Category Archives: Political Economy

A Clutch of Random Goodies- finance, net neutrality, deficit…

Here is just a clutch of good randomness that has been accumulating on my desktop…

PS featured image is Simon Johnson.

Bucknell and Truth

Bucknell gets unexpected reward for being honest about a mistake.  Is this worthy of an ethical snap?

Net Neutrality?

What the hell is net neutrality?  Baratunde Thurston  one of our tech/no speakers, explains it so well, it got picked up by Raw Story.   I love how Bucknell can be a producer of information and wisdom and not just a user. 

Organization Theory is Cool

A book review about organization theory I really need to read.  Orgtheory.net is the one blog I wish I read more.

Learn from Nice Rich People

Lessons for failure and management from philanthropists.

We are drowning in deficit! (are we?)

Compare your answers to the US public and, um, the reality.

Change Doesn’t Happen.  Until it Does.

From AFL-CO vs Home Depot, through Frank-Dodd, to Citigroup.  Is corporate governance and executive compensation changing?  Maybe.  Read abotu some pretty big changes at the link.

Is a Tax Better than Regulations?

You want policy ideas?  You like finance? You dislike “regulation” that tries to dictate firm behavior?  Try this one.  Instead of trying to tell financial firms what they can or can’t do, how much capital to have on the books, and so on, how about you tax a vice- like we do with alcohol and tobacco- and simply tax financial transactions to make trading for the sake of microscopic gains on immaterial price shifts non-economic?  Read. here about Europe’s experiment with a different, and I would argue,  less intrusive form of regulation to change financial markets and firms.

You want even more financial regulation news?

You are really, really troubled.  I hope Vinny, Loukas, Mike, and… (who else are finance jocks?) are reading this. Simon Johnson.  yes, THAT Simon Johnson, had this blog post about the 12 “angry bankers” of the Fed and their ideas to push for transparency in money market fund valuations as part of the (yes, that same one) Frank Dodd bill reforms that created the systemic risk council.  In a nutshell, the financial industry does NOT WANT such valuation while the regulators do.

I am never surprised when practicing “capitalists” fight against actual free markets (with liquidity and transparency).  Businesspeople are often, perhaps usually anti-capitalist if you define capitalism not as maximum wealth accumulation, but as free markets that expand the prosperity of a society.  Am I alone in seeing this?

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Filed under Business, Government, innovation, macroeconomics, management, organization theory, policy, Political Economy, Politics, Power, Activism, Social Innovation and Entrepreneurship [SiSe]

Happy Belated Labor Day

x-posted at Biz Gov Soc

I have been meaning to comment on labor day, this past Monday all week. There is some kind of irony in Bucknell’s lack of observance of labor day. Do we not think learning and teaching are “work”? Of course some classes of employees are off, but not students nor faculty. I am not whining about wanting a day off, just wondering what the institution is say9ing, or not, in its scheduling choices. Bucknell aside, what are they key “issues” of the day, as C. Wright Mills would have us describe them? What is the state of working for a living in the ol’ US of A? The NY Times provided two interesting views on labor on the day in question. First, Robert Reich, professor (but Micheal Reagan thinks this is a disqualification to speak on matters of bread and butter), former Labor Secretary under Clinton, author, and very funny short man (one of his book titles was Let Me Be Short) tackles the two big issues of the day: the stagnant economy and rising inequality. Reich provides an interesting set of graphs to accompany his points. (Click to enlarge). First, the evidence: productivity is up, incomes are flt, and the wealthiest are wealthier at a faster rate than everyone else. Whether this is a problem or not can be divided into two pieces. First- are there negative effects to rising inequality? Second- can rising inequality understood not as a problem, but as the outcome of a more virtuous process? In this case, the process would be a well-functioning economy that allows individuals to find their own optimal point of rewards in the labor market relative to what they put into it (effort, capital). In other words, a free market will produce inequality as a result of liberating the engines of wealth-seeking. I’ll leave it to a reader to determine whether or not the inequality is a problem. The data are clear and it should be beyond debate that there is increasing inequality. His chart sums up the explanation of why. Wages stagnated starting around 1980, but the great “middle class” of America kept spending thereby creating enough demand to sustain economic growth for the producers of America (and the world). How did they do it? First,WOMEN. The women moved into the workforce in massive numbers. Whether it was to express their autonomy, enact a feminist vision of gender-equality, or to make the ends meet, the raw fact is they entered the economy. AS historians and sociologists have pointed out, this was really a re-entry into labor as the myth of the domestic, lesiure-oriented housewife was a historical anomaly. From hunter-gatherers to pioneer homesteads to early industrial work in homes, women did much, if not most, work. Second, taking on debt. Lots of it. At some point in the recent past, the average US household savings rate was negative. Negative! I remember when I heard this , it was like a punch to the stomach. You can’t sustain that. Blind faith in rising house prices and the slick sales pitches of elements of the mortgage industry played a big part in the bloating of debt. Anyway, that brings our story quite nicely up to the stories of the housing bubble, the role of Wall street in the bubble, and then AIG and the other Wall Street players at the center of the “great recession.” The other article, by Harvard Business school professors (woo hoo! Go Management Scholar), Teresa Amabile and Steven Kramer, shifts our focus from the buig picture to the small details of everyday work. At their conclusion, they offer this seemingly unobjectionable thought: “Work should ennoble, not kill, the human spirit.” This reminds me of another irony of labor day- shouldn’t we work on labor day? My grade school had school on MLK day so we could learn about him and the history of civil rights in our country. Anyway, digressions aside, what Amabile and Kramer found is disheartening: most professionals are disengaged, frustrated, and disatsified with work. They are unhappy. Using a HUGE amount of data (12,000 diary entries form 238 “professional” employees), they found that 33% were unhappy. What would make them happier? Is it some sort of Enron-like PRC with huge bonuses attached to the best reviewed? No. Is it little rewards and trophies? No. Is it more pay overall? No. Is it getting to lord over a prized working spot over co-workers? No. What is most motivating is making progress on meaningful work. So, Edward Freeman’s “responsibility hypothesis”– that people innately want to take responsibility for their work, finds some empirical evidence. Meanwhile, I am reminded of a clip from a food documentary I saw at our campus theatre the other day: Fresh. Chicken Farmers talk about how it is so hard to find people to “process” chickens (butcher) that they use work crews form a local prison to do it. Can manual labor be as meaningful as the professionals in Amabile and Krmaer’s study long for? Can butchering chickens be experienced as meaningful work? Or would simply paying more (and thereby reversing a little the flow of wealth Reich talks about) do more good? Do my students feel their academic assignments are meaningful work? Do I, as a professor-manager, provide the tools to enable them to be motivated by progress on meaningful work?

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Filed under economics, Political Economy, sociology

Grab-Bag

Here are a bunch of interesting links I have not had time to fully digest.

“Countdown to a Meltdown” an article from 2005 in which James Fallows of The Atlantic lays out how a third party candidate will win the presidency in 2016 after 8 years of ineffective Democratic presidency.  Interesting use of creativity and focusing on larger political and economic trends.

“Revenge of the Ratings Agencies” a NYT op-ed frames the Stnadard & Por’s downgrade as a political act not in terms of a D-R blame game, but as a threatened industry playing hardball.

The law called for exposing rating agencies to civil liability in securities lawsuits if their ratings were inaccurate. It also challenged the oligopoly’s dominance by calling for the Securities and Exchange Commission to explore the feasibility of having an independent organization select rating agencies for asset-backed securities, instead of having the bond issuers select and pay the agencies, as they now do.

“Serving Shareholders and Democracy” is a NYT editorial about how the SEC should force public firms to disclose to shareholders how and how much money they spend on politics.

Last week, a group of legal scholars sent a petition to the S.E.C. urging it to craft rules requiring companies to disclose to shareholders how they use corporate resources for political activities.

Here, the NYT reports on what seems like a very common-sense idea: have natural gas drillers post funds to a special emergency response fund to cover clean up in case of inevitable accidents.  I man need this for class.

Finally, London and riots.  I saw a link somewhere mentioning this academic paper by Ponticelli and Voth, from a research center (the CEPR) that looks at Europe 1919-2009 and finds that in general, cuts in government expenditures lead to more unrest like riots, strikes, and assassinations.  A free copy can be found here.  While this may seem self-evident, it is useful to have it confirmed empirically.  The results also suggest it is not due to cultural factors, demographics, or lots of “bad people.”  What I also noted is that more media coverage did not seem to matter.

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Filed under economics, Political Economy, Politics, Power, Activism, Protest

Natural Capitalism

I am just now picking up Lovins, Hawken,and Lovins Natural Capitalism book.

I am wondering if I could use it in a module on alternative perspectives on capitalism module. I also was wondering what has happened since it was published in 1999.

There is a is a website called natcap.org.

Here I found a more recent edition with a new introduction. http://www.naturaledgeproject.net/NatCap2005.aspx.

What I like best about it is the focus on solutions. I feel like that would mitigate people who dismiss change as naive idealism.

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Filed under Books, Business, Great Companies, management, Political Economy, social innovation

Labor Day Thoughts

This post is mostly for my students (and myself)  since the unyieldingess of the academic calendar means we are in class on labor day.

I know as a kid growing up with two professional, salaried parents, I had no concept of labor day aside from that three day weekend.  I wonder how many of my students have a similarly hazy and immaterial understanding of the “labor” part of labor day.

So, how is the state of our workforce?  Not good. 

Official unemployment is at 9.7%.

This number of course, due to how it is measured (those actively looking for work in last four weeks).  That doe snot include discouraged workers, those who are marginally attached (would work more), or who have dropped out of the labor force.  This NY Times article nicely adds a human face to those categories.

They were left out of the latest unemployment rate, as they are every month: millions of hidden casualties of the Great Recession who are not counted in the rate because they have stopped looking for work.

And it has pictures!

This discouraged worker carpenter fills his time by cutting grass with clippers.

This discouraged worker carpenter fills his time by cutting grass with clippers.

The Bureau of Labor Statistics (BLS) has a very broad category to capture these various situations people find themselves in.  In August, the u6 measure, as it is known, came in at 16. 8 million. That was a 6 million increase over the year prior.  At 155 million in the labor force, that is an unemployment rate of 10.8%.  Throw in the number of people dropping out of the labor force all together, and you can  add another % point to get to an unemployment rate of around 12%.

Over at CalculatedRisk, the following chart captures the way that unemployment is steeper (big drop) and longer (more time to recover) than most recent recessions.  In short, this is a whole new world and historical analogies are rough at best.

Click to enlarge.

Well, there are bound to be bumps when you unleash the creative, destructive forces of capitalism, some might say.  Overall, we do better if we take the long view.

This is not a jobless recovery, it is a  jobless economy.  The amount of job growth since 200o is essentially zero. This graph shows that the ten year change in private employment is almost zero.

Edit

UPDATE: Here is a small glimmer of good news.  While labor-managemment, or labor unions in general, are usually seen in pretty negative terms, I am happy to share this little list of organizations acorss sectors that are successful and rely on collaborative organizaed labor partnerships.

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Filed under Business, economic sociology, economics, Political Economy

What is wrong here

X-posted at my class blog.

“Retention bonuses” would seem to be bonuses by any other name.  Obviously, public and political scrutiny is at super high levels as we reel from the financial crisis.

This little nugget caught my eye about a joint venture between Citigroup and Morgan Stanley:

According to the newspaper [The WSJ], not all of the joint venture’s 20,000 brokers would get retention payments. It said a broker who brought in $1 million in revenue last year might expect to get $500,000 to $1 million, depending on how much he continues to produce.

Continue reading

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Filed under Banking, corporate governance, corruption, economics, Government, Political Economy

Headlines turning my world upside down

This is headline at Huffingtonpost.com

SENIOR REPUBLICANS: NATIONALIZATION OF BANKS MUST BE AN OPTION


What?  Why are Republicans in favor of nationalization?  Is this the path to Fascism?  Do they mean more of the same.. i.e. Socialized risk and privatized benefit?

My head is spinning.  I suppose I should read the article.

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Filed under Political Economy, Politics, Power, Activism

No blank check for Wall Street.

No blank check for Wall Street.
This is worse than a bad deal – this isn’t a deal at all. This is a blank check to some of the richest companies in the world.

This is a blog post with a petition linked to  it.  I may not agree with all the language, but this is not the time to let the desire for the perfect trump the reality of present action.

We should express our concerns as citizens about the parameters fo this extraordianry action, even if we don’t get to write the legislation.

Krugman on “Cash for Trash.

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Filed under activism, Banking, economics, macroeconomics, policy, Political Economy, Politics, Power, Activism

The end of history, again

When the Berlin wall fell, and then the Iron Curtain, and then the Soviet Union dissolved into national tribes pursuing free market economies, the academic conservatives were gleeful.  “The End of History” was the zeitgeist text and meme that Fukuyama penned.  The metanarrative debate and power struggle about the role of government at “the commanding heights” was over.  Government had little role in the economy.  She could (and the female pronoun is very apt) nurture the children and clean up the messes, but had to stay in the private sphere of domestic concerns and stay out of the public sphere of productive work and economics.

With the tectonic shifts in the last two weeks, leading to today’s headlines about a massive bail out of the bad debt and paper by a government agency; with the infusion of something like $300 billion Treasury dollars into Bear Stearns, the FMacs, and AIG; with monetary policy at  the bottom of the tool box with only a few thumbtacks left (the key T billrate dropping to essentially zero), I suggest its the end of history, again.

There are no Unicorns, and there can be no totally free markets.  The Fed and Treasury had to step in and take direct action, in the spirit of Keynes, because they had no other choice to avoid a massive, 1932-esque economic collapse.

The debate is on again about the role of government, law, policy, and institutions in managing the economy and how to achieve a more just society.

I am not going to even respond to any neoliberals or other market ideologues until they acknowledge that the Reagan-Thatcher revolution has come to a grinding end.  The overall governing philosophy that “markets are always better and government must be progressively marched to the sidelines of the economic game” is dead, dead, dead.  When real people had to make real decisions over the last two weeks, that world view came up empty of ideas and solutions.

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Filed under macroeconomics, Political Economy, Politics, Power, Activism, social theory

All that is solid melts…

My thoughts exactly…

Daily Kos: State of the Nation
Now that the People own a major insurance company, it’s fair to ask how the People’s Insurance Company, along with the People’s Mortgage Companies and the People’s Investment Banks, will benefit the People who Own them. Can we expect lower premiums, equity sharing, and corporate perks for our hundreds of billions of dollars?

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