent a significant number of years with the company, is left twisting in the wind, hanging onto little more than an adjective card that has the word “eccentric” written on it. Also due for more attention, one would have expected, is the late-arriving Sports (capitalized, for some reason) division of the agency, which now appears to be floating the company financially. Finally, Ovitz’s replacement, current CAA president Richard Lovett, has very little to offer about the present state and trajectory of the company beyond reliably optimistic soundbites.

Again, I likely am not in the target audience for this book, and I would not be surprised if those closer to Hollywood and with a longer-running experience in or familiarity with the entertainment business enjoyed and learned from it. It is possible that Miller did not probe his subjects forcefully enough; independently, it is possible that the subjects simply refused to speak more openly (Sylvester Stallone, whose comments appear throughout the book, apparently had few such qualms). At a minimum, however, the book would benefit from a greater attention to organizational detail. It just came out in an updated paperback edition, though, so that may address some of these concerns.

Categories: Books, Corporations

Are the “Best” Airlines Environmentally Friendly?

March 31, 2015 1 comment

Earlier this year, the Wall Street Journal recently released its 2014 rankings of major airlines, as determined by evaluating the carriers according to seven different factors, including on-time arrivals, cancelled flights, mishandled baggage, and complaints. Environmental-impact factors were not included in the Journal’s analysis. Here are the Journal’s results:


FiveThirtyEight also recently released a ranking of major airlines, but their analysis focused exclusively on environmental impact. More specifically, FiveThirtyEight ranked carriers based on fuel efficiency:

The International Council on Clean Transportation (ICCT), an independent nonprofit funded by private foundations and entities such as the UE and World Bank, has been tracking airline fuel efficiency since 2010. Its latest report found no overall net gain in fuel efficiency from 2012 to 2013, and a 27 percent gap between the three most efficient carriers — Alaska, Spirit and Frontier Airlines— and the least efficient one, American Airlines.

The report’s “fuel efficiency score” is a unitless measure calculated using an airline’s revenue passenger miles, the number of airports it serves and its flight frequency per unit of fuel burned. A score of 1.00 is the industry average. The greater the number, the better the efficiency.

Here are their results:


As the following crude chart indicates, setting aside outliers like Alaska and American, there generally appears to be an inverse relationship between consumer satisfaction and fuel efficiency:


This chart plots the eight airlines appearing in both reports according to their ranks for consumer satisfaction (WSJ) and fuel efficiency (FiveThirtyEight), a larger number being “better” (i.e., greater consumer satisfaction or greater fuel efficiency). As plotted, Frontier, Southwest, JetBlue, Delta, and Virgin American illustrate an unmistakable inverse relationship between consumer satisfaction and fuel efficiency: as the former increases, the latter decreases. The two extreme outliers are Alaska, which earned top marks for both consumer satisfaction and fuel efficiency, and American, which was ranked second-worst in consumer satisfaction and worst in fuel efficiency.   Read more…

Homo Erectus Corporatus: Evolution of the Corporate Corpus

March 28, 2011 1 comment

Much was and continues to be made of the U.S. Supreme Court’s ruling in Citizens United v. Federal Election Commission, 588 U.S. 50 (2010) that the First Amendment prevents the government from limiting the political speech of corporations and unions as it had under the Bipartisan Campaign Reform Act of 2002 (the McCain-Feingold Act). See generally here and here.

Randy Travis: "A pretty natural kinda person."

The decision sparked a discussion about corporate personhood. Cf. here (discussing corporate responsibility). For those who agreed with the outcome, the notion that corporations had civil rights akin to those of natural persons was obvious: after all, corporate entities can sue and be sued, pay income tax, and even can be members of other legal business entities, just like ordinary people. For those who did not, the concept that an organizational creation of the law would have First Amendment rights was plainly absurd. Despite the protests of those opposed to the ruling, such as the American Constitution Society, however, the ruling stands, and no immediate challenge is on the horizon. It wasn’t always so obvious, however, that the law should treat corporations like humans.

In 1809, when the Supreme Court still had February Terms, Chief Justice John Marshall for a six-member majority in Bank of the United States v. Deveaux, 9 U.S. (5 Cranch) 61 (1809) held that, for purposes of federal diversity jurisdiction, corporations were citizens of a sort. Marshall recognized the apparent conceptual conflict that remains today, and, after citing a series of British legal authorities, stated his conclusion:

As our ideas of a corporation, its privileges and its disabilities, are derived entirely from the English books, we resort to them for aid, in ascertaining its character. It is defined as a mere creature of the law, invisible, intangible, and incorporeal. Yet, when we examine the subject further, we find that corporations have been included within terms of description appropriated to real persons.

Id. at 88. Despite this language, the Court’s view was that the corporation was not really independent of its shareholders, and its state citizenship was to be determined based on their state citizenship.

By 1844, the Court believed its Deveaux decision had been “carried too far, and that consequences and inferences have been argumentatively drawn from the reasoning employed in [that case] which ought not to be followed.” Louisville C. & C.R. Co. v. Letson, 43 U.S. (2 How.) 497, 555 (1844). In overruling Deveaux, the Letson Court held that a corporation is a citizen of the state in which it was incorporated, independent of the locations of its human shareholders. Id. at 557-58.

A corporation created by and doing business in a particular state, is to be deemed to all intents and purposes as a person, although an artificial person, an inhabitant of the same state, for the purposes of its incorporation, capable of being treated as a citizen of that state, as much as a natural person. Like a citizen it makes contracts, and though in regard to what it may do in some particulars it differs from a natural person, and in this especially, the manner in which it can sue and be sued, it is substantially, within the meaning of the law, a citizen of the state which created it, and where its business is done, for all the purposes of suing and being sued.

Id. at 558. The Letson Court, by severing the link between the corporate person and the human person, thus created a more independent form of corporate personhood.

In 1958, Congress enacted 28 U.S.C. § 1332(c)(1), which provides that “a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business,” with no mention of the citizenship of shareholders, directors, or other representatives.

Board of Directors and CEO of Murder, Inc.

In some ways, then, the Citizens United decision is not surprising when viewed in the context of the progression described above. If a corporation may sue and be sued of its own accord, independent of the humans who own and operate it, it already has the due process rights afforded all civil litigants. If the entity uncontroversially possesses some set of rights, how controversial is it that it should possess a broader set of civil rights beyond those attendant to the processes of civil litigation? Alternatively, because the basis for even those uncontroversial rights is a legal fiction, does it make sense to extend the scope of privileges beyond that which is absolutely necessary?

Categories: Corporations, Legal, Politics

Elections United?, Vol. II

October 27, 2010 Leave a comment

The 2010 Supreme Court Term is underway and already has featured some high-profile cases, but it’s a case from 2009 that’s getting the most attention these days. Citizens United v. Federal Election Commission, 558 U.S. 50 (2010), in which the Court struck down a provision of the Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155 (2002) (commonly, the McCain-Feingold Act), prohibiting the broadcast by corporations and unions of election-focused information in the days before a presidential primary or election, has been the subject of renewed discussion (which never really fell off dramatically following its issuance early this year) leading up to the elections that are now less than a week away. Critics of the decision are worried that virtually unbridled corporate and union campaign spending will have adverse effects on the democratic process. (Other critics are so upset over the decision that they are considering an attempt to impeach the Chief Justice in response.) More recently, some observers (including critics of a new series of U.S. Chamber of Commerce campaign advertisements) have latched onto the less directly presented issue of foreign funding in American elections, a question I raised in my initial report on the case. At that time, a poll showed that two-thirds of the readers of this site favored exclusion of campaign donations from foreign corporations.

With the ongoing goal of gaining a better understanding of the rationale behind singling out foreign financial influences for exclusion from American campaigns and the proximity of the mid-term elections, I hope interested readers will review the earlier post (here), which fleshes out the issue in greater detail, vote in the poll embedded in that post, and then offer comments here.

Corporate Responsibility and the Man in the Mirror

August 29, 2010 6 comments

Last week, Dr. Aneel Karnani, a University of Michigan business school professor, presented “The Case Against Corporate Responsibility” in the pages of the Wall Street Journal. The core of Karnani’s argument, that “the idea that companies have a responsibility to act in the public interest and will profit from doing so is fundamentally flawed,” comes in two early paragraphs:

Very simply, in cases where private profits and public interests are aligned, the idea of corporate social responsibility is irrelevant: Companies that simply do everything they can to boost profits will end up increasing social welfare. In circumstances in which profits and social welfare are in direct opposition, an appeal to corporate social responsibility will almost always be ineffective, because executives are unlikely to act voluntarily in the public interest and against shareholder interests.

Irrelevant or ineffective, take your pick. But it’s worse than that. The danger is that a focus on social responsibility will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds. As society looks to companies to address these problems, the real solutions may be ignored.

Karnani’s thesis strikes me as unremarkable. What are interesting, however, are two related topics, one of which he does not explore, and the other of which he underexplores. The first is the relationship between a corporation and an individual in the responsibility context, and the second is Karnani’s concern that “the real solutions” may be lost with a focus on corporate responsibility.

A corporation is an organization of humans engaged in a business enterprise. People incorporate as a way to order their affairs and be treated under the law in a way that is tied to the nature of their activity. While the law commands that corporate governors act to maximize profits, the incentives for individual actors are not so different. For people, as for corporations, there often is a cost to acting in a socially responsible manner, and individuals who commit themselves to environmentally friendly behavior, for example, may find themselves in a difficult financial position. Substituting “people” for “corporations” in Karnani’s article would have challenged us to look more critically at our own life choices.

Additionally, those who pursue environmental, health, and other responsibility goals should consider the fact that the behavior they aim to encourage usually is more expensive for people than their current behavior. Healthier food and hybrid cars are more expensive than the less responsible alternatives. Leaders need to decide whether to try to align incentives– through government regulation or mobilization of collective action, for example– to achieve health and environmental goals or, more radically, to break out of a cost-benefit analysis altogether.

The second point, that a focus on corporate responsibility will distract from “the real solutions” to social problems, is an important contribution that could come out of a discussion like the one Karnani initiated, but Karnani doesn’t do much with it. Expecting corporations to act responsibly with respect to social problems “will delay or discourage more-effective measures to enhance social welfare in those cases where profits and the public good are at odds,” he writes. This is the obvious conclusion that flows from the premise that corporations only act to maximize profits. More interesting is whether, when profits and the public good are not at odds, the corporate-provided solution is suboptimal or incomplete, for example. This might happen because a corporate solution arises in response to consumer demand, but because the mass of consumers are not experts and may manifest their demand imprecisely, the “solution” will not respond to the actual underlying problem, but rather the consumers’ reaction to their understanding of that problem. It might also happen because corporations, ever profit-maximizers, choose cheap solutions to problems that require more thorough treatment or choose to make a big deal out of resolving a relatively minor issue while distracting consumers from more serious– and more expensive– issues that go untreated. See also here (discussing the danger of distorting discourse through a disproportionate focus on relatively minor issues). On the other hand, perhaps it’s the case that consumers can gain a sufficient understanding of problematic issues like health and environmental degradation and can communicate their desires for more responsible corporate behavior in a way that forces an appropriate response. Karnani did not pursue this avenue in his article, so the thoughts in this post are merely speculation.

Karnani’s article, as interpreted and expanded upon here, is a helpful reminder that people, not disembodied concepts like “corporations” and “the government,” must be the ones to act in response to social problems.

Categories: Action, Corporations

Elections United?

February 10, 2010 2 comments

Last month, the Supreme Court decided Citizens United v. Federal Election Commission, 558 U.S. ___ (2010), holding that the First Amendment prevents the government from limiting political speech in the form of corporate funding of a feature-length film. The government cannot restrict certain disfavored speakers like corporations. Political speech is important to democracy regardless of the speaker. Specifically, the Court struck down a provision of the Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155 (2002) (commonly, the McCain-Feingold Act), prohibiting the broadcast by corporations and unions of election-focused information in the days before a presidential primary or election. Justice Kennedy’s majority opinion retained the Act’s relevant disclosure requirement and proscription of direct donations by corporations and unions to candidates.

The decision sparked substantial reaction in the days following its release, as people waded through the fractured decision (basically, 5-4 against the speech restriction, 8-1 in favor of maintaining the disclosure requirement, with five different opinions authored– Kennedy for the majority, Chief Justice Roberts concurring, Justice Scalia concurring, Justice Stevens concurring in part and dissenting in part, and Justice Thomas concurring in part and dissenting in part). President Obama added a new twist to the conversation when he weighed in on the decision in his first State of the Union Address, less than a week after the Court decided the case. With a majority of the justices present, sitting in the front row, the President noted his “due deference to separation of powers” and opined:

Last week, the Supreme Court reversed a century of law to open the floodgates for special interests – including foreign corporations – to spend without limit in our elections. Well I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities. They should be decided by the American people, and that’s why I’m urging Democrats and Republicans to pass a bill that helps to right this wrong.

(Emphasis added.) At this moment, television cameras panned the audience, catching Justice Alito mouthing “not true,” apparently in response to the President’s assertion that “foreign corporations” are among those “special interests” for which the decision opened “the floodgates.” SCOTUSblog‘s Lyle Denniston highlights a relevant portion of the majority opinion:

That section said: “We need not reach the question whether the Government has a compelling interest in preventing foreign individuals or associations from influencing our Nation’s political process.”  The opinion then cited a provision of federal law[.] In essence, that provision bars any “foreign national” from making any direct or indirect contribution of money or anything of value “in connection with any federal, state, or local election[.”]

The clear implication of the phrasing is that the Court, in the future, might well uphold such a ban by finding that the Government did, indeed, have a strong interest in keeping foreign money out of U.S.  campaigns, at any level of government.

The Court’s statement that it “need not reach the question” hardly “open[s] the floodgates.” At very most, it suggests that a majority of the Court is willing to overturn that provision, but a fair reading yields the simple position that the Court is not addressing questions it does not have to answer and is clarifying the scope of its holding. This is a common, widely accepted practice of the Court’s. Congressional Democrats nevertheless sprung to action. Senator Al Franken‘s office said that the President’s statement, quoted above, “urged…legislative action.” In explaining his decision to introduce restricting legislation, the release stated: “Nothing in our current laws, however, explicitly prohibits foreign companies from creating American subsidiaries or getting control of American companies and using them to flood the airwaves in support of their preferred candidates.” This assertion contradicts Denniston’s statement, quoted above.

Whether the first-term Senator or the journalist who has covered the Court for fifty years is stating the law accurately, a more interesting question persists: should we exclude foreign corporations from influencing American elections?

One starting place is to wonder whether exclusion is possible to a meaningful extent. Not only do many foreign corporations have a substantial presence in the U.S., many companies people think of as “American” actually are foreign-owned (e.g., Anheuser-Busch, Ben & Jerry’s, Trader Joe’s, 7-Eleven, Firestone Tires). If one is concerned about the influence of individual foreigners, the scope is even wider, expanding to include American corporations run by people born abroad (e.g.PepsiCo).

Others have speculated on the complexity of this subject, given globalization realities:

In a world characterized by high levels of political and economic interdependence, one wonders whether there can be any pure cases of domestic political change, untouched by significant external influences. The exceptions are likely to overwhelm any generalized prohibition of intervention based on the importance of allowing people to work out their own salvation.

Charles R. Beitz, Political Theory and International Relations 87 (Princeton University Press 1999) (1979).

Even if it were possible to craft legislation that could separate foreign corporations from domestic ones as a matter of identification, is this a desirable, justifiable distinction? The combination of the Constitution’s Article II § 1 and Twelfth Amendment limit eligibility of the offices of president and vice president to “natural born Citizen[s],” but no other office is so limited. Reasonable justifications exist for this restriction, but do they apply to a restriction on foreign influence in election campaigns? Is there a different basis for justifying the proposed exclusion? Or is it simply an easy way for those opposed to corporate spending in campaigns generally to cut back on a (possibly substantial) portion of it?

Justified or not, the issue of restricting foreign influence on domestic elections matters to people on both sides of the aisle. Before the recent legislative initatives by Democrats mentioned above, the Republican National Committee accused Obama of failing to disclose campaign donations from abroad, and foreign celebrities like Sir Elton John have involved themselves in U.S. presidential campaigns.

Finally, if we are concerned about foreign influence on domestic elections, should we be concerned about interstate influence on state and local elections?

There are reasonable intuitions as to why we would want to steel our elections from foreign influence, even if it it is a practice that Americans have engaged in abroad. Setting aside golden rule and reciprocity concerns about political intervention, the failure to enunciate a basis for exclusion impairs this debate.

The Thin Line Between Libertarianism and Anarchy

January 6, 2010 12 comments

Before 2007, most Americans probably did not know what a libertarian was, or where one fit along the familiar political spectrum. Vague notions of liberty, radicalism, and Montana may have come to mind. During the 2008 presidential campaign, however, Representative Ron Paul, a Texas Republican, brought libertarian ideals to the fore of American consciousness. It was Paul, not Senator Hilary Clinton, Governor Mitt Romney, or Senator Barack Obama who set the campaign’s fundraising records with his $6 million Money Bomb. Paul attracted further attention when he disagreed with other Republican candidates about the War in Iraq. Listening to his rhetoric, laced with allusions to the Constitution and references to “small government” and “non-interventionist foreign policy,” people began to gain a substantive understanding of libertarianism, and many found themselves agreeing with a line of political thinking that fits neatly neither on the Left nor Right.

Although people, particularly academics, tend to haggle over what exactly it means to be a libertarian, the concept of a “small government” is a necessary element. A small government, in this sense, is one that does little in the way of taxation, spending, and regulation. Advocates of small government often frame their position in terms of a government of enumerated, and therefore limited, powers. The idea comes from the early defenders of the Constitution during the state ratification debates, and it was their reason for opposing a bill of rights. Excepting the amendments, the Constitution contains mostly grants of power. The idea was and is that government could exercise those specifically enumerated powers and no others. The short story of American history is that government practice has not supported this view.

The constitutional basis does not seem to be the only reason libertarians want small government: they tend to think it’s good policy, too. Libertarians value a private sphere, within which government has no place. The expanse of this private sphere is directly proportional to the magnitude of freedom and liberty in one’s life. Liberties are not safe, and freedom cannot exist where government regulates.

If personal liberty is prized above all else, is government the only enemy of freedom or merely the most visible?

Libertarians often call for privatization. They believe that the private sector can provide more efficiently many or all of the services the public sector endeavors to provide. In the quest for liberty, though, is the public-private distinction the most worthwhile one to draw?

Those Duke boys undoubtedly had an appetite for destruction, but it would be hard to call Luke and Bo (and Daisy) anarchists.

I am not an expert on anarchy, but I understand it to be less concerned with this public-private distinction than libertarianism. Libertarians worry about domestic surveillance and national identification programs that put personal information in the government’s hands, but do not appear to have any problem with surrendering this information to private entities. Anarchists, it seems, do not make such a distinction. In theory, they would be just as likely to resist a federal identification program as they would giving similar information to a private corporation, like Google. Google offers a wide set of services free of financial cost, but with high information costs. Users give to Google the full contents of their emails, chats, and internet searches. Those who use Google’s web browser, Chrome, offer up the entirety of their online activity. It seems likely that even non-libertarians would think twice before granting the FBI full access to this information, but many Americans– perhaps a majority of internet users– use some of Google’s services every day without second thought.

Google isn’t the only example of private (non-governmental) gathering of personal information, of course. Private schools, financial institutions, athletic clubs, and grocery stores collect identifying information all the time and almost certainly without significant resistance. Even video stores ask for a substantial amount of personal information before issuing a membership card.

The question for libertarians is whether there is any basis for opposing perceived privacy invasions by government but not by corporations and other private entities. Indeed, one might think that there is more reason to be concerned with the information we give to Google and Visa than with that the Department of Homeland Security or the Internal Revenue Service collects; after all, libertarians do believe in democracy.

The libertarian response might have something to do with the voluntary nature of private engagement and the perceived involuntary nature of public information-gathering. For example, individuals can choose to rent movies from Blockbuster or not. If they don’t want to give the weird amount of information the store requests before customers can rent a video, they don’t have to patronize that store. On the other side, people perceive less participatory choice when it comes to governmental solicitation of information.

I am not sure that voluntariness is enough for libertarians to justify their public-private distinction. If there are reasons they don’t want to give personal information to the government, wouldn’t many of those reasons apply with equal force to private entities (or even counsel, as suggested above, a preference for public institutions over private ones)? Is there any solid foothold that allows libertarians to preserve this distinction and avoid pushing their views to their logical conclusion and down the slippery slope to anarchy?

Categories: Corporations, Privatize Tags: