Let's get clear on what Republican candidates are advocating.
Right now - largely because of recovery from the Great Recession - the federal government has a deficit of $1.5 trillion.
US total GDP is about $15 trillion.
Republican candidates refuse to raise taxes but insist on lowering the deficit to zero. That is, they want to pull out $1.5 trillion of a $15 trillion economy.
Essentially, they are advocating that we eliminate 10% of the economy - mostly government and government contractor jobs. Even disallowing the ripple effect of this (think of all the "private sector" businesses near air or naval bases that would go under after such layoffs), such an action would more than double an unemployment rate that is already too high.
I do believe that we face a new set of problems that will require Obama to be as creative for this time as FDR was for his. His solutions to date has been expensive but timid, in the sense that it offers too little that could be called innovative. His solution has been timid but the Republican's solution is simply terrible.
Post Script: David Stockman - one of Ronald Reagan's chief advisers - admitted that their austerity plan to reduce the deficit will make the job market worse, probably resulting in a decade of double-digit unemployment. Read it here at Jonathon Cohn's column.
R World (Ron Davison muses aloud)
15 June 2011
Social Invention
In the 1700s and 1800s, technological innovations "just happened." Then in the 1900s, R&D labs within the military, universities, and corporations made technological innovation a regular occurrence. Technological inventions were both expected and managed. You may like your iPhone4 but you know that an iPhone5 will eventually debut. There is no expectation that any one piece of technology is the ultimate.
This century will be to social invention what the last century was to technological invention. It will become something we expect, whether through charter schools or new ways of managing employees or through new government agencies or even through the NGOs and foundations that have recently grown in number and impact.
More and more people are creating new kinds of banks and corporations, schools and governments. Soon, people will realize that this is the new process of society, not a one-time act. It will dawn on us in the same way that it finally dawned on Henry Ford that for all its genius, the Model T was not the final say in cars.
That, it seems to me, is worth thinking about.
This century will be to social invention what the last century was to technological invention. It will become something we expect, whether through charter schools or new ways of managing employees or through new government agencies or even through the NGOs and foundations that have recently grown in number and impact.
More and more people are creating new kinds of banks and corporations, schools and governments. Soon, people will realize that this is the new process of society, not a one-time act. It will dawn on us in the same way that it finally dawned on Henry Ford that for all its genius, the Model T was not the final say in cars.
That, it seems to me, is worth thinking about.
13 June 2011
Obama - Tea Party Founder
It's easy to dismiss the Tea Party. For one thing, they seem fond of a 18th century lifestyle that preceded the age of big corporations, big government, and life expectancies that extended much beyond one's thirties. But while they seemingly lack intellectual appeal, they do resonate emotionally with a chunk of voters. Enough voters, in fact, to cost Obama the 2012 election.
In the decade of the 00s, bankers made billions and then cost us trillions. As CEO of Goldman Sachs, Hank Paulson made $37 million in 2005 alone. He left banking with a net worth of $700 million when he became the US Treasury Secretary. Not only did he engineer a bailout of trillions for the banking industry (including billions for Goldman Sachs) but included in the bailout legislation clauses protecting bankers from any liability for the financial meltdown of 2008.
The financial meltdown cost millions to lose jobs and homes and wiped out retirement accounts for millions more. No one has gone to jail for this bank robbery. Countrywide CEO Mozilo did have to pay $67.5 million in fines and settlement fees, which sounds like a lot until you realize that he made $470 million in just the six years leading up to the bursting of the bubble. Not only did Mozilo escape jail time or financial hardship, but even the ratings agencies that assured bond holders that packaged subprime bonds deserved AA and AAA ratings were allowed to continue to do business without any penalties for their egregious failures to warn investors.
What Obama should have done is appoint someone as savvy as Elliot Spitzer to investigate the players in the drama leading up to the costliest financial collapse in history and found people to penalize and even imprison. Not only would this have bolstered his support among his base, it would have won over so many of the independent voters whose outrage at Wall Street led them to join forces with the Tea Party. By failing to address the injustice of systemic abuse of American taxpayers, Obama fed the emotional energy that the Tea Party has tapped.
And to prosecute would not just salve the anger of Americans. Prosecution would have helped to curtail bad behavior by bankers, letting them know that while the American government could not afford to let the financial system collapse, it certainly could afford to prosecute and jail a number of bank executives. As much as trillion dollar bailouts, prosecution would have helped to strengthen the banking system by making bad behavior costly.
Obama's apparent disdain for the emotional cost of the 2008 crisis may cost him re-election. And may even give him a place in history as the co-founder of the Tea Party.
In the decade of the 00s, bankers made billions and then cost us trillions. As CEO of Goldman Sachs, Hank Paulson made $37 million in 2005 alone. He left banking with a net worth of $700 million when he became the US Treasury Secretary. Not only did he engineer a bailout of trillions for the banking industry (including billions for Goldman Sachs) but included in the bailout legislation clauses protecting bankers from any liability for the financial meltdown of 2008.
The financial meltdown cost millions to lose jobs and homes and wiped out retirement accounts for millions more. No one has gone to jail for this bank robbery. Countrywide CEO Mozilo did have to pay $67.5 million in fines and settlement fees, which sounds like a lot until you realize that he made $470 million in just the six years leading up to the bursting of the bubble. Not only did Mozilo escape jail time or financial hardship, but even the ratings agencies that assured bond holders that packaged subprime bonds deserved AA and AAA ratings were allowed to continue to do business without any penalties for their egregious failures to warn investors.
What Obama should have done is appoint someone as savvy as Elliot Spitzer to investigate the players in the drama leading up to the costliest financial collapse in history and found people to penalize and even imprison. Not only would this have bolstered his support among his base, it would have won over so many of the independent voters whose outrage at Wall Street led them to join forces with the Tea Party. By failing to address the injustice of systemic abuse of American taxpayers, Obama fed the emotional energy that the Tea Party has tapped.
And to prosecute would not just salve the anger of Americans. Prosecution would have helped to curtail bad behavior by bankers, letting them know that while the American government could not afford to let the financial system collapse, it certainly could afford to prosecute and jail a number of bank executives. As much as trillion dollar bailouts, prosecution would have helped to strengthen the banking system by making bad behavior costly.
Obama's apparent disdain for the emotional cost of the 2008 crisis may cost him re-election. And may even give him a place in history as the co-founder of the Tea Party.
06 June 2011
The American Job Market - A Self Inflicted Wound
Excerpts from The Economist. Government policy to reduce the deficit and move towards fiscal responsibility is proving economically reckless. It is now costing us jobs and putting us at risk for a double-dip recession.
After producing job gains averaging 220,000 per month in the three months to April, the economy added just 54,000 in May, below expectations. The private sector did a bit better, adding 83,000 jobs, but that was well off the healthy rate of hiring enjoyed earlier in the year. The unemployment rate rose to 9.1%, from 9.0% in April.
America's job woes have also been self-inflicted. Private firms have added over 1.7m jobs in the past 12 months, but the government has shed nearly half a million over the same period (not counting the loss of temporary Census jobs last year). Local governments alone have cut 446,000 positions since September of 2008. Some of those government jobs losses reflect a sensible rationalisation of workforces. Too many of them reflect the damaging effect of pro-cyclical budget cutting due to balanced-budget rules in cash-strapped states. More federal aid to states might have dampened the reductions, easing the drag on national growth.
The ongoing debt-ceiling battle is an additional source of uncertainty. Legislators continue to bicker over how and how much to trim from the federal budget in exchange for an agreement to raise the nation's statutory limit on borrowing. Failure to raise the ceiling by August will trigger default. Just yesterday Moody's, a ratings agency,threatened to downgrade America's debt rating if a deal on the ceiling weren't reached by next month.
In a global economy this volatile, the American economy is going to have a rocky month here and there. But American government officials are doing themselves no favours. Federal Reserve officials are overly concerned with inflation given the outlook for slowing global growth. Now is no time for policy tightening. And elected representatives in Washington are playing with fire. By cutting too much spending in the short-term and turning the debt-ceiling fight into a political battle, Congress risks making a large unforced error. The economy is simply too vulnerable at the moment for politicians to make those kinds of mistakes.
05 June 2011
The Difference Between the Private and Pubic Sectors
When teaching macroeconomics, I wrote a test asking students about the difference between the public and private sectors. It was not until I was grading the tests that I realized that I'd made a typo. The question as I'd actually written it was, Describe the difference between the private and pubic sectors.
Former presidential candidate John Edwards apparently suffered from similar confusion.
Former presidential candidate John Edwards apparently suffered from similar confusion.
03 June 2011
When Our Inventions Invent Us
Of all inventions institutions are unique: they are the only inventions that, in time, invent us. Institutions like school, business, church, government and media define the individual’s life. A seven-year-old child has little choice about whether he is educated within an Afghani Wahabi school, where he is taught that America is evil, or in an Oklahoma City elementary school, where he is taught that America is good. Yet by the conclusion of either education, the individual will have learned to defend what he is taught. One of the first things that any institution does is teach its members how to defend that institution.
There are no other inventions that program into their users this defense of the invention. Phonographs become CD players with little protest. Horse-drawn carriages become automobiles; telegraph gives way to telephone. Yet individual Jews, Christians or Muslims will die protecting their church. Austrians, Mexicans and Ethiopians will die protecting their country. Institutions do not just shape the life of the individual; they readily sacrifice those lives in order to survive.
The question is whether its possible to create a generation that is not institutionalized. Such a generation could treat institutions as tools rather than, be treated as tools by these institutions. It seems to me that such a remove will be necessary before we can engage in social invention in the same way that we now engage in technological invention.
02 June 2011
31 May 2011
Tweets of Spring - May Recap
"There are two kinds of people: people who have food and people who might have food." - a dog.
Bidets without warning.
My new motto: Our only real option is wild optimism.
If you give everyone same education you reduce income inequality only 10%. If you give everyone same income you reduce differences in life satisfaction only 5%.
Put differently, things that make a difference don't make that much difference.
For stock market to work, two people have to wake up believing perfectly contradictory things: "now is a perfect time to buy! / sell!"
RT @aaronsw: Confused tourists are always asking me how to get to Harvard. I tell them: pick rich parents.
Biz idea: recyclable cereal box that's actually ebook or tablet. Take it to store to periodically fill up. Read articles / comics on side.
One reason companies die is that as they mature, they become less tolerant of crazy people and crazy ideas. http://bit.ly/jyX7zQ
Systems define most outcomes. Changing teachers, politicians, bankers is like changing actors in hopes that Romeo & Juliet will end happily.
Per blog hits someone in Mecca wonders "will women take over the world" Women taking over Mecca seems as likely as fish taking over Phoenix.
Tuo kuzi fang pi. A Mandarin expression meaning excess caution. Translates to English as "to take your trousers off to pass wind".
21 May 2011. The day that the word enraptured came to mean "surprised by the persistence of the status quo."
#WorldBlu Clarification on "world ends tomorrow" message. Should read, "world AS YOU KNOW IT ends tomorrow (if that's what you choose)"
#WorldBlu Might have been among the highest concentration of visionary, smart, passionate and engaged people gathered in 1 place this year.
#WorldBlu What if organizational democracy is the bridge rather than destination? Still so much unknown about where it will take us.
TSA scrutinized 2 pilots bags VERY closely. Are they worried they might have something that gets them into the cockpit? Baffling.
The World's First Twitter-Based Hedge Fund Is Finally Open for Business - The Atlantic http://t.co/LP4tWXf via @AddThis
RT @herbkim: CFO asks CEO: 'What happens if we develop our people & they leave?' CEO: 'What happens if we don't & they stay?' via @prawlings
RT @TheIdeasEconomy: “Transform local elections of leader chosen for a time period into project-oriented elections."http://ow.ly/4T3B9
Heirarchy - form of government in which anarchy is inherited from parent to child. Ex, "Our family is not a democracy, it is a heirarchy."
Band name: audio ninja. Play sort of Muzak / Windham Hill / Chill music until the crowd is lulled. Then breaks into loud, raucous music.
For Sandi: RT @TheOnion: NEWSWIRE: Updated U.S. Citizenship Test Just Asks Immigrants 'Do You Like Hot Dogs?'http://onion.com/Lt5p
Rahm Emanuel today becomes Chicago's new mayor and the man most likely to add actual swearing to the swearing-in ceremony.
Product idea: bumper sticker made of Kindle-like ink that updates as you update status on facebook or tweet.
This week, heading up to San Francisco for a conference on democratizing the workplace. It is intriguing. http://bit.ly/l6WGcZ
In 2010, Chevron's CEO made $16.3 million, Conoco's CEO made $17.9m, Exxon's CEO $29m. Entire US Senate combined? $17.4 million.
Blogger was down for a day. Obvious conspiracy between big media, business, and government to silence us. Now to post on spring flowers.
Every week, enough Android phones are sold to give to every person in Chicago. Every month, enough to give to every person in Greece.
One often overlooked reason for breezes: plants exhaling oxygen. This is why there's so often a breeze in forests or tropical settings.
I don't mean to brag but I'm #1. And, they just called #93 so I should get my tostada soon.
Last week for me a first: $4.999 for gas.
R World: California Mortgage Market Has a Bad Hair Day (or, how to make a billion dollars a day) http://bit.ly/kXYEcp
Drove by the Crossover Church yesterday. Made me wonder if somewhere there isn't a Hangover Church for the newly repentant.
Idea for "Not so Happy Hour." Open Mic for people to vent about the week they've had.
Life of Riley at Old Globe was hilarious. Colin McPhillamy was a brilliant standout in a really standout cast.
Since 1980, politicians give tax cuts because work place doesn't give pay raises.
Had incomes grown since 1980 at same rate as 1900 to 1980, US avg would be $45,502 instead of actual $32,708.
I'm not saying that he was primitive but he did get his clothes from Abercromagnon & Fitch.
Only 15 days away from dos Xx's de Mayo (or is that just XX de Mayo?) - 4X the celebratory potential of Cinco de Mayo.
Diet tip. Drain all the power (calories) off of a potato, using it as a battery before baking or frying. Total calories after? Zero.
@DanielPink Peter Block once said leadership is a collusion between control freaks and people who don't want to accept responsibility.
Bad weekend to have made Obama angry. Within 2 days, he goes after 3 enemies: bin Laden, Qaddafi , and Trump. 2 for 3.
Almost as important as knowing how to think is knowing what NOT to think about. You're always meditating, the question is on what?
Grammar can be the difference between wedding and funeral: your toast or you're toast.
Sort of cool to get a blog hit from the Executive Office of the President. Maybe now that he's caught Osama he's looking for new projects.
One trillion dollars. One decade. Finally got one man. Not obvious to me that we actually won this round.
What would Voltaire say? 21st century and the two biggest news stories are about a royal wedding and the beatification of a pope.
Finding the Energy to be You (or, Stop Wasting Energy Trying Not to be You)
I wonder how much energy people waste trying not to be who they are? It is true that everyone has some things about themselves that it would be best for everyone if they did not. Everyone has a tendency towards something like sloth or being just a little too curt or too flirtatious or … well the myriad ways of being that we don’t like in others or ourselves.
The sad thing about this is that the energy we spend trying to rid ourselves of the bad is diverted from trying to build on the good. The charismatic or creative self gets distracted, if not repressed, by our project to squelch the undisciplined or reckless self. There is only so much energy and if we waste it on not being us we have so little energy left with which to actually be us.
Peter Drucker once wrote that most problems cannot be solved and most problems are rendered irrelevant by success. Picasso made a mess of relationships but what if he’d worked successfully at getting relationships right but didn’t leave us his incredible body of work? Would the world really have been a better place if that had happened?
I wonder how much energy we’d have to do great things if we accepted that we, ourselves, were not that great but nonetheless accepted ourselves and then tried to find our way in the world with what it was about ourselves we wanted more of?
That might be one way to end a personal energy crisis, to find the energy for life that might otherwise be missing. You're only alive once - you may as well be fully alive.
After writing the above, I read an excerpt that Thomas gave from from Franzen's "Liking is for Cowards. Go for What Hurts." Franzen seems concerned with something similar.
After writing the above, I read an excerpt that Thomas gave from from Franzen's "Liking is for Cowards. Go for What Hurts." Franzen seems concerned with something similar.
If you dedicate your existence to being likable, however, and if you adopt whatever cool persona is necessary to make it happen, it suggests that you’ve despaired of being loved for who you really are. And if you succeed in manipulating other people into liking you, it will be hard not to feel, at some level, contempt for those people, because they’ve fallen for your shtick. You may find yourself becoming depressed, or alcoholic, or, if you’re Donald Trump, running for president (and then quitting).
...
The simple fact of the matter is that trying to be perfectly likable is incompatible with loving relationships. Sooner or later, for example, you’re going to find yourself in a hideous, screaming fight, and you’ll hear coming out of your mouth things that you yourself don’t like at all, things that shatter your self-image as a fair, kind, cool, attractive, in-control, funny, likable person. Something realer than likability has come out in you, and suddenly you’re having an actual life.
....
I was forced to confront a self that I had to either straight-up accept or flat-out reject.
30 May 2011
Why Peter Thiel is Paying Kids to NOT Go To College (and why that's great)
Peter Thiel made a lot of money as an entrepreneur and investor. Now he has given away money to 20 kids under 20 to help fund heir entrepreneurial ventures. Oh, and to not attend college.
This is awesome.
It is no longer knowledge work that limits us. Unemployment rates for recent grads have never been so high. The information economy is ending the same way that the industrial economy ended about a century ago; not because information and knowledge workers are suddenly disappearing but because we have enough of both that they no longer limit.
What now limits our economy is entrepreneurship. In order to really break that limit, the corporation will have to transform the role of (at least a few - many many) employees into that of entrepreneur. But the corporation is not the only place where entrepreneurship needs to be encouraged.
Think about a world where instead of kids serving 2 years in the military after high school or spending 2 years in a church mission, they spend two years engaged in a start up. Think of what they would learn, what questions this would force them to ask, what skills they would acquire, what problems they'd solve, and how much having even thousands - much less millions - of kids engaged in such a way each year. Of course, if we did that, think of how disruptive those kids would be to the traditional education system once they had engaged in such experiences. To accommodate them, universities would have to transform (as if that would be a bad thing.)
Practically speaking, I think the money would be better spent on kids fresh out of university rather than high school. Thiel himself became an entrepreneur after getting a BA and JD from Stanford.
You can't comment on the direction a car is going when it is parked at the curb. Thiel should be applauded because he's giving us more of what we have so little at the expense of what we have in such abundance. Millions of kids go to university. Thiel has just diverted 20 of them into entrepreneurship instead. That - it seems to me - is hardly excessive. In fact, it seems like a very, very small start to something that could be huge.
This is awesome.
It is no longer knowledge work that limits us. Unemployment rates for recent grads have never been so high. The information economy is ending the same way that the industrial economy ended about a century ago; not because information and knowledge workers are suddenly disappearing but because we have enough of both that they no longer limit.
What now limits our economy is entrepreneurship. In order to really break that limit, the corporation will have to transform the role of (at least a few - many many) employees into that of entrepreneur. But the corporation is not the only place where entrepreneurship needs to be encouraged.
Think about a world where instead of kids serving 2 years in the military after high school or spending 2 years in a church mission, they spend two years engaged in a start up. Think of what they would learn, what questions this would force them to ask, what skills they would acquire, what problems they'd solve, and how much having even thousands - much less millions - of kids engaged in such a way each year. Of course, if we did that, think of how disruptive those kids would be to the traditional education system once they had engaged in such experiences. To accommodate them, universities would have to transform (as if that would be a bad thing.)
Practically speaking, I think the money would be better spent on kids fresh out of university rather than high school. Thiel himself became an entrepreneur after getting a BA and JD from Stanford.
You can't comment on the direction a car is going when it is parked at the curb. Thiel should be applauded because he's giving us more of what we have so little at the expense of what we have in such abundance. Millions of kids go to university. Thiel has just diverted 20 of them into entrepreneurship instead. That - it seems to me - is hardly excessive. In fact, it seems like a very, very small start to something that could be huge.
27 May 2011
My New Motto
"Our only real option is wild optimism."
I may get t-shirts printed up. Or bumper stickers. Just this evening, it occurred to me that this is my motto.
I may get t-shirts printed up. Or bumper stickers. Just this evening, it occurred to me that this is my motto.
24 May 2011
Why Cities Keep Growing, Corporations And People Always Die, And Life Gets Faster | Conversation | Edge
Why Cities Keep Growing, Corporations And People Always Die, And Life Gets Faster | Conversation | Edge
Geoffrey West shares some fascinating things that he and his team have learned about systems dynamics. (Click through on the subtitle to see his talk or scroll down to read the transcript.)
One, growth in cities provides some economies of scale. Give him the number of people in a city and he can give you the number of gas stations, miles of roads, etc. The good news is that these kinds of things grow more slowly than the population.
Economic activity, however, grows faster than the number of people. Incomes and innovation within a city grow faster than the population. This, too, is a good thing.
His team has recently analyzed data on companies and he's found a few odd things. One, the profits to sales ratio shrinks as a company gets larger. Two, the rate of innovation also slows. Three, the volatility of sales each year actually becomes greater than the profit percentage. (For instance, at a particular stage, volatility in annual sales of 10% might accompany a profit rate of only 5%.) Companies die as they become less tolerant of crazy ideas and crazy people (their rate of innovation, consequently, slows).
Oddly, as cities become larger they foster more innovation yet as companies become larger they become less innovative. This - it seems to me - has to do with how citizens are "managed" less than employees.
Oddly, as cities become larger they foster more innovation yet as companies become larger they become less innovative. This - it seems to me - has to do with how citizens are "managed" less than employees.
One of the things that makes this so fascinating to me is that it suggests that these dynamics explain more about rates of growth and life expectancies (yes, even of companies) than more traditional explanations like culture, history, and conscious policies. For me, it is further confirmation that an understanding of systems is not just going to be nice in this new economy: it will be necessary.
23 May 2011
The Deficit's Root Cause
The deficit is pretty simple. The federal government spends more than it collects in taxes.
It's worth asking why Americans feel entitled to both low taxes and high levels of government spending. Maybe the root problem is simply one of growth in incomes. Or rather, a lack of growth.
Between 1900 and 1999, wages grew from $4,200 to $33,700. That's a lot. Faster growth than at any time in history. Ever. This allowed for two things: households got a steady growth in take home pay even while paying more in taxes and getting more government programs like public education and social security.
Yet the phenomenal wage growth slowed late in the century. From 1900 to 1980, wages grew 2.2% a year.
In the 1980s, when Reagan's policies supposedly had such a positive impact on the economy, wage growth slowed to 1.8%.
In the 1990s, when Clinton's policies supposedly had such a positive impact on the economy, wage growth slowed further to just 1.6%.
In the first decade of the 21st century, it got worse. Wage growth dropped into negative range, to -.3%.
It's worth asking why Americans feel entitled to both low taxes and high levels of government spending. Maybe the root problem is simply one of growth in incomes. Or rather, a lack of growth.
Between 1900 and 1999, wages grew from $4,200 to $33,700. That's a lot. Faster growth than at any time in history. Ever. This allowed for two things: households got a steady growth in take home pay even while paying more in taxes and getting more government programs like public education and social security.
Yet the phenomenal wage growth slowed late in the century. From 1900 to 1980, wages grew 2.2% a year.
In the 1980s, when Reagan's policies supposedly had such a positive impact on the economy, wage growth slowed to 1.8%.
In the 1990s, when Clinton's policies supposedly had such a positive impact on the economy, wage growth slowed further to just 1.6%.
In the first decade of the 21st century, it got worse. Wage growth dropped into negative range, to -.3%.
These might sound like small differences, but percentages have a way of quickly compounding. By 2009 wages were about $44,000. They would have been $62,000 had wages grown at the same rate in the 30 years after 1980 as they had in the 80 years before 1980.
Slower growth means that wages are about $18,000 a year less. That's a difference of 40%.
You could make the case that politicians have been giving tax cuts because the work place is no longer giving raises. American workers expect their take home to raise every year. For that to happen when wages don't go up, taxes must go down.
One big reason for the polarization in politics is the sharp division on how to deal with lower incomes. The left wants to mitigate the pain of lower incomes with government spending; the right wants to do it by lowering taxes.
As long as wages continue to stagnant or drop, this polarization - and the painful choices - will only get worse.
It might be worth thinking about how to jump start income growth again. Any other solution will leave Americans feeling poorer for the simple reason that they are.
For more on wages in the 20th century, look at Donald M. Fisk, American Labor in the 20th Century, http://www.bls.gov/opub/cwc/cm20030124ar02p1.htm
Fitz & the Tantrums
I can't tell you for sure which one is Fitz and which one is the Tantrum. I do know that she's beautiful and this song has a rollicking edge to it that makes you wonder whether rock and roll wasn't some dyslexic's way of saying rollicking. Enjoy!
22 May 2011
The Day After
As it turns out, I was less than enraptured by 21 May 2011. It might just be that this becomes the day when enraptured comes to mean shock at how persistent is the status quo.
Of course, it might just be that the 21 May prophet was right but could never have predicted how few would be rapture-worthy. The good news is that there is now one less reason - on a list of none - to be arrogant. "You weren't rapture worthy, right? You're still here? So don't act like you're all that."
Of course, it might just be that the 21 May prophet was right but could never have predicted how few would be rapture-worthy. The good news is that there is now one less reason - on a list of none - to be arrogant. "You weren't rapture worthy, right? You're still here? So don't act like you're all that."
17 May 2011
Corporate Immaturity
The 1990s were a good time for economics and business in America.
During Clinton's administration, median incomes rose $6,000, more jobs - 22.5 million - were created than under any other administration, unemployment and inflation were at the lowest in 30 years, and the number of people living in poverty dropped by 15 million.
About the same time, Jack Welch was CEO of General Electric. He, too, presided over record performance. During his 20 years, GE's revenues rose from $27 billion to $130 billion, and its market value rose from $14 billion to $410 billion.
Two popular leaders who presided over great business / economic performances.
In Jack Welch's best year, he made $125 million.
In Clinton's best year, he made the same amount as he did in his worst year: $200,000.
Jack's salary could have paid Bill's for 625 years.
Such disparity was not an anomaly of the 90s. Last week, oil company CEOs appeared before the Senate. All three of the American CEOs made more than the entire US Senate. (Well, nearly all. Chevron's CEO made only $16.3 million, about a million less than the 100 senators 's combined salary of $17.4 million. Conoco and Exxon's CEOs made $17.9 and $29 million.)
This seems like a serious clue that the corporation is still immature, about where the nation-state was at the dawn of the Enlightenment.
After he’d removed the Finance Minister from his position, Louis took the man’s wealth and added it to his own. Suffice to say, Louis lived well. And in this we see the final problem with absolute monarchies: they make the state a tool for the few.
Unemployment is persistently high. Median wages have been largely stagnant for decades. Yet CEO pay continues to steadily - and spectacularly - rise. Is anyone out there talking about reform?
[1] Will & Ariel Durant, The Age of Louis XIV: a History of European Civilization in the Period of Pacal, Moliere, Cromwell, Milton, Peter the Great, Newton and Spinoza: 1648 – 1715 [New York, NY, Simon & Schuster, 1963] 19
14 May 2011
Senator & CEO - the roles that rob you of your humanity
This week, Senator Schumer asked five oil executive CEOs whether they thought that any other budget item that could be cut from the federal budget might be more important than their tax breaks. They were unable to think of one that was. Schumer, quite rightly, used their hesitancy to point out the inherent (fill in the blank with either immorality, stupidity, or just plain oddity) of their positions. Tax breaks to companies making billions in profits were more important than, say, healthcare for children or the elderly? Funding that might actually save lives?
But the CEOs could have turned the tables on Schumer and asked him if an action would take the lives of 10 Serbs, say, but save the life of one American, would Schumer vote for it. As a US Senator, Schumer is in a position that requires him to save American lives above all others. He'll spend more money for TSA rather than more money for nutrition to Africa. He'll vote for policies that are more likely to kill Iraqi civilians if they save the lives of more American soldiers.
The choices of Schumer and the CEOs are not choices that reflect their humanity. They are choices that reflect their position. CEOs are hired to (mostly) maximize profits for stockholders, no matter what condition that leaves suppliers, competitors, employees, or the governments that regulate their behavior. Senators are hired to hold up the national interest. Neither are supposed to do what is best for humanity.
Pity, really. Because both CEOs and Senators are in a position to do so much good. Too bad that they are, instead, focused on only doing good for so few.
But the CEOs could have turned the tables on Schumer and asked him if an action would take the lives of 10 Serbs, say, but save the life of one American, would Schumer vote for it. As a US Senator, Schumer is in a position that requires him to save American lives above all others. He'll spend more money for TSA rather than more money for nutrition to Africa. He'll vote for policies that are more likely to kill Iraqi civilians if they save the lives of more American soldiers.
The choices of Schumer and the CEOs are not choices that reflect their humanity. They are choices that reflect their position. CEOs are hired to (mostly) maximize profits for stockholders, no matter what condition that leaves suppliers, competitors, employees, or the governments that regulate their behavior. Senators are hired to hold up the national interest. Neither are supposed to do what is best for humanity.
Pity, really. Because both CEOs and Senators are in a position to do so much good. Too bad that they are, instead, focused on only doing good for so few.
America - Where One CEO can Afford to Buy an Entire Senate
This week, alpha males squared off against each other: Oil company CEOs and US Senators. Given that nothing confers respect like money, it was no contest.
So far this year, the five oil companies represented (Shell, Chevron, Exxon, Conoco, and BP) have made profits of $36 billion. More interestingly, each American CEO made more than the entire American senate before which they appeared.
Combined, the 100 Senators made $17.4 million last year (each makes $174,000).
Chevron's CEO made $16.3 million, Conoco's CEO made $17.9 million and Exxon's made $29 million.
America is nothing if not predictable. It doesn't matter that the oil companies are so profitable when the the deficit is so large. Their $2 billion in tax breaks will continue.
Senator Schumer asked, did any one of these CEOs want to go on the record as saying that perhaps their tax cuts were less important than any other, single program or issue? This after reminding them that cuts to education, health care, and social security were likely.
Not a single CEO could see how any of those programs were more important than their tax breaks.
Let me make an obvious but important point. These CEOs are not paid to show an interest in the American economy or the American people. They made it clear that if the marginal cost of producing oil in Texas were higher than producing it in Indonesia, they would shift production overseas. Their loyalty is to company profits.
A tax break of $1 will benefit Exxon. That dollar may be used to create a job in Saudi Arabia or Houston. Or be paid in dividends to an investor in Japan or San Francisco. There is no guarantee that the money will benefit the American economy. In fact, there is a guarantee that the money will be dispersed globally.
That, it seems to me, is worth remembering.
So far this year, the five oil companies represented (Shell, Chevron, Exxon, Conoco, and BP) have made profits of $36 billion. More interestingly, each American CEO made more than the entire American senate before which they appeared.
Combined, the 100 Senators made $17.4 million last year (each makes $174,000).
Chevron's CEO made $16.3 million, Conoco's CEO made $17.9 million and Exxon's made $29 million.
America is nothing if not predictable. It doesn't matter that the oil companies are so profitable when the the deficit is so large. Their $2 billion in tax breaks will continue.
Senator Schumer asked, did any one of these CEOs want to go on the record as saying that perhaps their tax cuts were less important than any other, single program or issue? This after reminding them that cuts to education, health care, and social security were likely.
Not a single CEO could see how any of those programs were more important than their tax breaks.
Let me make an obvious but important point. These CEOs are not paid to show an interest in the American economy or the American people. They made it clear that if the marginal cost of producing oil in Texas were higher than producing it in Indonesia, they would shift production overseas. Their loyalty is to company profits.
A tax break of $1 will benefit Exxon. That dollar may be used to create a job in Saudi Arabia or Houston. Or be paid in dividends to an investor in Japan or San Francisco. There is no guarantee that the money will benefit the American economy. In fact, there is a guarantee that the money will be dispersed globally.
That, it seems to me, is worth remembering.
10 May 2011
California Mortgage Market Has a Bad Hair Day (or, how to make a billion dollars a day)
As of 2000, a Californian who wanted to sell home loans could get a license without taking a single class. By contrast, to become a professional barber he or she would need 1,500 hours to qualify for a state license.
From this simple contrast, we can conclude which of the following?
1. Californians better understand the consequences of a bad haircut than they do a bad home loan.
2. Financial market deregulation became confused with financial market anarchy just before the bust.
3. Appearances are everything.
Oh, wonder why jobs still aren't coming back into the construction industry? It is possible that the market got a tad over-built as a result of sub-prime mortgages. Between 2000 and 2005, the volume of sub prime loans quadrupled. Not only did house prices rise, but so did the amount borrowed against them and the number of houses built.
One hedge fund manager who bet against this bubble began to make one billion a day in 2007 when the sub prime market began to unwind. Now, four years later, the construction industry still has not recovered.
Financial markets are competitive, and that's good. But like sports, even competition - especially competition - suggests the need for rules. Just think how much better off we'd be if we took finance as seriously as sports and properly made and enforced rules to keep play fair. Or even if we took finance as seriously as haircuts.
Facts taken from Sebastian Mallaby's More Money Than God: Hedge Funds and the Making of a New Elite, pp. 323-331.
From this simple contrast, we can conclude which of the following?
1. Californians better understand the consequences of a bad haircut than they do a bad home loan.
2. Financial market deregulation became confused with financial market anarchy just before the bust.
3. Appearances are everything.
Oh, wonder why jobs still aren't coming back into the construction industry? It is possible that the market got a tad over-built as a result of sub-prime mortgages. Between 2000 and 2005, the volume of sub prime loans quadrupled. Not only did house prices rise, but so did the amount borrowed against them and the number of houses built.
One hedge fund manager who bet against this bubble began to make one billion a day in 2007 when the sub prime market began to unwind. Now, four years later, the construction industry still has not recovered.
Financial markets are competitive, and that's good. But like sports, even competition - especially competition - suggests the need for rules. Just think how much better off we'd be if we took finance as seriously as sports and properly made and enforced rules to keep play fair. Or even if we took finance as seriously as haircuts.
Facts taken from Sebastian Mallaby's More Money Than God: Hedge Funds and the Making of a New Elite, pp. 323-331.
08 May 2011
Austin
Austin is a curious place. It is not just Texas's capital but is home to University of Texas, a campus with 50,000 students. Another 50,000 college and university students are sprinkled in among the population of about 750,000. It is almost as if the rest of Texas thought that it was best to corral all their liberals - all the dangerous professors and politicians - into one place where they could keep an eye on them. This way, they grudgingly acknowledge the need for government and higher education while limiting the influence of liberals on the average Texan.
03 May 2011
Tweet April - From Business Ideas to Buddhist Hymn
Maybe next month we need a May skeptics' day. April Fools' Day credible, May Skeptics' Day incredible.
Like bliss on a ritz. Hung the hammock. 70. Sunny. Great book. Insert sigh of contentment here
All the Canadians are rooting for the Yukon in tonight's NCAA final four game.
Idea: air basketball. Full size court with blowers like air hockey to make it easier to leap and run, like playing on the moon.
The one time you can be sure that people will do what you tell them is when you tell them to do what they want.
Idea for kiosk outside court house. Sell "If he's not guilty, why did they arrest him?" t-shirts to folks who want to escape jury duty.
Only states where Republican candidates are running ahead of the incumbent president are in the south and the Middle East.
Idea for more useful polling. Rather than ask opinions, ask for solutions to problems or punch lines for potential joke
Twice today I confused the date. Maybe absent minded. Prefer to think it's proof that my experiments in time travel are coming to fruition.
The US spans 7 time zones and California is smack in the middle. One more reason we should be home to the nation's capital
Idea for a t-shirt to sell to Bill Gates. "If only I had a nickel for every nickel I had."
If they had a fact factory, I think it would be fun to work there.
Rap feeds listeners a steady diet of hate, making them angry and anti-social. But unlike talk radio, it does rhyme and have rhythm
Liberal brains empathic and deal better with uncertainty. Conservative brains quicker to id and respond to threats.http://bit.ly/dW23ok
Deficit reduction idea. Special day when people send a portion of their income to the central government. Maybe as soon as next week.
Exxon made $19 billion profits in '09, paid $0 taxes and got a $156 million rebate from IRS. See others http://1.usa.gov/g5lwpo
My specialty is stand alone comedy. It's like standup only no one else wants to hear it.
Circumlocution is no way to set things straight.
I really like country music..... Jamaica is a country, right?
So, Earth Day is over. Hmm. Over, eh. As if there is anywhere else we can go.
"Lives based on having are less free than lives based on either doing or on being." - William James
If Britain were a democracy, Brits would vote on who would marry William to become queen. Now that would be a fun campaign to watch.
I may soon announce when I will announce whether or not I am thinking about running for president.
Dear President Obama. Nothing is less reasonable than reasoning with unreasonable people. You can stop now.
Last quarter (that's a 3 month period, not a year) Exxon's profits were $11 billion. That's obscene. Time for a name change to XXX-on.
Trouble choosing whether to attend John Paul's beatification at Vatican or royal wedding. An invitation for either could help me decide.
Cambridge - site of awesome discoveries like electron & DNA. Coolest royal wedding tidbit? Will &
Kate r now Duke and Duchess of Cambridge.
Poor William. Soon he'll need a toupee. Lucky for him, he's got a few of the early model, solid gold ones in the closet.
Buddhist hymn: He ain't heavy ... he's enlightened.
NFL Draft Day. Society's little reminder to college grads that they should have done the practical thing and majored in football.
Not flying but floating cars. Drives normally but then just tie them to a pole and let them rise. No more searching for a parking space.
01 May 2011
The Conspiracy Deepens
I predict that next, Trump will investigate the curious fact that Hawaii supposedly joined the union in 1959, just two years before Obama was supposedly born. What if there is a massive conspiracy to hide the fact that those two dates were actually reversed? Sure, Obama was born in Hawaii but quite possibly before it was part of the union. He may as well have been born in Guam or the Philippines or just a life raft drifting in the middle of the Pacific.
Sadly, Trump's feelings of self-importance could only be enhanced by his essentially having ordered the president to prove something both obvious and already proven.[Kudos to Obama for timing his response to Trump just before the correspondent's dinner where he managed to downsize Donald's ego into a new, fun-size.]
Meanwhile, we can only hope that Obama eventually gives up on the unreasonable assumption that one can reason with unreasonable people. Even if he gets re-elected, his time in office is short. There is no sense wasting time placating the perpetually implacable.
Sadly, Trump's feelings of self-importance could only be enhanced by his essentially having ordered the president to prove something both obvious and already proven.[Kudos to Obama for timing his response to Trump just before the correspondent's dinner where he managed to downsize Donald's ego into a new, fun-size.]
Meanwhile, we can only hope that Obama eventually gives up on the unreasonable assumption that one can reason with unreasonable people. Even if he gets re-elected, his time in office is short. There is no sense wasting time placating the perpetually implacable.
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