Political Chowder's NUMBER OF THE WEEK - Sponsored by www.no-deal.org


January 20 , 2008
NUMBER OF THE WEEK
$275
From: NBER Working Paper No. 13417
Issued in September 2007



Hatred and Profits: Getting Under the Hood of the Ku Klux Klan

By Roland G. Fryer, Jr, Steven D. Levitt



During its heyday, in the mid-1920s, was the Ku Klux Klan more like a marketing firm than a terrorist organization? A new paper co-authored by Steven Levitt, the University of Chicago economist who scrutinized the Klan in the best-selling Freakonomics, argues that the group was far more successful at raising money than at achieving its professed goals of passing racist legislation and intimidating black or foreign-born Americans. The authors, who compiled data on more than 60,000 Klansmen from several states, found that even at the height of its power—in the mid-1920s, membership may have been as high as 4 million—the Klan was politically ineffective. There's "little evidence" that its activity prompted African Americans to leave their communities, and though significant numbers of Klan-backed politicians were elected to local and national office, they don't seem to have pushed through very much legislation. But the Klan did have an "uncanny ability to raise revenue." New-member initiation cost $10 and annual dues $5, and members were required to buy an official Klan robe and encouraged to purchase other Klan paraphernalia, such as swords or helmets. Klan members typically spent about $275 (in today's dollars) in their first year and about $80 in subsequent years. Recruiters received a 40 percent commission for bringing in new members. Using similar incentives up the chain of command, the Klan operated on a "multi-level marketing principle, much like modern companies such as Amway and Avon" do. The higher-ups reaped huge profits: the authors calculate that D. C. Stephenson, the "grand dragon" of Indiana, took in more than $2 million annually from state operations.

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Vermont's FairPoint proposal has ripple effect

By Dan McLean
Free Press Staff Writer
January 16, 2008
Revised terms of FairPoint's bid to buy Verizon's land lines throughout northern New England -- now under consideration by Vermont regulators -- have created a ripple effect in Maine.

Regulators in Maine approved the $2.72 billion transaction earlier this month. The deal includes a provision that requires Verizon to provide FairPoint with more than $235 million for debt reduction.

Maine's public advocate is concerned the finances of the deal require another look, however, because of commitments the Charlotte, N.C.-based phone company subsequently made to the Vermont Public Service Department.

"The Vermont stipulation contains terms that may threaten FairPoint's financial viability," Maine's deputy public advocate, William Black, wrote in a motion filed with the Maine Public Utilities Commission Friday.

The Office of the Public Advocate in Maine wrote "various additional Vermont-specific commitments by FairPoint that, if put into effect, will have a material financial impact on FairPoint, as a whole." FairPoint Communications Inc. may be committed to pay "as much as $70 million to $80 million, or more," the filing said.

The tentative deal reached in Vermont, for example, includes a "performance enhancement plan" that would set aside up to $12.5 million annually for service quality remediation, if certain targets are not met.

Maine's public advocate is concerned some of the funds set aside for debt reduction could be used for other purposes because of terms in the pending Vermont deal.

The arrangement now being considered by the Vermont Public Service Board, which acts as the state's regulatory body, was reached Jan. 8 between the phone companies and the Vermont Public Service Department, which represents consumers.

"We believe that the settlement supports the principle that the dollars Vermonters would pay to FairPoint will result in the service and investment Vermonters deserve," said Stephen Wark, the Department of Public Service's consumer affairs director. "We do not believe that the conditions of our settlement should harm the interests of other states, but regulators in those states will need to form their own opinions."Fred Bever, spokesman for the Maine Public Utilities Commission, said Maine's regulators are reviewing the petition and the Vermont proposal.

FairPoint is seeking to buy Verizon Communications Inc.'s roughly 1.6 million land lines in Maine, New Hampshire and Vermont. Each of the states must approve the sale for it to proceed.
Contact Dan McLean at 651-4877 or dmclean@bfp.burlingtonfreepress.com



There are many, many more issues that need to be examined. This is just a snippet of what's wrong with this deal. For more in depth details, please go on-line to www.no-deal.org. This is a bad deal for consumers, tax payers, rate payers, our communities and for the economic growth of New Hampshire.