Steve Head, a Man for All Seasons, Needs Legal Advice

I have previously blogged about Steve Head's courageous pro se lawsuit against the National Council for the Accreditation of Teacher Education, NCATE.

Head had run afoul of the dispositional assessment requirement at San Jose State University College of Education (SJSUCE). His multicultural instructor (sic) told him that he was unfit to teach because he defended the United States in class. Much like an incident at Brooklyn College several years ago involving student Goldwyn and Professor Parmar, SJSUCE used quack "dispositional theory" to fail Head. Head then sued.

Head brought a pro se case to federal court through a section 1983 lawsuit. California State University (CSU), of which SJSUCE is a part, filed a motion to dismiss. The federal San Francisco Northern California District Judge William Alsup agreed with CSU's right to throw out students based on dispositional assessment. Judge Alsup threw out Head's case.

Since then, Head appealed, still pro se, to the 9th Circuit. The briefs (opening, CSU's response, and Head's reply) are filed as of July 2.

Head's is the first federal case and first federal appellate case to consider the constitutionality of using outright quackery, namely dispositions theory, to discriminate against a student. The fight illustrates that the problem with public schools lies partly in their political and legal regulation and partly in the judiciary's willingness to kowtow to their political power, to include NCATE's.

This is a first-impression case that defines the limits of permitted, non-disruptive, classroom speech that challenges the inculcation/indoctrination divide at a time when it is most important in our national life.

Steve's fight is not over multiculturism but rather the use of multiculturalist rhetoric as ideological litmus. Steve's "F" grade was not based on his failure to learn the required materials but due to his professor's dislike for his thoughts, which are entirely mainstream.

The 9th circuit has a reputation for being liberal but also a reputation for defending First Amendment rights such as those Head claims. Typically, pro se appeals in the 9th circuit are assigned to a pro se office in which they are quietly sabotaged by forbidding the pro se litigant to appear before the appellate bar, and instead substituting an in-house lawyer to make oral arguments ostensibly on behalf of the pro se litigant. These steps are implemented in a way engineered to sabotage the case for the sake of reducing 9th circuit caseload and of kowtowing to powerful interests such as teachers' unions and the educationist establishment. What does Judge Alsup care if the schools have let our children down?

Lawyers shy away from representing such cases, I suppose, because they know that if they ever attempted to argue effectively on the record in oral argument, they would run the risk of being blacklisted by judges. In any case Mr. Head finds himself in the situation of having fought CSU legally to a standstill in federal appellate court over whether dispositions, which lack validation, violate first amendment rights of education students.

Head is now in search of a lawyer to represent him to take the heat. He is also looking for amicus briefs and for help with legal fees which he has largely borne himself in the last 3 1/2 years in his fight for better quality public education and students' constitutional rights.

Those interested in helping him may contact him via my e-mail address (mailto: mlangbert@nyc.rr.com).

High Net Worth Needs to Be Adjusted for Risk

Last week, Merrill Lynch and Capgemini released their 11th annual study of high net worth and ultra high net worth households. High net worth means that someone has over one million dollars in liquid assets (excluding primary residence but including second homes, investment real estate and liquid investments) while ultra high net worth means that someone has over thirty million dollars. They find that:

"Driven by a strong global economy, the wealth of the world's high-net-worth individuals (HNWIs1) increased 11.4 percent to US$37.2 trillion in 2006...The number of HNWIs in the world increased 8.3 percent in 2006 to 9.5 million and the number of ultra-high-net-worth individuals (Ultra-HNWIs2) grew by 11.3 percent to 94,970."

According to bar graphs on p. 3 and the appendix to the study (p.31), the United States has the most HNWI's, with the number having increased by 9.4% to 2.9 million. According to the Census Bureau, the US population is currently roughly 303 million, so HNWIs are about 0.95% of the US population. However, the number of millionaires is growing more quickly in developing countries like India than in the US.

There has been concern about growing inequality. Globalization and the Americanization of the world economy, some critics might argue, is now causing increasing inequality around the world.

Measures such as the Merrill Lynch Capgemini study are misleading, though. The study notes that high net worth individuals have benefited from a booming global real estate market. Likewise, several years of stock market valuation increases also have contributed to the increasing number of high and ultra high net worth individuals.

About 31% of HNWI's wealth is in equities, 24% in real estate, 21% in fixed income securities and 14% in cash. This a moderately risky investment profile. Wealth is not static. Should real estate, stock and other financial markets contract, the number of high net worth individuals will contract in tandem.

Measures of HNWIs and ultra HNWIs ought to account for the riskiness of their holdings, for example by showing the historical variance in returns of the assets that HNWIs hold. Given that markets in real estate and stocks have been bubbly in recent years, the global bouyancy in the Merrill Lynch/Capgemini numbers may be misleading.

Robert Cherry's New Book on Welfare Reform

Oxford University Press has just published Robert Cherry's new book on welfare reform, Welfare Transformed. The book has already been praised by those who are left of center as well as Ron Haskins who was the Republican point person on welfare reform in the 1990s and was a Bush appointee as well.

In addition, Bob tells me that he has just come out with a book, Rethinking Poles and Jews: Troubled Past, Brighter Future, published by Rowman & Littlefield. The Polish embassy is paying for a Polish translation.

Robert Cherry, who is my colleague and friend at Brooklyn College, is an imaginative and creative scholar, and I am looking forward to reading both of his books.

Warren Buffett Should Stay within His Circle of Competence

Today's New York Sun notes that while Warren Buffett complains that he is taxed too little on $46 million in income, his actual economic income last year, including unrealized capital gains, was more than $10 billion dollars. The reason is the unrealized appreciation in Berkshire Hathaway stock, which meant more than $10 billion to Buffett this year. I own four "B" shares that have climbed to $3,621 each this year so I have probably made $1,500 in unrealized appreciation. Tip money compared to a billionaire, but bless Buffett's soul.

Curiously, Buffett argues that public hedge funds and equity funds should be taxed more heavily. Presumably he includes his firm, Berkshire Hathaway. Buffett argues that because hedge fund managers are earning hundreds of millions in salaries, there should be special taxes on hedge fund managers since in many cases they pay lower taxes than those of us who count our earnings in the lowly thousands.

Those New Yorkers who have managed to survive the New York diaspora (the rest having been driven out by "humane" policies of the kind that Mr. Buffett advocates) hear about the hedge fund billionaires. They are obnoxious, boorish, greedy and, in a phrase, nouveaux riche.

Envy is natural in a free society. Success is sometimes out of proportion. This was true in the 19th century with the success of Standard Oil and John D. Rockefeller, and it was true in the twentieth century with the success of A&P, which was prosecuted for anti-trust and price fixing between the 1930s and 1950s. This also has occurred in the case of the hedge fund managers. But there is a difference. Unlike Standard Oil and A&P, hedge fund managers rely on government to profit and have not been particularly innovative in developing new products or new management methods, as did John D. Rockefeller and A&P's Hartford brothers.

Apologists for hedge fund managers, such as Weekly Standard, claim that private equity and hedge funds improve the management of firms that they buy and then resell. This claim is nonsensical. It is well known that corporate acquistions mostly destroy shareholder value in the long run. If you were to limit your investing to stocks of firms that private equity and hedge fund firms have taken off the market and then made public again my hunch is that you will be spending your retirement holding a tin cup. Mark Sirower's book Synergy Trap explains why outsiders do not make good managers. As well, Hayek noticed that management is primarily a matter of knowledge specific to time and place. Outsiders such as financiers lack specific knowledge. The most famous private equity deal involving Henry Kravis and RJR Nabisco that was immortalized in Barbarians at the Gate ended up a financial embarrassment because KKR held onto it.

Federal corporate welfare has made private equity managers, including Warren Buffett, rich. Corporate welfare takes the form of artificially low interest rates that the Fed has pursued since the 1980s. I have previously blogged that hedge fund managers, such as the Carlyle Group's William E. Conway, are well aware that Keynesian monetary policies that liberal economists and the New York Times advocate have spurred enormous profits for hedge funds and have amounted to a transfer from mainstream America to the financial community. There are other beneficiaries of Keynesian re-distribution, to include corporations, universities, mortgage payers and, of course, Warren Buffett. Those who benefit from low interest rates, which stimulate demand for unproductive investment such as $120,000 to study with Paul Krugman or $800,000 for for a condominium in Bayshore, Long Island naturally favor inflationary policies. These include Buffett, Krugman and hedge fund managers. No wonder Buffett, Gates, etc. are all liberals who support left-wing economic policies.

Buffett's father was a hard-money Republican. When Buffett was a student at Penn, he was photographed riding an elephant. However, the elephant must have smacked him upside his head with his trunk, because Buffett switched to the Democrats. Although Buffett is the greatest investor who ever lived, he lacks competence with respect to policy issues. In investing, Buffett argues that you should only invest in areas in which you have expertise, i.e., are within what he calls your "circle of competence". Perhaps he should take his own advice, and avoid advocating frivolous tax policies.