Archive for the ‘Business – General’ Category

Constellation NewEnergy’s Third Party Investigator

The At Issue program on WBBM Newsradio (on Audacy) interviews Richard Dent, NFL Hall of Famer and MVP of Superbowl XX, concerning his legal battle with Constellation NewEnergy.

Also on the interview is Dr. Charles Steele, President and CEO of the Southern Christian Leadership Conference, the organization once led by Dr. Martin Luther King.

Constellation NewEnergy Terminates Dent’s Contracts and the Legal Battle

In 2018, Constellation NewEnergy terminated its energy contracts with Dent when two unnamed persons accused him of sex harassment and improper conduct. Constellation refused to disclose the names of the persons who had made these defamatory statements.

In 2019, we filed a Rule 224 presuit discovery petition in the Cook County Circuit Court to compel Constellation to disclose the names of Dent’s accusers. (Dent et al. v. Constellation NewEnergy et al., 2019 L 002910). Constellation filed a motion to dismiss the petition for failure to state a claim under Illinois Civil Procedure Code Section 2-615. When a defendant in a civil suit files a 2-615 motion, black letter Illinois law requires the court to accept as true, for purposes of that motion, all of the well-pled facts alleged in the complaint or petition.

In Dent’s case, though, the Circuit Court judge ignored the facts pled in Dent’s 224 petition and accepted as true facts that Constellation improperly added in its 2-615 motion. For example, Constellation NewEnergy refused to disclose to Dent the name of its third-party investigator, and that is exactly what Dent’s Rule 224 petition alleges. However, in a flagrant departure from the duties of a court in a 2-615 motion, the Circuit Court held that Constellation NewEnergy had disclosed the identity of the investigator.

During oral argument before the Circuit Court in July 2019, the trial judge agreed with me that Dent’s 224 petition was not a “fishing expedition.” (Dent et al v Constellation NewEnergy et al, 2019 L 002910, Transcript of Proceedings, July 19, 2019, at pg. 4, line 4 to pg. 4, line 20). Despite this, the Circuit Court denied Dent’s 224 petition on the basis of a case that prohibited the use of that rule for “fishing expeditions.” (Low Cost Movers v. Craigslist, Inc., 2015 IL App (1st) 143955). Low Cost Movers was neither relevant nor applicable to Dent’s petition, and neither Dent nor Constellation had cited it in briefing on the 2-615 motion.

Constellation NewEnergy told Dent, and the 224 Petition alleged, that it was going to terminate all of Dent’s contracts because of the allegations that had been made against him. Yet the Circuit Court held that the cause in fact and proximate cause of Constellation’s termination of Dent’s contracts was…(wait for it…wait for it…)…Constellation’s termination of Dent’s contracts. Yes, you read that right. (Dent et al v Constellation NewEnergy et al, 2019 L 002910, Memorandum Opinion and Order, July 31, 2019, pgs. 2-3). In the Cook County Circuit Court’s hands, cause and effect became fungible commodities. If I knew a first semester law student who committed so puerile a logical fallacy I would recommend (gently, of course) serious consideration of an alternative career.

We appealed this ruling to the First District Court of Appeals. In November 2020 the Illinois Appellate Court, without requiring oral argument, reversed the Circuit Court on grounds of abuse of discretion and held that Rule 224 was indeed the appropriate procedure for Dent’s case. (Dent et al. v. Constellation NewEnergy, Inc. et al., 2020 IL App (1st) 191652, 175 NE3d 742).

Constellation then filed a petition for leave to appeal with the Illinois Supreme Court, which that court granted in March 2021. The case was argued before the Illinois Supreme Court on September 22, 2021. You may replay the oral argument here:

Constellation NewEnergy’s Private Eye

In public statements Constellation NewEnergy claims that the allegations against Dent were “confirmed by an independent third party investigator.” That is their chief defense. But Constellation’s own allegations tell a different story.

At about 5:45 p.m. on July 10, 2018, Dent arrived at the JW Marriott Hotel at 151 W. Adams Street in Chicago, where Constellation NewEnergy had arranged for its golfing guests to collect passes and other items for their golf outing the following day. Constellation claims that an unnamed man, Person B, observed Dent at the JW Marriott, and Person B alleged that Dent was “drunk and disorderly” at that place and time.

After collecting his items for the golf outing, Dent drove from the JW Marriott to the Shedd Aquarium, at 1200 South Lake Shore Drive. As the crow flies, the JW Marriott is about 1.6 miles from the Shedd Aquarium. Dent arrived at the Shedd Aquarium at or about 6:30 p.m. on July 10, 2018.

Constellation NewEnergy’s pre-golf cocktail reception, where they alleged that Dent physically groped an unnamed woman (Person A), was held on the Shedd Aquarium’s patio. That patio is an open space overlooking Lake Michigan.

More than 100 people were at Constellation NewEnergy’s party at the Shedd Aquarium patio.

Dent had invited Sam Cunningham, the Mayor of Waukegan, to the Constellation NewEnergy cocktail party. Constellation knew that Dent had invited the Mayor of Waukegan to their cocktail party as his guest. Dent and Mayor Cunningham were generally in each other’s company throughout this event.

In Chicago on July 10, 2018 the sun set at 8:28:31 p.m. Dent left the Constellation party at about 8:00 p.m., about a half hour before sunset.

Constellation NewEnergy claims that the allegations against Dent were confirmed by a third-party investigator. This is more than curious because the alleged groping incident occurred on the patio of the Shedd Aquarium, an open space, in front of a crowd of more than 100 people, and in daylight. Yet the only person who Constellation NewEnergy claims witnessed this alleged groping is Person B – the unnamed man who was inside the JW Marriott Hotel — 1.6 miles away.

According to Constellation NewEnergy’s allegations, not one person – not one – who was at the Shedd Aquarium patio on the evening of July 10, 2018 witnessed any alleged groping by Dent.

According to Constellation NewEnergy’s allegations, Dent would have had to drive through downtown Chicago traffic, during the weekday evening rush hour, in a drunken condition, to get from the JW Marriott to the Shedd Aquarium. At these times the CPD usually keeps an eye out for drunk drivers, especially after “happy hours.” Dent was not stopped for any reason as he drove from the JW Marriott to the Shedd Aquarium.

According to Constellation NewEnergy’s allegations, Dent would still have been drunk at the Shedd Aquarium cocktail party, which immediately followed his visit to the JW Marriott. Dent was at Constellation NewEnergy’s cocktail party at the Shedd Aquarium for about an hour an a half. Yet Constellation NewEnergy does not allege, and has not presented any witness who has alleged, that Dent was drunk at the Shedd Aquarium event.

Though Constellation NewEnergy knew that the Mayor of Waukegan was Dent’s guest at the Shedd Aquarium party that evening, its supposed third-party investigator never called the Mayor of Waukegan to ask if he saw anything.

Based on Constellation NewEnergy’s own allegations, Person B, their supposed eyewitness, was not even at the Shedd Aquarium when the groping incident is alleged to have occurred. Rather, he was inside the JW Marriott Hotel at 151 West Adams Street.

The Witness to the Alleged Groping Had X-Ray Vision

As a kid I used to watch reruns of The Adventures of Superman (1952-1958) starring George Reeves as Clark Kent, the mild-mannered reporter for The Daily Planet newspaper. In that TV series, X-ray vision was one of Superman’s superpowers. Constellation NewEnergy’s independent third party investigator believes that Person B, their supposed eyewitness to the alleged groping, had X-ray vision better than Superman’s since Person B could see through 1.6 miles’ worth of concrete and steel buildings, all the way from 151 West Adams Street to 1200 South Lake Shore Drive.

Constellation’s Person B can see through tall buildings.

That’s quite a trick.

Constellation NewEnergy’s claim that it had an independent third-party investigator confirm the accusers’ allegations is inexpressibly ridiculous. Constellation refused to name its supposed investigator, perhaps to spare him or her being imprinted with a mark of indelible ridicule by having to explain how their only witness to the alleged groping saw everything through 1.6 miles’ worth of steel, concrete and downtown Chicago buildings.

Whoever Constellation’s investigator was, they make Inspector Clouseau look like Sherlock Holmes.

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Consult the Negotiator is the podcast of Marc Siegel, a leading labor and employment attorney in Chicago. Marc’s podcast series focuses on strategies and tips for negotiation and settlement of disputes. Marc was kind enough to invite me on as a guest to discuss taking on utilities and power suppliers, and approaches to settlements with those types of adversaries. It’s the May 19, 2021 episode, so if you’d like to hear yours truly, please listen to Consult the Negotiator wherever you get your podcasts. Thanks!

UPDATE 5.24.2021: Here’s the link to the podcast:


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Roll out the barrel, we’ll have a barrel of fun…

Around April 20 there were headlines about oil “going negative.” However, it’s easy to read too much into the headlines: no gas station was going to pay consumers to fill up their tanks.

What really happened was that the NYMEX West Texas Intermediate (WTI) May (then the prompt month) futures contract went down to negative $37.63 per barrel. That’s the first time that the WTI contract had ever gone into negative territory, so it was an extraordinary event by any standard. Still, only the May contract went negative; contracts for later months, June, July, etc., were still positive.

Several factors came together to push the May WTI futures contract price below zero, chief among which was the precipitous drop in demand for oil due to the coronavirus pandemic. Energy-intensive economies around the world ground to a halt. Car and truck traffic fell off sharply, as did air traffic. The decline in oil use meant that refineries cut back on output, and therefore purchased less. As if that were not enough, shortly before the coronavirus lockdowns hit full force, Saudi Arabia and Russia failed to agree on oil production quotas. That started an oil price war that flooded the international market with a huge oversupply of crude oil. Oil storage facilities around the globe started to reach maximum capacity. That’s important for the NYMEX WTI contract because it’s physically settled, meaning that if you hold a buy (long) contract that’s still open (i.e., not offset by a sell (short) contract), you have to take physical delivery of the huge quantity of petroleum represented by that contract. By way of comparison, the Brent futures contract, the other oil benchmark, didn’t follow WTI into negative territory; unlike the physically-settled WTI futures contract, the Brent is cash-settled against the Brent index price. Storing oil costs money. The oil supply glut meant that traders holding May WTI contracts had to settle out at a negative price because the commodity had become a liability rather than an asset.

Historically, oil prices have always been subject to big ups and downs. Back in July 2008, Brent crude traded at $147.27/bbl. By December 2008, that price had fallen to $30.28/bbl. Petroleum price stability is the exception, not the rule.

Generally speaking, demand and supply in the oil market are relatively inelastic, meaning that a price increase doesn’t immediately translate into a decrease in consumption because oil is difficult to replace quickly as a fuel or industrial commodity. Likewise, if oil prices fall, supply doesn’t immediately fall far enough to bring prices back up. The marginal cost of continuing to run existing oil wells (as opposed to the very high cost of bringing a new oil field into production), and the cost of plugging a well and then reopening it in the near term, mean that oil supply will not fall off radically when there’s a price drop. Oil supply and demand changes do have effects over the medium- and long-term, though. For example, back in the 1970s oil price shocks resulted in much higher prices to consumers, but prices did go back down. But those price shocks caused a shift away from oil as a generating fuel for electricity over the long term, as natural gas and nuclear power became favored generation types.

The history of oil prices is largely a history of attempts by oil producers to control the price by controlling supply. The most recent of these attempts was the failed negotiations between Russia and Saudi Arabia regarding output reductions in order to maintain price levels. Over the past twenty to twenty-five years, Saudi Arabia, with the largest readily accessible oil reserves, has played the role of swing producer. In the early 20th century, Rockefeller’s Standard Oil played that role. A swing producer can turn the oil spigot on or off to keep prices stable. And price stability is key because it helps to ensure a consistent long-term demand. If demand starts to rise quickly, the swing producer will provide additional supply. If demand starts to fall, it will cut back. But the swing producer (say, Saudi Arabia) is not the only seller in the market, and as the swing producer tries to exercise countervailing price pressure to maintain price stability, its competitors will step in to capture marginal sales on the way up or down. Being a swing producer is very expensive proposition, and the allure of capturing marginal sales while the swing producer bears the cost is one of the reasons why cohesion is so elusive for cartels like OPEC.

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War on Christmas

A Parliamentary soldier breaks up a Christmas celebration, ca. 1645.

Remember the alleged War on Christmas that Fox News pounds every year in order to pour gasoline on the flames of the Culture Wars? For about two decades Bill O’Reilly, formerly one of the chief strategists of the victimhood racket that is Fox’s War on Christmas, used this non-existent war to sell the two products that his viewers simply couldn’t get enough of: grievance and rage.

What does the War on Christmas have to do with the present push to reopen the U.S. economy?

For that, we go back once again to the period of the English Civil Wars (plural), which, believe it or not, is a nearly inexhaustible source of information for understanding the United States in the 21st century.

Christmas in seventeenth-century England would be very recognizable to contemporary Americans. Churches, homes and other buildings were decorated with holly and ivy. Religious services on Christmas Day were well-attended. Gifts were exchanged with family and friends. If you were in one of the well-off social classes, you’d give Christmas boxes with little gifts and sweets to your servants, your tradesmen and maybe even the poor. Just as in Dickens’ A Christmas Carol, the holiday dinner was a great feast, with bumpers of brown ale, roast beef, ‘plum-pottage’ and minced pies. One of the favorites was a block of Stilton cheese submerged in that brown ale, and, if reports are believed, this dish gave off an aroma as pungent as that of an un-emptied chamber pot at mid-morning. People danced, sang, played card games and went to see plays and mummer parades. These plays were hardly morality tales. The biggest difference, of course, was that their Christmas celebrations went on for twelve days, which is where we get that repetitive partridge and pear tree carol that’s still with us today. (Maybe the idea was to take a swig of ale for each of the twelve days and see if you were still upright at the end of the song.)

None of this sat well with the Puritans running the Commonwealth. To them, the celebration of Christmas was nothing more than “a popish festival with no Biblical justification,” an excuse for “wasteful and immoral behaviour…with the [t]rappings of popery and rags of the beast.”

So in 1644 the Puritan-led Parliament banned the celebration of Christmas and, by law, replaced it with a day of fasting and prayerful contemplation. Soldiers patrolled the streets of London breaking up any parties and seizing any food they suspected was for a Christmas meal.

What’s important for today’s coronavirus crisis is that the Puritans ordered all shops and markets to stay open throughout the 25th of December and the eleven other days of Christmas. This was a signal failure of the Commonwealth. The shops and businesses didn’t re-open, and the citizenry didn’t leave their homes to patronize England’s commercial establishments. More importantly, the Puritans created an undying ill will against them for trying to take Christmas away from the English people. The Puritans’ Old Testament sentiments undoubtedly contributed to H.L. Mencken’s definition: “Puritanism: The haunting fear that someone, somewhere, may be happy.”

There’s a lesson here for Trump, who thinks that, following his abject failure to prepare for and meet the Covid-19 crisis, he can reopen the economy by fiat. When a government attempts something beyond its reach, most likely it will not just fail, but will produce a result directly opposite to that which it wants to achieve.

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An Ethiopian Air Boeing 737

Following two crashes of Boeing 737 Max 8 commercial jetliners for apparently similar causes — the plane’s autopilot mechanism took over and caused the plane to suddenly go nose-down during take-off — news outlets have reported that similar complaints about the 737 Max 8 have been registered by U.S. pilots over the past several years, although no accidents have occurred.

The important thing, though, is where those pilots registered their complaints.

They registered them in a federal government database.

An anonymous government database.

No names of pilots are given. No names of airlines are given. According to the news reports, this anonymous reporting facility is provided by the U.S. government so that commercial airline pilots can make these reports and complaints without having to worry about “repercussions to their own careers.”

The flying public (i.e., people like you and me) should stop and think about that for just a moment.

You board an airplane at an airport. But the big airlines whose planes you’re getting on, the companies to whom you are entrusting your very life, are so prone to retaliate against a pilot who reports a problem that the United States government has to intervene and provide an anonymous reporting system so that pilots can raise life-and-death issues without worrying about whether they’ll put themselves out of their jobs.

There may also be pilots who have witnessed problems with their aircraft who, despite the existence of this anonymous reporting service, made no complaint because they didn’t trust that system and didn’t believe that their report would remain anonymous.

The next time you hear that fugazy little jingle about flying the friendly skies of Acme Air, think about that anonymous database, about why it’s necessary, and then draw your own conclusions about what those airlines really think about the safety of the flying public.


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Amazon’s Jeff Bezos – An “Average” Guy

Last week Jeff Bezos, the richest man on Planet Earth with a reported $100 Billion in net worth, decided that Amazon would no longer consider building its Headquarters 2 Project (HQ2) in Long Island City, New York. Amazon had never made any commitment to build in New York, and in fact it’s still looking at locations in other states. But feelings of unrequited love have spurred critics on both the left and the right to complain. The right complains that the left is anti-business. For its part, the left is split: some complain about lost jobs (even though they didn’t exist yet), while others argue that the deal was a huge give-away and unnecessary to boot.

Based on public information, Amazon’s gross annual revenue for 2018 was $233 Billion, a 30.9% increase from 2017’s annual gross of $178 Billion. For our purposes, we’ll forget all about what Amazon may have earned, gross, in any prior year, and what it may have done with that money, whether pay it out in dividends, re-invest in the company, etc. We’ll give Amazon every benefit of the doubt by being conservative on its revenues, as well as conservative on what it was supposed to get from various New York public piggy banks.

Amazon canceled consideration of New York City as a home for its new HQ2 because of friction with various political players in NY who opposed the project. We’re told that opposition was due chiefly to the proposed economic incentives to Amazon that would be provided at public expense. So what was Amazon supposed to get in this deal? Reports over the last few days use a figure of $3.0 Billion, but according to news reports from last November, the real total appears closer to $2.6 Billion. Still a lot of money, but none of the current reports go into same detail as those from November. Based on the November reports, the gist of the deal was this:

  • $1,200,000,000: Amazon was going to receive $1.2 Billion in NY State tax credits through the Excelsior Jobs Program if it created 25,000 net new jobs in New York State with an average salary of $150,000 per job by June 30, 2028. Without reviewing the actual documents, we can’t say whether this 25,000 job/$150,000 average salary requirement was a condition precedent to Amazon’s receipt of the tax credits, or whether those credits had some kind of best efforts fudge factor. Giving Amazon the benefit of the doubt, we’ll assume this requirement is a condition precedent.
  • $505,000,000: New York State would give Amazon a grant of $505 Million to reimburse it for the cost of building its new office space in Long Island City. (Subtotal: $1,705,000,000).
  • $325,000,000, netted to zero (-0-): Another reported cash grant consists of $325 Million from the Empire State Development Program. Again, without having seen authoritative documents, it’s not clear whether this $325 Million is part of, or in addition to, the $505 million grant mentioned above. Giving Amazon the benefit of the doubt, we’ll regard it as part of the $505 million grant, and discount it entirely. (Subtotal: still $1,705,000,000).
  • $900,000,000: New York City, through its Relocation and Employment Assistance Program (REAP) would have added another $900 Million in grants. (Subtotal: $2,605,000,000).
  • – $-0- : New York State and New York City officials had promised to either rehab or build new infrastructure and mass transit facilities that serve the area Amazon would occupy in Long Island City. This would be public money as well, though review of the news reports did not disclose any definite dollar amount or commitment. Because these projects, if completed, would benefit the public at large and not just Amazon and its proposed new HQ2, we’ll give Amazon the benefit of the doubt and disregard any public dollar commitment public transportation and infrastructure improvements.

The total estimate of public dollars to be spent for Amazon’s benefit is thus $2,605,000,000; or just call it $2.6 Billion. The punditocracy would have us believe that Amazon nixed its Long Island City plans because of the difficulty of obtaining from New York (state and city) tax and other incentives that amounted to just a little over one percent (1%) of its gross revenues for each of the years 2018 and 2017.

Unlikely, but we’ll run with it anyway.

Some proponents of the Amazon project argue that this really isn’t public money. That is absurd. Tax abatements, tax credits and deductions, and grants from government agencies are all sourced, whether directly or indirectly, from public money. A state tax credit is public money of the state: it reduces a tax otherwise payable to the state on a dollar-for-dollar basis. Even the most ardent supporters of Amazon’s project have to admit that there’s no such thing as a free lunch.

Let’s do a little quick math. As Mark Twain said, there are lies, damn lies and statistics, so let’s revisit Amazon’s promise to provide an “average salary” of $150,000 for 25,000 net new jobs. The pundits bemoaning New York’s loss of Amazon’s HQ2 take this to mean 25,000 jobs paying $150,000 each. But remember that old joke about the statistician who had his head in an oven and his feet in a freezer. When asked if he was okay he replied, “On average, I’m just fine.”

The federal minimum wage is currently $7.25 per hour. That minimum wage rate hasn’t been increased since 2009. If a minimum wage employee works a full year (52 weeks/year), he or she will gross $15,080 per year.

Bezos will soon marry a woman who will be his second wife. Bezos could hire his new spouse as CEO of the New York City Division of Amazon at a salary of $3,385,000,000 ( net new employees = 1). She could have her paychecks direct deposited to their joint checking account, should she so wish. As a practical matter, that money would be coming back directly to Bezos.

That leaves Bezos with another 24,999 new employees to hire. He could hire every single one of them at the federal minimum wage of $7.25 (earning just $15,080 per year). By doing this, Bezos meets his requirement to create 25,000 net new jobs at an “average” salary of $150,000 per year. In fact, under that employment scenario he’s exceeded that threshhold by about $480 (the average salary would be $150,479.40, to be exact).

Would that happen? Maybe not. Amazon would need some high-level and mid-level management employees and non-management supervisors, etc.

Still, you can put those numbers on your calculator and play with them any way you like for as long as you like, and you can come up with numerous distributions of 25,000 salaries that keeps the vast majority of Amazon’s prospective Long Island City employees at minimum wage while still enabling Bezos to claim $1.2 Billion in NY State tax credits.

Next time we’ll take a look at corporate welfare for Amazon.

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Sen. Elizabeth Warren (D-MA)

Senator Elizabeth Warren (D-Massachusetts) has suggested a wealth tax of 2 percent on assets above $50 million, and 3 percent on assets of more than $1 billion. She estimates that such a tax, which would by its nature be limited to the very rich, could generate $2.75 trillion in revenue over a decade. To paraphrase the late Everett Dirksen, a trillion here, a trillion there, and pretty soon you’re talking real money.

Starbucks billionaire Howard Schultz and former NYC mayor billionaire Michael Bloomberg have, of course, slammed Warren’s proposal as a gateway drug to Venezuela-Maduro style socialism. Continued critiques from Schultz, Bloomberg and the billionaire class will probably do more to garner support for Warren’s proposal than she herself could do with a thousand townhall meetings.

Schultz and Bloomberg apparently have forgotten that while they have ascended to levels of wealth that would make Croesus look like a homeless person, hundreds of millions of Americans (and Britons, and Europeans, etc.) have been undeniably left behind by the Great Prosperity of globalization and financialization of the economy. Wealth taxes have been proposed before, though not in the U.S.

Towards the end of the First World War, Great Britain considered imposing a wealth tax. Throughout the war, Great Britain not only had to equip and supply its own forces, it also had to advance funds to its allies France, Russia and Italy since none of them had enough cash to purchase necessary war matériel. By 1917, the cost of the war, including subsidies to allies, had put unprecedented strain on Britain’s national budget.

During the first three years of the war, taxation rates in Great Britain had increased significantly, and the levels of income to which the tax was applied were lowered. In consequence, many segments of the population that had never before paid income taxes were moved onto the tax rolls. This was accompanied by some erosion of civilian support for the war. In Parliament, Labor members argued that the working classes were bearing a disproportionate share of the war’s cost. Coal miners in South Wales even staged a tax strike in 1917. Labor proposed a tax on capital to ease the deficit, but the Tory constituencies opposed additional taxation generally, and a levy on capital in particular.

Ultimately, the British Treasury rejected any capital levy over concerns that it would cause a slump in asset prices because asset holders would try to raise capital by sales of those assets. That would depress capital markets and, most worrisome of all, possibly reduce the United States’ confidence in the soundness of Britain’s economy.

Of course today, despite nearly two decades of continuous foreign wars, the U.S. is not in the position Great Britain occupied in 1917.


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Traditional technology, superhuman application.

I was on the road yesterday and realized how we’ve come full circle on payphones, that ancient technology (before the era of the cellphone) that enabled everybody to stay in touch, more or less. It even gave rise to new idioms that are still in use, even though the machinery that gave rise to them is long gone. In the 21st Century, you can’t “drop the dime” on somebody (i.e., call the authorities to report somebody for a crime) because there’s nowhere to drop the dime. Payphones used to cost a dime, but where is there a payphone around now? The county jail?

In the old-style payphone, like the ones Superman used to avail himself of, you’d go into a phone booth and close the folding glass door to shut out a bit of the street noise. In other words, you’d rent the phone for a dime, and the booth was free. (Why did Clark Kent think that changing in a phone booth, with clear glass panes, would help maintain his secret identity? It’s one of the Great Mysteries of the 20th Century.)


Some people really liked phone booths. 

Then the booths went away and were replaced with phone kiosks: a payphone surrounded by a big metal hood that might give you a little protection from the rain, but not much.

Then came the era of the cellphone, and payphones gradually went the way of the crossbow, the walled city and the eight-track tape.

Now, we’re in the era of the road warrior, but even a warrior needs a quiet space for an important call every now and then. Enter the rent-a-quiet-booth business. In coffee shops and malls and airports you may see these brightly colored booths with plush seating, outlets for your charger and USB ports. They put the old-style phone booth to shame. You rent them by the hour, and they claim to be soundproof (or close to it).

And thus we’ve come full circle. In the old days the booth was free and you rent the phone. Now you rent the booth and bring your own phone. And it costs a lot more than a dime.

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In response to the Cambridge Analytica/data-scraping crisis, Facebook’s CEO Mark Zuckerberg has said he’s open to “the right regulation.”

You should be very afraid.

Companies as big as Facebook don’t recoil from regulation. They seek it. Regulation brings inestimable advantages, chief among which is the opportunity to capture the regulator. One need not look far to find prior examples.

In the run-up to the Great Recession of 2008, the Federal Reserve under Alan Greenspan treated the largest banks and mortgage lenders not as entities they regulated but as clients they had to help.

The Nuclear Regulatory Commission would be better known as the Nuclear Plant Approval and Preservation Commission.

Nuclear regulators in Japan looked forward to employment with Tokyo Electric Power Company, which had predictable effects on their reviews of plants like Fukushima. These are just a few examples, and we haven’t even touched Big Pharma.

Creation of some new commission to regulate privacy matters on social media would provide a juicy target for cooptation by Facebook’s immense wealth. No federal agency (and presumably it would be a federal, rather than a state, agency) can compete with Facebook’s immense resources, and Zuckerberg’s friends in Congress could control its funding levels year by year. As with Fukushima, regulators would view their time at the agency as a rung on the ladder to a higher-paying job with Facebook. A new statute granting this commission jurisdiction over privacy issues in social media could insulate Facebook from class actions if such matters were reserved to the new agency’s expertise.

When Facebook talks about “the right regulation,” he has in mind a well-trained regulatory spaniel that will run and fetch the frisbee no matter how far Zuckerberg flings it.

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Tax Reform

The GOP-passed tax reform law, a/k/a the Tax Cuts and Jobs Act of 2017, lowered the corporate federal income tax from a maximum of 35% to a flat rate of 21%.

Numerous transmission utilities file tariffs with the Federal Energy Regulatory Commission that are based on a cost of service revenue requirement. The expense of federal corporate income tax is one of those costs of service. When a corporation’s tax rate goes down from a maximum of 35% to a flat 21%, its income tax expense goes down, and thus its cost of service revenue requirement goes down. So, one would think that when transmission utilities’ tax rates go down, as they have, that benefit might flow through (or is that trickle down) to ratepayers.


No transmission utility filed any amendments to its tariffs to reflect the new, lowered tax rate. Maybe they thought nobody would notice it, and they could pocket that 14% difference. (“Oh boy!!!).

So on March 15, 2018, FERC opened a series of new proceedings requiring that these transmission utilities either lower their rates to reflect the tax cut, or show cause why they should not be required to do so.

Your tax dollars at work.

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