I have a confession to make.I don’t eat, sleep, and breathe the practice of law.In what passes for spare time, I teach, I write articles and books, and I lecture.But every now and then, my gaze drifts over to that Mexican wrestling mask I brought back from a trip to Cancún, and I think “What if . . . ?”Could I battle it out in courtrooms by day, and by night enter a wrestling ring as “El Abogado Luchando” (The Fighting Lawyer) in the lucha libre?Okay; actually, I don’t have that pipe dream.But Chicago lawyer Tom Benno does, and he’s actually turned his dream into reality.
To casual observers, the 57 year-old Benno is your typical suburban Chicago trial lawyer.But a couple of years ago, the former high school wrestler and longtime wrestling fan had an itch he wanted to scratch. He learned of Carlos Robles, a real estate agent/wrestling promoter who was running an independent wrestling league, GALLI—Gladiator Aztecs Lucha Libre International—patterned after the “lucha libre” Mexican wrestling, complete with capes, masks, and fast-paced athletic moves.Benno and Robles became business partners, and the league started taking on some of the characteristics of American professional wrestling, featuring heroes and villains and storylines.Shortly after Benno got involved on the business end and provided legal advice, another idea struck him—why not wrestle as well?
Benno began training—losing 40 pounds, building a wrestling ring behind his wood-paneled law office and perfecting his moves.Equally important, he developed his wrestling alter ego: “Apocalypto,” a character who “plays the mediator, staying neither good nor bad, leaving audiences uncertain.”Befitting this new persona, Benno-as-Apocalypto wears a mask with one side depicting a grin, and the other a frown.Apocalypto made his wrestling debut last November, entering the ring at the AddisonParkCommunityRecCenter to the Darth Vader “Imperial March” from Star Wars.After some flying leaps off the turnbuckle, and a few more well-choreographed moves, Apocalypto had his first “victory.”
Friends and family have been mostly supportive of Benno’s masked moonlighting.While his wife Terri appreciates the fact that he has an outlet that’s gotten him into better shape—she says “there are worse things he could be doing than wrestling”—she is not completely sold on “Apocalypto.”She says “I know Tom is a lone ranger and he doesn’t fit into boxes too well . . . . I guess I just hoped this whole thing would be a like a fleeting fancy.Except obviously, it’s really not.”Benno himself knows that, at 57, his days in the wrestling ring are numbered.But he’s thoroughly enjoying it while he can, and even finds similarities between his profession and his avocation.Practicing law and wrestling, he says, both require you to “be dramatic, have presence and be spontaneous and always think on your feet.”
Tom Benno is not the only lawyer who moonlights by slamming into people.Amy Dinn is a 36 year-old civil litigator by day with the Gardere Wynne Sewell law firm’s Houston office.But at night, she becomes “The Prosecutor,” competing with a roller derby team in Houston.Dinn competes in 3–4 games a month at the local and national level.Dinn notes that “The roller derby of today is not the same as it was in the Seventies.It is an empowering sport for female athletes.It’s also a sisterhood.”It’s also a painful one; the 5’10” Dinn works out at least 3 times a week, in addition to 3–4 team practices each week that can last up to 3 hours, and she’s endured reconstructive knee surgery and back surgery.Dinn says that co-workers were surprised at first about her unusual hobby, but that the physical demands of it made keeping her roller derby competition impossible.“The first time you get hurt the cat’s out of the bag at work.I come in bruised or walking funny and co-workers ask questions.”Like Tom Benno, Amy Dinn also observes that her chosen sport has much in common with her day job.“Litigation is a high-stress profession,” Dinn notes.“Sometimes you have to be aggressive and stand your ground on your position.”
Young lawyer Emeka Onyejekwe took a less painful path to moonlighting and, eventually, a career change.The attorney seemingly had everything he wanted after graduating from NYU School of Law in 2006, taking a job as an associate with one of the most prestigious law firms in the country.But something was missing; Onyejekwe had a deep, abiding interest in music since the age of 8, and had even been in a band during college.After toiling less than a year in the legal trenches, the lawyer embarked upon a different path.He became hip hop artist “Mekka Don”—“the Legal Hustler.”“Mekka Don” proclaims “Music is my calling.God spoke to me and I listened.”
And, really, isn’t that what it’s all about?A law degree affords a person many opportunities, but sometimes it’s just not enough.So, even if you don’t quit your day job, you don’t have to abandon your passion—whether it’s wrestling, roller derby, rapping, or even writing.I’m sure John Grisham doesn’t regret following his dreams after long days at the courthouse.
Probably the biggest single lesson of the last few years outside monetary policy has been that the contract between top management and shareholders is broken. Top management rewards itself with ever more grandiose bonuses and option payments, while shareholders are fobbed off, not with dividends which have value, but with “share repurchases” which do not. It is truly time for shareholders to “Occupy the C-suite” (of high corporate officials who are determined to be chiefs) and demand fair treatment
Dividends are the key to sound corporate governance. They are also the solidest and most transparent method of providing shareholders with a return on their money. The solid dividend stocks of yesteryear provided the best investments of all for individual investors, because their dividends tended to increase with inflation, unlike bond coupons. Those about to retire could do no better than buy solid dividend stocks. The stocks’ fluctuation in price was of no consequence, provided the dividend continued to be paid reliably, with occasional adjustment for inflation.
This comfortable world was disrupted by the arrival of Modern Finance, in particular the Modigliani/Miller Theorem. Prior to its arrival, finance executives had calculated a company’s debt capacity by examining the worst possible recession, then ensuring that the company’s debt service (including principal repayments) would be covered by a comfortable margin during that recession. Debt was known to be cheaper than equity, but the dangers of loading up with debt had been only too clearly demonstrated during the Great Depression, at a time when bankruptcy often meant liquidation.
The Modigliani/Miller Theorem changed all this by postulating that a company’s cost of capital did not vary with its capital structure. Then the fact that debt interest was tax-deductible while equity dividends were not made leverage economically attractive. The 1978 Bankruptcy Act, allowing corporate management to stay in control (and keep getting paid) during a bankruptcy, further removed the barriers to leverage, since it now seemed that bankruptcy had cost primarily for the creditors, and not for the company itself or its management. Shareholders lost out in bankruptcy of course, but if the company was leveraged enough, their economic loss was minor and they had been paid for the risk involved. The leveraged buyout boom of the 1980s and subsequently and over-expansionary monetary policies from 1995 exacerbated the trends to leverage, short-termism, management control and speculative corporate finance.
A substantial role in this unpleasant long-term trend has been played by a further development, the replacement of dividends by stock repurchases. According to their propagandists, stock repurchases are as beneficial to shareholders as dividends, but more tax-efficient. Instead of getting returns in highly-taxed (until 2003) dividends, shareholders would make their money through capital gains, which would not be taxed at all until the shares were sold, and then only at capital gains rates.
As a replacement for dividends, stock repurchases are very unsatisfactory. For one thing, unless the company conducts a (rare) formal tender offer individual shareholders do not actually get their stock repurchased; the repurchases occur between the company and large brokers and institutional investors. Further, while stock repurchases increase nominal earnings per share, if they are carried out at prices above the company’s net asset value they dilute its net asset value per share. Thus whereas individual investors get their fair share of $100 million paid out by the company in dividends, they get nothing like their fair share of $100 billion in stock repurchases above net asset value, since the asset backing for their shares shrinks by proportionately more than the share count.
The opposite is of course true for managers whose remuneration is partly or wholly in the form of stock options. Dividends are unattractive to such management, because they reduce the share price and the value of their options. Conversely, stock repurchases both increase the value of the shares into which their options can be exercised, and ensure that the issue of shares through their options is not in itself dilutive. In extreme (but quite frequent) cases companies match stock purchases to generous options grants, without paying cash dividends. In such cases, management gradually takes control of the company, whose asset base is hollowed out by repeated stock purchases at a premium to net asset value, leverage increases ad infinitum and individual shareholders get nothing until the company maybe goes bankrupt in the next downturn, wiping out their stake altogether.
It does not help that stock buybacks are generally laughably mistimed. Modern management, obsessed by budgets, almost always fails to spot downturns in its business and the economy generally, while assuming that periods of prosperity will continue ad infinitum and indeed improve (as their budgeting process forces them to assume). Consequently, in innumerable cases (think of Netflix last year) stock repurchases are made at grossly inflated prices, intensifying the bubble in a particular stock, and are then halted after the business and the stock have turned down and management discovers there’s no money left. Worse still are the cases, frequent in 2008-09, in which stock repurchases at inflated prices are succeeded by an emergency stock issue in a bear market, as the company is found to have inadequate funding for the recession.
Now Finnov, a research collaboration sponsored by the European Union, has proposed banning stock repurchases. The group points out that such repurchases were banned in many European countries before 1996, being considered a manipulation of the market. In Europe as in the U.S. such programs have proliferated, rising in London from a value of $2.6 billion in 2000 to $14.7 billion in 2008. Finnov makes the same points as above relating to value destruction and destabilization of companies.
In the United States, we can at least take away the tax advantage of share repurchases over dividends. Dividends should be made fully tax-deductible at the corporate level, and fully taxable at the individual level, thus removing their double taxation. By doing this, much of the political salience of the “Buffett rule” would be removed, since rich people’s dividends would be taxable at income tax rates above 30%, while in reality suffering less overall tax than now. Egregious under-taxation of millionaires would then be confined to capital gains tax and to loopholes such as the charitable contributions deduction and the “carried interest” under-taxation of private equity returns.
This would give shareholders more incentive to demand dividends from managements, but the British experience of 2000-08 shows this may not be enough – in Britain the “Advance Corporation Tax” system achieves much of the effect of dividend tax-deductibility, albeit at the cost of horrendous tax complexity. Management’s incentive to engage in share repurchases could be further reduced by allowing stock option exercise prices to be adjusted for dividends paid, with appropriate tax payments by their beneficiaries when they did so. While the EU’s proposed prohibition against stock repurchases may be too draconian, they should at least be restricted to formal tender offers open to all shareholders, so that individuals can participate properly.
Overall, we must return to a financial system in which companies are built for the long term, and investors’ ideal retirement portfolio consists of shares in substantial companies, paying 5-6% dividends. The current system, in which the retired are supposed to invest in bonds with pathetically low interest rates, or speculate short-term in the stock market, buying and selling like day-traders in the hope of capturing capital gains, is far too demanding of individual investors and turns the market into a casino.
In a well-ordered financial system, the majority of shares are owned by individuals, whether in taxable accounts or through their retirement accounts. Those shares provide primarily a steady and increasing flow of dividends, suitable for investors seeking income in retirement. There are a number of changes needed for this to happen, from cutting back the estate tax (so that company founders have an incentive to keep the company in their families) to restoring monetary policies that encourage saving and depress stock prices (thereby increasing yield and reducing volatility). Recent changes in accounting standards need to be reversed, so that “mark to market” accounting of derivative positions and balance sheets and creative goodwill accounting are not allowed to distort financial statements beyond the comprehension of anyone without an advanced degree in finance. But the most direct means of moving towards this objective is simple: removing the double taxation of dividends and ensuring that management avoids stock repurchases except through formal tender offers open to all shareholders.
Shareholder capitalism is the most effective mechanism for wealth creation known to man. Managerial capitalism offers no such advantage.
There are no guarantees that dividend paying stocks will continue to pay dividends. In addition, dividend paying stocks may not experience the same capital appreciation potential as non-dividend paying stocks.
(Originally appeared in The Bear's Lair.)
Martin Hutchinson is the author of "Great Conservatives" (Academica Press, 2005)—details can be found on the Web site –and co-author with Professor Kevin Dowd of “Alchemists of Loss” (Wiley – 2010). Both now available on Amazon.com, “Great Conservatives” only in a Kindle edition, “Alchemists of Loss” in both Kindle and print editions.
Boy howdy, the pro life and pro-abortion debate sure has heated up lately. In case any of you have not kept up with the news, a highly charged debate has erupted over the resignation of my newfound hero, Karen Handel, vice president for public affairs for the Susan G. Komen Foundation. Seems that Ms. Handel drove the decision to defund Panned Parenthood, the slaughterhouse organization of the unborn, funded mostly by liberal minded individuals and supported by politicians mostly affiliated with the Democrat Party. A promise Ms. Handel made when she ran for governor of Georgia in 2010 prior to being hired by the Komen Foundation. I get a kick of how Planned Parenthood boast that they render medical health assistance to help women burden with an unwanted pregnancy. And by doing so, they kill their unborn baby. Such caring individuals aren’t they?
During this Susan G. Komen and Planned Parenthood skirmish I was baffled at the public outcry over the announcement of Komen pulling their funding from Planned Parenthood. As a Catholic and strong pro-life advocate I strongly supported Ms. Handel decision. However, I was sadden that due to the public relations mess that ensured her decision, the Komen Foundation reversed Ms. Handel’s decision to defund Planned Parenthood which sadly led to her resignation. In departing, Ms. Handel stated that she decries the “gross mischaracterizations” of the situation and maintains that the decision was not about politics, though many politicians, mostly Democrats, decried her actions. She went on to say that before she joined Komen, the controversy related to Planned Parenthood had long been a concern to the organization. And why shouldn’t it be, the Komen Foundation tries to save lives, while Planned Parenthood murders the unborn! In her signoff, Ms. Handel waived her right to a severance package. Were I in her shoes I’d probably do likewise, I wouldn’t want a drop of the blood of one murdered unborn on my hands!
I just received a letter from Allied Women’s Center, a pro-life group in San Antonio that I support. The letter stated that in 2011 the organization save 72 (mostly Hispanic) babies from being murdered at Planned Parenthood facilities in San Antonio. I became aware of this group while attending mass in San Antonio some 15 years ago. What impressed me with these wonderful volunteers was when they carried 3 beautiful Hispanic babies into the church and told the congregation that when they approached the mothers of the soon to be aborted babies, they begged them to let their babies live. The volunteers assured the pregnant girls that they would help them by caring for them until their babies were born. They went on to tell the congregations that many times after the babies are born the girls often fall in love with their babies and decided to care for them. Every Christmas I get a letter with photos of the beautiful babies this wonderful organization save annually.
In conjunction with the Komen, Planned Parenthood funding abortion issue, the Catholic Church found itself in complete opposition with the Obama Administration in which the President signed off on a Health and Human Services ruling that says that under ObamaCare, Catholic institutions — including charities, hospitals and schools — will be required by law, for the first time ever, to provide and pay for insurance coverage that includes contraceptives, abortion-inducing drugs and sterilization procedures. If they do not, they will face ruinous fines in the millions of dollars. Or, they can always go out of business. In other words, the Obama Administration told the Catholic Church that its institutions couldn’t be Catholic anymore. After a strong protest from the church’s bishops stating they will not bow down to the President’s abortion demands. The Obama Administration sort of reversed it abortion stance. However, they will still provide insurance contraceptive coverage to those who want it free of charge. Meaning, taxpayers will be funding the killing of the most innocent of our society, the unborn.
None of this surprises me; the smallest part of this story is political. There are 77.7 million Catholics in the United States. In 2008 they made up 27% of the electorate, about 35 million people. Obama carried the Catholic vote, 54% to 45%. Will Catholics support Obama in 2012? It wouldn’t surprise me if they will. Many of my friends and family members are Catholic and they despise abortion and same sex marriage but they still vote for liberal Democrats. Just look at the Democrat leaders like Pelosi, Biden, Kennedy, Kerry and other Democrat Catholic politicians who champion these issues strongly opposed by the Catholic Church.
An estimated 1.37 million abortions are performed annually in the United States. Hitler and his henchmen, who slaughtered 7 million Jews, pale in comparison to what the Democrat Party supports in condoning and funding abortion institutions in the United States. While white women obtain 60% of all abortions (1,197 daily), their abortion rate is well below that of minority women. Black women are more than 3 times (1,207 daily) as likely as white women to have an abortion, and Hispanic women are roughly 2 times as likely (829 daily). I’m certain that white supremacist groups like the KKK and others loved what Planned Parenthood and the Democrat Party does in killing those they hate.
I’ll end with this comment by the Rev. Clenard H. Childress, a black minister, who calls this phenomenon “black genocide”, and has built a national ministry around the exposure of what he calls “the greatest deception [to] plague the black church since Lucifer himself”.
The New York Times, a respected spokes-paper of the secular and liberal East Coast establishment, attacked the administration for caving in to the U.S. Conference of Catholic Bishops on whether the federal government will mandate that Catholic institutions must include coverage for birth control and even abortions via offering so-called morning after pills for employees.
The White House didn’t cave in to the bishops. Now the cost of birth control and abortion-causing drugs is merely being shifted to the insurance companies that insure the employees of Catholic institutions. In other words, the administration’s response is a circus shell game. This is a purposeful slap in the face to the Catholic conscience and the rest of us who believe that abortion on demand is a national tragedy.
Some Catholic officials indicated that if the administration’s original Obamacare initiative became practice, they would resort to civil disobedience. Out-of-touch East Coast media seemed to have been caught flat-footed by the backlash. All of this should have been no surprise. The Roman Catholic Church has been a vocal and principled opponent of abortion for years.
Conservative Protestants have been part of the backbone of this country since its founding. They are much more accommodative of birth control, but they have been part of the pro-life movement in this country since Roe v. Wade federalized the abortion issue in 1973. In just one recent example, Dr. Richard Land, who is president of the Southern Baptist Convention’s Ethics and Religious Liberty Commission, said Baptists will not comply with Obamacare mandates requiring religious institutions to cover abortifacient products.
Many secular folks, some who do not regard themselves as conservative, regard the war on the unborn in this country as abominable. Thoughtful folks, concerned with our aging demographics, see our free-for-all abortion environment as bad social policy. They are aware that aging populations (which we are) rarely sustain themselves.
Others question the racial politics of the origins of the pro-abortion movement. Planned Parenthood’s founder Margaret Sanger subscribed to the racial eugenics movement and sought to limit the population of certain racial and ethnic groups in America through abortion and other means. This was before the Nazis endorsed such views.
Planned Parenthood is still the leading provider of abortions in America, killing 332,278 babies in 2009. It appears at least some in the Obama administration would prefer Catholic hospitals engaged in the same activity. At the very least, they would force them to pay for birth control and abortion services. No one’s tax dollars should ever pay for an abortion, regardless of how one feels about abortion overall.
Birth control is available in this country at private cost; so is abortion, unfortunately. Some in the administration have stated that unplanned children are a threat to family stability. No doubt that unplanned pregnancies are a challenge, but they are not a threat to be disposed of, especially in a family environment.
During the whole national healthcare debate, neither birth control nor abortion coverage in Obamacare was rarely if ever mentioned by those who helped pass the law in both the administration and the then-Democrat Party-controlled Congress. Their real agenda is now apparent. They are attacking head-on those who wish to follow their religious beliefs. More importantly, they want to exploit the lives of the unborn to make a point.
Former Democrat speaker Nancy Pelosi said in 2009 that we have to pass the healthcare bill to see what is in it. With all the discretion that the 2009 Democrat Congress left in the bill to this administration, which has no value for unborn life or religious liberty, we now know.
How long will it be before the ghouls who promote this kind of abomination with your tax money will want to pick which sick or elderly person is denied care?
Ultimately, we must replace our own population, or someone outside our borders will – perhaps by force. No doubt our own demographic collapse will assist. Americans of all races, blends and beliefs are increasingly a melting pot. That is a good thing as long as we reestablish a culture of life and respect in this country. All innocent human life, of all races, should be celebrated and protected, not extinguished – whether paid for by government insurance or not.
This article was originally published in the Waxahachie Daily Light
It was an honor to know and work for Ronald Reagan, whose birthday we celebrate this week. I “cut my political teeth” working for him in West Texas in 1976 and 1980, running for the U.S. House at his suggestion in 1978, and later in his administration from 1981-85 in several executive positions.
I was very fortunate to meet with him numerous times both in private and public meetings, and there are two – of many – specific lessons that I learned from him that are enormously important today in 2012. They’re timeless actually.
First, know what you believe; and believe what you know. And be ready, willing and able to tell that story. I learned from Ronald Reagan that in politics the narrative is everything. The reason he could so compellingly explain to his fellow citizens the reality of economic consequences, the nature of evil, the noblest call of human liberty and dignity, and the Divine hand of the Creator in both our national and personal life, is simply because it was in his very soul.
He spent decades studying and conceptualizing his beliefs. So when he went before the public arguing that a bloated, government-run welfare state stripped human dignity out of individuals, and left them to the least that is in them, not the best that liberty could afford them, American’s responded to the conviction and the truth of his narrative.
When he said that our problems are not caused by too little spending, but by a predictable desire of a self perpetuating bureaucracy to take from the individual and consume for themselves, the truth struck like a bell.
When he described the “Evil Empire” and its political offspring that sought to corrupt God’s sovereign gift and enslave a world to a dark idolatry of the state, free men and women knew instinctively that his narrative was beyond human truth.
And when he spoke of the gift of human life, it was not a piece of DNA, but a life hand crafted by God.
Today, we suffer the “sound-bite conservative” in the political world. Too many of our politicians are men and woman of the moment. They throw around catch-phrases like “free markets” and “free trade” and “pro-life” like party favors. But you know in your heart they are just spouting words they think you want to hear, not the truth you need to hear. They simple don’t have a whole narrative in their souls; and whatever they believe today, can change by a poll tomorrow.
If the modern conservative movement wants to be freshly relevant - if we want to rescue our faith, our culture, our economy and our liberty - then we will become studied expositors of the narrative. We will tell the American people why we believe what we believe. Not reluctantly, no apologetically, and not with one eye to the political calculus.
Ronald Reagan’s narrative spoke to the American spirit like a song-bird sings to the world; he told both the Truth - and the truth.
The second thing I learned from Ronald Reagan was to speak to the future, not the past. He was a very practical man. He certainly used historical and factual stories from the past as guideposts, markers and warnings. But he led his countrymen by an optimistic vision of what God promised us we could be. Always in his narrative was the causal lightness that we took ourselves to seriously, and that there was a streak of common sense and ingenuity that ran in the American character – because liberty revealed it in us. God’s grace invited it. Our natural humor welcomed it.
Men look better after the years pass. We forget the turmoil and angst of Washington’s trek across the frontier of Revolution. We forget Lincoln’s foibles, mistakes and dark moods. So too, perhaps we shall paint a portrait of Ronald Reagan without some of the blemishes of his life because we want to only remember the best of him. But blemishes are not what make great men and women. Ronald Reagan was without serious question one of the giants of the twentieth century. We do him, nor ourselves, any wrong to pass by his blemishes, and celebrate his greatness.
As I go to sleep at night, my prayer is that our beloved America shall soon see another great leader for the young twenty-first century.
[Michael Giere lives in Northern Virginia and has been widely published on politics, public policy, and foreign affairs. He served in both the Reagan and Bush (41) Administrations.]