Isaac Laquedem

The Janus case on compelled union dues: it's time to extend the same protections to shareholders

This week the Supreme Court held, in a case called Janus v. AFSCME, that public employees could not be compelled to pay "fair share" fees to the unions that negotiate their contracts with the government, overturning 40 years of precedent.  The majority said that to compel public employees to pay anything to the union is a form of compelled speech that violates the First Amendment, because it requires people to subsidize a message with which they may disagree.  The decision is likely to weaken the economic power of the unions that represent state and local government employees, which mostly support Democratic candidates.

I oppose forced speech of all kinds, and the decision doesn't bother me -- if we can extend it to other forms of forced economic speech.  Consider retirement funds.  Private individuals can invest in all sorts of things, but as a practical matter a large pension fund (think of Oregon's Public Employment Retirement System or California's even larger CALPERS fund) must invest most of its capital in the stock market, which more than any other investment provides a reasonable amount of income, appreciation, and liquidity.  The stock market is simply a collection of corporations, most of which engage in political speech through lobbyists, public relations, and affiliated political action committees.  If we are going to give people the right to opt out of subsidizing political speech with which they disagree, then let's expand the principle, and allow pension funds to compel the corporations in which they hold stock to lay the cost of their political efforts on only those shareholders who agree with them.  There's no reason for a government pension fund that holds shares in Wal-Mart to subsidize any of Wal-Mart's political efforts with which the fund's governing board disagrees, for example, efforts to oppose increasing the minimum wage.  If compelled political speech is bad when unions do it, it must be equally bad when management does it. 

Imagine the fun if PERS could tell Wal-Mart that its board disapproves of Wal-Mart's lobbying efforts and that it insists on being excused from paying for them.  If Wal-Mart's political speech costs the shareholders 3 cents/share/year, then PERS could insist on Wal-Mart paying it a special dividend of 3 cents/share/year to compensate for the expense.  Shareholders who support Wal-Mart's politics could still pay for the work; shareholders who oppose Wal-Mart's politics wouldn't have to bear the expense. 

Fair, as the wags occasionally note, is fair.  Why should the law deny government retirement funds a right that the court has granted to government employees?  I wouldn't want to suggest that the court's majority might be two-faced about the issue, but the case, fittingly, is named after a plaintiff named Janus.

T.T. "Saki" Tzantarmas (1936-2017), the New Copper Penny, and the American Dream

The unlikely life of Theodosios T. Tzantarmas began in 1936 in Thessaloniki, the second-largest city in Greece and one with a lively reputation for challenging the government: it was the locus of the original Young Turks, who started the revolution that ultimately overthrew the Ottoman Empire.  Not everyone born in Thessaloniki becomes a revolutionary, but neither does everyone born there become a boxer, a pipefitter, a tavern owner, and a thorn in the side of city government.  In his 81 years, T.T. Tzantarmas, known as "Saki," did all of those things.

Most of his Portland friends knew Saki Tzantarmas, who died in Portland on July 20, as the owner of the New Copper Penny Bar & Grill, a rambling establishment devoted to drinking, betting, and celebration that until last year dominated the interchange of Interstate 205 and Foster Road.  Even people who never stepped inside recognized its sign as a Portland landmark, with its copper-colored profile of Abraham Lincoln in the style of a one-cent piece. Why a penny and not a dollar?  Mr. Tzantarmas came to this country, he said, without a dollar -- but he did have five pennies in his pocket.

By 1960 he had made his way to Portland, where he was working as a pipefitter, and the stories began.  He told friends that he had boxed professionally, and an image from 1965 shows Saki with noted Mexican welterweight Gaspar Ortega - but his boxing record at boxrec.com identifies him in just one match, with Don Marshall at the Portland Armory, which he lost in a technical knockout.

Boxing was not Saki's future, though he retained the fighter's stance and build the rest of his life.  A few years after his boxing match he bought a rundown tavern, which he named the Copper Penny.  When the business was forced to relocate in 1973, he moved the tavern to Southeast Foster Road just east of 92nd Avenue, renaming it the New Copper Penny.

Saki himself lived a life of contradictions.  Expressive verbally, he disliked writing.  Elegant in dress when he wished -- he could make a purple tie look impressively masculine -- he could also appear in the New Copper Penny looking like a patron who was about to be thrown out, instead of as the owner who even in his late 70s could still do the throwing.  Thrifty in business -- some might say tightfisted -- he was personally generous to friends and family, quietly helping friends in need.  Even his family name carried its own puzzle: nominally Greek, it might have derived from the Italian surname Zantani, or from a similar Turkish name.

As he expanded his business onto the entire block on Foster Road, he built the contradictions of his own life story into the New Copper Penny.  The oldest part of the business was a clean plain room with a concrete floor, stark like the Greece of his youth.  A middle section contained the off-track betting parlor and video poker machines, a nod to the practicalities of running a tavern in Oregon.  And a dilapidated passage with fraying carpet led to the elegant Pantheon Room (pictured here), a classically-decorated banquet hall, with Greek pillars lining the walls, reminiscent of the ancient glory of his homeland.

Under pressure from the Portland Development Commission to get out of the way of gentrification, Saki sold the New Copper Penny site, and the tavern, club, and banquet hall closed last year to make way for apartments.

An old story tells of the man who came to this country with nothing, started a business, became a success, and sent his son to college to become an accountant.  After graduating, the son examined the father's books and told his father that he couldn't tell from the books what the father's profit was.  The father said, "I came to this country with five dollars.  Take five dollars out of the till.  Everything else you see is the profit."  When Willamette Week interviewed Saki Tzantarmas in 2014, he pulled five copper pennies out of his pocket and showed them to the reporter.  The five coins were what he had brought to America sixty years ago.  Everything else -- his family, his friends, his property, and his story -- was the profit that he shared with the city that he adopted.  It would be a fitting memorial to T.T. Tzantarmas if, somewhere in the foundation of the monolith that is replacing the New Copper Penny, the developer would embed five copper pennies.

 

Donald Trump pivots to China

At least, that's how I interpret the juxtaposition of Mr. Trump firing James Comey as director of the Federal Bureau of Investigation at the same time that his son-in-law's sister is selling real estate investments and visas to the Chinese.

United Airlines: offering multimodal transportation to its paying customers

The Federal income tax (second in a series) and the Laquedem Cosmic Federal Budget Workweek

I enjoy reading the descriptions of natural history that condense the life of the universe into the scale of a single year, sometimes called the Cosmic Calendar, so that if the Big Bang happened on January 1, the solar system formed on September 2, life on Earth started on September 21, fish appeared on December 17, the ice age ended on December 31 at 11:59:33 p.m, and so on.  I also appreciate the similar scaling of the federal income tax and the concept of Tax Freedom Day, the day of the year on which the nation has earned total income equal to its federal and state income tax burden.  It's in late April.

Something I read inspired me to condense income taxes and the federal budget into a single workweek -- the Laquedem Cosmic Federal Budget Workweek.  Imagine that your annual work and income are condensed into a single workweek of five 8-hour days, each running from 9:00 a.m. to 5:00 p.m. (For this exercise, skip lunch and breaks.)  The tax freedom moment is Tuesday at 1:29 p.m., including state taxes.  Your federal income tax freedom moment is Tuesday morning at 9:20 a.m.

But let's take this scale one step farther.  If your income tax is allocated ratably among the $2.854 trillion (net of certain offsetting revenues including Social Security and Medicare taxes) that our federal government spends, for how much of the LCFBW are you working for which program? 

The answer is that from 9:00 to 10:52:19 Monday you're working for the Defense Department, from 10:52:20 to 12:37:26 you're funding other discretionary spending, from 12:37:27 to 1:19:39 you're funding the interest on the national debt, from 1:19:40 to 2:24:08 you're funding Medicaid, and from 2:24:09 to 3:51:23 you're funding the gap between Social Security and Medicare tax revenues and expenses.  For the rest of the Monday (remember, no breaks!) and 20 minutes Tuesday morning you're supporting everything else the government does that has some mandatory element, including SNAP (food stamps), federal and military retirement benefits, the earned income credit, some veterans' programs, and unemployment benefits, net of all offsetting revenue.  

Mr. Trump proposes to cut funding for the National Endowment for the Humanities, the National Endowment for the Arts, and the Corporation for Public Broadcasting.  How much of your workweek goes to support those three programs?  Last year the federal government funded public broadcasting with $445 million and sent about $150 million each to NEH and NEA.  On the Laquedem Cosmic Federal Budget Workweek scale, one minute equals $5.708 billion and one second equals $95 million.  The answer, then, is that the $745 million for those three programs together correspond to about eight seconds of your workweek.  If you read at a respectable 300 words per minute, in the time it took you to read this post you funded your share of the three programs twelve times over.  Now get back to work.

Federal Income Tax Policy (first in a series)

In January, Senator Mike Lee (R-Utah) proposed eliminating the corporate income tax.  As president-elect, Donald Trump wanted to lower the top corporate tax rate from 35% to 15%.

They may wish to review the history of how the nation's tax burden has shifted from corporations to individuals.  In the early years of the federal income tax, the burden lay about evenly on individuals and corporations.   In eight of the first ten years, the government actually collected more from corporations than from individual taxpayers.  That tenth year -- 1943 -- was the last year in which the United States government collected more income tax from corporations than from individuals ($9.56 billion from corporations and $6.51 billion from individuals).

The last year in which corporations paid as much as two-thirds as individuals was 1954 ($21.1 billion from corporations and $29.5 billion from individuals).

The last year in which corporations paid as much as half as individuals was 1967 ($34 billion from corporations and $61.5 billion from individuals).

The last year in which corporations paid as much as one-third as individuals was 2006 ($353.9 billion from corporations and $1,044 billion from individuals), and before that was 1977 ($54.9 billion from corporations and $157.6 billion from individuals).

The tax cut that the Republicans champion has already happened.

Has President Trump inadvertently banned Saudi Arabian visitors from the United States?

Hidden within Donald Trump's executive order on immigration is this little gem, section 9:

Sec. 9. Visa Validity Reciprocity.  The Secretary of State shall review all nonimmigrant visa reciprocity agreements to ensure that they are, with respect to each visa classification, truly reciprocal insofar as practicable with respect to validity period and fees, as required by sections 221(c) and 281 of the INA, 8 U.S.C. 1201(c) and 1351, and other treatment. If a country does not treat United States nationals seeking nonimmigrant visas in a reciprocal manner, the Secretary of State shall adjust the visa validity period, fee schedule, or other treatment to match the treatment of United States nationals by the foreign country, to the extent practicable.

"Nonimmigrant visas" are visas for business, education, and tourism.  The ringer here is that a few nations, most notably Saudi Arabia, prohibit tourist visits entirely: this website states that Saudi Arabia allows foreign visitors only for sponsored business travel, religious purposes, and family visits.  Conspicuously absent are visits for education and tourism.

If this portion of President Trump's order is upheld, and it might be, then he has directed the Secretary of State to treat Saudi visitors the same way that Saudi Arabia treats American visitors: that is, to keep them out of the country.  He's told the Secretary of State to exclude from the United States all Saudi nationals who are coming for education, or for non-specific business purposes, or simply to visit the United States -- even though Saudi Arabia isn't one of the nations on his list.  He's actually moved to exclude from the United States citizens of one of the nations that produced the 9/11 terrorists, even if he hasn't realized it yet.

A hotel chain chooses a president: a fable

Once upon a time the United Hotel Company needed to hire a new president.  It narrowed more than a dozen applicants down to two and called them in for a final interview.  "What's your experience in the industry?" they asked the finalists, though they had read their resumes.

The first applicant, a woman, replied, "I''ve spent more than 30 years working in hotels and the hospitality industry.  I worked my way through college serving tables in a restaurant.  When I graduated, I took a job in customer service at a hotel, then was promoted to run the catering department, and later became the sales manager.  I was out of the industry for 8 years because my husband ran a hotel chain -- he was the first CEO in 50 years at that company to turn a profit -- and I moved with him to support his career.  When he retired, I was selected to be the senior finance manager at another hotel chain, which I did for eight years, and then for four years was the director of communications.  Also, so you can know what else I've done, here are 10 years of my income tax returns."

The second applicant, a man, said, "I've never had a job at a hotel, but I know all about them because I stay in hotels and I have my weddings catered in hotels.  I've figured out some great ways to avoid paying my hotel bills.  I know all about how to stiff a hotel, so you should hire me because I can stop other people from stealing from you.  You need an outsider to teach you about fraud.  And if the business goes downhill I know all about how to reorganize it, because I've taken six of my own companies into bankruptcy.  I'm the best you're ever going to get, and if you don't hire me it means the system is rigged to favor the insiders.  By the way, your receptionist's cute.  I know people who own hotels in Russia - let's do a merger."

The hiring committee hotly debated which candidate to hire.  The committee was almost evenly divided, so it scheduled a final discussion and vote.  On the big day, one member was busy with other things, and didn't attend.  The members who showed up talked for a while and then voted.  The second candidate won by one vote, despite his inexperience, his bankruptcies, and his attitude, because he was a man.

This, of course, is a fable, and would never happen in American business, where decisions are based on merit.  Whether it happens in American politics depends on your ballot.

I'm shocked to find that gambling is going on here in Multnomah County

In matters of gambling, Oregon has two personalities.  The law prohibits casinos and commercial gambling, even as the state itself operates two lotteries and other games of chance.  ORS 167.117 permits Oregonians to engage in social games, such as the inoffensive wagering on the roll of the dice or the play of the cards, which I occasionally enjoy in the company of others of the Laquedemimonde.  What is a "social game?" The law defines the term to be (i) a game other than a lottery in a private home in which there are no house odds and no house profit, and (ii) a game in a business establishment in a city or county that has authorized social gaming, where there are no house odds, house profit, or house bank.  The idea behind this statute was that small towns might allow taverns to host card games in the hope of selling more food and drink, but the taverns weren't allowed to participate in or profit from the gambling itself. 

Where the camel's nose goes, the body will soon follow.  Prominent Portland attorney Tom Rask, who represents cardrooms in Washington, pointed out yesterday that Portland and Multnomah County are allowing games whose scale belies the benign adjective "social."  Pots of tens and hundreds of thousands of dollars are sometimes advertised, far more Hamiltons and Lincolns than the framers of ORS 167.117 envisioned.

What, then, can be done?  Mr. Rask called for the city to enforce state law and its own regulations, something the city seems disinclined to do.  (The city fathers and mothers prefer to place their wagers on real estate through the Portland Development Commission.)  The gambling houses themselves are keeping quiet.

A government that neglects the law for social reasons -- it's hard for a local government that receives money from the state lottery to seize the moral high ground when it complains about private enterprise joining in -- might enforce the law for financial reasons.  Here's where Multnomah County is missing a bet.  It can make a few dollars the easy way, if it cares to read ORS 91.240 and 91.245, two statutes buried in Oregon's non-residential landlord-tenant law.  ORS 91.240 prohibits landlords from renting any building, boat, or booth if they know or have reason to know that the tenant will use the premises for gambling purposes.  ORS 91.245 provides an incentive for the county to enforce the law: the penalty for being the landlord of a gambling house is "twice the amount of the rent of such building or other place for six months."  So if the district attorney can identify a few gambling houses that lease their space, the D.A. can chase the landlords for the penalty and turn the office into a profit center.  Your winnings, sir!

Richard See and Paul Gold, the accidental millionaires of downtown Portland

            In 1903 Richard See, age 19, came to America from Frankfurt, settling in New York, where he became a hat buyer for a large department store. Three years later a Russian emigrant arrived in Portland to pursue the American dream. He took the surname of “Gold,” though not because of the legend that American streets were paved with gold. In 1908 his wife Rose and their four small children joined him. A fifth child was born here in 1910 in a house on now-vanished SW Baker Street. Joe and Rose Gold gave their children plain American names – Jack, Paul, Sam, Sarah, and Dave – and raised them in the Jewish and Italian quarter of South Portland, where Joe Gold was a junk dealer.

            In 1921 Meier & Frank lured Richard See to leave New York for Portland, and placed him in charge of the millinery department. Meier & Frank’s hat sales soared when Mr. See carried out his promise to, in his words, “make at least ten trips a year to New York, to give the women of Portland the new styles as fast as they originate.”

            Around 1927 Paul Gold opened his first millinery store with his younger brother Dave. A gregarious man, Paul readily accumulated friends in Portland’s retail community, including Richard See, who was still buying and selling hats at Meier & Frank. In 1941 another friend, a shopkeeper in the Goodnaugh Building at 5^th and Yamhill, told Paul that his landlord was raising the rent and he didn’t know if he and the other Goodnaugh tenants could pay the increase. By coincidence, at about the same time Mr. See, who was planning for retirement, told Mr. Gold that he had saved some money and didn’t think that government bonds paid a high enough return. Perhaps, if Paul invested some of his money for him, Paul could do better?

            Mr. Gold did do better. “Paul made things grow,” his rabbi said when Mr. Gold died in 1981, and so he did, starting with the Goodnough. According to legend, Mr. Gold (pictured at right, foreground) approached the worried Goodnough tenants and promised that if they would pay him three months’ rent in advance, he would buy the building and not raise their rent for two years. The tenants pungled up, Mr. See wrote a check, and soon the Goodnough Building had become the first acquisition of the new firm of See, Gold & Associates. A few months later they bought a second building, the Kraemer Building at SW 2^nd and Washington.

            Pleased with their purchases, Messrs. See and Gold gave up the hat business to focus on buying downtown property. In 1944 they were able to buy the Hotel Oregon, at Broadway and Stark, for the amount of the unpaid property taxes. In 1945 they bought the Portland Garage, a parking structure at 5th and Taylor, later acquiring the rest of the block.  They acquired so much real estate that by 1956 the society page of the Palm Springs newspaper could describe them as “realtors from Portland, Oregon.”

            They became famous for never making counteroffers. If you quoted them a price for your building, they would say only “yes” or “no.” Would-be sellers learned to name their best price first. See, Gold & Associates continued to buy downtown property – like potato chips, no one can stop with just one – sometimes trading up, rarely selling. One exception was when they sold the block at 5^th and Taylor to Georgia-Pacific for an office tower, a deviation that Mr. Gold rationalized to his partners by pointing out that the property across the street that See, Gold & Associates owned would go up in value when G-P built its skyscraper.

            Messrs. See and Gold transacted their business from offices in the New Fliedner Building at 10^th and Washington. (It was called the New Fliedner Building because it had replaced the original Fliedner Building in 1907.) Mr. Gold could often be found at a corner table at Danny’s Delicatessen at 5^th and Yamhill across from the Farmers Market, where thick pastrami sandwiches fueled negotiations. In between acquiring buildings See, Gold & Associates found time for other ventures, including buying and operating the Pacific Department Store and Powers Furniture Company. Mr. Gold also flirted with the restaurant business, investing in one of Portland’s first Japanese restaurants and operating a downtown bar called the Harvester.

            Richard See died in 1979 and Paul Gold died in 1981. In their 40 years in business, they had owned buildings, separately or together, on every downtown avenue from 1^st to 11^th and on every downtown street from Salmon to Stark.  Last week the final property was sold, bringing to a quiet close a remarkable 75-year story of Portland real estate history.

            Messrs. See and Gold owed their success to Portland’s postwar growth – the streets of downtown Portland turned out to be paved with gold after all – but also to the happy accident of both being in the hat business. Had Mr. See bought shoes, or had Mr. Gold sold suits, they might never have joined forces to become rich together. Sometimes clothes really do make the man.