Interesting People mailing list archives
IP: GTE's $3.3 billion wireless purchase an unusual venture
From: Dave Farber <farber () cis upenn edu>
Date: Mon, 19 Apr 1999 03:01:59 -0400
Date: Sun, 18 Apr 1999 23:41:34 -0400
From: Declan McCullagh <declan () well com>
[From an electronic newsletter published by UCLA law prof Eugene Volokh.
Subscription info (if you are so inclined) is at the end. --Declan]
======================================================
"Minority Stakes"
by James Surowiecki, from Slate, http://www.slate.com
Copyright 1999 Microsoft Corp.; all rights reserved.
Ordinarily, last week's announcement that Ameritech
would be selling half of its wireless telephone
operations to GTE for $3.3 billion would have occasioned
little notice. Ameritech is being acquired by SBC
Communications, and in order for that deal to pass muster
with the FCC, Ameritech had to sell its wireless
operations in Chicago and St. Louis, where SBC also
offers service. So the sale was a foregone conclusion.
What wasn't quite as expected was that the deal
would, as the New York Times put it, end up being "the
first major telecommunications acquisition to be
described as a 'step forward' for racial diversity."
That's because GTE offered Georgetown Partners, a private
investment firm whose managing director is black, 7
percent of the equity in the wireless business in
exchange for $60 million in cash.
Georgetown Partners has no previous experience in
the telecommunications business, and even if it did have
any experience it's hard to see what influence the owner
of a 7 percent minority stake of one division of a
company the size of GTE could possibly have. Of course,
GTE wasn't looking for a noisy partner. Actually, all
indications are that it wasn't looking for a silent
partner, either. But SBC was looking for a way to look
good in front of FCC chairman William Kennard, who has
said that he wants to increase minority participation in
the telecom industry. So GTE decided that owning the
wireless operations with Georgetown was better than not
owning them at all.
This is, in other words, exactly the kind of thing
that gives affirmative action a bad name. In the Times
yesterday, Davenport happily admitted that he was the
recipient of preferential treatment, arguing that if he
had been white he would already have "100 times more
money than I have."
But even if that were in fact the case, William
Kennard -- and Jesse Jackson, whose Wall Street
initiative seems to have played some role in this deal --
has better things to do than help someone worth $100
million become worth $10 billion. Affirmative action,
whatever its flaws, had the noble goal of giving a chance
at real success to those who wouldn't otherwise have had
that shot. We're all ill-served when it's turned into a
mere spoils system, and when it consists of giving
someone who's already really successful the chance to be
really really successful.
That's especially true in this case, where
Georgetown is literally bringing nothing important to the
table: no telecom experience, no managerial experience,
and no real marketing experience. Even the money is
essentially irrelevant, since GTE hardly needed a partner
to come up with that extra $60 million. All this is is
an unearned gift.
Now, Wall Street is hardly the home of pure economic
rationality, where nepotism and connections play no role
at all. The Street still in many ways relies on an
old-boy network, and insofar as that locks out black
financiers and entrepreneurs, we're all hurt (both
morally and economically).
But there's a difference between something like
AT&T's recent bond offering, in which the black-owned
Blaylock & Partners was named a co-manager, and the
GTE-Ameritech deal. In the former case, Blaylock &
Partners was competing against its peers for business
that it was qualified to do. If race played any part in
AT&T's decision to say yes, it was only to ensure that
race didn't play a part in a decision to say no. If
Georgetown hadn't been included in the GTE deal, no other
investment firm would have been. I don't know what you
call it, but it's certainly not equal opportunity.
The really astonishing thing about all this is the
nakedness of SBC's ploy. In a statement it released on
the day the deal was announced, SBC actually said that
creating diversity was an important goal "for a number of
parties, not the least of which is the FCC," then
described the deal as allowing the company to do "good by
achieving the goal of expanding diversity within the
ranks of industry ownership."
Even if you set aside the use of the words achieving
and ownership to describe a 7 percent stake by a company
with no telecom background, this statement is painful
precisely because SBC makes no bones about the fact that
the only reason it's including Georgetown is because
Kennard wanted it to. SBC might just as well have said:
"OK, Bill. Are you happy now?" The only question that
remains is whether the parties to this deal are
self-deluded about the supposed virtue of their action or
else deeply cynical. Actually, I think we know the
answer.
* * *
James Surowiecki is contributing editor at Fortune,
staff writer at Talk, and the author of Slate's Moneybox.
Check out the Web version of this article on Slate -- one
of your editor's favorite publications -- at
http://www.slate.com/Code/Moneybox/Moneybox.asp
(It's the entry for 4/13.) While you're there, check out the
various links provided at the end of the article.
======================================================
"Guns and the Constitution"
by Eugene Volokh, from the Wall Street Journal
A federal judge in Texas has just done something no
federal court had done in more than 60 years: He held
that the Second Amendment protects people's right to keep
and bear arms. If this decision is affirmed by the Fifth
Circuit Court of Appeals, the case has a very good chance
of going to the Supreme Court, which hasn't yet resolved
this issue. And behind the narrow Second Amendment
matter lies a deeper question about the utility of a
written Constitution.
As in many constitutional cases, the defendant --
Timothy Emerson, a San Angelo doctor -- isn't the best of
fellows. During Dr. Emerson's divorce proceedings, his
wife claimed he had threatened to kill her lover. The
state divorce court apparently made no findings on this,
but entered a boilerplate order barring Dr. Emerson from
threatening his wife.
Though this state order said nothing about firearms,
a little-known federal law bars gun possession by people
who are under such orders. Dr. Emerson not only failed
to dispose of his guns, as the law required, but
eventually brandished one in front of his wife and
daughter. He was then prosecuted under the federal law,
though for gun possession rather than gun misuse.
The instinctive reaction here is that Dr. Emerson is
the very sort we'd like to disarm, trouble waiting to
happen. But when the divorce court issued its order, Dr.
Emerson hadn't been found guilty of anything. Had he
been convicted of a felony, all agree he would have lost
his right to keep and bear arms as well as his right to
remain at liberty. Here, though, there was no trial, no
conviction, no finding of misconduct or future
dangerousness. So when the federal law barred Dr.
Emerson from possessing guns, he was a citizen with a
clean record, just like you and me. Hence his Second
Amendment defense.
The hot constitutional question is whether the
Second Amendment protects only states' rights to arm
their own military forces, or whether it protects an
individual right. If the states-rights view is correct,
Dr. Emerson could have been disarmed with no
constitutional worries -- and so could anyone else. But
the Second Amendment's text and original meaning pretty
clearly show that it protects individuals. The text, "A
well-regulated Militia, being necessary to the security
of a free State, the right of the people to keep and bear
Arms, shall not be infringed," says the right belongs to
people, not states. And in the Bill of Rights "the right
of the people" refers to individuals, as we see in the
First and Fourth Amendments.
Moreover, the Second Amendment is based on the
British 1688 Bill of Rights and is related to right-to-
bear-arms provisions in Framing-era state constitutions.
The British right must have been individual; there were
no states in England. Same for the state constitutional
rights; a right mentioned in a state Bill of Rights,
which protects citizens against the state government,
can't belong to the state itself. So in the Framing era,
the "right to bear arms" meant an individual right.
What about the militia? The Second Amendment
secures a "right of the people," not of the militia; but
in any event, as the Supreme Court held in 1939, the
Framers used "militia" to refer to all adult able-bodied
males under age 45. Even today, under the 1956 Militia
Act, all male citizens between 18 and 45 are part of the
militia. (Women are probably also included, given the
Supreme Court's sex-equality precedents.) "Well-regulated
militia" in late 1700s parlance meant the same thing --
"the body of the People capable of bearing Arms," which
is how an early propsoal for the amendment defined it.
And the individual-rights view is the nearly unanimous
judgment of all the leading 1700s and 1800s commentators
and cases.
Based on this evidence, federal Judge Sam Cummings
concluded Dr. Emerson's gun possession (though not his
gun misuse) was constitutionally protected. If the
Second Amendment is to be taken seriously, then Judge
Cummings was right, and the other lower court cases
holding the contrary were wrong.
If, that is, the Second Amendment is to be taken
seriously. The notion of a written, binding Constitution
tells us it should be, but cases like this lead some to
wonder. Why, they ask, should today's decisions be bound
by the dead hand of the past? If we have a "living
Constitution" onto which courts may graft new rights, why
can't they prune away obsolete ones?
These are genuinely tough questions, which go far
beyond just the Second Amendment, and which have been
raised in past controversies by conservatives as well as
liberals. Let me give a few responses.
First, government entirely by the sometimes
hyperactive hand of the present also has flaws. The
benefits of liberties, however real, are often less
visible than the costs. When we see Dr. Emerson before
the court, accused of making violent threats, it's
tempting to treat the right to possess guns as a
nuisance. But we don't as easily see the hundreds of
thousands of people who use guns each year in self-
defense, including separating spouses who defend
themselves against would-be abusers.
Second, modern innovations that restrict traditional
liberties are often oversold. Realistically, people
willing to violate laws against violent crime will rarely
be deterred by laws against gun possession. Conversely,
if Dr. Emerson is the poster child for why some shouldn't
have guns, he is equally an example of how the law could
effectively punish people for misusing guns (by
brandishing them in a threatening way) rather than just
for having them. Maybe ignoring the Constitution is
neither so valuable nor so necessary.
Third, while some think gun rights are "obsolete,"
others disagree. Since 1970, 15 states have enacted new
state constitutional rights to bear arms or strengthened
old ones; 44 constitutions now have such provisions. In
the mid-1980s, nine states let pretty much all law-
abiding adults get a license to carry concealed weapons;
now the number is 31. A conclusion that the right is
obsolete thus doesn't rest on any unambiguous consensus;
it can rest only on the judge's personal policy
preferences. Do we trust judges that much?
And finally, do we trust judges to determine when
other provisions -- the Establishment Clause, the
privilege against self-incrimination, the jury trial, the
freedom of speech -- become obsolete, too?
* * *
Eugene Volokh is your loyal editor; you can find
links to his Second Amendment-related articles at
http://www.law.ucla.edu/faculty/volokh/index.htm#GUNCONTROL
He has collected a large set of original sources
on the Second Amendment, available at
http://www.law.ucla.edu/faculty/volokh/2amteach/sources.htm
For the opposite view of the Second Amendment, see
http://www.handguncontrol.org/ (Handgun Control, Inc.'s
Web site), especially
http://www.handguncontrol.org/legalaction/C2/c2rtarms.htm
======================================================
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- IP: GTE's $3.3 billion wireless purchase an unusual venture Dave Farber (Apr 19)