Friday, November 20, 2009

Cuomo plays politics

From the 23 November 2009 Greater Niagara Newspapers

By Bob Confer

New Yorkers have long had a love affair with their Attorneys-General. Many of the men who have been the state’s chief legal officer have done great things while in office. With New York City being the financial capital of the world there has never been a lack of activities for them to put under the microscope. This ongoing level of excitement in the realm of public defense has consistently earned them the respect of the average New York resident who typically considers the Attorney-General to be the second most powerful elected official in the state, just behind the Governor.

That same citizen tends to look at the position as something above the political fray. After all, the Attorney-General is supposed to look out for the singular and the collective, the well-being of both the little guy and the state’s citizens as a whole. But, despite those populist trappings, many of the most revered of our attorneys-general have gone on to a higher office, using the position as means to further their careers in government. Martin Van Buren became the eighth President of the United States. Jacob Javitz became a 24-year US Senator. Most recently, Eliot Spitzer went from the attorney’s office directly to the Governor’s mansion.

The current Attorney-General, Andrew Cuomo, is of the breed of those three, a determined man with his eyes on the same office once and temporarily held by his predecessor. But, unlike the men before him – who typically worked independently of Albany’s political machine when in office – Cuomo recently performed his magic in an effort to, at once, appease the people (by tempering an “evil corporation”) and appease the legislature (by helping the state government bailout its worst investment ever).

Earlier this month, Cuomo launched a lawsuit against microchip maker Intel, citing unfair practices in its control over 80 percent of the microprocessor market. Never mind that Intel was operating within reason, using normal practices (like rebates) over the course of business while making a product that was low in price yet high in quality. It was a lawsuit eerily reminiscent of the federal anti-trust suit against Microsoft more than 10 years ago in which Microsoft was wrongly chided for controlling the market when, in reality, it was consumer demand that allowed Microsoft to rule: Microsoft made a product people wanted at a price they were willing to pay. Microsoft’s competitors held a smaller market share for the same reason that Intel’s competitors do. They sell inferior products that their customers don’t want.

With the Microsoft case setting a precedent that Intel felt it couldn’t overcome, the company saved itself billions in penalties by settling out of court with Advanced Micro Devices (AMD) to the tune of $1.2 billion.

That’s obviously the outcome that Cuomo wanted. He couldn't have cared less about the lawsuit and wanted to do everything within his power to help out AMD.

It’s the second time in the past year and a half that our state government has bent over backwards to help AMD. In early 2008, then-senator Joe Bruno (the same fellow who is a defendant in a well-deserved corruption trial) teamed with Governors Spitzer and Paterson to put the finishing touches on a $1.3 billion incentive package for the chipmaker to open a new plant in NY under the guise of “Globalfoundries”. The legislature and Empire State Development cited it as a huge win for NY. Somebody – most everybody, really – didn’t do their homework because it was, more appropriately, a huge gamble for NY.

AMD - whose products rate poorly against Intel’s - has a long track record of bad performance. In the fourth quarter of 2007, just before the economy fell apart, their quarterly losses were $1.772 billion, among the biggest of their 9 consecutive quarters of losses which continues to this day (losses were $128 million for the quarter ending September 30). Numerous reports indicate that AMD will put the settlement towards its $3.7 billion in debt. So, you see, the settlement was NY’s way of guaranteeing its investment.

For the time being, Cuomo’s early Christmas present for AMD will keep the company afloat. But his charity – stolen from the coffers of Intel – coupled with the charity of our legislature –stolen from the taxpayers – show no signs of long-term return. There will be, though, a return on investment for Cuomo himself: By placating the legislature and helping it save face he has gained some powerful friends who will help him on the campaign trail and in the Governor’s office. It reeks of the very collusion he claims to fight.

No comments: