Under Penalty of Catapult

The Green Bay Packers are the only NFL franchise that operates without a single “majority” owner. Since the 1930s — long before the NFL adopted its current ownership rules — the Packers have been organized as a nonprofit stock corporation. The Packers periodically sell shares to the general public. These sales are not considered a public offering, however, so they’re not subject to federal securities regulations. Last year, the Packers’ board of directors authorized the sale of up to 280,000 new shares at $25 per share (plus a $25 handling fee for each order of one or more shares). No person may purchase more than 200 shares under the Packers’ bylaws. Including the current offering, there are about 5 million outstanding shares.

As many commentators have noted, the Packers’ shares are little more than a voluntary donation to the football team. Since the Packers are a nonprofit corporation, no dividends are ever paid to shareholders. If the Packers ever dissolve, their assets will be transferred to another nonprofit organization. Shares cannot be sold, only transferred to immediate family members. If anyone tries to sell their shares the Packers have the automatic right of repurchase at 2.5 cents per share. The only rights shareholders have are to elect the Packers’ board of directors and approve any future stock sales or amendments to the corporation’s bylaws.

Of course, despite lacking most of the traditional benefits of “ownership,” all shareholders must still consent to Roger Goodell’s universal jurisdiction:

The NFL Rules prohibit conduct by shareholders of NFL member clubs that is detrimental to the NFL, including, among other things, owning a financial interest in any other NFL member club or other professional football organization; loaning money to other NFL member clubs or any player, coach or employee thereof or any football official employed by the NFL; acting as an agent for any NFL player; publicly criticizing any NFL member club or its management, employees or coaches or any football official employed by the NFL; or paying an NFL player or coach. If the Commissioner of the NFL (the “Commissioner”) decides that a shareholder of an NFL member club has been guilty of conduct detrimental to the welfare of the NFL then, among other things, the Commissioner has the authority to fine such shareholder in an amount not in excess of $500,000 and/or require such shareholder to sell his or her stock. In addition, if the Commissioner determines that a shareholder has bet on the outcome or score of any game played in the NFL, among other things, then the Commissioner may fine such shareholder in an amount not in excess of $5,000 and/or require such shareholder to sell his or her stock. (Italics added)

So read literally, the Packers shareholders — all of whom are Packers fans, I’d assume — are not allowed to ever publicly criticize the team or the league. That means a negative Tweet or message board post could cost you your shares and up to $500,000.Now, I don’t think Goodell has ever fined a Packers shareholder, and I’d be somewhat surprised if he ever did. Still, it highlights the absurdity of the NFL bylaws, which give the commissioner a broad, non-reviewable power to fine the very owners who employ him.

On the other hand, I wonder if the Packers’ unique ownership structure might not be a working model for organizing a local government along more libertarian lines. Imagine a city where you sold shares to raise revenue for capital projects — building roads, fire stations, et al. — and limited the number of shares any one person could purchase at a time. Shareholders could vote for directors (city councilors) and for or against charter revisions (bylaws), but they could not sell the shares for profit or otherwise enjoy any special privileges. And when you needed to raise money for another capital project, you could just sell more shares. Operating expenses would then be paid through user fees — after all, Packers shareholders still have to buy tickets to actually attend games.

The Packers board of directors has about 40 members elected by approximately 112,000 individual shareholders. That’s far more representative than most city councils. The Packers board elects a CEO and an executive committee to oversee day-to-day operations, which isn’t substantially different than a city manager.

The eternal criticism of any form of voluntary government is, “What if people don’t support it and free-ride off the ones who do?” I think the Packers present a solid response. Thikn about it. Everyone knows the Packers shares don’t confer any substantial decision-making power over the team. The shares have no economic value. Yet people still line up to buy them every time there’s an offering. If you build and sustain a good product, be it a football team or local government services, people will support it. Call it civic or team pride, but clearly there’s a market for voluntarily pledging support to a community-based corporation.

I should add here when I speak of “local government services,” I mean only those common services that would otherwise exist in the market. I am not referring to regulatory schemes that cannot exist without the use of force, e.g. zoning. And I’m not suggesting a Packers-style model is the only one that could work. But we should also not be blinded into thinking that the for-profit, publicly traded stock corporation is the only valid method of aggregating capital and administering multiple-ownership property. One of my key criticisms of the NFL has been its strict adherence, the Packers notwithstanding, to an ownership model that promotes poor management and aggression against local taxpayers. Like government services, the NFL would benefit from competition among different governance models.

New Jersey Gov. Chris Christie vetoed Senate Bill 1 today, which would legalize same-sex marriage under state law. Christie claims he doesn’t oppose same-sex marriage per se, but rather the subject should be addressed by amending the New Jersey Constitution, which requires a public referendum:

Today, I am adhering to what I’ve said since this bill was first introduced – an issue of this magnitude and importance, which requires a constitutional amendment, should be left to the people of New Jersey to decide. I continue to encourage the Legislature to trust the people of New Jersey and seek their input by allowing our citizens to vote on a question that represents a profoundly significant societal change. This is the only path to amend our State Constitution and the best way to resolve the issue of same-sex marriage in our state.

I don’t find this argument persuasive. As the text of the bill notes, the New Jersey Supreme Court previously held “that denying rights and benefits to committed same-sex couples that are statutorily given to their heterosexual counterparts violates the equal protection guarantee of Article I, paragraph 1 of the New Jersey Constitution.” That paragraph states,

All persons are by nature free and independent, and have certain natural and unalienable rights, among which are those of enjoying and defending life and liberty, of acquiring, possessing, and protecting property, and of pursuing and obtaining safety and happiness.

In other words, individuals already have the right to enter into marital relationships with the person of their choosing. New Jersey failed to respect that right as it pertains to same-sex couples. The Supreme Court ordered the legislature to remedy this. Initially, the state tried civil unions. The legislature has now concluded that didn’t work. Now they’ve agreed to eliminate the legal distinction between opposite-sex and same-sex couples.

All of this is well within the legislative prerogative. I can find no grounds to support Christie’s argument that the situation “requires” a constitutional amendment. Why would one need to amend the Constitution to say something it already says?

Christie says “an issue of this magnitude and importance” requires a vote since it “represents a profoundly significant societal change.” I would say the fact that same-sex couples have organized to assert themselves indicates that change has already occurred. A vote is unnecessary. Nor is “societal change” the proper subject of an amendment to the New Jersey Constitution. Let’s consider the other amendments that have recently been put to the voters:

• In 2011, voters approved an amendment “to allow wagering on sports events at Atlantic City casinos and horse racetracks”;
• In 2010, voters approved an amendment “to dedicate assessments on wages by the state to the payment of employee benefits”;
• In 2008, voters rejected a proposed amendment that would have changed the method of selecting certain municipal court judges; and
• In 2007, voters rejected a proposed amendment that would have dedicated “annual revenue of an amount equal to a tax rate of 1% under the state sales tax for property tax reform.”

None of these subjects strike me as questions of fundamental social change. Although I suppose one could compare same-sex marriage to sports wagering — both have been practiced for years despite a puritanical minority’s use of the state to discourage it. Still, the 2011 referendum was about whether the state would extend the privilege of sports wagering to existing state-licensed institutions; it was not a question of individual rights.

And that’s what we’re talking about here. I am loathe to invoke the rhetoric of “civil rights” when discussing same-sex marriage, because I believe that civil rights should be reserved to those privileges and immunities arising from the political concept of citizenship. Marriage is an individual right that predates the state and exists outside of its commandments. Marriage also takes different forms in different human societies. It is an ever-changing institution.

“Societal change” is not a function of democracy, but of voluntary exchange. You can no more put the question of same-sex marriage up to a public vote than you could whether the Internet should exist. The free acts of millions of individuals produce change. All an election can do is try and thwart that change through the use of force — in this case, mob rule.

DeSean Jackson’s contract with the Philadelphia Eagles expired at the end of the 2011 season. In any other industry, he’d be free to walk away from the Eagles and seek employment elsewhere. But this is the NFL, where guild socialism rules the day, as ESPN.com’s Howard Bryant noted yesterday:

[T]he Eagles get to have it both ways. They don’t have to think enough of Jackson to commit to him with a multiyear contract, while at the same time they think too much of him to allow him to leave town. So the club is expected to place the dreaded franchise tag on him, keeping him in Philadelphia for one more season.

Jackson will receive big money, probably about $10 million for the 2012 season. As a franchise player, he’ll be one of the highest-paid receivers in football. But the lack of an opportunity for him to be an unrestricted free agent is exactly what the players should have been fighting against during last year’s lockout. Unrestricted free agency should have been the line in the sand for them then, and they should still be after it like the holy grail now.

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Outside of the military, it is difficult to think of an industry other than professional football in which an individual is not afforded the right, after some reasonable amount of time, to change jobs within his or her given field. Being able to choose a place to live and work is a simple American concept — this isn’t Cuba … except in the NFL. There are a number of factors in Jackson’s situation that are particularly galling: a club’s immense power to control player movement, even for players it doesn’t seem to like very much; the public’s comfort level with that system; the owners’ false insistence that the league can’t thrive without it; and, worst of all, the players’ refusal to make true, unrestricted free agency the core issue of their union.

I maintain the labor system itself is the problem. Federal law allowed the NFL clubs to publicly breach their existing player contracts — i.e., the lockout — without any fear of legal reprisal. The law also coerced individual players into assigning their negotiating rights to a collective entity, the NFLPA, ran by a former federal prosecutor with his own agenda. Players like DeSean Jackson never had a meaningful voice in the collective bargaining talks — and the resulting “agreement” further restricted his rights to negotiate with individual teams. The entire labor regime is fraudulent.

More specifically, the “franchise tag” Bryant rails against so eloquently should be considered a textbook case of fraud. The word “fraud” is admittedly overused to condemn any business practice a person doesn’t like. So let’s narrow things down a bit. A good starting point is the argument made by libertarian legal scholar Stephan Kinsella, who places fraud in the context of contract theory:

The theory of contract espoused here demonstrates that fraud is properly viewed as a type of theft. Suppose Karen buys a bucket of apples from Ethan for $20. Ethan represents the things in the bucket as being apples, in fact, as apples of a certain nature, that is, as being fit for their normal purpose of being eaten. Karen conditions the transfer of title to her $20 on Ethan’s not knowingly engaging in ‘fraudulent’ activities, like pawning off rotten apples. If the apples are indeed rotten and Ethan knows this, then he knows that he does not
receive ownership of or permission to use the $20, because the condition ‘no fraud’ is not satisfied. He is knowingly in possession of Karen’s $20 without her consent, and is, therefore, a thief.

DeSean Jackson is not a bucket of apples, rotten or otherwise. He’s selling his labor (or his time, if you prefer). The Eagles agreed to pay a certain price for that labor over a stated period. But that period is now expired. Both sides have fulfilled the terms of their agreement.

But now the Eagles can point to Article 10 of the 2011 Collective Bargaining Agreement. Section 2 of that article says the Eagles may designate one player whose contract expired after the previous season as a “franchise player.” This designation grants the Eagles exclusive rights to contract with Jackson for the following season. He is no longer allowed to negotiate with other clubs without the Eagles’ permission. In exchange, the Eagles must offer him a one-year guaranteed contract at a certain minimum rate. And in theory, the Eagles could do this to Jackson again next year after the one-year contract expires.

We know the law permits this under the theory that collective bargaining agreements are sacrosanct. But taking a more objective, Kinsellan approach, is the “franchise tag” Kosher? I certainly think it’s debatable.

Let’s look at the procedural history. The Eagles drafted Jackson in 2008. At that time, the NFL clubs were governed under the 2006 Collective Bargaining Agreement between the NFL Players Association and the NFL Management Council. Jackson was not a party to this agreement, as he was not a professional player at the time. Nonetheless, federal law required him to abide by the CBA’s terms, which permitted the NFL to allocate new players via a draft. Jackson either had to sign a contract with the Eagles — the terms of which were further restricted by the 2006 CBA — or not play in the NFL at all in 2008. He signed a four-year contract that expired after the 2011 season.

After the 2010 season, the NFLMC terminated the 2006 CBA and “locked out” Jackson and the other players, ignoring the fact he remained under personal contract with the Eagles. The NFLMC’s actions were expressly designed to coerce the NFLPA into signing a new CBA more favorable to the NFLMC. The NFLPA initially responded by disclaiming its status as a federally recognized labor union. A group of players, in concert with NFLPA leaders, then filed an antitrust lawsuit, arguing the league’s business practices were no longer immune from the Sherman Act absent a collective bargaining process.

Despite the legal fiction the NFLPA no longer functioned as a union, lawyers working at their direction negotiated a “settlement” to the antitrust lawsuit that included a new CBA. The NFLMC then imposed the 2011 CBA terms on existing contracts, including Jackson’s, negotiated under the now-defunct 2006 CBA. That included the franchise tag (which also existed under the 2006 CBA).

At any point, it’s not clear how Jackson could have granted “consent” to the Eagles’ ability to unilaterally prevent him from seeking employment elsewhere after his contract expired. Even before he joined the NFL, the NFLPA assumed the “right” to negotiate on his behalf without his express consent. The Eagles and the NFL were allowed to blatantly ignore their own player contracts when they imposed a lockout after voluntarily and prematurely terminating the 2006 CBA. And there’s little reason to believe Jackson had any meaningful role in negotiating the 2011 CBA. The lawyers drafted the agreement and then quickly organized a mass player vote where a simple majority could legally bind any dissenters.

And most egregiously, the “franchise player” provision of the CBA is, by definition, selectively enforced. It’s not as if all players whose contracts expired after 2011 are subject to it. A club can only designate one such player each season. Even conceding the entire CBA process is legitimate, if the provisions don’t equally apply to every person covered, that’s inherently suspect from the standpoint of ascertaining consent.

It would be one thing if Jackson signed a player contract that expressly said there was a team option to extend the term for one year. That would demonstrate a clear “meeting of the minds” in the course of negotiations. But here, the contract provided for an express term that ended after 2011, and the Eagles are now claiming a right, that wasn’t directly negotiated with Jackson, to extend the agreement against his will. On the surface, that looks like fraud to me.

The counter-argument, of course, is that the 2011 CBA is the law of the land and it binds Jackson because he, at a minimum, implicitly agreed to its terms by supporting the union and returning to work. I don’t think that’s enough to overcome the presumption of fraud. Again, I’ll rely on Stephan Kinsella, who discusses the problem of relying solely on written rules in “one-click” and “shrink-wrap” terms of service agreements:

So one problem with click-wrap agreements, for example, is that there is (arguably) often no “meeting of the minds” on the fine print–and the vendor is fully aware of this. If the customers routinely just click the “I have read and agree to these terms” box but never do read it, and the vendor knows this, then it’s a sort of fiction to assume both sides have actually agreed on these terms. For example supposed buried in fine print for a contract for sale of a $20 software program is the provision, “Buyer agrees to give 50% of his income to Vendor for life.” Is this enforceable? Of course not. Why not? Because there was no agreement to this. So the “hidden” terms have to be in some sense reasonable, at the least. (Here, too, “inalienability” concerns may kick in–even if the party is fully aware he is signing away his life income, or his kidney, or life, say, this may not be enforceable for inalienability concerns–see, on this, the contract article noted above, plus my article Inalienability and Punishment.)

I am not saying that clickwrap and fine print is not enforceable–I’m just saying that the libertarian view on property rights and contracts does not require that we formalistically equate “the contract” with “the writing,” and it does not require we figure all this out from our armchairs. The libertarian view can recognize that contracts about consensual, intentional transfers of title; that manifesting such consent is a matter of communication; that making determinations about the nature of a contract, or title transfer, is necessarily a fact-specific, context-bound inquiry.

So to follow Kinsella’s thinking, the proper question is whether or not Jackson, when he signed his 2008 contract, granted meaningful consent to the “franchise tag” that may now involuntarily extend his employment with the Eagles. If he didn’t grant such consent, then I think the Eagles and the NFL are guilty of fraud, at least in the Kinsellan-libertarian sense.

Remember, the NFL player contract is a standard form created by the CBA. Aside from compensation and number of years, there’s no room for negotiating or altering the terms. It’s very much like the “clickwrap” agreements Kinsella talks about above. And it’s not as if Jackson could have asked the Eagles in 2008, “Do you plan to use the franchise tag on me in 2011?” He signed a contract that said one thing — this is a four-year agreement — but actually meant something else.

Our friend Maury Brown, president of the Business of Sports Network, points out in a Tweet that “The NFL is to be not for profit.” He adds, “Don’t hurt yourself laughing.”

In talking with others about the NFL, I have also found surprise when explaining the NFL’s “not-for-profit” status. Article 2.2 of the NFL’s Constitution states, “The League is not organized nor to be operated for profit.” This refers to the NFL itself and not the individual member clubs or other joint ventures owned by the clubs, such as the NFL Network. The NFL is nothing more than a trade association or “business league” recognized as a tax-exempt organization under Section 501(c)(6) of the Internal Revenue Code.

When we commonly think of non-profit organizations, we think of groups exempt under Section 501(c)(3), which covers educational, charitable and scientific organizations. (It also covers amateur sports organizations, like the NCAA, but not professional sports leagues.) Many 501(c)(3) groups are publicly supported charities, which means donors may contribute to these organizations and deduct the contributions from their personal income taxes.

A 501(c)(6) group, in contrast, is not a publicly supported charity. Here is how the IRS defines organizations under this section:

Section 501(c)(6) of the Internal Revenue Code provides for the exemption of business leagues, chambers of commerce, real estate boards, boards of trade and professional football leagues, which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.

A business league is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit. Trade associations and professional associations are business leagues. To be exempt, a business league’s activities must be devoted to improving business conditions of one or more lines of business as distinguished from performing particular services for individual persons. No part of a business league’s net earnings may inure to the benefit of any private shareholder or individual and it may not be organized for profit to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only enough income to be self-sustaining).  The term line of business generally refers either to an entire industry or to all components of an industry within a geographic area.  It does not include a group composed of businesses that market a particular brand within an industry.

So as far as the IRS is concerned, the NFL is a chamber of commerce. Individual member clubs are still for-profit businesses subject to normal corporate tax laws. And any business run directly by the NFL is still a for-profit business. But the league itself is not.

The only notable difference between a 501(c)(6) like the NFL and a public charity under 501(c)(3) is that a 501(c)(6) has greater freedom to engage in political activity. A public charity may only engage in “insubstantial” lobbying activity without risking its exemption. A business league can engage in all the lobbying it wants, provided it “furthers the exempt purpose” of the group. (The NFL still can’t engage in direct political activity, i.e. contributing to campaigns.)

And the one advantage, from the public’s standpoint, of 501(c)(6) status is that the NFL’s annual tax return, Form 990, must be made available for public inspection. However, unlike a 501(c)(3), a 501(c)(6) does not have to let the public see any returns filed for any “unrelated business income.” In other words, the NFL will show you its return for the trade association part of its operation, but not necessarily that of its for-profit subsidiaries.

So how much money are we talking here? According to the NFL’s 2008 return (the last one I have on file), the NFL reported over $204 million in program service revenue plus about another $2.5 million in investment income and $470,000 in miscellaneous revenue. That’s against over $240 million in expenses, meaning the league reported a loss in 2008 of just over $33 million. The NFL also reported about $994 million in assets against $1.1 billion in liabilities.

The biggest chunk of the NFL’s assets are “notes and loans receivable,” about $800 million, which is primarily loans to individual clubs for stadium construction. This is where the NFL skirts the traditional bounds of a tax-exempt organization. Remember, to obtain a tax exemption, an organization’s revenues must be used for the exempt purposes and not “inure” to the benefit of individual members. But the NFL is using its exempt revenues to finance stadium construction that directly benefits individual owners—that is, the for-profit companies that run the actual NFL teams. According to the NFL’s 2008 return, there’s over $700 million in “loans” at zero-percent interest outstanding for stadium construction. Yet somehow the NFL retains its tax-exempt status.

In its zeal to pass legislation that would restrict free speech in the name of copyright, the Government of Canada is, not surprisingly, restricting the freedom of debate in the House of Commons itself. Yesterday the Conservative majority voted to limit debate on the second reading of C-11, which I discussed in detail the other day, in order to expedite its move towards a House committee.

The use of this “time allocation” motion — roughly akin to the U.S. Senate’s cloture — is supposed to be reserved for occasions when the various parties can’t agree on time limits for debate. Since the Conservatives won a majority last year, however, they’ve been much quicker to demand time allocation. This was the second such motion passed just this week.

Peter Van Loan, the Government’s floor leader in the House, defended time allocation as appropriate given the importance of copyright reform and blamed the opposition New Democratic Party for being obstructionists:

Mr. Speaker, after months of the NDP delaying and obstructing important legislation, it has actually revealed its true agenda. It intends to delay all legislation as long as it possibly can. That explains why the NDP has almost never agreed to hold a vote on any piece of legislation in this House.

Last week, I issued an invitation to come to an agreement on moving forward with legislation. The NDP member for Acadie—Bathurst [Yvon Godin] revealed the NDP plan to delay and obstruct all legislation by putting up every speaker possible. He justified this by saying the rules allow that every member has the right to speak. Indeed, that is the case. It is called “a filibuster” when parties put up every single speaker. The normal practice is not to do that.

The bill that we are talking about today has already been the subject of 75 speeches in this House and an opposition to block it from even getting to second reading.

By contrast, the identical bill, word for word, was sent to committee in 2010 after only seven hours of constructive debate in this place so that it could be reviewed in detail and improved through amendments.

If the NDP members had their way, Canada would go the way of other countries, such as the United States and countries in Europe, that have faced a political gridlock in a decision that caused economic uncertainty that threatened the world economy.

That is not what we want from our government. That is not what Canadians want. We are going to continue to have a productive, hard-working, orderly government that makes decisions and does the work that Canadians sent us here to do.

The crux of Van Loan’s argument is that the NDP is somehow being unreasonable by insisting that every member has a right to speak on a bill at every stage of consideration. Under the House’s standing orders, absent time allocation each member could speak once for up to 10 minutes at the current stage, second reading. There’s still committee and third reading stages.

There are 141 MPs representing opposition parties. If everyone spoke for the maximum 10 minutes, debate would take just under 24 hours. It would be repetitive and probably counter-productive, but it wouldn’t create gridlock as Van Loan suggests. Ultimately, his side has the numbers to wait out any opposition stalling. This isn’t the U.S. Senate where someone can hold the floor indefinitely.

The NDP’s counter-argument boils down to, “Every member has a right to speak.” I can’t argue with that, especially with a bill of this importance. The Conservatives reply is that they’ve already debated and considered this subject exhaustively, in this and earlier parliaments, and that they can’t debate this forever. To which I say, Why not? If you can’t fully debate the boundaries of free speech on the Internet — which is really what C-11 is all about — then what can you fully debate?

My latest at Saturday Down South looks at the Virginia General Assembly’s efforts to pass a “Tebow Bill” that would require public high schools to permit home-schooled students to play on sports teams.

My latest for Saturday Down South examines how Southeastern Conference athletic departments monitor and regulate the use of social media services by their student-athletes.

This week the Canadian House of Commons is expected to resume debate on C-11, a copyright reform bill pushed by the Conservative Party government of Prime Minister Stephen Harper. This is not quite the same debate that took place recently in the United States over SOPA. The C-11 debate isn’t so much a battle between Hollywood studios and the technology sector as it is a case of Harper and his ministers lashing out over an opposition that, well, opposes them.

C-11 is but the latest incarnation of a long battle to pass a copyright reform bill. First, a little background. From 2006 thru 2011, Harper led a minority Conservative government. That is, while he had the greatest number of seats in the House of Commons, the three opposition parties — Liberal, New Democrat and Bloc Quebecois — collectively held a majority. So Harper could accomplish nothing legislatively without some cooperation from the other side.

Eventually, the opposition overplayed its hand and forced Harper to call early elections last Spring, where he finally won a majority of the House. So now he can pretty much do whatever the hell he wants. And one of things he wants is this copyright bill.

The Bill

The bill itself has been introduced and debated in the last couple of parliaments in basically the same form as it remains today. This week, the government plans to move the bill to the second of three required readings in the House, and Harper’s chief lieutenant in the House, Peter Van Loan, said last week he hopes to secure final approval by April. To date, the government has not indicated it will accept any substantive opposition amendments.

So what is C-11 all about? The most controversial provision deals with the use of “digital locks” installed by content providers to prevent users from copying the contained work. Under C-11, such “technological protection measures” are given protected status. It would be illegal for a user to circumvent a digital lock that controls access to a work, though not a lock that merely restricts the ability to copy. Practically, this is probably a meaningless distinction, since works like DVDs or e-books may contain locks that do both, and it’s difficult to circumvent the copy control without doing the same with the access control. C-11 further bans the distribution of any software or other devices that could be used to circumvent either type of digital lock.

If anyone circumvents a digital lock for “commercial purposes,” they are subject to a fine of up to $1 million and a five-year prison sentence. There are several exceptions to the ban, including law enforcement purposes or providing access to “persons with perceptual disabilities.”

C-11 does take a less harsh stance towards internet service providers than the United States. The bill does not require ISPs to immediately take down any website accused of copyright infringement, but it does require the ISP to notify a user of any infringement accusation, and to store the user’s information for up to a year.

The other controversial subject of C-11 is modifying the definition of “fair dealing,” or what we call “fair use” in U.S. copyright law. C-11 expands fair dealing to include any use of a copyrighted work for “education, parody or satire.” The problem is that the government defines “education” quite restrictively. As the Library of Parliament’s report on C-11 suggested, “[e]ducation apparently refers to a structured context and would include training in the private sector but not cover ‘education’ of the public at large.”

Even within the “structured context” of a university course, C-11 imposes a ridiculous burden on students, particularly those who take online or distance courses. Consider this section in the bill:

It is not an infringement of copyright for a student who has received a lesson by means of communication by telecommunication under paragraph (3)(a) to reproduce the lesson in order to be able to listen to or view it at a more convenient time. However, the student shall
destroy the reproduction within 30 days after the day on which the students who are enrolled in the course to which the lesson relates have
received their final course evaluations.

This section goes on to say that the education institution has an affirmative duty to prevent students from “communicating the lesson” to others beyond what is permitted here.

Other provisions of C-11 further increase the scope of copyright in Canada. For example, the bill gives live performers copyright in their performances, which includes “moral rights” to “the integrity of the performance.” The bill also grants copyright in photographs and paintings to the artist, rather than the person who commissioned the works. Instead, the person who pays for the photographs only enjoys “limited rights to use it for personal or non-commercial use without the photographer or artist’s permission, subject to any contract that specifies otherwise.” This would mean, for instance, that a couple who hires a photographer for their wedding could be legally prevented from publishing their own wedding photos without the photographer’s permission — unless the couple was legally savvy enough to put a specific clause to the contrary in their contract.

The Debate

The Harper government has three basic arguments in support of C-11. First, we’re finally in the majority, so we have a “mandate” from the public to govern as we see fit. Second, C-11 will help Canada comply with various international copyright and trade agreements we’ve signed or plan to sign. Third, this bill will help protect jobs in copyright-dependent industries.

In response the opposition, led by the New Democratic Party, claims to support copyright reform in principle but objects to the government’s heavy-handed approach. Last November 28, the House, voting along party lines, defeated an NDP motion to prevent second reading of C-11 “because it fails to: (a) uphold the rights of consumers to choose how to enjoy the content that they purchase through overly-restrictive digital lock provisions; (b) include a clear and strict test for ‘fair dealing’ for education purposes; and (c) provide any transitional funding to help artists adapt to the loss of revenue streams that the Bill would cause.”

Debate on the second reading began on October 18, 2011. Charlie Angus, a NDP Member of Parliament representing Ontario, presented the opposition’s case, which demonstrated a solid understanding of the history and true nature of copyright:

The balance of the right to make a copy is not a property right. It has been argued over the years, and copyright lobbyists today will talk about their property and their right to protect their property. They will say they want to put a lock on the door to keep people from going in or to make them pay to go in, and that it is their property.

However, it is not a piece of property. Creativity is not a piece of personal property. It has been defined in Parliament and the courts.

I refer back to the 1841 debates where Lord Macaulay, who was a writer himself who had been ripped off and plagiarized many times over the years, fought within the English Parliament to separate the idea that it was personal property that copyright was created to protect. Macaulay at that time imitated much of the modern debate. He even talked about the pirates of that generation, the “knaves who take the bread out of the mouths of deserving men”, the people who would unfairly infringe on the copyright of the author and not pay for it as they should.

At the same time, he also called copyright an evil. It is interesting that he said that. He called it a necessary evil. He said that copyright should only exist for a period to ensure the author was paid, but it could not be used to interfere with the larger development of society. He said that the creation of ideas is not something that can be compartmentalized: that when a work is created, it is brought into a larger frame. Parliamentarians around the world have been trying to find the balance between people’s right of access to new ideas and the right of remuneration of the creator. Those are the two fundamental balances, and they are the balanced principles that the New Democratic Party has articulated throughout these debates for the last number of years. The two fundamental principles in the digital age are the same as they were back in the 1800s in the book wars: ease of access and the right to remuneration.

We talk about le droit d’auteur and copyright, but this bill does not deal with either of those rights. It is about corporate right, which is different from copyright.

Angus was especially pointed on C-11′s mandate that online students destroy class materials after 30 days:

That requirement would mean the creation of a modern book-burning regime. As well, we would see the creation of a two-tier set of rights. There is one set of rights in the analog and paper world that would allow students going to school in Toronto to keep their class notes. Those class notes are important, because year after year students keep them to build a body of work towards getting their degree. However, students on a northern reserve trying to get long-distance learning do not have that same set of rights. They have a lesser set of rights.

Unfortunately, where the NDP argument goes off the rails — that is, if you’re a supporter of individual rights — is in the party’s belief that more government intervention is necessary to address the problems of copyright. As the NDP’s motion above noted, the opposition wants the government to provide “transitional funding” for artists to compensate them for “the loss of revenue streams.” The NDP favors expansion of an existing government program that taxes certain types of media — blank CDs and cassettes — and ostensibly uses the proceeds to pay royalties to artists affected by copying. The previous, opposition-majority Parliament considered applying the tax to electronic devices — what the Conservatives rightly mocked as an “iPod tax” that would’ve been as high as $75 depending on the storage capacity of the device.

The NDP argument is ultimately anti-corporatist, not anti-copyright. They portray the government as a puppet of corporate and international special interests. And they’re right. Unlike the United States, where Hollywood’s influence within the Democratic Party drives the copyright agenda, the Harper government is primarily concerned with international public opinion. Most of C-11′s provisions are designed to bring Canada’s laws under treaties designed and pushed by the major copyright powers, the U.S. and the European Union. Harper would rather make laws in a back room with his fellow world leaders than negotiate directly with his own Parliament.

Nothing made this clearer then when the infamous Wikileaks cable dumps last year showed Canadian and U.S. officials working together to push copyright reform. Geoff Regan, a Liberal Party MP from Nova Scotia, offered this account during the October debate in the House:

Diplomatic cables, recently released through WikiLeaks, have revealed that much of the bill was drafted specifically to meet American expectations in terms of the digital lock provisions. I find that quite shocking and disturbing. It is not about what is in the interests of Canadians but what is in the interest of some U.S. interests. The Conservatives even offered to provide the United States government with an advance copy of the bill before the Parliament of Canada was allowed to read it.

That is shameful. It is hard to imagine that could happen. Surely, the Conservatives would have more respect for Parliament and for the House of Commons than to offer it to a foreign government before tabling it here and making it available for members and for Canadians to examine.

Worse than that, the cables revealed that the Conservatives actually asked the United States to place Canada on the United States trade representatives’ piracy watch list. They wanted to scare Canadians into supporting this copyright bill. Talk about a regressive, recidivist, bizarre way to approach this. Ten days after the Conservatives made the request, the U.S. was only too happy to oblige them. Naturally. It is no surprise that they went along fully.

The irony of all this, of course, is that the U.S. is now loosening up its own provisions on digital locks. During the last review of the American circumvention rules, it significantly loosened them up. While it is now legal in the U.S. to circumvent a protection measure to create a mash-up for YouTube, in Canada it is going to be illegal, thanks to the government. Can anyone Imagine that? The Conservatives talk about this being balanced, fair and a modern copyright law. This is regressive.

While the Bush White House had a direct line into the Prime Minister’s Office, the opinions and advice of Canadian stakeholders, Canadian citizens and Canadian experts fell on deaf ears.

Regan’s wright about Conservative scare tactics. This was apparent during the resumed C-11 debate on December 12, when the government’s representative, Paul Calandra, did little more than stand on the House floor and respond to every legitimate criticism of the bill by accusing opponents of ignoring the jobs that would be lost if the government didn’t get exactly what it wanted. Calandra repeatedly cited 14,000 jobs in the Ontario video game industry that were “at risk” without the digital lock provisions of C-11.

The jobs argument is a familiar straw man in U.S. copyright debates. Hollywood claims phantom losses due to “piracy” will ultimately lead to mass unemployment in the entertainment industry. The NDP’s Charlie Angus rightly addressed these arguments in his October speech to the House:

We have heard all this talk about piracy and the pirate bays. It is interesting that the very first pirate bay was in Los Angeles. We think Hollywood is the natural place to make movies, but it is not. Why, in God’s name, when the vast majority of the U.S. population lives on the eastern seaboard, would filmmakers go to the dessert outside Hollywood to make films? It was because they were escaping the copyright rules of the day. They could not make movies in the eastern United States because Edison controlled the copyright on the camera. However, there was not the same copyright rules in California, so Hollywood was the original pirate bay.

It went on through the years when the VHS came out. Jack Valenti, the defender of the Hollywood industry, called the VHS the Boston strangler of movies and begged Congress to shut it down, to make it illegal because VHS was a threat.

The big pirate company at that time was Sony, which is suing people all over the planet for corporate infringement now, because it had created the VHS player with the record button.

At that time there was a big corporate fight and everybody said that the VHS would destroy Hollywood. However, as you know, Madam Speaker, and you are very young but you were probably right in your prime when the VHS came out, people started to rent movies, something they would never have thought about before because they would go to the theatre. Now they were able to rent movies, so this pirate activity, which Hollywood tried to shut down, became such a lucrative new business that it did not have to bother releasing movies to theatres. It could just release it to VHS and eventually on to DVD.

[ ... ]

Let us look at the recording business. In 1906 the musicians in the United States tried to make the roller piano illegal. They thought the roller piano would make it irrelevant to hire musicians so they said that mechanical music was a threat to musicians. Who did not side with them? The American Music Publishers Association did not support the musicians. It figured the more roller pianos sold, the more copyright it would make on the actual sheet music. Therefore, the roller piano was made legal. In the 1920s the recording industry tried to shut down radio because radio was not paying royalties. In each area along the way the problem was the need to find a monetization stream.

The fight in the digital age is no different than it was in 1928 when the royalties of artists dropped over 80% in the recording business because radio was the Napster of the day. It found a monetization stream. We are asking the government to work with us on a monetization stream for artists and unless we find that, we will be at the copyright wars for decades to come.

Angus was doing so well up until that last sentence. The NDP is unfortunately stuck in a feedback loop: Government caused the exploitation of consumers and artists through copyright, so the only solution is…more government intervention! It’s the market, not government, that needs to solve the problem of finding a “monetization stream” for artists.

The Solution

None of the parties represented in the Canadian Parliament oppose copyright as such. That limits the debate to how far copyright should extend. Ultimately, that gives the advocates of the greatest expansion the advantage, since they can simply wait their opposition out. It helps greatly when the radical pro-copyright forces control the executive, because they can use their treaty-making powers and foreign relationships to circumvent parliamentary debate. Similarly, the international realm is dominated by those countries who are most committed to forcing their view of copyright on the rest of the world.

The NDP does have an opportunity, however, to change the rules of the game. The NDP could break ranks and adopt an abolitionist stance towards copyright. The other major opposition party, the Liberals, would never do this. The Liberals fell from grace after a long run as Canada’s dominant political party, and frankly, if they were still in power it’s likely they would have introduced C-11.

The NDP, in contrast, is a party very much in flux. It enjoyed a temporary surge of support in Quebec last year that propelled the party to official opposition status for the first time. The NDP continues to bring in new members in anticipation of its leadership election next month. And judging from the parliamentary debate on C-11 to date, the NDP has many members and allies in the artistic community. There’s clearly an opening here to move the copyright debate from the margin towards fundamentals.

Abolition is hard for a socialist party like the NDP to accept because of the fear that it will lead to further “exploitation” of artists by large corporations. Yet as libertarian scholars have argued in recent years, just the opposite is true. Corporate power is synonymous with state intervention. The larger, established firms will always have the advantage when it comes to securing government favors. The only practical, lasting solution is to remove the privilege entirely, not reform it by shouting “democracy” from the rooftops.

The NDP is in a unique position. It’s an opposition party that has never been in government. It doesn’t have to protect its establishment credentials as the Liberals do. And since the Conservatives do hold a majority, the NDP also can’t be accused of obstructionism. It’s free to oppose the government as loudly as possible without any public fear of an unwanted early election. And copyright is not an issue that enjoys deep support in any party, even the Conservatives. People support copyright more out of fear of the unknown alternatives. The NDP has a chance to present such an alternative in a manner that is consistent with the party’s overall ideology and membership.

Obviously, the Harper Conservatives would scream bloody murder if the NDP proposed abolition of copyright. Harper would raise the specter of Canada as a rogue nation, an outcast from the carefully crafted international norms of copyright. But, again, let’s remember the NDP is an opposition party. Their job is to oppose and present alternatives for public debate. Nobody expects the NDP would make any serious progress on such a proposal. Indeed, the NDP won’t even be able to stop C-11 as it now stands. What abolition would do is force the government on the defensive. The debate would no longer be about the scope of copyright, but whether it should exist at all in a world where technology has rendered it obsolete and an impediment to human progress.

The NDP could present a vision for a “liberated” Canada, where the end of copyright would make it a cultural and technological haven for the entire English-speaking world (and the French-speaking world, for that matter). It would also be the biggest Fuck You to the United States since the War of 1812. Canada doesn’t have to be a puppet to U.S. interests, especially on a subject where the majority of Americans don’t even support “U.S. interests.”

The British government decided to punish Fred Goodwin, former chairman of the Royal Bank of Scotland, for his mismanagement which led to the bank’s collapse-and-bailout four years ago. And they’re punishing him in the most British way possible — by revoking his knighthood.

Goodwin was awarded the honor of Knight Bachelor in November 2004 for “services to banking.” The Knight Bachelor (KB) is the ESPN of knighthood. It’s on basic cable and anyone who is even a little famous can get a title. Your fancier knighthoods include Knight Commander of the Most Excellent Order of the British Empire and the HBO of knighthoods, the Knight of the Garter.

Anyhow, Goodwin was a good little banker who aggressively expanded RBS until it became — wait for it — “too big to fail.” And then it failed, leading then-Prime Minister Gordon Brown’s government to bail it out at taxpayer expense.

Goodwin has not faced any criminal charges in connection with his management of RBS. Yet the public outrage over the collapse prompted an obscure group called the Honours Forfeiture Committee to review Goodwin’s knighthood. This is a committee of six bureaucrats, the senior civil servants in the British government. The Committee is not limited to reviewing cases where an honoree is convicted of a crime, but may also act when a knight “has been censured, struck off etc by the relevant professional or other regulatory authority for action or inaction which was directly relevant to the granting of the honours.”

The Committee advised Prime Minister David Cameron to revoke Goodwin’s knighthood. Cameron passed that advice on to Queen Elizabeth II, whose office in turn issued formal papers “canceling and annulling the Knighthood” as of February 1. Since honors are ultimately discretionary gifts from the Queen, Goodwin could not argue or appeal this decision. The Cabinet Office, which runs the Civil Service, issued the following statement:

The scale and severity of the impact of [Goodwin's] actions as CEO of RBS made this an exceptional case.

In 2008 the Government had to provide £20bn of new equity to recapitalise RBS and ensure its survival and prevent the collapse of confidence in the British banking and payments system. Subsequent increases in Government capital have brought the total necessary injection of taxpayers’ money in RBS to £45.5bn.

Both the Financial Services Authority and the Treasury Select Committee have investigated the reasons for this failure and its consequences. They are clear that the failure of RBS  played an important role in the financial crisis of 2008-9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses. Fred Goodwin was the dominant decision maker at RBS at the time.

In reaching this decision, it was recognised that widespread concern about Fred Goodwin’s decisions meant that the retention of a Knighthood for “services to banking” could not be sustained.

What I love about this punishment is that it’s naked scapegoating. Everyone basically acknowledges this. Prime Minister Cameron and his fellow party leaders all issued statements supporting the Committee’s decision. Nobody is pretending that this addresses any substantial question, such as Goodwin’s legal liability or the systemic failures of the government’s monetary policies. This is little more than publicly pointing at Goodwin and laughing at him — and telling him he can’t put “Sir” before his name anymore. This is government at its absolute silliest.

It’s even funnier to think a group of senior civil servants had nothing better to do than worry about this guy’s fake title. I’m sure if you examine everyone who has received an honor from the Queen with a fine enough comb, you’ll find something that could justify “canceling and annulling” their knighthood. But, of course, this was all about immediate politics. Bankers are a politically unpopular group in Britain — not without cause — and elected officials of all stripes need to quell the public’s fury lest they get the bulk of the blame.

I’ve always said professional sports represents the unholy trinity of anti-free market values: Subsidies, bureaucracy and intellectual property. The latter is the subject of a welcome ruling yesterday from Justice Steven D. Rares of the Federal Court of Australia. Justice Rares ruled against Australia’s two principal football leagues in a copyright dispute with the operators of TV Now, a service that allows Australian consumers to record over-the-air television broadcasts and replay them on their computer or mobile device.

Optus Mobile Pty Ltd., TV Now’s owner, actually initiated litigation in response to threats made by the National Rugby League and the Australian Football League. The leagues previously sold their “exclusive” internet and mobile broadcasting rights to Telstra Corporation. They maintained TV Now’s service infringed on their copyrights in the broadcasts.

Justice Rares disagreed. The Australian parliament amended Section 111(1) of its copyright law in 2006 to permit recording of a broadcast “solely for private and domestic use by watching or listening to the material broadcast at a time more convenient than the time which the broadcast is made.” The Australian government noted the express reason for this amendment was to ensure individuals could record television programs on their personal devices without fear of being declared lawbreakers:

Many ordinary Australians do not believe that ‘format-shifting’ music they have purchased or ‘time-shifting’ a broadcast for personal use should be legally wrong with a risk of civil legal action, however unlikely. Failure to recognise such common practices diminishes respect for copyright and undermines the credibility of the Act.

The failure to recognise the reality of private copying is also unsatisfactory for industries investing in the delivery of digital devices and services. Eg, the supply of personal recording devices by broadcasters of subscription television services is proving to be important for the development of digital television. The availability of personal recording devices is also likely to be important for digital radio. (emphasis added by Justice Rares)

The specific issue Justice Rares had to decide here was whether the TV Now service crossed the line from simply providing users with the means to exercise their right, under statute, to copy a work for “private and domestic use” and instead constitute an infringement on the copyright of the football leagues and their licensee:

A person needs to employ technical equipment to make a film of a broadcast. Section 111(1) does not require the person who makes the film to have any particular relationship, such as ownership, to the equipment by which it is made. The Parliament must have contemplated that a variety of techniques and technical equipment could be used by a person to make a film of a broadcast. Since the 1980s households have had an evolving array of recording equipment capable of making a film, or in popular parlance “copying”, what is broadcast on television. Since the House of Lords* decided CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013, copyright legislation has had to balance the legitimate interests of the makers of original works and of ordinary citizens who use technological advances to copy those works for their own use in their private or domestic lives. In that case their Lordships refused to prohibit sales of blank tapes, recorders or similar electronic equipment that were capable of making copies of another’s copyright work merely because people might use these in their own homes to make copies of such work, rather than work not protected by copyright. Mere sale of articles that have lawful uses does not constitute authorisation of infringement of copyright, even if the manufacturer or vendor knows that there is a likelihood that the articles will be used for an infringing purpose, such as home recording, so long as the manufacturer or vendor has no control over the purchaser’s use of the article.

The key, Justice Rares said, was determining who makes the copy (or copies) of a given work.:

I am of opinion that the user of the TV Now service makes each of the films in the four formats when he or she clicks on the “record” button on the TV Now electronic program guide. This is because the user is solely responsible for the creation of those films. He or she decides whether or not to make the films and only he or she has the means of being able to view them. If the user does not click “record”, no films will be brought into existence that he or she can play back later. The service that TV Now offers the user is substantively no different from a VCR or DVR. Of course, TV Now may offer the user a greater range of playback environments than the means provided by a VCR or DVR, although this can depend on the technologies available to the user.

The fact that TV Now’s servers might actually store the data is legally irrelevant, according to Rares. The football leagues tried to argue that TV Now was really an illegal broadcaster because it stored and, in effect, retransmitted the games to individuals in different formats. But Rares said that so long as individual users decided when to record and watch the programs, their actions fell within the category of “private and domestic use.”

Justice Rares may not be the final word on this case. His ruling is the equivalent of a district court decision in the United States. The football leagues may still appeal to the Full Court (akin to our court of appeals) and ultimately the High Court of Australia. And of course, since this is a case of statutory construction, the leagues and their broadcast partners could always lobby Parliament to simply change the law again. Still, it’s a good sign when any court stands up to copyright bullying from professional sports leagues.

In this country, the National Football League maintains a similar copyright policy, decreeing that all games broadcast on free television are “are intended for the private use of our audience.” The NFL goes so far as to claim all “accounts and descriptions” of a game are also protected by copyright, which is absurd on its face. Even in the United States, you won’t find a judge who will argue that a group of guys talking about the Super Bowl somehow infringe the league’s vaunted copyright.

As I argued in an earlier post, I question the applicability of copyright at all to over-the-air television broadcasts. By definition you’re gifting the content to viewers for no consideration. It’s contradictory then to assert a distinction between “private” and “public” use with copyright attaching only to the latter.

Sports leagues always want to have it both ways, however. In the TV Now case, the Australian leagues want to reap the financial benefits not just of their television contracts, but also potential internet and mobile fees. TV Now is a direct competitor with the league-sanctioned internet/mobile provider. The leagues want copyright not only to eliminate this competitor, but also create a contractual relationship with consumers where none exists — by directing them on what technologies they are and are not permitted to use within their own homes. It’s yet another case where the worship of intangible, fake property rights threatens to undermine the exercise of natural property rights.

*The House of Lords of the United Kingdom served as that country’s highest court until recently. Until the 1960s, the Australian courts treated House of Lords precedents as binding on Australia.

I previously addressed the Canadian government’s comical obsession with reforming the upper house of that nation’s parliament. But the Mother Parliament is no less obsessed. The Conservative-Liberal Democrat coalition that assumed power in the United Kingdom two years ago has been itching to do some major constitutional reform of its own.

The British House of Lords has always been a sore subject. It is, after all, a vestige of pre-democratic class theory. The Lords was historically a small group of peers who inherited their titles. They exercised equal power with the House of Commons until 1911. That’s when the shit hit the fan. The Conservative majority in the Lords thwarted the Liberal government’s efforts to introduce new taxes. The Prime Minister tried to create a bunch of new peerages to give himself a majority in the Lords, but King George V refused. The government called for new elections, prevailed, and the King acquiesced. To prevent a repeat of this stalemate, the government forced through the first Lords reform bill, which basically took away the Lords’ power to veto legislation passed by the Commons. The Lords could still delay legislation for a limited time.

Ironically, one of the few times the Commons used the 1911 reform bill to disregard the upper house was to pass a second Lords reform bill, in 1949. This time, the Labour government wanted to do some large-scale central economic planning without interference from the peers. So the 1949 law further reduced the time the Lords could delay the Commons’ mob rule.

Neither of these reforms altered the basic nature of the Lords as a non-elected body, although what was once a small group of hereditary peers was, by the late 20th century, a nearly 1,000-member chamber dominated by peers appointed for life (I don’t think a hereditary peerage has been created since the 1960s). When Tony Blair’s Labour government took power in 1997, they successfully moved to expel most of the hereditary peers, leaving just 90 with about 700 more life appointees.

Now David Cameron’s coalition wants to finish the job and convert the Lords into a mostly elected body. Last year the government circulated a draft bill that would create a chamber of about 300 members, 240 of them elected for non-renewable 15-year terms. Their terms would be staggered every five years to match scheduled House of Commons elections. The remaining members would be appointed by the government. (The reformed Lords would continue to include some bishops of the Church of England. Don’t ask.)

The government further proposes Lords elections depart from the traditional first-past-the-post system used for the Commons and instead use a single-transferrable vote. This means voters can rank candidates and if their top choice doesn’t win, the vote is then “transferred” to the next-ranked candidate until a candidate is elected. The Liberal Democrat part of the coalition tried to implement a similar system for Commons elections via a failed referendum last year. (I’d note many U.S. libertarians favor such a system for this country.)

Actually, Lords reform really is nothing more than a Liberal Democrat pet project to keep them occupied while the Conservatives run the government. There doesn’t seem to be any genuine enthusiasm among the Conservatives for this proposal. There’s already been numerous objections to the proposed size of the House — 300 is thought to be too small — and fears that an elected Lords would lead to deadlock with Commons. This mirrors the fears raised by opponents of Canadian Senate reform.

Canada provides an interesting compare-and-contrast. While the Canadian Senate is exclusively appointed, its membership is also strictly apportioned by region and province. The House of Lords has no ties to British geography. The proposed reform bill would create electoral districts that are larger than existing Commons constituencies. But the number itself, 240 as proposed, is completely arbitrary. It could just as easily be 400 or 800.

In Canada, the Conservative government is pushing Senate reform in part to strengthen its natural political base in the western provinces. With Britain, the third-place Liberal Democrats are betting that a chamber elected by single-transferrable vote will strengthen its meager standing in Parliament. In both countries, reform critics fear the unknown long-term consequences of holding a second set of legislative elections.

There’s also the common question of why have a second chamber at all. In Canada, the leftist opposition party and several provincial leaders publicly support abolishing the Senate. None of the British elite seem to favor that. There’s widespread agreement than some upper house is necessary. The government itself notes an elected Lords “would continue to scrutinise legislation, hold the Government to account and conduct investigations.” (Similarly, Canadian Senate defenders note it is a “chamber of sober second thought.”)

In both cases, the push for an elected upper house is an admission that the presently elected lower houses aren’t quite doing a thorough job of scrutinizing the government. Obviously, that’s bound to happen when the government controls a majority (or near-majority) of the lower chamber’s seats. The merging of executive and legislative power in the Commons means there’s little incentive for the chamber to scrutinize itself. At the same time, neither the British nor Canadian governments want to give up the “supremacy” of the Commons; they want elected upper chambers, but they don’t want to alter the constitutional alignment of power between the houses.

In my previous post, I sided with the Senate abolitionists in Canada. What concerned me the most was an elected Senate would be a competing body for power rather than a check on it. In particular, I thought an elected Senate might lead to a greater centralization of power by displacing the elected provincial legislatures. That’s not really an issue with Britain. The UK is already a highly centralized state in spite recent devolutions to regional parliaments in Scotland and Wales. The elected Lords would not correspond to or compete with any existing local governments.

Like the Canadian government’s proposed reforms, I also find the British government’s ideas a tad unwieldy. In Canada, there’s a written Constitution with specific amendment procedures. The government is trying to avoid directly amending the Constitution by using elections to “nominate” Senate candidates the government would continue to formally appoint. The British constitution is basically whatever Parliament says it is on any given day. Still, both proposals require the implementation of a complex new election scheme. More elections doesn’t equal better government or a greater protection for individual rights.

If I were the British Liberal Democrats, given my position as a progressive third-party agitator, I would actually go in a completely different direction. Instead of reducing the Lords to 300 elected members, why not just use the current system and appoint every single voter to the Lords? I’m dead serious. Unlike Canadian senators, there’s no statutory limit on how many peerages the Queen may create. So just make everyone a damn baron.

In effect, I’m proposing turning the Lords into a permanent national referendum on the work of the Commons, which is to say the government. Obviously you can’t fit several million people into the Lords chamber, which doesn’t even accomodate the current membership. And you’re not going stage elections, like you would for the Commons, on every single piece of legislation. But you could devise an online system that allows for debate and instant voting on contested measures. Sure, it would take time and money to develop such a system. So would creating and maintaining the elected House of Lords. Why waste those resources just to have 300 more politicians on the public payroll?

I don’t follow presidential politics as much as I used to, but given last night’s events in South Carolina, I’ll offer a few thoughts.

First, I’ve heard talk of a “brokered convention.” The likelihood of such an event is statistically insignificant. Even if the primaries conclude with no one candidate having a majority of pledged delegates, there will be a couple of months before the Republican National Convention for the candidates involved to strike a deal. Let’s assume things shake out with Mitt Romney in 1st place, Newt Gingrich in 2nd, Ron Paul in 3rd and Rick Santorum 4th. Romney and Gingrich will simply strike a deal. Gingrich accepts the vice-presidential nomination and a majority of the delegates ratify the new ticket, at worst on the second ballot. There won’t be some spontaneous movement towards Paul or Santorum. And if Gingrich refuses a deal, his delegates will simply abandon him.

The flaw in Gingrich’s candidacy is that he has no real base of support. What we saw in South Carolina yesterday was a pure protest vote against Romney. Ginrgich may continue to gather protest votes, but he lacks the financing and organization to make anything out of it. His campaign is 80% ego and 20% free media coverage.

Romney, Paul and Santorum each represent one of the GOP’s broad constituencies. Romney represents the chambers of commerce; Paul the libertarians; and Santorum the Christian right. The latter faction, Santorum’s, has been significantly weakened over the past few election cycles. This group is not insignificant, but it no longer scares anyone.

Paul’s libertarian faction is well-financed and well-organized, but it has a natural ceiling. There just aren’t that many libertarians in the Republican Party. Nor for that matter are there many libertarians in the general population. Paul’s campaign can only succeed by drawing in enough independent libertarian votes into the Republican primaries to overcome the entrenched advantage of Romney, particularly in the larger states.

The storyline on Romney is that Republican voters aren’t that excited about him. This is hardly a Romney problem. Look at the last five Republican presidential nominees: John McCain, George W. Bush, Robert Dole, George H.W. Bush and Ronald Reagan. Only Reagan was “exciting.” Democrats tend to nominate first-time, charismatic candidates like Bill Clinton and Barack Obama. Republicans operate like a bakery that call your number when it’s your “turn.” Reagan broke through because of his extraordinary charisma and his political base in California. In all other cases, Republicans look to the least threatening white guy available.

That’s not to suggest Romney is the inevitable nominee. Scandals always pop up at unexpected times. And Romney may simply crack under the barrage of constant attacks from his three remaining opponents. A Gingrich nomination is not inconceivable. There’s ample historical precedent for a fiery protest candidate winning the nomination: William Jennings Bryan and Barry Goldwater spring to mind. Of course, both men lost in the general election, so that’s not a good omen for those hoping to unseat Barack Obama.

(As an aside, I’m not terribly worried by the prospect of Obama’s reelection. Contra Gingrich’s view that a a re-elected Obama would be untethered and therefore more dangerous, recent history suggests second-term presidencies often go limp and get bogged down by residual scandals from the first term. I have every confidence the same would be true with Obama.)

The only thing that interests me during election cycles is who are the vice-presidential nominees. I find the superfluous fascinating. Four years ago at this time, I briefly published a blog called “Veepwatch” that speculated as to who the veeps would be. I’m proud to note I was one of the first to seriously float Sarah Palin’s name. I did not directly predict her nomination, but I strongly suggested it as a possibility.

There have already been calls for Obama to dump Joe Biden and replace him with a stronger personality, especially Hillary Clinton. I would consider any move to dump Biden a major upset. Dumping a VP is a sign of weakness that no president wants to show. It doesn’t matter if the president dislikes his number-two. Whatever chance George McGovern might have had in 1972 was destroyed when he was forced to replace his original vice-presidential candidate, Thomas Eagleton, after revelations were published about his medical history. Replacing a VP is a sign you’re giving up.

I don’t think a VP selection has any significant impact on the outcome of an election. Vice presidents are generally not chosen with an eye to the electorate; they’re usually chosen to settle intra-party strife. Sometimes, as with Palin, they’re just desperate attempts to get attention.

If Romney is the nominee, his VP selection may prove moderately interesting. Since he’s an ex-governor, he won’t feel any pressure to “balance” the ticket one way or the other. In other words, he’s not a senator who might feel the need to pick a non-senator. I also don’t think he’ll feel compelled to select a female or non-Caucasian candiate for novelty value. If anything, he may double-down on boring white guydom (hello, Bob McDonell!)

At the advent of commercial television in the early 1950s, the NFL was spooked by the possibility of fans watching the games from their homes instead of paying to attend them live. The league’s owner-operators promptly adopted a blackout rule that prevented the telecast of all of a team’s home games to “protect” live attendance. By the 1960s, however, the league started to see value in television as a medium for expanding the game’s popularity. The NFL signed its first single-network contract, providing all of its games would be available for telecast on CBS. The owners still maintained a home blackout rule. By the 1970s, this was watered down: Home games would not be blacked out if they sold out at least 72 hours prior to the scheduled kickoff.

The networks — today the NFL has four broadcast partners — agreed to honor home blackouts for non-sold-out games in their contracts with the league. The Federal Communications Commission, at the league’s behest, adopted further rules that prohibited cable and satellite operators from making blacked-out games available in the affected markets. The FCC is now reconsidering this rule and has asked for public comment.

The FCC’s original justification for the cable and satellite ban was that it would “protect” the general availability of games on free network television. This is just as silly as the NFL’s longheld view that blackouts are necessary to “protect” live attendance. The blackout rule may have been an understandable, if premature, reaction to the unknown impact of television in the early 50s. But we now know that television, far from decimating the NFL, has made it the most popular professional sport in the U.S. by a substantial margin.

The NFL became a multi-billion-dollar entity by giving away its product for free. It wasn’t brilliant ownership or an authoritarian commissioner, but entrepreneurial television networks that figured out how to turn a second-rate sport — remember, in the 1950s baseball, college football and even boxing were more prominent sports than pro football — into must-see entertainment. Other entrepreneurs built secondary markets around gambling on the NFL (fantasy football), talking about the NFL (24-hour sports talk radio) and even talking about the mundane administrative aspects of the game (NFL draft “experts”). All of this happened in spite of the thirty-plus guys who actually owned the teams.

The problem is, those owners still believe in an outdated stadium model. The owners don’t compete for television revenue, the majority of the league’s income, because that’s divided equally regardless of performance. Most of the secondary revenue remains outside the league’s grasp. That leaves the live attendance. A team keeps 60% of its own gate, so every owner wants to maximize not just the number of bodies in the stadium but the price paid per body.

The stadium market is horribly distorted. Local governments often provide hundreds of millions of dollars in subsidies to construct stadiums. Decades of Fed-induced cheap debt allowed owners to borrow hundreds of millions more. Stadium location, capacity and pricing are no longer driven by the marketplace but by a host of political factors. Too many stadiums were built with too many seats for too much money. The continued enforcement of the blackout rule is simply a pathetic attempt to try and “force” consumers to subsidize this poor decision-making.

It’s also woefully counter-productive. If nothing else, a televised game advertises a team’s presence on local television for three hours. The NFL is saying it’s better not to advertise the game at all, because somehow that will induce demand to rise. It’s a good thing the companies that will pay upwards of $4 million per half-minute to advertise during next month’s Super Bowl telecast don’t think that way. Otherwise the television networks would stop writing multi-billion-dollar checks to pay for the NFL’s broadcast rights.

Actually, the networks are really at fault here. They are the league’s primary customers. Yet they’ve passively enforced the blackout rules for decades out of some misplaced fear of offending the league’s owners. It shouldn’t be up to the FCC to end the blackout policy. The customers have every right to say, “We’re paying for these games, and we’ll televise them where and when we want.” Sure, the NFL can walk away, but there’s not exactly an unlimited supply of television networks willing and able to pay the premium prices the league is accustomed to receiving. If push comes to shove, the NFL will end the blackout rule out of pure self-interest.

Following last November’s elections, Virginia’s Senate found itself equally divided between Democrats and Republicans, 20-20. Just as the vice president officially presides over the U.S. Senate, the lieutenant governor of Virginia presides over the state Senate and is constitutionally authorized to serve as a tie-breaking vote. This is particularly important when it comes to organizing the Senate and determining the makeup of committees where most of the real legislative work is accomplished. There’s no hard-and-fast rule on how to handle such situations. In the federal Senate, the vice president’s vote has been considered dispositive in determining partisan control. During the 107th Congress, which spanned the end of the Clinton administration and the start of the Bush administration, the Senate was divided 50-50. Vice President Al Gore gave the Democrats the majority until Vice President Dick Cheney assumed office and gave Republicans organizational control.

In 1995, when Virginia’s Senate was also divided 20-20, Democrats attempted to claim unilateral control through then-Lt. Gov. Don Beyer’s tie-breaking vote. Beyer declared there was no constitutional limit on his tie-breaking powers and that he would vote to give his fellow Democrats a majority. He was sadly thwarted by a single conservative Democratic senator who said he would oppose such an effort. This led to a “power sharing” deal where committee chairmanships and assignments were split equally.

Yesterday, when the new 20-20 Senate convened, Republican Lt. Gov. Bill Bolling opted not to follow the 1995 example, voting to give Republicans organizational control. Earlier this month, Bolling preemptively issued a memorandum outlining his views of the tie-breaking power. He noted the Virginia Constitution empowers the lieutenant governor to act as president of the Senate and cast any tie-breaking votes “unless another provision of the Constitution of Virginia has expressly imposed a limit on the Lieutenant Governor’s authority to cast a vote.” He cited several specific cases where the Constitution limits voting to “elected members” of the Senate, such as financial bills and election of judges, and on those matters, Bolling said he would not cast a tie-breaking vote on final passage. As for organizing the Senate, Bolling said no constitutional provision limited him, so he was “fully empowered” to cast the deciding vote.

Bolling struck what he hopes is perceived as a moderate position, giving fellow Republicans control while announcing limits on his future tie-breaking power. No doubt this is political self-preservation. Bolling plans to run for governor in 2013, so he doesn’t want to alienate fellow Republicans — who now control the governor’s office and both houses of the General Assembly — or independent voters, who might look at yesterday’s events as an excessively partisan affair.

I can’t really fault Bolling here. His memorandum makes a strong case. And the problem, if there is one, lies with giving the lieutenant governor the job of presiding over the Senate in the first place. The form and function of the legislative presiding officer has evolved erratically over the centuries. In Britain, the speaker of the House of Commons is completely impartial. Although chosen by the members, upon election the speaker is expected to sever all partisan ties and typically runs for re-election as an unopposed independent. The Canadian House speaker is also considered impartial, although he does not generally sever party ties.

Historically, upper chamber speakers were creatures of the executive. The Canadian Senate speaker is still appointed by the government. The Lord Chancellor, a British cabinet officer, presided over the House of Lords until recent reforms empowered the members to elect their own speaker. And in the United States, of course, the vice president has always been the Senate’s president, a role he actually fulfilled day-to-day until the latter half of the 20th century.

Once again, I’d note the cautionary warnings of my favorite framer, George Mason. At the constitutional convention — presided over by a very impartial George Washington, mind you — Mason objected to the whole idea of having an executive officer, the vice president, presiding over half of the legislature. The vice presidency itself was a last-minute addition to the final draft of the Constitution. It helped resolve a couple of issues. First, it fit in with the idea of having an Electoral College where each member voted for two candidates. Second, since the Senate would have two members from every state, appointing the vice president as presiding officer prevented a situation where one state would sacrifice half its Senate delegation to the impartiality of the chair.

The House speakership acquired a more partisan character early in the 19th century. This was due to the separation-of-powers itself. In the British and Canadian parliaments, the speaker serves as a buffer between the executive, which is largely composed of members of the legislature itself, and opposition members. But in the U.S., the House, Senate, and White House all constitute distinct centers of power. The House speaker, therefore, assumed a role closer to that of a prime minister or leader of the opposition than an impartial presiding officer. The vice president’s role as president of the Senate has largely withered away except when there’s a tie vote.

Lt. Gov. Bolling surprisingly took a more British-Canadian approach with his tie-breaking memorandum. While there are no statutory qualifications on a British speaker’s tie-breaking power, there are well-understood conventions regarding the practice. Generally, a speaker will vote to preserve the rights of the House. For example, he will break a tie in favor of continuing a debate. He will vote to support the government on a confidence motion — something that doesn’t exist in the U.S. system — but against final passage of a bill, as that conflicts with the principle that only a majority should pass laws.

Of course, let’s see if Bolling sticks to his memorandum if a major initiative supported by his fellow Republican, Gov. Bob McDonnell, comes down to a 20-20 vote. The memorandum itself is not legally binding. Bolling is still a member of the executive branch — McDonnell named Bolling to the ludicrous portfolio of “chief jobs creation officer” — and his preemptive attempt at statesmanship could still fall prey to his political ambitions. Bolling is facing a tough primary against the state’s attorney general, which only gives the lieutenant governor more incentive to use his current post to the maximum benefit of his party.

Barack Obama has pushed the presidential power to make “recess appointments” to its limit. Obama made several such appointments recently — including three members of the National Labor Relations Board — despite the fact the Senate legally remains in session. Obama’s argument, supported by his own White House counsel, is that the Senate isn’t really in session, so recess appointments are okay.

It’s a nonsensical argument. The Constitution is often vague and mysterious, but not on this point. Neither house of Congress can adjourn for more than three days without the consent of the other. The House never adopted a resolution granting the Senate such permission. While the Senate has not been actively legislating over the recent holiday, it has held pro forma meetings — basically a senator gavels the empty chamber into session, then promptly adjourns it — to comply with the letter of the three-day requirement. Why would the Senate do this instead of just adjourning for the holiday? To prevent Obama from making recess appointments. Yes, the Senate exploited something of a loophole, but they did it cleanly. Obama’s answer is just to pretend the loophole doesn’t exist.

But rather than harp on this constitutional chicanery, I’d note this ongoing cat-and-mouse game of recess appointments (which all recent presidents have played with the Senate) vindicates one of our less-revered framers, Col. George Mason. Mason was one of a handful of delegates to the Constitutional Convention who did not sign the final document. He stated a number of objections, including his fellow delegates’ failure to create a privy council to advise the president. What exactly is a privy council? In the British system, the privy council is the formal body that advises the monarch on the exercise of executive power (the modern British cabinet is actually a subcommittee of the larger Privy Council, which is now a ceremonial body). The Constitution never provided for such a council. The framers only adopted language providing the president “may require the opinion, in writing, of the principal officer in each of the executive departments.”

Mason wanted a privy council to check the president’s appointment powers. He thought it dangerous to leave that responsibility to the Senate, which he correctly predicted would have to remain in constant session. Mason was a strict believer in separation-of-powers and, aside from ambassadors, he believed the legislature should not have a direct role in overseeing executive branch nominations. Instead, he proposed the Senate choose a six-member privy council — two from the northern states, two from the middle states and two from the southern states — that would approve presidential nominees. Benjamin Franklin seconded Mason’s proposal, noting, “a Council would not only be a check on a bad President but be a relief to a good one.” Unfortunately, only three of the 11 state delegations present voted for the motion; even Mason’s fellow Virginia delegates saw no value in a privy council.

New Hampshire and Massachusetts still retain executive councils from their Revolutionary days. In both states, the councilors are elected by geographic district. The New Hampshire council is particularly powerful, approving not just appointments but most state contracts. The Massachusetts council, known as the Governor’s Council, primarily approves judicial nominations.

A federal executive council, along the lines proposed by Mason, could have had a substantial impact on the development of the modern American state. I don’t think a council would change much in terms of the president getting executive nominees approved. Even under the present system, a Senate controlled by the opposite party rarely opposes a president’s cabinet or managerial nominees. The same would likely hold true with a council controlled by opposition politicians. All a council would do is expedite the appointment process and eliminate the need for recess appointments.

The real test would have been judicial nominations. Even the Senate rarely scrutinized judicial nominees much before the advent of modern media. Today, however, a Supreme Court nomination is a major event that occupies months of the Senate’s time. Even lower court judgeships have become potent sources of partisan conflict. The result is a backlog of caseloads on the lower courts and a parade of bland Supreme Court nominees who rarely stray from the Ivy League law school/appeals court judge model. I wonder if a president might think outside the box more with judicial nominees if he only faced confirming them before, say, a 12-member privy council rather than 100 elected senators looking to raise money from interest groups. We might also have seen less attention paid to single issues — i.e., abortion — in Supreme Court nomination battles if the Senate had been cut out of the loop.

The other area a privy council might have impacted modern-day government is the growth of the president’s internal staff. Absent a formal council, early presidents adopted a cabinet, which by the mid-20th century gave way to the Executive Office of the President — the West Wing. Now presidents rely almost exclusively on a small group of sycophants answerable only to him. This is essentially what Mason and Franklin feared most: a secretive cabal with no sense of public accountability. Mason wanted the privy council to assume some of the administrative burdens of the presidency, and in doing so provide a mechanism for executive accountability. Instead, we ended up with the Nixonian concept of “executive privilege” — a presidential staff that operates in total secrecy. Indeed, the current brouhaha over Obama’s recess appointments reflects. It was the White House counsel that “advised” Obama his actions were legal, yet the White House won’t release the memorandum containing that advice, nor will it explain whether it ever consulted with the Justice Department’s Office of Legal Counsel, which normally gives such advice.

Certainly, a privy council would not have been a cure-all for the multiple defects in the original Constitution, nor would it have prevented many of the abuses committed under that document’s auspices. But Mason was prescient in identifying the lack of a council as an enabler for the type of unrestricted executive power we are now witnessing.