Senator strikes a blow for bread and circuses

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One can’t help but breathe easier after hearing about Utah Senator Orrin Hatch’s desire to hold subcommittee meetings and possibly introduce legislation to rectify perhaps the most pressing issue facing humanity today: the college football Bowl Championship Series.

As Hatch told the Deseret News: “As I have said before, the BCS system is anti-competitive, unfair and un-American. I am looking forward to exploring what legislative remedies might be applied to fix a system that violates our nation’s antitrust laws by placing non-BCS universities at a serious competitive disadvantage.”

And who says there are no statesmen left anymore?

Of course, this has absolutely nothing to do with the fact that Hatch’s homestate University of Utah football team was the nation’s only undefeated team at the end of the last bowl season, but did not get invited to the BCS championship game — and finished No. 2 in the final Associated Press poll (which is not tied to the BCS).

Actually, this may not be a bad thing. Sure, getting pandering politicians involved in college football can’t help but be bad for schools, athletes and fans, but if it takes our elected leaders’ attention off things like micromanaging our economy for even a little while, it’s a good thing.

(Hat tip: With Leather)

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Standing up for small-town South Carolina

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Kudos to Brian McCarty over at Voting Under the Influence for striking a blow for his hometown of Honea Path, SC, and, by extension, small towns everywhere.

McCarty relates a recent experience that occurred in Columbia when, in response to telling someone that he was from the Upstate community of Honea Path (population 3,504), he was asked “Why in the world would someone like you ever move to place like that?”

Instead of punctuating his affection for his hometown with a few choice words, McCarty instead eloquently laid out the virtues of Honea Path – and that of many other small towns – on his blog.

Among the highlights:

“Someone like me,” remembers being able to walk or ride my bicycle all around town to places like the library or Wilson’s Dime Store to buy baseball cards. I remember small town legends like the late Sheriff E.E. “Duck” Cooley, coming into the barber shop and putting his gun on the sink as he got his hair cut and we boys looked wide eyed at him and the gun. I remember Bill Ashley, that old marine who fought in the Pacific, teaching me how to stack hay and telling me, “I am going to show you this one time boy and one time only.”

“Someone like me” hauled hay, cut grass, and worked in the local mill. No politician I ever worked for or any big client ever taught me as much about life as growing up in Honea Path did. In Honea Path I found heroes. My neighbor growing up, Tom Moore comes to mind. He had polio as a kid, but that did not keep him from teaching me the game of basketball. His grandson carries on the family honor flying helicopters in Iraq today. There was Dr. John Taylor, who taught me how a professional ought to be and conduct his career. There was the before mentioned Bill Ashley and so many others.”

Values such as hard work, integrity and honor aren’t exclusive to small towns, but they certainly do seem to be respected more there. There also seems to be a bit more emphasis on manners and humility in smaller communities.

Is life in a small town for everyone? Probably not. Is living in a big city the root of all evil? Of course not. But many folks fortunate enough to have spent time in smaller locales seem to understand the importance of having balance in one’s life, something city residents may want to consider once in a while as they rush about, wondering why they feel like hamsters on a treadmill and their lives seem so unfulfilling.

Well said, Mr. McCarty, well said indeed.

Leventis to retire as First Community chairman

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Jim Leventis, who with Mike Crapps helped build First Community Bank into one of the premier community banks in South Carolina, will retire as chairman of holding company First Community Corp. in May, it was announced Thursday.

Leventis, who helped found the bank in 1995, was named chairman emeritus and will remain on the board.

He will be succeeded as chairman by Mitchell Willoughby, a First Community board member and, like Leventis, an attorney.

“Jim was the Chairman when we organized First Community in 1995 and has been our only Chairman in our fourteen year history,” Crapps said in a company press release. “He has been a role model to all of us in exemplifying servant leadership and true commitment to our community.

“We will miss his guidance as Chairman, but are delighted that we will continue to enjoy the benefit of his wisdom as he remains an important member of our Board of Directors,” Crapps added.

Today, First Community has 11 offices and $650 million in assets. First Community has always been a first-class operation, due in no small part to the Leventis’ efforts over the years.

An uncritical look at Darlington’s impact

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Darlington Raceway brings in $54 million to South Carolina each year and is responsible for creating 874 jobs in the region, according to the report commissioned by the track and released Wednesday by the Washington Economic Group.

The report, done at a cost of $12,000, took several months and quantified direct economic benefits and those that are indirectly linked to the spending that goes on during a race, the track said, according to The Associated Press.

Other findings included:

  • NASCAR events and other activities at Darlington lead to $19 million in labor income to workers in South Carolina.
  • Federal, state and local governments collect more than $7.9 million from Darlington events.
  • Track activities contribute $30 million a year to South Carolina’s gross state product.

Unfortunately, trying to track down the report proved futile Wednesday. The Washington Economic Group had nothing about the study on its website – not even a press release – nor did Darlington Raceway.

While there’s little doubt that Darlington is a big money maker for the SC Pee Dee region, it would be nice to see some hard data to back up that assertion.

Economic impact studies are notorious for their use of “multipliers,” mathematical adjustments that account for how each dollar of outside money generates several-fold in additional spending. The figures generated, in other words, are theoretical.

And any discussion of benefits should also address costs, including lost opportunities, a key reason why official numbers are often overstated.

For example, while Darlington brings in tens of thousands of race fans from out of the area on a race weekend, it also likely drives out some local residents who don’t want to deal with the traffic and hassles inherent with the NASCAR influx.

More likely than not, this study neglected to include the revenues that will be lost by area supermarkets, retail stores and other businesses when those Darlington-area residents eager to escape race weekend head out of town for a few days.

That doesn’t change the fact that Darlington is integral to South Carolina’s economy, but it would be nice to know the figures being tossed around are accurate.

Analyzing Keynes’ perpetual motion machine

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Discrediting economic theories advanced by Newsweek magazine wouldn’t seem much of an accomplish, but William Anderson of Frostburg State University does it so well that one can’t help but sit up and take notice.

In the March 9, 2009, edition of Newsweek, writer Daniel Gross declares: “For our $14 trillion economy to recover and thrive, hoarders must open their wallets and become consumers, and businesses must once again be willing to roll the dice.” He later adds that “If everyone saves during a slack period, economic activity will decrease, thus making everyone poorer.”  

Anderson, in a piece on the Ludwig von Mises Institute’s website titled “Is the Economy a Perpetual Motion Machine?,” says he’s not surprised that Newsweek would spout this sort of tommyrot, but finds it considerably more disconcerting that many of our elected leaders also buy into this economic claptrap lock, stock and barrel.

The problem with this “theory,” he argues, is that it’s more than just a pie-in-the-sky academic exercise; it’s driving the US economy into a deep depression through reckless spending and misinvestment.

The highlight is Anderson’s summation of Keynesian theory:

“If I can put the whole Keynesian set of fallacies into one statement, it would be this: the modern Keynesians believe that the economy operates like a perpetual motion machine, with government spending being the “grease” that keeps it from slowing down. The “friction” in this economic machine, according to the pundits, is private saving. Eliminate it, and the economy goes on forever, adding energy and expanding indefinitely.”

The above would be a whole lot funnier if those in charge of doling out our tax dollars didn’t actually buy into this foolishness.

Whittle to be ousted from South Financial board

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As part of a settlement involving a pair of shareholder lawsuits brought against The South Financial Group, founder and chief executive officer Mack Whittle will resign from the board of the Greenville, SC-based financial services company and South Financial will enact significant corporate governance reforms.

According to a Securities and Exchange Commission document filed Wednesday, South Financial has reached an agreement in principle to settle suits filed Nov. 7, 2008, by Vernon A. Mercier, and Nov. 26, 2008, by John S. McMullen.

The suits were filed in the weeks after Whittle “stepped down” from South Financial, the company he began in 1986, but not before taking a golden parachute estimated to be worth at least $12 million.

The suits alleged that South Financial’s board “improperly accelerated the retirement of and approved excessive compensation” for Whittle.

Whittle had originally been scheduled to retire by year-end, but that date was moved up to October 27, in order that South Financial might get $347 million in federal bailout money and Whittle would still be able to retain his lucrative buyout. Whittle’s payout would have been in excess of federal guidelines if he’d not left the company before South Financial received the government money.

South Financial lost $569 million in 2008 and saw its stock price fall from $15.67 a share to $4.31. It closed Wednesday at $1.20.

Under terms of the settlement Whittle will resign from the company’s board, effective as of the date court approval of the settlement becomes final and he will contribute $250,000 to assist South Financial in settling this matter.  

Other highlights include:

  • South Financial agrees that it will not nominate a former CEO of the company to its board for a period of two years after the departure of the CEO from South Financial;
  • The board shall add an additional independent director to its board, one with a background in financial services;
  • Fully 75 percent of South Financial’s board shall consist of independent directors;
  • The chairman shall be independent, be elected by secret ballot of the board annually and shall be limited to four consecutive years of service as chairman;
  • The board shall amend South Financial’s corporate governance guidelines so that the positions of chairman and chief executive shall be held by two different people. Whittle held both positions between 2005-2008.

In addition to Whittle, other defendants named in one or both of the suits were: Darla D. Moore, John C.B. Smith Jr., William P. Brant, J.W. Davis, M. Dexter Hagy, Michael R. Hogan, William S. Hummers III, Challis M. Lowe, John W. Pritchett, H. Earle Russell Jr., Edward J. Sebastian, William R. Timmons III, David C. Wakefield III, and William P. Crawford Jr.

As part of the settlement, $500,000 will go to cover plaintiff’s court costs, split between $300,000 cash and $200,000 worth of company stock, to be paid from the company’s Directors & Officers insurance policy.

So, if one reads this correctly, and that’s no mean feat given the legalese involved, Whittle made off with at least $12 million for helping run South Financial into the ground, and his punishment was getting kicked off the board and having to pay $250,000? Sweet work if you can get it.

Here’s ‘change’ that definitely won’t be happening

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Bill Wilson of Americans for Limited Government has an easy solution to clear up doubts about whether our elected leaders’ “outrage” over the hefty bonuses paid out to AIG executives is legitimate or simply political pandering.

Wilson last week in a letter urged President Barack Obama and members of Congress to “return the $4.37 million they received in campaign contributions from AIG since 1989, including the $644,218 they received in 2008.”

“If the American people are to believe all the angry words and threats coming from the White House, President Obama must return the $104,332 he received from AIG during the 2008 campaign cycle,” declared Wilson in a statement.

According to OpenSecrets.org, AIG gave some $644,218 to candidates for federal office in 2008. According to Wilson’s letter, “[I]n return, it received from the Federal Reserve some $173 billion in taxpayer-guaranteed loans. That represents nearly a 27 million percent return on their 2008 ‘investment’ into politicians’ loyalty.”

“The 2008 money received by the President and members of Congress should clearly be returned, but more than that, the honorable thing would be for any politician who has ever received a penny from AIG to return it to the American taxpayers who are now paying to keep the company afloat,” Wilson said.

“These campaign kickbacks must be returned,” Wilson added.

A word to the wise: Don’t hold your breath.

(Hat tip: Cafe Hayek.)