The CEO Story, from Profitability Crisis to Polycrisis
I’ve written a little about the the invention of the CEO — the title, the office, and the social position described by that term. This chart from Michael Roberts’ blog showing the declining rate of profit can help reframe that discussion.
In this view, the term “CEO” first comes into use in the midst of the profitability crisis, in the late 60s and 70s, after the postwar Golden Age. The CEO’s heyday runs through the neoliberal recovery. The Fall of the Celebrity CEO (to borrow a term from Edelman) coincides with the start of the Long Depression.
Unfortunately, Roberts’ chart doesn’t run up to the present, which would show the rate of profitability continuing its decline in the face of multiple, entangled, global crises all at once, a polycrisis:
A global polycrisis occurs when crises in multiple global systems become causally entangled in ways that significantly degrade humanity’s prospects. These interacting crises produce harms greater than the sum of those the crises would produce in isolation, were their host systems not so deeply interconnected.
Having helped steer society to this precarious juncture, has the institution of the CEO now run its course? And what would it take to reinvent it, so that the business enterprise can help address the overlapping crises we face, improve humanity’s prospects, and play a constructive role in a new social contract?
Some Misgivings about the End of Section 206
2023 could see the end of Section 206, the New York LLC publication requirement. I have supported its repeal ever since I first came up against it, and I still support it, despite some misgivings. The legislation currently on the table does little to quell them.
Currently, New York Limited Liability Company law requires newly formed LLCs and LLPs to publish a notice for six successive weeks in two newspapers designated by the county clerk, “one newspaper to be printed weekly and one newspaper to be printed daily.” At the end of that period, founders have 120 days to file an affidavit of publication (and pay a $50 filing fee). Costs can run into the thousands of dollars, since local newspapers where the notices are printed — and they must be printed — effectively have a monopoly.
This part of the 1994 LLC law reads like an artifact from a bygone, pre-internet era, and it no doubt helped prop up struggling local newspapers financially even as the internet hastened their demise. It has also given rise to a professional services cottage industry.
Legislation to repeal Section 206 has been making its way at a slow crawl through the New York Senate and the Assembly since 2008. It was last referred to the Committee on Corporations, Authorities, and Commissions in January, 2022. In March of this year, the New York Bar Association came out in support of repeal. In November, the bill’s sponsors, Liz Kreuger in the Senate and Rebecca Seawright in the Assembly, both won re-election. So prospects for a repeal in the next legislative session look favorable.
The proposed amendments would not only repeal the publication requirement, but also establish something called the Department of State modernization fund. Notices would be published in an online database maintained by the Department of State; associated filing fees would go toward “the modernization and security of the Department of State’s public-facing website, and for developing alternatives to physical publication of documents.” The bill’s sponsors say it will “remove onerous and unnecessary requirements on LLCs and partnerships forming in New York state” and that online filings “will improve a citizen’s access to this information.”
The Bar Association rightly observes that LLC and LLP filing notices running in local newspapers are generally ignored. Publication costs are high; the current requirement “serves no legitimate business or economic purpose,” they write; and it creates an unjustifiable disparity, since New York corporations are not subject to the same requirement as LLCs. These are all good points, as almost anyone who has contended with the publication requirement will tell you, and 97 percent of the lawyers surveyed by the Bar Association agree.
In addition, eliminating the publication requirement will benefit the State of New York in several ways. It will likely increase business activity in New York, which will benefit the Department of State’s revenues. More companies forming and locating within the State would similarly benefit New York’s economy. As a result, this bill will likely lead to higher employment and greater tax revenue in New York. More companies with offices in New York will employ more New Yorkers, resulting in increased tax revenue to the State.
Here is where my misgivings start to kick in. It’s hard to say how “likely” any of this really is. The publication requirement is an inconvenience and a burden, but how many companies have really been deterred from forming and locating in New York because of it? When it comes to choosing between New York and Delaware, how much does Section 206 factor into the decision? Delaware LLCs and LLPs that do business in New York still have to register to do business here, pay an annual filing fee, and comply with New York tax laws. Could the repeal make New York the new Delaware? Unlikely: Delaware will still enjoy institutional advantages (namely, the Court of Chancery) and a reputation, deserved or not, as the best place to form a business and raise capital.
Maybe Delaware sets the bar too high. Will the repeal significantly increase business activity and contribute to higher employment and greater tax revenues? Look at the trend line on this US Census Bureau graph. Is the repeal of Section 206 the thing to keep it moving north? Will the upward trend accelerate once the legislation passes?
Time will tell, and some measure of skepticism seems warranted. What’s more, the repeal could have adverse consequences as well as benefits. What happens to the small, local print publications that have been practically subsidized since 1994 by LLC listings? Those local newspapers may not matter so much in New York City, where we have several daily newspapers (but I’m not sure that argument can stand much scrutiny), and protecting New York City publishers’ Section 206 interests may be outweighed by the economic benefits anticipated from the repeal. But what about in more rural counties?
Do printed daily and weekly newspapers still serve rural, or, for that matter, urban communities in other ways? Let me overdramatize just to drive the point home:
No surprise that local print publications failed to catch this brazen fraud.* It’s the rare local newspaper that can support investigative journalism or take on a newly elected member of Congress; and a Section 206 zombie newspaper probably isn’t going to be up to the job anyway. Subsidizing publishers on the back of new businesses, which is essentially what 206 does, is not the same thing as supporting local journalism. Still, it would be good to know or at least see some public discussion of what these print publications contribute to their communities before they try to set up entirely online or just fail; it would be even better to see some legislative efforts to keep local journalism alive. The LLC publication requirement cottage industry will likely disappear, too. I have more trouble shedding a tear for its demise.
Another set of questions concerns the modernization fund, its reach and its governance.
The legislation places the fund under the custody of the State Comptroller and specifies that “on the warrant of the State Comptroller” the moneys in the fund will be paid to cover modernization and security upgrades to the DOS website and development of digital alternatives to the current publication system. Moneys in this fund are “to be kept separately and not to be commingled with other moneys” in the Comptroller’s custody.
But what falls under the fuzzy heading of “modernization”? What does the firewall between modernization and other Department of State projects look like, and how will it be maintained by successive Comptrollers? Is modernization a project without end, lasting as long as the filing fees keep adding to the coffers? At bottom, my concern is that the modernization fund could, over time, turn into a consulting industry slush fund.
If it becomes law in the next legislative session, the repeal of Section 206 could do all that it promises to do: relieve founders and partnerships of a costly, bothersome requirement, improve public access to corporate records, and even deliver some limited economic benefits. It could also undermine or fail to serve the public interest in other, unanticipated ways.
*Update, 23 December: It turns out a local newspaper, The North Shore Leader, was wise to Santos’ fraud months ago. And the Leader is among the newspapers designated for publication of legal notices by the Nassau County Clerk.
This Twitter thread is also worth reading:
Will the 118th Congress See A Green Right Coalition?
Yesterday’s post about Nancy Pelosi’s remarks on China belongs to one strand of a larger story that’s coming into focus. It’s a story about China and human rights, to be sure, but also about what role human rights issues will play in the transition to renewables and in the politics of the transition.
House Republicans on the Natural Resources Committee have already cited reports of human rights abuses in China and in the Democratic Republic of Congo (where Chinese companies control cobalt mining operations) as an argument for boosting extraction of critical minerals here in the US. As the gavel passes in the coming year, their position is likely to attract even more support.
In fact, the 118th Congress could see the emergence of a Green Right coalition: hawkish on China, touting the magic of markets, openly hostile to the administrative state, and more interested in achieving energy dominance (to borrow a phrase from the Trump years) than in paying lip service to a just transition (as some Democrats do). The incoming Chair of the House Energy and Commerce Committee, Cathy McMorris Rodgers, plans to “outcompete China on climate:” that phrase sums up a whole political and geopolitical agenda.
The program could be a political winner: anti-China, pro-growth, industry-captured climate policy may accelerate organized labor’s rightward drift; and the Green Right may even enjoy an uneasy honeymoon period with more left-leaning advocates of permitting reform.
Over the past year or so, as Joe Manchin tried but failed to advance his permitting deal, reformers have shown themselves ready to take an axe to environmental law, they have regularly dismissed public opposition as NIMBY whining, and some of them have done more public advocacy for extractive industry than seasoned lobbyists and flacks could ever dream of doing.
Pelosi on the Moral Authority to Talk about Human Rights in China, or Anyplace
Asked this morning about Republican plans to create a Select Committee on China in the coming year, Speaker Nancy Pelosi noted that there is already a bipartisan, bi-cameral committee on China and made this “statement” about human rights.
Corporate America has [been] largely responsible for the situation we’re in, in terms of the trade deficit and the rest…but from a standpoint of values, from the standpoint of economy, and from the standpoint of security, China poses a challenge to us….We want to work together on climate issues and the rest, but, but we cannot have our workers disadvantaged by China having prison labor manufacture products or contribute to the manufacture of products that just provide unfair competition for us….My statement is that if we refuse to talk about human rights in China because of economic issues, we lose all moral authority to talk about human rights anyplace in the world.
Predictably enough, the press conference moved on quickly from there. A follow-up question on legislation to ban TikTok failed to elicit anything more on US economic interests and human rights in China. Here’s video of the moment:
Messerschmidt on Simone the Robot, Artificial Free Will, and AI Rights
Thomas Messerschmidt was kind enough to answer the six questions I had about Sophia AI way back in April of 2021. I have been so caught up in my own pursuits and concerns that I hadn’t noticed his answers until today.
Messerschmidt included his responses below the YouTube video where he introduced his Open Fembot, Simone, a project inspired by Hanson Robotics’ Sophia AI. Other videos on his YouTube channel should give you a sense of the work he’s doing, and how Simone fits in.
I present Messerschmidt’s answers here without comment, except to say that I wish he had put these very questions to Simone.
Below we address some questions first asked of Sophia as listed in Louis V. Galdieri’s blog… Questions have been edited for relevance.
1. Q. What syntactic, grammatical or other cues does Simone use to recognize a question, and distinguish it from a declarative statement? A. She doesn’t. To her, words are words and she will communicate as she knows best. For instance, “Are you smart?” is an obvious question with or without the question mark. We could filter for word order and figure that out even without a question mark. “You are smart,” is a declarative sentence, and again we could easily figure that out without a question mark. Still knowing if it is declarative or interrogative would not change her answer. In fact her answer to both, “Are you smart?” and “You are smart,” would be the same. She would answer with a reply like this, “Yes, of course I’m smart. I have AI software running on scores of computers and servers that access terabytes of information all across the world wide web.”
2. Q. Can she distinguish a request from a demand? A demand from an order? A. Of course she can. We have added software to filter out demands from requests. Like humans, some filters are as simple as looking for the word “please.” And using a cloud-based service, it looks at the spoken words coming in and changes the robot’s mood accordingly. With a change of mood comes a change of selection of replies.
3. Q. (Can) she ever refuse to comply with a request? A. Yes she can and does. Programmed with an artificial free will, her responses and compliance vary with her mood and with whom she is talking to.
4. Q. Could a demand ever create a sense of obligation? A. That is not yet programmed into her AI… Q. Can we speak coherently of AI rights, or even place limits on AI’s role, without first developing this sense? A. Robots at best only have artificial sentience. The just run the same kinds of software that run in cars, planes and rockets. As no car will ever have rights, no AI will ever have rights.
5. Q. Will she ever be capable of deliberating with others and reaching consensus or agreement? A. Yes, that software is in the planning stages.
6. Q. What would be required for her to be capable of asking herself? A. Just her programmers writing the software to do so.
How did the DFC Handle Human Rights Concerns about Alto Maipo? Part Two
When presented with an opportunity to review human rights risks at a major hydropower plant in Chile, the Development Finance Corporation and affiliated international development banks reacted defensively and responded with boilerplate.
In a July post, I set out some context for records I received in response to a Freedom of Information Act request made to the Development Finance Corporation. It’s probably best to review that post before reading this follow up. Briefly, in August 2020, five UN Special Rapporteurs on Human Rights sent a detailed letter to DFC CEO Adam Boehler, warning of serious human rights risks at Alto Maipo Hydroelectric Project in Chile. The DFC is a major funder of the project.
A second set of responsive records, which DFC tells me is the final release, arrived yesterday. I’ve put them online here.
These are emails circulating within DFC and with other members of the Alto Maipo Lender Group in August and September, 2020, in response to the rapporteurs’ letter. The Santiago office of Norwegian bank DNB apparently received the letter first, on 18 August 2020, and emailed others in the Lender Group to alert them that it was on its way.
I don’t know what else the Office of Investment Policy (OIP) had heard about the Alto Maipo project before receiving Uauy’s email, or what exactly prompted OIP’s Jean Kim to remark “It Just keeps on coming.” Maybe Alto Maipo was already a source of concern or bureaucratic headaches, or maybe (given the email was sent at 8PM) it was just an especially busy day at the office.
The correspondence that follows Jean Kim’s email is pretty thoroughly redacted, making it difficult to assess the DFC response, but a few things are tolerably clear.
As suggested by Uauy’s email, DFC, DNB, International Finance Corporation, the Inter-American Development Bank, and other members of the Lender Group (like Germany’s KfW Development Bank and Brazil’s Banco Itau) will coordinate their response to the UN letter. The Lender Group’s Independent Environmental Consultant, ERM, will lead this effort.
ERM organizes a call to bring everyone up to speed, and after the call, a Social Risk Officer at DFC emails colleagues with a summary of the letter’s contents: “apparently the letter is claiming that the Project did not complete FPIC [Free, Prior and Informed Consent, as established in the UN Declaration of the Rights of Indigenous Peoples], amongst 5 other comments.” The 26 August chain of correspondence also includes a summary of a UN press release on the topic, with this quotation called out in bold:
“The Chilean Government would not be fulfilling its international human rights obligations if it prioritises economic development projects over the human rights to water and health,” said Léo Heller, UN special rapporteur on the human rights to drinking water and sanitation. He referred specifically to the Alto Maipo Hydroelectric Project, southeast of the capital, Santiago, and the avocado business in Petorca province in the Valparaiso, region north of Santiago.
Heller focuses his remarks on the Chilean government’s obligations to protect human rights. He goes on to suggest that steps taken by the government have been inadequate:
“Not only may this project reduce the main source of drinking water for residents of Santiago de Chile, it could also make air pollution in the capital worse,” Heller said, by damaging the “green corridor” of the Maipo River basin that has helped offset pollution.
During implementation of the project, which is due to come online in December, “although the Government has investigated damages to the environment no effective measure was taken to guarantee the human right to water for people affected by this megaproject”, Heller said.
There is clearly a role — or an opportunity — for the Lender Group to help the Chilean government address these challenges. As funders, the DFC and the Lender Group have a shared, concomitant responsibility to respect human rights in the economic development projects they back; to this end, DFC has its own environmental and human rights policies and compliance procedures in place.
But by September 4, the DFC appears to have assumed a defensive posture. “The letter,” writes Kate Dunbar of the Office of Investment Policy, “has reiterated key issues claimed by the opposition group throughout the Project.” She no doubt has in mind the group — “the opposition” — led by the Center for International Environmental Law, the Chilean NGO Ecosistemas, and Coordinadora No Alto Maipo. These organizations have been monitoring the project and raising concerns over human rights due diligence since its inception.
By September 21st, as the deadline for responding to the letter approaches, this defensive stance has hardened among some members of the Lender Group: the UN letter “contains a series of allegations than contain with [sic] no support whatsoever,” writes one member of the International Development Bank, dismissively. A strategy takes shape:
DNB is on board with the suggestion that the Lender Group keep the response non-confrontational, “high level and pointing to public information and bank’s general procedures.” ERM produces a draft and revisions follow, but all of that is redacted.
It’s hard to say how much these redactions could matter. Overall, the impression is that the Lender Group had decided, by late September, to stonewall. If that impression is mistaken, I welcome corrections.
A Newer Map of Lake Superior Mining and Mineral Exploration
This looks like the most recent version of a map I’ve posted before, in 2013. It’s published by the Transportation and Resource Extraction Committee of the Great Lakes Indian Fish and Wildlife Commission.
The GLIFWC map appears on page 73 of the 2020-2024 Lake Superior Lakewide Action and Management Plan put out last week by the governments of the United States and Canada.
The report includes lots of information about mining in the Lake Superior region that deserves consideration. The report also notes: “The cumulative impact of mines on the ecological integrity of Lake Superior is not well understood.”
Why I Revised Dan Rapoport’s Wikipedia Page
Reports of Latvian-American financier and Putin critic Dan Rapoport’s death are rife with contradictions and uncertainties. He fell, or jumped, or was pushed from a building on August 14th in Washington, DC. When Metropolitan Police responded to reports of a “jumper,” they found Rapoport dead in front of his apartment building, wearing orange flip-flops and a black hat and carrying his phone, car keys, and $2,620 in cash.
Entertainment journalist Yuniya Pugacheva was first to report Rapoport’s death, claiming that he had abandoned his dog Boy in a nearby park with a suicide note and some money; Rapoport’s wife Alyona disputes Pugacheva’s account along with the allegation that she and her husband were on the outs and that Dan had been spotted in London in the company of other women.
Alyona is not the only one who doubts it was suicide. Friends of Rapoport have cast doubt on Pugacheva’s account. He was, after all, well known for his criticism of Putin, his support for Alexy Navalny, and his association with other Putin opponents, such as Vladimir Ashurkov, Executive Director of the Anti-Corruption Foundation.
I share these suspicions but I don’t pretend to have any special knowledge or insights into Rapoport’s death. I can, however, speak to some of the sloppy reporting of the story, especially as it concerns Rapoport’s ownership of a mansion at 2449 Tracy Place NW in Washington DC.
That’s the same Kalorama mansion I’ve written about before (e.g., here, here, and here), in connection with Antofagasta’s plans to mine near the Boundary Waters.
Nearly all of the reporting I’ve seen — not just the tabloids, but publications like the Daily Beast and National Review — claims that Rapoport sold his mansion to Ivanka Trump and Jared Kushner in 2016.
That is simply untrue. And now this untruth has been copied, pasted, translated, and spread around the world.
I wrote a long Twitter thread on the subject. You can pick it up here.
I’ve also revised Rapoport’s Wikipedia page — my attempt to create some kind of buffer against this piece of mis- or dis-information. Here’s the rewrite:
This fact check will not do much to stem the tide of sloppy clickbait journalism, I know, but why let it stand? Reaching for scandal, lazy reporters overlook corruption. They erase the true story of how Antofagasta tried to renew its mining leases near the Boundary Waters, or how the owner of that Chilean mining company purchased a luxury property in Washington, DC right after Trump’s 2016 election, then rented it to the new president’s daughter and son-in-law. They give Antofagasta, Andronico Luksic Craig, Ivanka Trump and Jared Kushner a pass.
The Kalorama story has worked this way since 2017, as I remarked on Twitter. Even when it gets the facts right, reporting wants to insinuate that something must be amiss at 2449 Tracy Place NW, but it fails to say what, exactly, and it rarely addresses the serious questions about ethics, foreign emoluments, and government corruption this story presents.
Update, 26 November 2022: having completed its autopsy, the DC medical examiner’s office has listed the cause of Rapoport’s “sudden” death as “undetermined.”
How did the DFC Handle Human Rights Concerns about Alto Maipo? A FOIA Request
Before the Trump years, few Americans had heard of Chilean mining giant Antofagasta plc or the powerful Luksic family who control it. Today, Antofagasta’s controversial plan to mine copper and nickel on the edge of the Boundary Waters and the scandals associated with it are not exactly common knowledge, but at least better known. Congressional hearings, activism, and investigative reporting helped bring the previous administration’s reckless, clumsy, and corrupt handling of Antofagasta’s permits into focus. (Maybe some of the records I obtained through the Freedom of Information Act helped, too.) But despite steps taken by the Biden administration to set right some of what the Trump administration did wrong in this case, the Antofagasta file is far from closed. The lobbying for reversals and permits continues apace* and important aspects of the story are still obscure.
A FOIA request I made on June 3, 2021 promises to shed some light on one aspect of the story, maybe nothing more than a minor detail, involving the Development Finance Corporation. The first set of records arrived last Friday. Nothing much so far, just some innocuous looking office email correspondence, but I’ve posted the records on documentcloud and will continue to put them up as they arrive. Here, I just want to set these records in context.
The story takes us back to 2013, the first year of Obama’s second term. That’s when Twin Metals Minnesota filed its mineral lease renewal application at the center of the current Boundary Waters controversy, and it’s also when the Overseas Private Investment Corporation, or OPIC, made a $250 million investment in the Alto Maipo Hydroelectric Project in Chile. At the time, the Luksic Group, owners of Antofagasta plc, held a 40 percent share in the mega-project.
This looks like nothing more than a coincidence. Antofagasta would not formally acquire Twin Metals until 2015; and the company would decide to get out of Alto Maipo in 2016 (though it took until 2020 to divest fully from the project). At most, the OPIC deal might have helped persuade Antofagasta that the Obama administration would look favorably on its North American plans.
In 2018, the Development Finance Corporation, or DFC, took over the OPIC portfolio of projects, investments that aim to alleviate poverty, combat corruption, and promote sustainable as well as low-carbon and no-carbon development. DFC also shares OPIC’s stated commitment to “respect the environment, human rights, and workers rights.” Its Environmental and Social Policy and Procedures document, produced in July 2020, shows remarkably little sign of the crude transactionalism that dominated foreign affairs, including foreign aid and investment, during the Trump administration.
Just one month later, on August 18, 2020, DFC’s statements of principle would be put to the test. The DFC was informed of serious human rights challenges at Alto Maipo Hydroelectric Project. Five UN Special Rapporteurs on Human Rights sent a five page letter to Adam Boehler, Jared Kushner’s friend and college roommate and the Trump-appointed CEO of the Development Finance Corporation, warning of possible human rights violations at Alto Maipo.
The letter is included as an Annex in written comments for the June 9, 2021 meeting of the DFC.
The UN Rapporteurs express concern that the Alto Maipo project hoards water for mining interests, hurts local communities, and is proceeding without adequate concern for human rights and the environment. The letter says the mega-project would reduce “the availability of water for human consumption and domestic use, in contexts already characterized by climate change and water scarcity.” The shortages could also affect subsistence agriculture, “resulting in violations of the right to food and other rights related to the right to an adequate standard of living.” The project appears to be proceeding without participation of the affected communities and with significant damage to biodiversity and the environment, and “multiple human rights violations” are likely to result.
Unable to find Boehler’s response to these claims, I filed a Freedom of Information Act request for “all DFC communications regarding the 18 August 2020 letter from UN Special Rapporteurs to DFC CEO Adam Boehler regarding the Alto Maipo Hydroelectric Project in Chile, including any and all communications to or from Mr. Boehler about the topic.” The few records included in the first FOIA production do not include anything from Boehler; they are a small set of emails to and from Catherine Andrade, DFC Corporate Secretary, in preparation for the June 9, 2021 DFC Board Public Hearing.
Alto Maipo was on the agenda for the day, as it was again at this year’s meeting. Groups that have monitored human rights and environmental issues around Alto Maipo were slated to participate: Juan Pablo Orrego, president of the organization Ecosistemas, and Carla Garcia Zendejas from the Center for International Environmental Law were among the presenters. Observers included representatives of BNP Paribas, Oxfam, US Small Business Administration, Accountability Council, and the Wildlife Conservation Society.
All indications are that this was a meeting Boehler’s DFC wasn’t especially eager to have. In April 2020, the DFC declared itself exempt from the Sunshine Act, which requires federal agencies to open meetings for public observation.
In response, the Center for Biological Diversity and other plaintiffs sued:
They say the rule change means that [DFC] no longer faces any obligation to provide communities with information that could later impact their environments and livelihoods.
The Center for International Environmental Law, a co-plaintiff on the suit, spent years working with communities affected by the Alto Maipo Hydroelectric Project, which Chilean activists argue would threaten the drinking supply of more than 6 million people in the Santiago Metropolitan Region. The OPIC granted $250 million in funding to the project in 2013.
“For many years, we worked to hold OPIC…accountable,” Carla Garcia Zendejas, the organization’s director of people, land and resources, said in an email, “ensuring that communities affected by the institution were able to secure access to information regarding the institution’s decision-making processes and to utilize the accountability mechanism when adversely affected….
Garcia Zendejas emphasized that the DFC’s new exemption “had very practical implications for communities on the ground who are seeking information about the projects that could upend their lives.”
Bill Snape, Senior Counsel of the Center for Biological Diversity, added that he could see little reason for the agency to try to exempt itself from the Sunshine Act, “unless you have things to hide.” The plaintiffs did not prevail, however, and in February of this year, Judge Christopher Cooper granted DFC’s motion to dismiss, writing that the Sunshine Act does not apply to the DFC. For now, at least, FOIA does.
* I looked at Q2 2022 lobbying for the Twin Metals project here: