Saturday, October 31, 2020

Typhoid Trump's COVID-19 Death Count Includes 700 Deaths from Rallies and 99,300 New Cases Yesterday

Arlington-National-Cemetery | Scattered Thoughts and Rogue Words 

The Wall Street Journal reports today that the U.S. suffered 99,300 new COVID-19 cases yesterday. The WSJ notes that this marks a new record high. COVID marches on in the U.S. with its death toll at about 230,000. Fox News reports that number does not count total "excess deaths" suffered in the U.S. which would bring the death toll to 305,000 dead Americans.

Such numbers demand reflection and context. The COVID death toll now amounts to 100 times the number of deaths Osama Bin Laden inflicted on the U.S. on 9/11. The COVID death toll more than doubles the total U.S. deaths from the Viet Nam War, the Korean War and World War I combined. It exceeds U.S. combat deaths in World War II. All this death in only six months.

The U.S. death count per capita now exceeds 70 fatalities per 100,000 people. The U.S. death toll amounts to 6 times the deaths per capita in Germany from COVID, and 10 times the death rate in Greece. Singapore boasts at least as much diversity as the U.S. and its death toll is less than 1/100th of the U.S. per capita death rate. South Korea boasts the same 4-season climate as the U.S. and their death toll per 100,000 stands at less than 1. Taiwan with a total of 7 deaths has a per capita rate that stands at 1/2000th of the U.S. death rate. In the "US political failures have driven COVID-19 morbidity and mortality."

For example, the Trump Administration raised the White Flag on COVID-19 in recent days and pushed the pseudo-science of "Herd Immunity" as its excuse for abject failure to control the contagion. Thus, White House Chief of Staff Mark Meadows stated in a live interview with CNN that: "We are not going to control the pandemic." 

This finally explains the consistent recklessness of the Trump Administration in hosting super-spreader events, mocking the use of masks, and ignoring its own guidelines for the isolation of Administration personnel infected by COVID. In short, Trump now seeks herd immunity as cover for an out of control pandemic that now rips through our population sowing deaths beyond any war, conflict or terrorist attack.

In fact, a team of Stanford economists just posted a paper demonstrating that Trump rallies leave behind localized spikes in COVID cases and they attribute 700 American deaths to these super-spreader events. Here is the (edited) abstract:

We investigate the effects of large group meetings on the spread of COVID-19 by studying the impact of eighteen Trump campaign rallies. To capture the effects of subsequent contagion within the pertinent communities, our analysis encompasses up to ten post-rally weeks for each event. Our method is based on a collection of regression models, one for each event, that capture the relationships between post-event outcomes and pre-event characteristics, including demographics and the trajectory of COVID-19 cases, in similar counties. [W]e conclude that these eighteen rallies ultimately resulted in more than 30,000 incremental confirmed cases of COVID-19. Applying county-specific post-event death rates, we conclude that the rallies likely led to more than 700 deaths (not necessarily among attendees).

Typhoid Mary only infected 53 persons with Typhoid fever!

I urge all thoughtful Americans to read this study prior to casting a vote for Trump. The reckless disregard of U.S. citizens evinced by the Trump campaign in terms of exposing Americans to more death and disease renders Trump unfit to govern.

More fundamentally, the Typhoid Trump approach to COVID implies millions of deaths and long-term disabilities due to the 156 million cases we will need to reach herd immunity without a vaccine: "A strategy of going for herd immunity from natural infection would lead to a massive death toll—estimates suggests the result could be somewhere between 1 million to 2.5 million dead Americans. The U.S. health system would buckle under the weight of so many hospitalizations and ICU admissions." Only our most vicious enemies could want an American massacre of such a scale!

Very recent research shows the folly of seeking herd immunity before mass vaccination: the COVID anti-bodies fade over time.

Surging COVID cases will also crash the stock market and kill small businesses with all the job losses that follow which explains the massive support of Wall Street for Joe Biden. Herd immunity spells economic devastation.

We simply cannot afford the costs of Trump's herd immunity approach of doing nothing to control this pandemic.

Friday, October 30, 2020

Teaching "Corporate Governance" Differently in 2020

by Cheryl Wade, Harold F. McNiece Professor of Law, St. John's University School of Law

I decided to teach my Corporate Governance seminar slightly differently this semester in light of all that is happening in 2020. We have discussed the nuts and bolts of corporate governance – the roles of officers, directors and the process for nominating them; fiduciary duty; compliance; and shareholder democracy, among other things – but our discussion is taking place in the context of the corporation’s position and status in civil society. Some of my students will explore the role of public companies in addressing existential issues such as the global pandemic as a matter of social responsibility. We discussed the ability and appropriateness of public companies in addressing climate change. We considered the corporate governance failures at financial institutions that exploited consumers. Our approach this semester acknowledges the inextricable link between even the most mundane corporate governance issues on one hand and environmental and social matters on the other. 

Earlier this semester, I asked my students to think about the role of the corporate lawyer in helping companies avoid the public relations nightmares that sometimes ensue socially irresponsible behavior. Zach Sobel wrote, “imagine this, a corporate lawyer pushes their client to accept responsibility for whatever actions were alleged (assuming they actually did do what they are accused of). The public would be left with nothing to complain or hypothesize over, and the conversation moves from what the company did to how the company will respond.” Ricardo Gray agrees with Zach about the benefits of a corporation admitting wrongdoing “The corporate attorney serves the corporation so advice to have the corporation admit wrongdoing may seem backward, but after a corporation is caught red-handed remedial steps that do not leave those injured with a bad taste in their mouth, will only improve the likelihood of the corporation's success in the future.” Then Ricardo waxed poetic. “Specifically, once the corporation has caused harm to stakeholders, a corporate attorney becomes both a shield of the corporation, in that he or she will attempt to minimize liability and defend it from lawsuits and a sword, in that he or she will cut a path forward for the corporation to continue operations after the harm is caused.” 

I asked my students how firms can avoid litigation in the first place? Chris Gaine suggested that risks may be mitigated “by creating and implementing robust legal compliance systems.  In seeking to comply with the law, companies should look at relevant legal standards and aim to exceed them instead of just adhering to them.  Companies should also aim to comply with the “best practices” of a given industry, which manifest ideal ethical standards beyond what the law requires.” Greg Kramer also focuses on the potential of adequate corporate compliance. “One lesson from the spate of fraudulent, coercive, and otherwise illegal behavior of financial institutions leading up to the Great Recession (as well as more recent examples like Wells Fargo) is that these crises were not merely the result of a handful of bad actors at the top of an organization.  They involved systemic misbehavior of frontline employees across different parts of the organization.  But obviously, a board is incapable of monitoring every single operational activity of a company where the potential for misconduct exists.  Thus, boards must sift through this “noise” and focus their monitoring on key “signals” of systemic misconduct.” Federica Marini mentioned another crisis-avoidance structure that complements what Chris calls “robust” compliance. Federica writes that “while solving crises focuses on ending on-going emergencies and limiting damages to a client’s business, risk management is about finding solutions to avoid loss altogether prior to the occurrence of crises.”

Ryan Smith was concerned about another context with which public companies grappled in recent years – sexual harassment allegations. Ryan considers this problem in light of companies’ public disclosure about their investigation of harassment claims. “In the course of investigation, the firm should ask outside counsel to assess whether the company’s public statements require correction or updating based on what the investigation reveals.” Alexa Major also wrote about disclosure but did so in the context of COVID-19 and admonished firms to be careful about disclosing information about “the impact of the current pandemic on ‘business as usual’.”

All of my students submitted answers that reflect hopeful perspectives concerning the roles and obligations of public corporations. I have shared the ideas from just a few of them in this post.

Monday, October 19, 2020

Never Ever, Thought I Would See This . . . . Warren Buffett Gets Bamboozled?

Just out . . .  Berkshire Hathaway, Warren Buffet's investment firm, is suing international law firm Jones Day for fraud.  In 2017, a Berkshire Hathaway subsidiary Precision Castparts purchased Wilhelm Schulz, a German oil and gas pipemaker for $940 million dollars.  Only problem, Wilhelm Schulz fraudulently manufactured invoices, invented "phantom customers," and misrepresented their financial position during the acquisition (they were in fact at the time in discussion with insolvency representatives).  Precision Castparts, the Berkshire subsidiary, ended up losing some $755 million in the deal as the fraud and misrepresentation later became clear.  In fact, an arbitrator recently awarded Precision Castparts 643 million euros ($756 million) based on Wilhelm Schulz's true value at the time of acquisition of 157 million euros (approximately $200 million).  Because Wilhelm Schulz is in bankruptcy, it is very unlikely that Precision Castparts will recover much of any of the arbitration award.  Thus, the lawsuit against Jones Day, the lawyers that represented Wilhelm Schulz in the acquisition.

From Bloomberg:  "According to the suit, Jones Day conspired with Schulz to create a misleading picture of the German company’s value. Toward that end, the firm’s lawyers drafted documents including a securities purchase agreement and disclosure statements they knew were false, Precision claims."

This represents a rare misstep in Warren Buffet's empire, as he is recognized as one of the world's savviest investors.  If Berkshire and Precision were taken in a "fast shuffle," one has to assume that the fraud was deep indeed.

hat tip to Molly Curington, University of Arkansas at Little Rock Bowen Law School, 2L
photo: public domain

Friday, October 9, 2020

Why Are There Still So Few Black CEOs?

Stalled Progress

The number of CEOs of Fortune 500 companies who are minorities or women has inched up in the past 20 years, with Black CEOs making only tiny gains.









Note: Data are through August 2020 and may include CEOs who left during the year.

Source: Richard Zweigenhaft, Guilford College

The Wall Street Journal recently asked the question "Why Are There Still So Few Black CEO?"  In 2020, carefully culled statistics show that less than 1% of all Fortune 500 CEOs are African American, naming just four out of 500 of the Fortune 500 that are led by black CEOs.  Further, the WSJ continues in reporting that all U.S. companies with more than 100 employees, African American senior leadership stands at only 3%, while the black population in the United States is roughly 13%.  Why is African American senior corporate leadership in the U.S. so inexplicably lowe?  The chart above details the achingly slow progress for CEO diversity in the past 20 years.  

Why is this so?  Some reasons provided in the article include:

Opportunity for leadership and promotion is not equally distributed;

"Black professionals face greater obstacles early in their career, are viewed more critically than their colleagues and frequently lack the relationships that are pivotal to advancement";

Unadulterated racism;

Companies often emphasize diversity recruitment but fall short on retention efforts and advancement; 

Many companies tended to see diversity as “nice to have, but not a must have,” although in recent months based in large part on the Black Lives Matter movement, more corporations seeking assistance with board recruitment have specifically mentioned diversity as a priority.

On the issue of unadulterated racism, "One 2019 study of racial bias in hiring in the sciences found Black applicants for postdoctoral positions were rated as being less competent, hireable or likable than their white, Latino or Asian peers.  A 2014 study in which people were asked to evaluate identical legal writing samples found that people consistently found more errors and judged the writing as being poor when they were told the author was Black.  A 2017 study examining callback rates for Black job applicants found discrimination levels haven't improved in the past 25 years."

One common refrain from white leaders for failing to diversify corporate leadership is that the talent pool is too shallow.  This age-old adage is belied by the facts.  From the article:  "When it comes to Black advancement, one popular argument among many white executives is that there is a “short supply” of talent. . . .  In reality, . . . the pool of highly educated, experienced Black professionals has never been greater.  In 2019, 26% of Black people age 25 and older in the U.S., or seven million people, had completed at least four years of college, up from 15% in 1999, according to federal data. Among white[s] . . ., that figure was 36%, or 63 million, up from 26% in 1999.  More than 13% of master’s degrees were given to Black graduates during the 2016-17 academic year, up from 9.4% in 2000-01."

The largest takeaway from firms that successfully diversify their corporate board is commitment.  Making a commitment to add diverse talent requires affirmative effort and the research indicates that diversity grows corporate profits.

hat tip to Will McGrath, 3L Arkansas Little Rock Bowen School of Law

Wednesday, October 7, 2020