Voting Habits of U.S. Adults
Nov 10th, 2003 • Posted in: Statline
Here are two incontrovertible perceptions about our age: Complexity is rising, and trust is ebbing.
Take these perceptions separately and each strikes us as obvious. Take them together and we can see why the crisis in the mutual fund industry raises such alarm.
The rise of complexity is easy to document. It’s evident in technology, with the increases in the speed and power of computers. And it’s evident in the sciences, where cellular biology vies with cosmology and quantum mechanics to present the most gee-whiz discoveries. Watching today’s proliferation of intricate, exacting, and detailed ideas, I wonder whether experts in any of these fields can comprehend the other fields — the way scientists in the 1950s could read Scientific American and grasp each others’ conceptual territories.
The ebbing of trust is similarly easy to trace. From Enron and Arthur Andersen to Sammy Sosa and Kobe Bryant, from Jayson Blair to the Catholic Church, we’re spiraling downward into a perceived collapse of fidelity and integrity. When both individuals and institutions fail us, much of what we thought we could count on seems destined to let us down.
If either of these trends existed alone, we could get by. As long as the world didn’t seem impossibly complex, we could survive without trusted advisers. We’d simply figure things out for ourselves. And we’d do fine in a complex world as long as we could trust those who understood it to run it properly.
The problem comes when the trends intersect and complexity meets distrust. That’s what the mutual fund crisis is all about.
Don’t get me wrong. I’m not arguing that mutual funds are as complex as quantum theory. But complexity is relative. Consider the sheer size of this fund industry, with some $7 trillion under management. Think about the speed at which its transactions operate through a subtle set of interrelations in a complicated global trading universe.
More importantly, consider the penetration of mutual funds, in which 95 million Americans — half the nation’s households — hold investments. A lot of employees with holdings in these funds don’t think of themselves as “investors.” Investors spend their evenings learning about financial matters. Ordinary employees do other things. They may not even realize that the news about mutual funds actually applies to them. In the old days, they understood putting money in a savings account or under a mattress. Today, the relative complexity of financial matters is baffling, so they leave their money management to people they trust.
Or thought they could trust. That’s why the current collapse of confidence is so significant. Unless families are prepared to learn a lot about financial markets, they’ll have to depend on trusted advisers. When that trust fails, the massive structure we’ve created to promote retirement savings — and the huge amounts of capital thereby available to fuel the economy — is at risk.
Little wonder, then, that Arthur Levitt, chairman of the Securities and Exchange Commission (SEC) from 1993 to 2001, is so upset about the mutual funds mess. “What’s happening today,” he told the public television program “Wall Street Week with Fortune” last Friday, “is the most outrageous of any of the violations of any of the frauds we’ve seen in this century. More people were involved and the nature of the violation was an absolute rip-off of the public.”
That same day, the SEC’s current chairman, William Donaldson, told a group of investment industry professionals in Florida that the Wall Street scandals represented “a fundamental betrayal of our nation’s investors” and that “the securities industry has found itself stuck in a legal and ethical quagmire.” He expressed confidence that investment professionals would “pull the industry out of the muck,” but noted, “You can be sure that if you don’t, those of us in government will.”
The finance community likes formulas, so here’s one: The need for trust increases as the square of the perceived complexity of the financial system. Double the perception of complexity, and you need to quadruple the trustworthiness of those involved. Triple the complexity, and trust needs to grow ninefold.
The present trend is just the reverse. New complexity, it seems, has lowered the trust levels. It has simply provided the villains with new thickets in which to hide. The upshot, we fear, is that those in charge may have been systematically ripping us off. Not ripping off them, the investors, but us, the ordinary folks.
That’s why this ethical collapse is potentially so important. It has a very big footprint. If it’s not quickly contained by regulators and courts, the drain on mutual funds — as millions of ordinary non-investors thrash around without much guidance, trying to find places to put their money when they can’t trust anybody — could be significant. The drain on ethics, whose goal is to promote trust in goodness, could be even greater.
(c)2003 Institute for Global Ethics
“Here we have a man presumed to be the most prolific serial killer — a man who preyed on vulnerable young women, and I thought, as many of you did, if any case screams out for the death penalty, this was it. The mercy provided by today’s resolution is not directed at Ridgway, but toward the families who have suffered so much, and to the larger community.
– Norm Maleng, discussing last week’s announced plea bargain between prosecutors and Gary Ridgway, the confessed serial killer of at least 48 young women in Washington State. Maleng, a prosecutor in the case, was forced to choose between seeking the death penalty for Ridgway based on evidence in seven killings or foregoing the death penalty in exchange for Ridgway’s cooperation in bringing closure to the families of 41 other murder victims. (“In Deal for Life, Man Admits Killing 48 Women,” New York Times, Nov. 6)
WASHINGTON
The beleaguered mutual-fund industry took another beating last week with a series of announcements, resignations, and congressional testimony on fraud, illegal trading, and insider dealings.
Among the developments:
“The ‘unholy trinity’ of illegal late trading, abusive market timing, and related self-dealing practices that have recently come to light are matters that affect us all,” Cutler told a Senate Governmental Affairs subcommittee. “And they go right to the heart of the trust … between mutual fund and other securities professionals and the individual investor. As my colleagues and I have gathered evidence of one betrayal after another, the feeling I’m left with is one of outrage.”
A wave of charges, lawsuits, and investigations are expected in the coming weeks and months, noted the Times.
WASHINGTON
Former HealthSouth head Richard Scrushy surrendered last week to the FBI, pleading not guilty to an 85-count indictment that could carry penalties of up to 650 years in prison and more than $36 million in fines.
Scrushy, who founded the Alabama-based firm that operates rehabilitation and outpatient surgery centers, is the first chief executive to be charged under provisions of last year’s corruption crackdown law known as Sarbanes-Oxley, reported the Reuters news agency.
Scrushy was ousted from his chief executive role in March, after HealthSouth’s board was forced to admit that none of the company’s past financial statements could be trusted due to suspicions of a $2.5 billion accounting fraud.
Federal prosecutors have accused Scrushy of masterminding the fraud through a cultural “code of silence” that included incentives for underlings who played along and intimidation for those who did not, reported the Washington Post.
Fifteen former HealthSouth executives have pleaded guilty to fraud-related charges, agreeing to help prosecutors with their cases. Scrushy last week refused to join their ranks, pleading not guilty.
BRUSSELS
The European Union last gave an initial green light to banning gender discrimination in matters of insurance and banking, putting the financial sector on notice that longstanding practices may soon change.
For years, insurance firms have set premiums based on a person’s gender, such as higher auto insurance fees for young male drivers.
Banks often set tougher terms, require more collateral, or deny services altogether for female applicants seeking loans or mortgages, according to the BBC.
Such practices, though widely accepted and statistically justifiable in the eyes of the industries, are nothing short of gender discrimination, EU social affairs commissioner Anna Diamantopoulou charged last week.
“Replace the word ’sex’ with the word ‘race’ and the discrimination suddenly becomes much clearer,” Diamantopoulou told a news conference, reported the Reuters news agency.
Under Diamantopoulou’s urging, the European Commission last week approved a draft law that would make such practices illegal.
The vote prompted an outcry from the financial services sector, which said the measure would raise premiums and cause chaos in the industry.
The proposal, which will be debated next year by EU ministers, is expected to pass in 2005, according to Reuters. If approved, it would outlaw sex discrimination in banking by 2007 and in the insurance sector by 2011.
LITTLE ROCK, Arkansas
Wal-Mart Stores Inc. last week received a “target letter” from the U.S. Attorney’s office, which is accusing the nation’s largest retailer of complicity in hiring illegal immigrants to work in its stores.
The letter, indicating that the firm is formally under investigation, follows a nighttime raid on cleaning crews at Wal-Marts in 21 states last month, leading to the arrest of roughly 250 allegedly illegal workers from 18 countries, reported the Associated Press.
Federal investigators have accused Wal-Mart of turning a blind eye to the use of illegal workers in order to keep labor prices low.
Wal-Mart has denied the charges.
In interviews with the Times, federal law enforcement officials said that position is disingenuous, noting that 13 Wal-Mart subcontractors pleaded guilty to hiring illegal workers in 1998 and 2001, suggesting a long and obvious pattern of abuse.
Those law enforcement officials said that while Wal-Mart may not hire the illegal workers itself, it is likely aware that its subcontractors do so via an elaborate shell game of opening, hiring, shutting down, and reopening with a new company name.
Critics claim that the practice of hiring illegals has hidden costs, both to the illegal workers who face harsh conditions, long hours, and lack of healthcare, and to competitors that play by the rules.
“When you don’t pay taxes, don’t pay Social Security, and don’t pay workers’ comp, you have a 40 percent cost advantage,” Lilia Garcia, executive director of the Maintenance Cooperation Trust Fund, which fights the use of illegal aliens, told the Times. “It makes it hard for companies that follow the rules.”
The Times report says that Wal-Mart rivals Kmart and Target, as well as three California supermarket chains, have been targeted for similar violations.
Wal-Mart, which faces grand jury hearings in mid-December, said it “was not surprised” by last week’s developments, saying it had anticipated the charges from “comments made by federal officials after the raids.”
Over the weekend, nine of the immigrants captured during the raids sued Wal-Mart for $200,000 in overtime pay, accusing the company of discriminating against them because of their illegal status. The plaintiffs, all from Mexico, charged Wal-Mart with “knowingly and with the intention to defraud the United States government” allowed the hiring of illegal workers “in order to save money on cleaning service” contracts, reported the New York Times.
LOS ANGELES
Prompted by school shootings and corporate scandals, schools across the country have begun implementing programs aimed at integrating ethics and academics to produce not just smart graduates but good people.
The movement, broadly known as character education, was chronicled last week by the Los Angeles Times, which focused much of its attention on St. Genevieve High School, a local 420-student Catholic school.
From teaching sports teams to respect their opponents to having seniors welcome freshman with hospitality instead of hazing, St. Genevieve has been hailed as a leader in the field.
It recently was given one of 10 “National Schools of Character” awards by the Character Education Partnership, a group based in Washington, DC, that says the push for such programs has accelerated since the 1999 Columbine High shootings.
St. Genevieve principal Daniel Horn agrees, saying the Columbine killings pushed him to focus on kids’ characters as much as their grades.
“You don’t pick on the very youngest or the newest or the most vulnerable,” Horn told the Times.
“Character is our spirit. It’s who we are. It’s the very core of our being. Now, the current mood of the country is too much about test scores,” Horn added. Society is “not concerned enough about, ‘Are we graduating good people?’”
The Times report notes that while 14 states, including California, now mandate some form of character education, only a few fund the initiatives. The federal government now funds character education programs in 47 state school systems.
LONDON
The biggest U.K. teachers’ union last week said it may defy the government and boycott several rounds of required student testing, claiming the tests undermine their professional judgment and role in the classroom.
The threat from the National Union of Teachers (NUT) follows heightened tensions between the union and the government, which so far has refused to negotiate over the contentious issue of testing young students.
Teachers say the required tests, especially those administered to students aged 7 and aged 11, do more harm than good by adopting a unilateral approach to young students still finding their academic stride.
A survey of NUT members indicated that 82 percent would support a boycott of required tests for seven-year-olds, and 71 percent would refuse to administer the tests for 11 year olds, reported the BBC.
Instead of such one-size-fits-all exams, teachers should “be able to use their professional judgment to their pupils’ benefit and in support of their primary purpose of educating children,” NUT general secretary Doug McAvoy said.
The government says it, too, has the best interest of students in mind, insisting that the tests ferret out underperforming classrooms and help underserved students get noticed and get help.
“National testing has a very clear moral purpose. It means we have high expectations for every single child,” U.K. Education secretary Charles Clarke said last week. “It enables schools to tailor their teaching to each child’s needs. And we can compare each child’s progress with that of other children.”
NUT members will receive ballots on the boycotts over the next several weeks, with a final decision expected in December.
If a boycott is approved, it will be the second such industrial action. In 1994, another teachers union — the National Association of Schoolmasters Union of Women Teachers — staged a similar protest, noted the BBC.
FOUNTAIN VALLEY, California
A religious-rights group has launched legal action against a California high school that refused to allow a handful of seniors to wear T-shirts spelling out pro-Christian messages in their class’s yearbook photo, the Los Angeles Times reported last week.
On October 21, Fountain Valley High School said the 13 students, whose T-shirts lined up to make messages including “Jesus is the way,” could not stand together during the photo shoot. Eleven left in protest.
The Pacific Justice Institute, a legal group focused on religious freedom issues, accused the Huntington Beach Union High School District of violating the students’ constitutional rights to free speech.
At the heart of the conflict is whether the speech of individuals, especially when voicing an organized message, becomes school speech when printed in an official publication such as the school yearbook.
Mix in the public school’s status as a government entity, and the situation becomes more complicated given the constitutional separation of church and state, noted the Times.
Assistant superintendent Carol Osbrink said that co-opting a group event to espouse a collective message crossed the line — regardless of the nature of the message.
While an individual may permissibly wear a message T-shirt, a coordinated action “says to the public that the school endorses that message, as opposed to being the beliefs of an individual student,” Osbrink told the Times.
“The message could have been anything, and the district still would not have wanted to be a party to endorsing it,” she added.
The Huntington Beach Union High School District, which sits just south of Los Angeles, is expected to reply soon to the Pacific Justice Institute’s complaint, according to the Times.
Special to Newsline from Canadian correspondent Errol P. Mendes
OTTAWA
Many Canadians are shocked at the story being told by 33-year-old Canadian citizen Maher Arar, who claims that U.S. and Canadian officials conspired to have him deported to Syria because they knew he would be tortured there and might supply information useful to U.S. authorities.
Arar was detained at New York’s JFK Airport in transit back to Canada after a holiday in Tunisia.
He was recently released by Syria after intense pressure from the Canadian government and lobbying by human rights groups and his wife, Monia Mazigh.
Arrar alleges that U.S. authorities detained him on September 26, 2002, even though he was traveling on his Canadian passport, and sent him to a New York detention center for several days before sending him to Syria, his birthplace and the other country of which he was a citizen but had not returned to since he was 17 years of age.
Arar had pleaded with U.S. authorities to be sent back to Canada, not Syria, where he knew he would be tortured, he said.
In Syria, he was held in a cell for more than 10 months. He describes the cell as a grave, which was in almost total darkness and measured three feet by six feet.
Arar says he was tortured and made to confess to going to Afghanistan. He discovered that a fellow Canadian, Abdullah Almalki, was also there and being tortured even more severely.
He is alleging that Canadian security agencies may have supplied information to U.S. security agencies that Almalki was a co-signer of a lease taken out by Arar in 1997 and had other links with Almalki.
Almalki has been investigated by the Royal Canadian Mounted Police in connection with the supply of computer equipment that may have ended up with a terrorist organization.
Arar claims that he was a friend of Almalki’s brother and that Almalki only co-signed the lease because his brother had been detained by other business. Arar, who is adamant that he has never visited Afghanistan or has any terrorist links and only confessed to stop the torture, is now asserting that because of his minor acquaintance with Almalki, the Canadian and U.S. authorities conspired to deport him to a country where he could be tortured to extract further information from him.
There is a growing demand by Canadian members of Parliament from all parties and many human rights groups that a public inquiry be held to find out the extent of Canadian complicity in what is regarded as serious human rights violations by not only Syrian authorities, but also by Canadian and U.S. authorities.
WASHINGTON
Hoping to put a little more bite into its bark, Microsoft Corp. last week upped the ante in its fight against malicious virus writers, posting $250,000 bounties on the identities of two hackers the company has yet to catch.
The bounties — put on the writers of the Blaster and Sobig worms — are the first announced under a new $5 million bounty fund established by Microsoft and announced last week.
The company’s announcement comes one month after Microsoft admitted that security concerns have begun to affect its bottom line, reported the Reuters news agency.
“These are not just Internet crimes, cybercrimes, or virtual crimes,” Microsoft general counsel Brad Smith said at a news conference. “These are real crimes that hurt a lot of people.”
Blaster and the latest variant of Sobig wormed their way into computers in August and September, infecting more than 500,000 computers, crashing thousands of systems, and clogging the Internet for days.
While U.S. investigators have leads on the authors of three of the six Blaster variants, the author of the original worm has yet to be fingered, reported Reuters.
While many hackers aim to help — writing potentially malicious code that they submit to antivirus firms for cataloguing in a “zoo” — others aim to wreak havoc, exploiting flawed code for the fun and fame of it, noted Reuters.
With last week’s bounty announcement, Microsoft hopes to put a chill on such code writers, turning their admirers and colleagues into possible informants, according to PC World.com.
“They should think, ‘Uh-oh, there is somebody who knows what I am doing and they have an incentive to turn me in because there is a reward,’” said Microsoft corporate attorney Hemanshu Nigam.
From the Gallup News Service:
“Just how different are today’s young voters from older voters? A recent CNN/USA Today/Gallup poll examined the attitudes of the youngest voters in the country and finds a mixed picture: 18- to 29-year-olds’ attitudes significantly differ from the attitudes of those aged 30 and older in many ways, but also are quite similar in others.
“Young Americans are more likely than older Americans to describe their views on economic issues as liberal, to identify themselves as independents rather than Republicans or Democrats, and to rate the government and the president positively. They also follow news about politics less closely than older people do and are much less enthusiastic about voting.
“On specific issues facing the country, they are more supportive of homosexual marriages, Social Security privatization, and the maintenance of different cultures in the country. Despite more liberal views on some moral issues, younger Americans and older Americans have similar views on abortion….
“Americans aged 18 to 29 are somewhat less likely than older adults to affiliate themselves with either the Republican or Democratic parties. Nearly half (45 percent) of young adults say they are politically independent, with the remainder more likely to identify themselves as Republicans (30 percent) than as Democrats (24 percent). By comparison, only 38 percent of the older adults say they are independents, while 34 percent identify themselves as Republicans and 27 percent say they are Democrats.
“Some experts believe that an affiliation with one of the political parties grows over time the more people vote and become familiar with the political process. That younger voters are still developing their political orientations gives the young voter segment particular importance to politicians who try to influence that process and thus create lifelong partisans. The downside of the youth vote, on the other hand, is the fact that in the short term, young people are much less like to vote than those who are older….
“Despite lower participation in the political process — voting at relatively low rates and not following politics very closely — young Americans actually express considerably more trust in the government than do older Americans….
“Younger and older Americans express somewhat different views about a variety of issues facing the nation.
“There is little difference in the views of older and younger Americans on abortion. Twenty-six percent of 18- to 29-year-olds say all abortions should be legal, 52 percent say abortion should be legal only under certain circumstances, and 22 percent say all abortions should be illegal. Similarly, among older people, 26 percent say all abortions should be legal, 57 percent say only certain circumstances warrant the legality of abortion, and 16 percent say all abortions should be illegal….”
“The best test of a man is authority.”
– Montenegran proverb
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