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Joshua Shulman: Rights Have to Be Enforced Somehow

by Joshua Shulman on April 18, 2012

Huffington Post…

There are two ways to enforce rights. A government agency can do it, or it can be outsourced to private contractors, which means plaintiffs’ lawyers. If we’re going to use a government agency, then we have to make sure they do it efficiently, because our tax dollars fund those agencies. If we’re going to use private lawyers, they’ve got to be able to make good money doing it, otherwise they’ll do something else instead. If neither of those systems works for us, then let’s not pretend that we care about the rights that we’re refusing to enforce. The New York Times presented a front-page article on April 17 about lawyers suing New York City businesses that don’t have good wheelchair access. The story is that the plaintiffs’ lawyers are finding violations — easy in New York City, with its many ancient buildings, narrow-aisled, with aging or nonexistent ramps — and then choosing a plaintiff from a cadre of disabled people. Then the lawyers threaten to sue the allegedly violating business, the plaintiff gets a few hundred dollars, the lawyer gets a few thousand, and it all seems like a shakedown to the poor business owner. Of course, this is not how it’s supposed to work. A wronged person is supposed to seek out the lawyer, not the other way around. So this article has provoked anger against the trial lawyers who are supposedly abusing the system for their own enrichment. Having lived in New York, I treasure the funky old out-of-compliance stores, where even a non-handicapped person has difficulty navigating the aisles. I love those places, and my personal belief is that a variance ought to be available to them so they can preserve their funky old character, even if it means that the “temporarily able-bodied” are the only people who can safely get in and out. But of course, that’s not the law. That’s not the choice that we as a country have made about this issue. The choice that we made, and the law that we passed to enforce that choice, is that almost all businesses open to the public have to be able to safely accommodate handicapped people. And then we as a country made another choice: the government would not be given the resources to enforce this law. Instead, we would give an incentive to private contractors (lawyers) to enforce the law, by forcing out-of-compliance businesses to pay the lawyers’ fees when the lawyer could prove that the business was out of compliance. So now we’re angry at lawyers for being too aggressive in their enforcement? Well, here’s a story about what happens when we choose the other path of having a government agency enforce the laws. The Equal Employment Opportunity Commission (EEOC) is supposed to investigate alleged employment discrimination, then if it finds a violation, negotiate with the violating business to fix it, and if that doesn’t work, then the EEOC may file a lawsuit against the business. Note that the EEOC is required to try to negotiate a workable solution before it files a lawsuit. Seems reasonable. But the EEOC is short of resources. They field about 100,000 complaints of discrimination every year. They recovered more than $450 million for employees last year, with a budget of $343 million. So you could say they’re running a profit, sort of. But they are still constantly understaffed, overworked, and simply don’t have anywhere near the resources needed to investigate every one of those 100,000 claims. So, like all government agencies, the EEOC has to decide how to most efficiently allocate their scarce resources. One obvious choice is to focus on companies that are practicing system-wide discrimination, so they can bring class-action suits. For example, CRST Van Expedited Inc. is one of the largest trucking companies in the United States. They have an “internship” program, in which women who want to become truck drivers are paired with male truck drivers, and left together unaccompanied for weeks at a time, with predictable results . By bringing a claim against a company like this, which has allegedly caused sexual discrimination and harassment against hundreds of women, the EEOC should be able to use its resources efficiently, right? Protect hundreds of women with just one big lawsuit, instead of trying to pick them off one at a time, which would take forever, and lots of agency resources. Well, the Eight Circuit Court of Appeals just slapped down the EEOC , saying that their lawsuit against the trucking company fails because the EEOC did not take the required step of trying to negotiate in good faith with the trucking company about each case individually . But doing that would eliminate the efficiency of having one big case instead of many small ones. The EEOC did negotiate with CRST about their (idiotic) program as a whole, but not about each individual case. Sure, in an ideal world, they would talk about each case separately. But in a world where efficiency matters, that’s a crazy requirement. It’s exactly the kind of requirement, in fact, that makes a government agency unable to perform its function of keeping the workplace free of discrimination. Which leaves it to whom, exactly, to to enforce our rights against workplace discrimination? Why, to the private lawyers, of course. In fact, one of the few women who opted out of the EEOC suit against this trucking company sued CRST privately. The jury awarded her $1.5 million . We as a country have to decide what rights we want to enforce, and whether to enforce them with government agencies, or with private contractors. But whipsawing back and forth is unfair. If we choose government agencies, then we’ve got to let them be efficient. Listen up, Eight Circuit. If we choose private contractors, then we’ve got to let the profit motive motivate them. Listen up, lawyer-bashers.

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Joshua Shulman: Rights Have to Be Enforced Somehow

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Huffington Post…

You may often think, “How can I increase my number of face-to-face appointments when so many companies aren’t buying right now?” The problem lies in the question itself. If you’re scheduling an appointment just to sell something, you may have a tough time getting the appointment. If the perception of your prospect is that the very reason you’re calling is to either sell them something over the phone, or schedule a meeting to sell them something, you’ll likely hear things like “It’s not in our budget,” “We’re not making any purchases now,” “We don’t have any money,” “We’re not in the market,” and “Our budget has been frozen.” In other words, you may be setting yourself up to hear “no.” If, however, you position your introduction over the phone as an opportunity to meet in person so you can learn more about your prospect and their potential future needs, you may have better luck. After all, if your goal is simply to learn about the prospect, you may not have an opportunity to sell them anything at all, so there’s less resistance to setting up a meeting. If you still encounter “no” when asking for that first meeting to start the discovery, and potentially selling process, here are some tips to get the meeting anyway. First, if you have a good sense of humor, use it, and you’ll be half way there. Making someone laugh breaks down the barrier between two otherwise strangers. If the response to your question in asking for a meeting is, for example, “We don’t have any money,” say “Neither do I, that’s why I’m calling YOU!” Now of course, part of the humor in this is your delivery, so you may want to practice a few times before trying it live. Another response to the all too common, “It’s not in our budget” objection is “In that case, now is the perfect time to meet! We’ve found it very beneficial to discuss future needs and our solution early so that if you decide to proceed, we can be of help during your decision-making process.” Notice I said, “If you decide to proceed” which implies that you’re not going to shove the sale down their throat, but that the prospect will be making the decision to proceed or not. It’s also a good idea to present yourself as a resource to the prospect, regardless of whether they’re in the market at the moment or not. Then, actually BE a resource for them, even if it means meeting several times, providing valuable information that will help them and offering advice in your area of expertise even if it’s outside of the potential solution you may have to sell them. Another good rule of thumb is to give something of value to your prospect three times before asking for anything in return, like an order. Providing something of value might mean something as simple as sending an email with an article relevant to a recent discussion the two of you had about their needs, or introducing your prospect to another member of your team or resource within your company who can provide expertise, such as an engineer or project manager. If you’re genuinely interested in helping them with their plight, regardless of having the entire solution to sell yourself, your sincerity will become obvious to the prospect and it will only make sense they buy from you when they’re ready to make a purchase. Also, the rule of reciprocity is at play here. It’s human nature to give back to those who have helped us. By helping the prospect first, you set up the dynamic of the rule of reciprocity and they will be likely to reciprocate the favor you’ve done for them, by placing their order with you. Once you’re ready to close the sale, if budget is still an issue, you can discuss payment plans, leasing options, no money down, 90-day payment and other terms that may make your solution more appealing to your prospect. Your willingness to work with them and their budget will increase your chances of ultimately closing the sale. You can also reflect back with the prospect to your earlier discussions about what was important to them which will help build the value of your solution, framing the money issue more as an investment than as a cost. Finally, sometimes the answer is “no,” but you know what? That’s okay too. Part of learning to love hearing “no” is knowing that it’s only a matter of time before you hear the word “yes.” The more “nos” you get, the closer you get to “yes.”

Read more:
Andrea Sittig-Rolf: The Audacity of Nope: Why Hearing "No" Can Help Salespeople Get to "Yes"

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Bob Edgar: ALEC Tries Humor as Defense

April 16, 2012

Did you know that some of the biggest, baddest names in American business have funnybones? Walmart, ExxonMobil, Pfizer, even the Koch brothers — plus hundreds of others, actually — are cut-ups. Who’d have guessed? But it’s true. Last week, as tens thousands of Americans voiced our collective outrage at the work of the American Legislative Exchange Council (ALEC), a lobbying front underwritten by these and other major companies, they delivered a side-splitting response . “This is an attempt to silence our organization… This is an all-out intimidation campaign,” groused Ron Scheberle, ALEC’s executive director. “America needs organizations like ALEC to foster the discussion and debate of policy differences in an open, transparent way and not fall back on bullying, intimidation and threats.” Scheberle’s comment was written, so I can’t tell if he was grinning when he uncorked it. But the notion that people like me, who’ve been publicly taking on ALEC and its political/policy agenda, are somehow intimidating, is a laugher. And the suggestion that ALEC fosters open, transparent debate is absolutely hilarious. Think of it. We’re just a bunch of everyday folks — working moms and dads, students, retirees, small business owners, a cross-section of Americans — who object to the way that multi-billion dollar companies, through ALEC, have been pushing laws that encourage vigilante justice, threaten to block millions of people from voting, attack our public schools and deny climate change. And somehow, because we dare to speak up and challenge these behemoths, we’ve become fearsome intimidators? C’mon man! Nobody’s trying to silence ALEC. Silence and secrecy are ALEC’s biggest weapons. At Common Cause, where I work, we’re trying to amplify — not suppress — ALEC’s voice. That’s what they don’t like. For years, ALEC’s corporate members have quietly poured money into the campaign funds of thousands of our elected representatives, entertained and lobbied them at resort hotels far from the eyes and ears of the public and press, and used them to advance ALEC’s “model” legislation. It worked because nobody knew about it. Well, now folks are learning. Because Common Cause and other groups have picked up a megaphone and spread ALEC’s message and tactics, companies are re-thinking their involvement with ALEC. And some of them — smart, responsible companies like Coca-Cola, McDonald’s, Wendy’s, Kraft Foods and Intuit, are getting out. That’s not bullying. It’s democracy.

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Terry Connelly: We Have Seen This Stock Market ‘Horror’ Movie Before

April 16, 2012

Here we go again. It’s the second quarter of the year, and once again — as in 2010 and 2011 — the hedge fund investors that missed the rally in the U.S. stock market have rebooted their “sky is falling” pitch to scare the rest of us out of our shareholdings. They do this so they can buy back into the market on the cheap and enjoy the rally that will occur in the second half of the year — just like the previous years. Two months ago, “a few” members of the Federal Reserve Board were favoring a QE. Now, they say it’s just “a couple.” So, one day it’s a strained reading of month-old Federal Reserve Board meeting minutes that concludes that the Board has taken additional monetary stimulus “off the table” because just “a couple” as opposed to “a few” have agreed that action may be necessary. (What if the “couple” happened to be Chairman Bernanke and Janet Yellen, his deputy?). In the end, a couple and a few are the same thing, but the market has overread “a couple.” Curiously, CNBC, the main market news outlet on cable, started promoting this thesis right away (presumably as part of its virulent anti-Obama campaign to talk down the market lest the President’s re-election campaign get any bounce from better stock prices and fatter 401(k)s and sure enough the market went down by triple digits. Then came the monthly jobs report showing only 120,000 net jobs created in March. Clearly a disappointing number compared with the more than 200,000 in February and January, except for the fact that these monthly estimates (which are based on a projection model for a set of interviews with employers, not an actual numerical “headcount”) are always wrong and corrected in subsequent months. On a corrected basis, the QUARTERLY jobs report — a more reliable indicator — shows a step up in hiring for each of the past THREE quarters, rising from 300,000 plus in Q3 2011 to 400,000 plus in Q4 2011 to more than 600,000 plus in Q1 2012. Of course, this data never made it onto CNBC. Then came the hedge fund hit to Spanish and Italian sovereign debt interest rates when the European markets opened Tuesday after the Easter holiday. Here’s how that happens: the hedgies don’t have to actually sell Spanish and Italian government bonds and take losses. All they have to do is bid up the price of credit-protection (the famous credit default swaps (CDS) that helped bring on the U.S. financial panic in 2008) on Spanish and Italian debt. The CDS contracts pay out only if the debt defaults, so a higher price implies a higher risk of default on the underlying debt. When that happens, investors tend to dump the underlying debt, sending the interest rates up. The hedge funds and other big investors know from the past two years of experience that such movements in the CDS markets move the European sovereign debt markets down and in turn, spook the U.S. stock markets into their now famous “chicken little posture.” Translation: you can manipulate the U.S. stock market down by 500 points or more over two or three days just by bidding up a few Euro debt CDS contracts on Italian and Spanish debt! But you won’t hear that on the supposedly informative CNBC. You just hear about the Spanish and Italian interest rate spikes, just like last year and the year before. You also hear about other European sovereign debt at just about this time of the year — after a run up in the U.S. market that some of the “big boys” missed out on. And so, on Tuesday after Easter, we went down 200 more points on the Dow. As CNBC cheers on the incipient “market correction” and puts on a series of chartists warning of free-fall. Just to top it off, the CNBC mavens chat incessantly about the coming downturn in corporate earnings on the first day of Q1 reporting season, quoting of course unnamed experts that earnings will actually fall for the quarter. Never mind that 3/4th of the early reporters — a small but at least “actual” sample — have already reported earnings that EXCEEDED estimate. Never mind that Alcoa, which was panned all day long by the cable Cassandras, actually reported earning revenues and earnings after Tuesday’s closing bell that also significantly exceeded estimates! Are we seeing a pattern here? It’s déjà vu all over again, as Yogi Berra would say. Fool me once, your fault; fool me twice, my fault; fool me three times, well, that’s the lot of U.S. equity traders, as they again fall for the hedge funds’ head-fake apocalyptic scenario in the second quarter, and take the rest of us down with them. What the hedgies and their shills at CNBC count on is the fact that average investors aren’t used to short selling, so they don’t understand that folks who come on TV and talk the market down might actually be “talking their book” just like the typical stock “promoters” they are justly suspicious of. Wise up, stock investors — you are being had, again — by some real pros that count on you having a short memory from the games they played the last two years, at just this time of the year. They, not you, made the money in the second half of the past two years. Wise up!

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Al Norman: Wal-Mart’s ‘Terrifying’ Attack on the First Amendment

April 16, 2012

Cathy Kern is somewhat of a folk hero in North Tonawanda, N.Y. But if you ask folks at city hall, or at Wal-Mart corporate headquarters, what they think of Cathy Kern, you’ll get the opposite response. Over the past six years, Kern and other anti-Wal-Mart activists have filed 5 lawsuits that effectively staved off the development of a Wal-Mart superstore in their community. Ultimately Wal-Mart prevailed, and their huge store is now in its final stages of completion. North Tonawanda (NT) is located midway between Buffalo and Niagara Falls, in Niagara County. There are already 6 Wal-Mart’s within 16 miles of NT, including a supercenter in Niagara Falls 9 miles away. In November, 2006, Wal-Mart submitted an application to the City to construct a 183,000 square foot superstore. In May, 2008, the city’s Planning Commission approved the environmental impact statement, and by September, 2008, the site plan was approved. Kern and other NT residents formed a group called NT First, and filed a lawsuit to annul the Planning Commission’s decision. In June, 2009 the state court did annul the site plan approval, saying that the city was required by its own code to submit a stormwater pollution prevention plan — which had not been done. The court sent the case back to the city to complete. Between November, 2009 and July, 2010, Kern et al. filed three more lawsuits against Wal-Mart, each raising a different point of law. In the fourth lawsuit, Wal-Mart and the City filed a motion to impose sanctions against Kern and her lawyer, David Seeger, for “frivolous” litigation. In September, 2010, Judge Ralph Boniello, III dismissed the fourth lawsuit, and permitted Wal-Mart and the city to seek the sources of Kern’s funding. Boniello ruled that the lawsuit was “filled with re-statements of matters previously litigated and half-truths [and] has only served to further delay the project and cause the Respondents to incur additional legal fees.” Boniello added: “In fact [Wal-Mart and the City] have raised the possibility that such delay tactics are consistent with a national campaign allegedly funded by outside groups whose sole goal is to block Wal-Mart developments.” The Judge ordered Kern and Seeger to produce their funding sources and NT First membership names, or face contempt of court. In a letter dated December 9, 2010 , Attorney Seeger informed the Judge that the group NT First had “terminated its existence,” ended its representation by Seeger, and liquidated its checking account balance of $13.22 — donating it to The Salvation Army. Seeger noted that under New York law, “an unincorporated association’s financial exposure is limited to those assets held by it and for it through its members.” Seeger noted, “The Association, now that it has laid bare its financial records [and] membership lists… has no reason to continue its existence, and no means to afford any further legal representation.” Seeger told the Court that the members of NT First “remain concerned that Wal-Mart, in furtherance of its nationwide campaign to legally attack its opponents, will attempt to force additional disclosures and otherwise terrify its member and officers.” Attorney Seeger warned, “The First Amendment secures Petitioners members’ various First Amendment freedoms including… the right to petition the government for redress of grievances.” Citing the Citizens United case, Seeger wrote: “disclosure of donations and funding is off limits, except upon a demonstration of compelling state interest.” Citing three U.S. Supreme Court cases between the NAACP and the State of Alabama (1959 to 1964), Seeger argued that unincorporated associations are immune from state scrutiny of memberships lists. “At bottom,” Seeger said, “Wal-Mart is not entitled to the requested disclosure, unless there is a compelling state interest overriding the First Amendment Protection.” In June, 2011, a group called The Clean Water Advocates of Western New York , led by Cathy Kern, filed a fifth lawsuit under the Clean Water Act in federal court. This suit was originally filed against Wal-Mart, North Tonawanda, and the N.Y. State Department of Transportation. A U.S. District Court Judge signed a consent decree requiring the NYSDOT to comply with its stormwater permit. To fight her contempt charges, Cathy Kern is now represented by Buffalo civil rights attorney Frank T. Housh. “When Wal-Mart began an illegal, permitless construction of its Superstore,” Housh told me, “North Tonawanda First did what citizens groups are supposed to do: they petitioned the Courts for relief. Their efforts were hugely successful. Wal-Mart and its rubber-stamp local government were forced to get a construction permit, divulge its plans to the public, and follow the procedures in the Clean Water Act.” Housh says because of this success, “my clients have been targeted for reprisal. Put simply, Wal-Mart is seeking the bankruptcy and public humiliation of a woman in her sixties who lives alone with her cats because she succeeded in making them follow the law. They want her ruined life to stand as an object lesson to anyone who believes the rules which apply to everyone else apply to the world’s largest corporation.” Judge Boniello has made it clear, Housh says, that he may order Kern to pay hundreds of thousands of dollars in fees to Wal-Mart’s attorneys. Boniello’s Order was stayed pending an appellate court ruling on the propriety of the Judge’s Order, which should be issued in the next few weeks. In December of 2010 — three months after Justice Boniello’s decision to allow Wal-Mart to pursue NT First documents — the New York Daily News reported that Wal-Mart had donated $10,000 to the Niagara County Republican Committee. NT Mayor Robert G. Ortt, and NT City Attorney Shawn Nickerson — both strong proponents of the Wal-Mart project — are Niagara County Republican office holders. So is Justice Ralph Boniello, III, who was elected to the Niagara County Supreme Court in 2001. As of 2010, Boniello’s salary is $146,700. The Republican Judge is up for re-election in 2014. Wal-Mart has used its legal muscle countless times to appeal local zoning decisions to the county courts, to the appeals courts, and beyond. The corporation has more lawsuits than men’s suits. In North Tonawanda, Wal-Mart’s hounding of local residents for legal fees, membership lists and donor lists, is just another attempt by a 1 percent corporation to chill public participation and to narrow the First Amendment freedoms not just of Cathy Kern — but of citizen activists everywhere across America. Al Norman is the founder of Sprawl-Busters. He has been helping communities fight big box sprawl for almost 20 years. His latest book, Occupy Walmart will be released in early May.

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Ben Hecht: Mainstreaming Social Innovation With the Public Sector

April 16, 2012

Social innovation has been a hot topic for a number of years now, but never more so than today. Conferences, awards, magazines, even a White House-led Social Innovation Fund, are dedicated to it. And for good reason. People have lost confidence in the institutions that they historically relied upon to solve our most pressing problems. Leaders have realized that if they want to change the status quo in their lifetimes, they need to stop waiting and start building their own solutions. More often than not, however, when we refer to social innovation, what we really mean is innovation sponsored by the social sector (“social sector innovation”). We’re talking about nonprofits created to fill gaps in a terribly broken system, such as connecting patients and their families with the basic resources they need to be healthy ( HealthLeads ) or providing urban young adults with the skills, experience and support that they need to reach their potential through professional careers and higher education ( YearUp ). Organizations like Echoing Green , Ashoka and New Profit , have accelerated the creation of a social sector innovation field by supporting the emerging leaders of these organizations with grants, business planning and connecting them to a network of similar ‘social entrepreneurs.’ As I stood atop the trading floor of the New York Stock Exchange (NYSE) last Wednesday however, I realized how incredibly self-defeating this narrow definition of social innovation is if large scale change is our goal. I was literally witnessing one of the most effective and lasting social innovations in the U.S. and it had been done by the public sector. The more I thought about it, the more I realized that public sector-led social innovation (“public sector innovation”) differs from social sector innovation in one absolutely fundamental way: it actually has a much better chance of having permanent, lasting impact from the outset. Many social sector innovations, like ones I’ve helped lead over the past 20 years, toil for years to build a successful model and then struggle for years thereafter to both get the attention of government and the adoption of the model by the public sector. In contrast, public sector innovation is undertaken with the assumption that if it is successful, it will go straight, “intravenously” into effect. No annual fundraising or advocacy necessary. The innovation and related funding will quickly displace the old way that government did business. For instance, what Linda I. Gibbs, New York City’s Deputy Mayor for Health and Human Services, has done in New York is one example of the extraordinary power of public sector innovation strategies. After her appointment, Gibbs created the Center for Economic Opportunity (CEO) to design and implement evidence-based initiatives to reduce poverty. On the policy side, the Center developed an updated poverty measure that it not only adopted but has also been adopted by the Obama Administration. On the program side, for example, CEO created Financial Empowerment Centers to help citizens take control of debt, improve credit ratings, deal with debt collection and learn to create budgets. After serving over 13,800 residents, helping them to reduce over $6.9 million in debt, build more than $900,000 in savings and achieve financial stability, the innovation went straight into the mainstream — it’s now the way the city does business. Not a pilot. Nice but that’s not all especially given how cities compete with their peers. In 2008, Mayor Michael Bloomberg of New York City and then-Mayor Gavin Newsom of San Francisco, two mayors committed to this issue, created the Cities for Financial Empowerment (CFE) Coalition . Since then, a dozen cities have come together to share promising approaches, build a unified policy program and adopt innovations into their mainstream operations. I was standing atop the NYSE because I was celebrating, with CFE co-chairs Jonathan Mintz, NYC Department of Consumer Affairs Commissioner, and José Cisneros, City of San Francisco Treasurer, the announcement of The Cities for Financial Empowerment Fund (CFE Fund) at Living Cities as part of NYSE’s Financial Literacy Week. The Fund will institutionalize this loose-knit collaboration of cities interested in financial empowerment. In essence, it will help cities to skip a generation of innovation and go right to intravenous adoption of what works. We need to do more to celebrate and replicate these types of successes. We need to honor the vision of public sector innovation trailblazers like Linda Gibbs, Jonathan Mintz and Jose Cisneros as much as we honor the extraordinary efforts of social sector innovation leaders like Wendy Kopp and Geoffrey Canada. The more the better.

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Javier Garcia-Martinez: Science Deficit

April 16, 2012

The current worldwide economic situation is bringing scrutiny to how developed countries balance their national budgets, and for the scientific community this provides a timely and interesting opportunity to observe how public investment in scientific research and development (R&D) is being either increased or significantly reduced by different countries. Some countries believe that investment in R&D is one to help get out of the crisis; heavily investing in R&D can diversify their economies and increase their competitiveness. For example, France has announced a €35,000-million ($4.6-billion) investment in research. Germany has implemented a 5-percent increase in the budget of its main research institutions until 2015. But other countries are trying to reduce public expending at all costs. Recently, Spain announced a whopping 25.6-percent cut in its budget for R&D. It is interesting to note that Spain is, along with the countries that have been bailed out (Portugal, Italy, Greece, and Ireland), among the countries that spend the least amount in R&D. Conversely, countries that invest more in R&D have very low-risk premiums. It seems that public investment in R&D is the effective recipe against the contagious economic illness that many developed economies are suffering. One could think that at least the markets will react positively to short-term radical measures to reduce national deficits. Unfortunately, for those countries that are dramatically cutting in R&D, although markets will be benevolent to dynamic and competitive economies, they will be merciless to economies with high unemployment rates, lack of opportunities, and brain drain, trends that underinvestment in R&D will only aggravate. A good example was seen when Spain was significantly punished by the markets in the days after announcing these austere but unselective measures on March 30. Just few days later a national call for promoting scientific culture was announced by Fecyt, a government organization devoted to promoting science and technology. A crucial issue is how to convince now-young Spaniards that there is a future in science when there is no money there, and when the leaders of the country have decided that is not a priority. Furthermore, what does this mean for those who already decided to go for a career in science? In the past, companies have been incentivized via tax deductions to invest in innovation, but now many of those incentives are gone. How can we convince others to place a bet on R&D when the leaders of the country have decided that this is something superfluous, something that has to go in difficult times? However, the unprecedented reduction in government investment in R&D is only one of the recent measures announced that exacerbates our “science deficit” and that will impact our ability to create a more competitive and diverse economy in Spain. Since the end of last year, by law, no public institution can hire any new scientist, teacher, or professor, no matter how good, how capable of attracting funding, or how able to create new companies he or she is. This is especially dramatic for the researches under the Ramón y Cajal program, which include some of the most brilliant scholars of Spain, typically between 35 and 45 years old. Sadly, it seems that bright futures for these individuals exist only abroad. Suddenly closing programs that took years to build doesn’t make any economic sense, as the losses and opportunity costs will be far greater than the money saved. Similarly, pushing the best and the brightest away at their best time of their careers after investing so much in their education and training is possibly the worse decision a government can make to recover from an economic crisis. A similar cut has been announced in education (22-percent reduction), which is significantly higher than the average reduction in the national budget (16.9-percent). This is despite the fact that three out of 10 students in Spain are unable to finish the Obligatory Secondary Education (ESO) and Spain is 12 points below the average of the OCDE countries (18 points below in science) in the PISA study. As in the case of public investment in R&D, those countries at the top positions of the PISA ranking are also the ones with lower-risk premiums; more sustainable, competitive, and diversified economies; and better-paid jobs. Research and education seems to act as vaccine against the worst consequences of the crisis, which in the case of the Spain is unemployment, which reaches almost 50 percent for young people. In the U.S., the Obama administration has identified education as one of the key strategies for the future of the country, specifically focusing on the teachers, announcing a nation-wide program to train 100,000 teachers of STEM in the next 10 years. Balancing public budgets is not only necessary but urgent in many developed countries, because their economies are not able to grow at the level that will allow maintaining many public services. However, dramatic reductions in strategic programs and education, and closing the doors to the most talented, will have only limited, short-term budget impacts, and they come at the expense of making it impossible to create conditions that foster growth, competitiveness, and a dynamic economy.

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Bill Moyers: The Rich Are Different From You and Me — They Pay Lower Taxes

April 16, 2012

Benjamin Franklin, who used his many talents to become a wealthy man, famously said that the only things certain in life are death and taxes. But if you’re a corporate CEO in America today, even they can be put on the backburner — death held at bay by the best medical care money can buy and the latest in surgical and life extension techniques, taxes conveniently shunted aside courtesy of loopholes, overseas investment and governments that conveniently look the other way. In a story headlined, ” For Big Companies, Life Is Good ,” the Wall Street Journal reports that big American companies have emerged from the deepest recession since World War II more profitable than ever: flush with cash, less burdened by debt, and with a greater share of the country’s income. But, the paper notes, “Many of the 1.1 million jobs the big companies added since 2007 were outside the U.S. So, too, was much of the $1.2 trillion added to corporate treasuries.” To add to this embarrassment of riches, the consumer group Citizens for Tax Justice reports that more than two dozen major corporations — including GE, Boeing, Mattel and Verizon — paid no federal taxes between 2008 and 2011. They got a corporate tax break that was broadly supported by Republicans and Democrats alike. Corporate taxes today are at a 40-year-low — even as the executive suites at big corporations have become throne rooms where the crown jewels wind up in the personal vault of the CEO. Then look at this report in the New York Times : Last year, among the 100 best-paid CEOs, the median income was more than $14 million, compared with the average annual American salary of $45,230. Combined, this happy hundred executives pulled down more than two billion dollars. What’s more, according to the Times “… these CEOs might seem like pikers. Top hedge fund managers collectively earned $14.4 billion last year.” No wonder some of them are fighting to kill a provision in the recent Dodd-Frank reform law that would require disclosing the ratio of CEO pay to the median pay of their employees. One never wishes to upset the help, you know. It can lead to unrest. That’s Wall Street — the metaphorical bestiary of the financial universe. But there’s nothing metaphorical about the earnings of hedge fund tigers, private equity lions, and the top dogs at those big banks that were bailed out by tax dollars after they helped chase our economy off a cliff. So what do these big moneyed nabobs have to complain about? Why are they whining about reform? And why are they funneling cash to super PACs aimed at bringing down Barack Obama, who many of them supported four years ago? Because, writes Alec MacGillis in The New Republic — the president wants to raise their taxes. That’s right — while ordinary Americans are taxed at a top rate of 35 percent on their income, Congress allows hedge fund and private equity tycoons to pay only pay 15 percent of their compensation. The president wants them to pay more; still at a rate below what you might pay, and for that he’s being accused of – hold onto your combat helmets — “class warfare.” One Wall Street Midas, once an Obama fan, now his foe, told MacGillis that by making the rich a primary target, Obama is “[expletive deleted] on people who are successful.” And can you believe this? Two years ago, when President Obama first tried to close that gaping loophole in our tax code, Stephen Schwarzman, who runs the Blackstone Group, the world’s largest private equity fund, compared the president’s action to Hitler’s invasion of Poland. That’s the same Stephen Schwarzman whose agents in 2006 launched a predatory raid on a travel company in Colorado. His fund bought it, laid off 841 employees, and recouped its entire investment in just seven months — one of the quickest returns on capital ever for such a deal. To celebrate his 60th birthday Mr. Schwarzman rented the Park Avenue Armory here in New York at a cost of $3 million, including a gospel choir led by Patti LaBelle that serenaded him with “He’s Got the Whole World in His Hands.” Does he ever — his net worth is estimated at nearly $5 billion. Last year alone Schwarzman took home over $213 million in pay and dividends, a third more than 2010. Now he’s fundraising for Mitt Romney, who, like him, made his bundle on leveraged buyouts that left many American workers up the creek. To add insult to injury, average taxpayers even help subsidize the private jet travel of the rich. On the Times ‘ DealBook blog , mergers and acquisitions expert Steven Davidoff writes, “If an outside security consultant determines that executives need a private jet and other services for their safety, the Internal Revenue Service cuts corporate chieftains a break. In such cases, the chief executive will pay a reduced tax bill or sometimes no tax at all.” Are the CEOs really in danger? No, says Davidoff, “It’s a common corporate tax trick.” Talk about your friendly skies. No wonder the people with money and influence don’t feel connected to the rest of the population. It’s as if they live in a foreign country at the top of the world, like their own private Switzerland, at heights so rarefied they can’t imagine life down below. Moyers & Company airs weekly on public television ( check local listings ). See more features — including our all-new TAKE ACTION page — at BillMoyers.com

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David Burwell: Of Oil Prices and Elephants

April 16, 2012

Six wise men of Industan, of learning much inclined, went to see an elephant, though all of them were blind, that each by observation might satisfy his mind. The debate over gas prices, what causes them to soar and crash, and who is to blame, is a parlor game played out in Washington at the start of the driving season every spring, and even more so in presidential election years. It is a redundant, blind-leading-the-blind discussion. So, let’s see if we can parse the arguments made by the proponents of the various “truths” about gasoline prices to find the culprit. By analogy, we will track the arguments to the classic J. G. Saxe poem, “The Blind Men and the Elephant,” with oil being the “elephant” in the room. The first approached the elephant and happening to fall against his broad and sturdy side at once began to bawl, “This mystery of an elephant is very like a wall.” The wall of worry — that some natural (like a hurricane) or man-made (such as a terrorist act, a war, or an embargo ) disaster will cut off our access to oil and drive gasoline prices higher. This is a fear that oil exporters of any stripe diligently encourage. And it is partly true–Hurricane Katrina cut off both access to oil and caused refineries to shut down, causing a gasoline price spike. But the United States, like all net oil importing nations, have set up strategic petroleum reserves to safeguard access to oil in times of such interruptions. The U.S. strategic reserves already have more than 200 days of U.S. oil imports safely stored in salt domes in Texas. Absent an OPEC-like coordinated embargo, which would do more damage to OPEC than to oil importers (see below), these interruptions will be short term and the price hike mild. So risk of supply interruption can’t fully explain the problem. The second, feeling of the tusk, cried “Lo what have we here, so very round and smooth and sharp? To me ’tis mighty clear, this wonder of an elephant is very like a spear.” The spear of the gas tax — a tax that pierces the heart of every American driver. But the 18.4-cent federal gas tax is less than 5 percent of the price of a gallon of gasoline. It is also getting smaller as a percentage every day as gasoline prices rise. Add state and local gas taxes and the average is still only 12 percent of the total price per gallon — one of the lowest in the world. It also has not risen since 1993 — even though fully 60 percent of Americans think the gas tax rises every year. While this tax is supposed to keep our transportation infrastructure in good shape and performing efficiently, it is so inadequate to meet present needs that the quality of U.S. infrastructure has fallen, according to the World Economic Forum, from fifth in 2001 to twenty-third place globally. So gas taxes — while a minor contributor — can’t be the culprit either. The third approached the elephant, and happening to take the squirming trunk within his hands, thus boldly up and spake, “I see,” quoth he, the elephant, is very like a snake.” The snake of speculation — this argument appears to have some merit, especially if one compares global daily consumption of oil (89 million barrels) to actual oil traded on public commodity markets every day (over three billion barrels ). Clearly most oil traded is done by those who have no intention of ever taking possession of it. This argument is bolstered by commentators who note the existence of ” dark pools ” of oil traded privately between oil companies, banks, and investment companies as a kind of reserve currency. These private trades are estimated to be many multiples higher than publicly-traded oil stocks and can lock up inventories, thus causing prices to soar even in times of low demand and high supply. A recent study by the St. Louis Federal Reserve estimates that speculation accounts for about 15 percent of the oil price rise over the last ten years. But it also says that “fundamentals (supply and demand) continue to account for the long-term trend in oil prices.” This snake, if it has a bite, is not poisonous. The fourth reached out with eager hand, and felt above the knee, “what this most wondrous beast is like is very plain” said he, “tis clear enough the elephant is very like a tree.” The ever-growing tree of demand expansion — true, global demand for oil has risen over the last decade, from 76 million barrels per day in 2000 to 87 million in 2010 , but supply has kept pace. Moreover, OECD oil consumption has peaked and is now in decline , and new, unconventional oils have expanded potential supply to meet all needs far beyond the time their carbon emissions will push global temperatures to catastrophic levels. The simple fact is that the OPEC nations, with 77 percent of global proven oil reserves and 42 percent of production, have models that calibrate the exact amount of that oil to put on the market to secure maximum financial return. The United States, representing about 10 percent of global production but 20 percent of global consumption, cannot substantially affect the oil price — nor can more drilling. In fact, America already has more than 50 percent of all the in-use wells in the world. Canada, which produces 50 percent more oil than it consumes , has higher gasoline prices than the United States. The fifth, who chanced to touch the ear said, “E’en the blindest man, can tell what this resembles most — deny the fact who can; This marvel of an elephant is very like a fan.” The fan of inflation — the theory goes that as the U.S. continues printing money to cover its trillion-dollar deficits, inflation will rise and, with it, the price of oil, since it’s priced in dollars. Nice idea. But inflation remains tame while the price of oil has doubled since the depth of the Great Recession in early 2009. Inflation may be a future culprit, but it certainly is not pushing oil and gas prices up anytime soon. The sixth no sooner had begun about the beast to grope, than seizing on the swinging tail that fell within his scope; “I see,” said he, “the elephant, is very like a rope.” The rope of the resource curse — this is a little-understood contributor to the world oil price that may eventually hang the oil-exporting economies. These economies, primarily the OPEC countries, Norway, and Russia, are heavily dependent on export sales of their natural resources — especially oil — to fund their national budgets. Over 50 percent of the federal budget of the Russian Federation is from taxes on sales of exported oil, and this percentage is much higher in some Middle Eastern countries. These revenues are then disbursed to subsidize their social contracts with their citizens — cheap energy and low-cost housing, without which social unrest would accelerate. This requires ever-rising oil prices. Ten years ago, Russia could fund its social contract at a world barrel price of oil of $20. But by this year, Moscow’s budget needs an average price of $115 a barrel to break even. The Middle Eastern states are feeling the pinch as well: Barclay’s Capital recently estimated that the cost of the Arab Spring alone pushed the break-even point for Saudi Arabia’s budget from $78 a barrel to $91 a barrel — to fund the extra spending needed to prevent social unrest from threatening the regime. So, if gas prices are the elephant, did the six wise men find their answer? So six blind men of Industan disputed loud and long, each in his own opinion exceeding stiff and strong; though each was partly in the right, they all were in the wrong! As it is with elephants, so it is with oil prices — plenty of “wise men” talking about what drives oil prices and all are partly in the right — but mostly in the wrong. For the real answer on what is driving gas prices higher, let’s look into the mirror. We all hate high gasoline prices but we love the lifestyle that gasoline supports: the freedom of the open road — flat, straight, fast, and free (with no tolls). We buy up cheap land where you can “drive until you qualify” for a home mortgage (with interest deductible). We then expect the government to build and maintain the infrastructure that supports our 50-mile commute to work, even though we oppose the gas taxes that fund all the infrastructure that provides these very same lifestyle benefits. Until we grasp the reality that the price of oil is directly related to how we waste it, we will continue to dedicate countless hours and endless column inches looking for a different culprit. The elephant in the room is not the price of gasoline — it is us. David Burwell is the director of the energy and climate program at the Carnegie Endowment for International Peace .

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Robert Teitelman: Stray Thoughts on the Rise of Shareholders

April 16, 2012

A post earlier in the week about a Gretchen Morgenson column in The New York Times continues to bug me. Morgenson was once again thumping the tub for “say on pay,” that is the ability of shareholders to have a greater say on corporate compensation schemes. The big takeaway here, to me, is that Morgenson and the corporate governance crowd continue to believe that some day, somehow, shareholders will take up their democratic responsibilities as owners and actively participate in corporate monitoring. I’m skeptical on empirical grounds, but whatever. More interesting is a stray thought that wandered through the post. From a certain perspective, governance arrangements — today that means shareholder hegemony — take on a kind of foundational importance, just as in democratic politics the constitution serves as a kind of governance operating system or source code. Rising from that model should theoretically flow a variety of either virtues or sins: alignment or misalignment of incentives; rough equality or inequality of pay; efficient or inefficient use of resources; good results or bad, which are then reflected in rising or falling shares; and, ultimately, in an economy that provides mobility, job creation and innovation — or the opposite. Historically speaking, we saw a shift somewhere in the ’70s from an earlier model that emphasized stakeholder interests — workers (often unions), communities, customers and shareholders — and that was embodied in a class of relatively large and stable corporations that dominated the landscape. This is often viewed as the bad old days of governance; and stakeholder governance, with its agency issues and separation of ownership and control, is the defective model that current governance theory has long defined itself against. The question then is a simple one, reflective of a complex historical situation: Why were many of the virtues we now seek — relative equality, lower CEO pay (relatively and objectively), global competitiveness, nearly full employment, considerable innovation (a difficult subject to pin down, of course, though there was little talk of technological stagnation in the ’60s, which stagnationists like Tyler Cowen look back on with nostalgia ) — more associated with that era of retrograde stakeholders than, say, the shareholder model of today? In short, if CEOs and boards used stakeholders to entrench themselves so effectively, why didn’t their pay go through the roof? Again, these are complicated and dynamic historical circumstances. It’s very true that American corporations existed in a kind of protected and hegemonic position in the three decades after World War II. With the rest of the industrial world trying to recover from the war, American corporations could do nearly anything they wanted. Globalism existed for American multinational companies, but it was relatively limited, hedged in by protectionism at home and abroad and restrictive regulations, particularly on the flow of capital and credit. It was also the last decades of high industrialism: Economies of scale prevailed, which allowed efficient output and plentiful jobs at relatively large and dominant companies. Even innovation was viewed as something best done on an industrial scale: It was the age that recalled not the Manhattan Project, but it was the heyday of Bell Laboratories which Jon Gertner lays out so well in his new book . It was also an era that came to a sudden and wrenching end with the stagflation of the ’70s. Still, while all those factors help explain relative equality and the dominance of large companies, they don’t begin to explain compensation and the destructive practices that are supposed to flow from “entrenched” management. So it’s intriguing. But now, like a dog chasing a stick, we head a little deeper into the weeds. Earlier this week, JW Mason, who normally posts on his own econoblog, The Slack Wire, wrote an essay as a substitute for Mike Konczal at Rortybomb. Mason explored the tensions and contradictions between two causal explanations of the financial crisis: The notion that the Federal Reserve had spawned the mispricing of assets (like mortgages) by keeping interest rates too low, and the argument, often made, Mason points out, by the very same economists, that global trade imbalances (well, mostly China) flooded the developed world with too-cheap capital. The post is well worth reading carefully, but what piqued my interest was Mason’s provisional conclusion that the real problem might not have been either of those phenomenon, but rather that the crisis represented a failure of the private financial system to optimally match up savings and useful investment ideas. Near the end of a fascinating comment discussion, Mason refers back to an earlier post on The Slack Wire on the subject of nonfinancial corporations and intermediation, that is banking. That post, in October 2011, opens up with one of the more fascinating graphs I’ve seen lately. It tracks nonfinancial corporate after-tax profits, dividends and total payouts from 1950 to 2011. I’ll let Mason lay it out: In the neo-liberal era, up until 1980 or so, nonfinancial businesses paid out about 40% of their profits to shareholders. But in most of the years since 1980, they’ve paid out more than all of them. In 2006, for example, nonfinancial corporations had after-tax earnings of $800 billion, and paid out $365 billion in dividends and $565 [billion] in net stock repurchases. In 2007, earnings were $750 billion, dividends were $480 billion and net stock repurchases were $790 billion. Mason goes on to compare what those numbers suggest about corporations to homeowners using residences as piggy banks: That is, a steady disinvestment has taken place. He then goes on to make a series of political arguments that you can accept or not. (A side note: Mason’s graph also casts a light on all the handwringing about companies hoarding cash after the crisis. In fact, while profits did plunge, the total payout mostly remained above that level — and for a time in 2009 the two ran together. Those very cries that companies must pay out more may suggest how far we’ve come in terms of shareholder expectations. It also points up the split between shareholder interests and workers. Companies were continuing to pay out to shareholders, not using the cash to rehire.) But what are the numbers really saying? Well, clearly something has changed (we should also be careful to note that the period 1950 to 1980 was not exactly “normal,” if normal means anything in this context). Here we take refuge not in economics as much as in economic history. If there’s any powerful trend that defined the shift in finance that was first strikingly evident in the ’70s, it was the rise of institutional shareholders, accompanied by the cult of performance and portfolio management. The historical context here is complex too — and it undermines some of the more reductionist arguments of the neo-liberal critique from the left — but it does trace a remarkable shift from equity markets that are sideshows for individual investors to institutionally dominated equity markets that have, since the ’70s, made a series of demands and arguments for their own prescience, efficiency, rationality and supremacy. The shift of governance from stakeholders to shareholders is only the most obvious sign of this demand for hegemony by shareholders. The track of rising corporate payouts is another piece of evidence. The question all this stirs up I’m in no position to answer: Are we better or worse off economically, socially and politically with shareholders in that pre-eminent a role? Is there a balance point? Have we, in a world of activist hedge funds and high-frequency trading, overshot that point? Has the cult of share performance, once such a tonic to a closed, inefficient and cartel-like Wall Street, devolved into rampant speculation? Is there — God forbid — a role for stable, even entrenched managers at, say, companies like Facebook or Google? (Felix Salmon goes after an entrenched Google floating an “evil” two-class share scheme here. ) Have we gotten corporate governance wrong? It’s easy to ask these questions but difficult to answer them. That said the ascendancy of the shareholder is a topic worth pondering. The original post can be found here . Robert Teitelman is editor in chief of The Deal magazine.

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D. Sidney Potter: Stories From the Frontline: Why Is Mortgage Aid, Hater-Aid?

April 16, 2012

As a continuing topic from the post entitled, “Stories From the Frontline: Robo Signers vs. the Silent Enemy,” the following is a continued look into the operational innards of mortgage operations centers. Why is the banking industry — for the most part, since I personally detest over generalizations, resistant to essentially doing the right thing and/or at least doing it in a timely matter? It is almost fascinating that acclimatization is loathed, rather than embraced. It is not often one gets to be a white knight in the face of such Armageddon-like financial tragedy, but these banking guys in the C-suite found a way to do it without really trying. Sociologists would call that cognitive dissonance. For example, I was engaged a few years back as a mortgage operations consultant for one “Too Big to Fail” bank that shall remain nameless (let’s just say it’s logo is a stage coach), whose loss litigation team had to consist of less than 30 full time members! Albeit, this was back in 2009, and banks were gonna through a deer in the headlights stage in adjusting their operational capacity to meet the massive avalanche of foreclosures coming upon them, but this mind you was a very apparent understaffing at this particular banks’ headquarter location. Out of curiosity and in passing, I asked the vice president in charge of this ‘start-up’ department, where were all the loan modifiers. Her reply, and slightly stunned response, was that they were working on it! Hello, did you not get the memo that the economy just got pierced wide open with a set of vice grips for open heart surgery and that it may have forgotten to administer itself with anesthesia. (Maybe the email went to her junk mail). The silent enemy — who are a form of malfeasant employees, are not necessarily a conniving bunch; and like the poisonous affect a few drops of python venom has on a healthy 200-pound man, so to can a few bad men within an industry that is entrusted in safe keeping our money. In the end, those individuals who work in loss mitigation centers for the banks are to a point, contributorily responsible for the prolonged economic recession. Like the 1977 movie Network , one wants to open a window and yell out “I’m mad as hell and I’m not going to take it anymore.” Mortgage mess, be over already, will you. But ultimately, these loan modifiers who are known as LMs (aka Lone Morons) are good Germans. And good Germans do what good Germans do best, and that is they do what their told. But consequently, they benefit financially by their individual group conformity — and as luck would have it, results in some of them not losing their own home to foreclosure. How ironic. Poetic justice almost sings again. The loss mitigation business, is not the only industry to do well when a mega-disaster hits. I’m not an expert on the histrionics of vaccinations, but somebody had to have made a killing with the onset of the black bubonic plague or even the polio epidemic at the turn of the last century. During and after every disaster there’s clean up to be done. What about German uniform manufacturers (for soldiers and prisoners), in the 1930s and ’40s? And lest we forget about German oven makers in the 1940s. Business most have been brisk. Couldn’t keep up with the demand. And in present day America, watch how many insurance claim adjusters come off unemployment whenever there’s a massive tornado. They call it tornado season for a reason. As a banking professional, you start to fill like you’re in the ‘body bag’ business of the mortgage industry. It doesn’t make what you do anymore digestible knowing that it’s God’s work, depending upon your mindset in which you try to convince yourself that you’re at least helping people. Metaphorically, it’s like being on a parole board and realizing that even though it’s usually a 3 to 5 board vote, your one vote could be the difference in properly adjudicating for the inmate/prospective parolee their future. Hence, some of the mortgage operations consultants — such as myself, take the contrarian point of view that a loan modification applicant ought to be helped, not hurt. For many bankers, the word help is a four letter word. And hence, that is the narrow bandwidth in which you live in — in which you can justify your professional credentials, and your professional wherewith all, and still look another mortgage ops professional in the eye without drawing scrutiny, scorn and contempt from others. And once again, you’d like to think that you’re doing God’s work, vs. the atypical maladjusted mortgage ops professional in the next cube over, whose’ pulling down $2k-plus a week while simultaneously casting judgment over others. For this reason, you come across some (although not nearly enough — since everyone has their best interest in hand), mortgage ops professionals who become the moral equivalent of Supreme Court Justice Anthony Kennedy. You become the swing vote. You become the unseen voice of reason. You become the final arbitrator, who may be able to justify the investigation or non-investigation of a mortgage applicant for suspected fraud. Realizing that another person fate is dependent upon you checking a box off on an intake sheet, or that the approval or denial of a loan modification may affect the uprooting of an entire family, or that because of professional peer pressure you deny a financially healthy loan applicant a cash-out “refi” that he is otherwise entitled to. This can sometimes be a heady undertaking. Without equivocation, you become the final denominator. Quite often, mortgage ops consultants are responsible for Monday morning quarter backing. You act as a referee of what’s just occurred. And sometimes you don’t always get instant replay and/or a commercial break to thoughtfully analyze the situation. In effect, you step atop a pedestal and decide (more or less), to fully adjudicate in your subjective opinion who wins or losses. Almost like Caesar summoning his court and deciding which of two remaining Gladiators to feed to the lions — or maybe both of them, for pure entertainment purposes. Even Caesar loved ratings. Some mortgage ops consultants where unfortunately ex-mortgage brokers who had no compunction, reluctance or guilt in seeing some hard working customers lose their home as a result of a loan modification specialist being short sighted. And in Caesar fashion, raising their clenched fist and pointing their thumb down. Next Huffington Post segment. Stories From the Frontline: Please Tell Me I’m in Kansas.

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Dave Johnson: The National Manufacturing Strategy Debate

April 14, 2012

President Obama has been pushing policies to boost American manufacturing. Democrats in Congress are pushing a package of bills under the label “Make It In America.” The Obama administration’s Gene Sperling gave a big speech recently describing the vital importance of a healthy manufacturing sector to our economy. But others say promoting manufacturing is “the wrong target” and reviving manufacturing won’t help revive our economy. So what’s the story? Gene Sperling, Director of the Obama administration’s National Economic Council gave a big speech at the recent Conference on the Renaissance of American Manufacturing . Sperling talked about how a manufacturing “commons” works, and why it is a good thing if government promotes this commons. A manufacturing commons is an ecosystem, in which manufacturers, suppliers, designers, innovators and all the other manufacturers, suppliers, designers and innovators all complement each other, creating a “cluster” effect. When all of these components are working together it creates a “virtuous cycle” but when they don’t it creates a “vicious cycle.” So because the sum of these parts is greater than the whole, each component’s interests do not align with the interests of the whole — and “our” (We, the People’s) manufacturing capacity is degraded, which degrades our standard of living. So government (We, the People) must play a role in promoting the whole effort. From Sperling’s speech: The ecosystems that grow up around these intersections of innovation and production tend to be complex. They are the result of evolutions that occur over periods of years and decades. Once the virtuous, reinforcing cycles are broken they are difficult to recreate, and they can turn to a vicious cycle. That’s why losing pieces of our manufacturing base should be such a serious concern. … For any single firm, the decision to move production elsewhere may make economic sense. But that decision impacts suppliers and the local talent pool. This makes the decision even easier for the next firm to leave and even harder for the next firm considering coming there to say yes. Job Loss Not Just Competition And Productivity Sperling traces the history of our manufacturing and shows that we didn’t lose jobs when competing with Japan, and didn’t lose jobs during periods of high productivity growth. He shows that what happened between 2000 and 2009 (the Bush years, and China in the WTO) with the loss of 50,000 factories and millions of manufacturing jobs was different , saying “the dramatic loss of manufacturing employment in the past decade was a break from the past and cannot be explained by the conventional view of productivity and technology gains.” Since 2000, the manufacturing sector lost nearly one-third of its workforce, a total of nearly six million jobs. Unlike the preceding decades, according to the Federal Reserve, manufacturing production, the measure of the physical amount of goods that we make, actually declined from 2000 to 2010 by 5 percent. This drop was not just a result of the recession. From 2000 to 2007, manufacturing production grew at only 1.3 percent per year, the worst peak-to-peak performance since World War II. Sperling explains why this loss is so significant to our economy: Manufacturing is special in that so many other jobs depend on manufacturing, extending “from the web of suppliers that support manufacturers to the communities where manufacturing plants often serve as an anchor employer.” For those of you here from towns across the U.S. that rely on a major manufacturer, or states like Michigan where I come from, you understand the impact of manufacturing. In addition to the web of suppliers, the expansion of an auto plant brings other types of businesses to town including new restaurants, retailers, and service providers feeding off of this economic activity. If an auto plant opens up, a Wal-Mart can be expected to follow. But the converse does not necessarily hold — that a Wal-Mart opening definitely does not bring an auto plant with it. So it is clear that this is not just about the back-and-forth of companies competing, we have a national interest in bolstering the manufacturing sector. Finally, Sperling described some of the administrations manufacturing initiatives. He did not come out and advocate for a coordinated national industrial strategy — which every major competitor has and we don’t have. But his speech did advocate “policy to support manufacturing.” This is at least a start. Criticisms And Agreements Matthew Yglesias at Slate, in “Forget the Factories” writes that it is “foolish” and worries about the, “troubling possibility that these ideas will actually guide policy in a second term rather than simply serve as props in a re-election campaign.” Yglesias writes that. It should be obvious that the path forward for America is to focus on our strengths in information technology and media, and not compete with the Chinese for manufacturing supremacy. Yglesias writes that manufacturing areas are “poor” while high-tech areas are “richer” and “more prosperous” and we should “earn from the most prosperous parts of the country, not to imitate Chinese clusters that are even poorer than America’s industrial hubs.” Also, “creating new billion-dollar software startups has a lot more to do with the future of American prosperity.” Yglasias concludes that we should “instead build and expand new industries that push living standards up and keep factory owners searching abroad for cheap labor.” Ezra Klein wrote a piece for the the Washington Post titled “Is industrial policy back?” in which he argued that “cozy consensus against industrial policy is, at least when it comes to manufacturing, flawed.” Describing what Sperling’s argument, Klein wrote: There is, in other words, a building argument that the market is failing to appropriately price the benefits of manufacturing firms. They’re worth more to the economy than they are to individual firms. And that’s the key to this new argument: Sperling isn’t saying America should support the manufacturing sector because it delivers good jobs, or it’s been important to America’s middle class, or even because China is competing unfairly. He’s saying there’s a market failure. And even the most orthodox economists will tell you that it’s appropriate for the government to intervene to correct market failures. Even so, he says the Obama administration isn’t really doing all that much, For all this, the Obama administration’s strategy to promote high-tech manufacturing is modest: A couple of tax cuts, mostly. Some money for research into basic technologies and new techniques. And a sustained effort to talk up the industry’s importance and thus signal to investors that America intends to fight for its manufacturing base. None of these are game changers. At least the consensus against doing anything is changing. Economist Mark Thoma writes in Is Manufacturing the Answer? , “At one time I would have been opposed to industrial policy, but I have been reevaluating my position lately (I can’t say I’ve been convinced as of yet, but I want to stay open-minded on the question).” He links to EPI’s Lawrence Mischel, who writes in Robert Lawrence misleads the New York Times on manufacturing , saying that, … closing the trade deficit would provide millions of jobs and boost the economy. For instance, my colleague Robert Scott has shown that growing trade deficits with China eliminated 2.8 million U.S. jobs between 2001 and 2010 alone, including 1.9 million jobs displaced from manufacturing. Similarly, correcting the currency imbalances with China, Hong Kong, Taiwan, Singapore and Malaysia could add up to $285.7 billion (1.9 percent) to the U.S. GDP, create up to 2.25 million jobs over the next 18 to 24 months (most in manufacturing) and reduce U.S. budget deficits by up to $71.4 billion per year. … manufacturing employment will not return to 25 percent of employment. Nevertheless, we can gain a lot of manufacturing jobs by strengthening the recovery and through appropriate trade and currency policy. This would provide millions of good jobs, aid many communities, and be good for the nation. Edward Luce of the Financial Times writes in “America reassembles industrial policy” that we do have an industrial policy, that favors oil and Wall Street, Whether it is the schooner-rigging of tax incentives for Wall Street — and the federal tax system’s subsidies for debt over equity — or the panoply of write-offs for Big Oil, Washington never stopped promoting favored sectors. Manufacturing was simply not among them. Most are of long pedigree. Some might say it would be easier to pass through the eye of a needle than to separate the fossil fuel sector from its Washington subsidies, which date from the second world war. No presidential hopeful would dare to suggest scrapping Depression-era farm subsidies because they skew so heavily towards key states such as Iowa. Luce points out that Facebook and Twitter might be glamorous, but making actual things is where innovation comes from, Facebook and Twitter may bring disruptive social change. But the most valuable innovation still comes from making products such as semi-conductors, batteries and robotics. Just Look Around I think a problem with economists (and a lot of big-city columnists and journalists) is that they somehow are unable to just look around them. All one has to do is drive around the midwest for a few days, Michigan, Ohio, etc. and you will see for yourself how important — and different — manufacturing is to the country, and what happens when factories close. It affects the entire community and those jobs are not replaced — and the ripple effect from the loss of a community’s jobs base is terrible. All the other jobs that manufacturing supports go away, too, when manufacturing goes away. I live in Silicon Valley. Facebook, Google and Twitter employ relatively few people relative to manufacturing. Apple sends its manufacturing to China , because in China working people don’t have any say , so they can treat workers there worse than workers here in our democratic society will allow. In fact, Silicon Valley has high unemployment , in some areas here as much as 25 percent or more of the office and light industrial buildings are for lease, and our downtowns and commercial streets have plenty of empty stores. They’re just newer , so they don’t look as bad as the downtowns across the midwest. But it is as bad. In February, economist Christina Romer wrote in a New York Times op-ed, “Do Manufacturers Need Special Treatment?” that argued that our government should not promote manufacturing. In it she wrote: American consumers value health care and haircuts as much as washing machines and hair dryers. And our earnings from exporting architectural plans for a building in Shanghai are as real as those from exporting cars to Canada. I responded, in Manufacturing On Planet Economus , and think my sentiments very much still apply in response to this ongoing discussion: Here is the difference: We can’t just keep servicing each other. This “service economy” thing hasn’t worked out so well here on Earth, and now we have a huge trade deficit. It is “better to produce real things” because that is what you sell to others to get the money to pay each other for haircuts (and scissors). Manufacturing brings so much along with it that entire economies have been, are and will be supported. China isn’t making its living by cutting each others’ hair. Neither is Germany, or other countries that have realized the importance of manufacturing and manufacturing policy to an economy. Manufacturing brings with it all the businesses in a supply chain, it brings the research and innovation that manufacturing requires, and it brings a lasting real infrastructure that requires enormous investment to duplicate elsewhere before competition is enabled. Today we have a tremendous current account imbalance that resulted from the terrible trade deficits suffered since we were invaded by this crowd from planet Economus, who told us we don’t need manufacturing — that we should transform ourselves into a “service economy.” And it will require enormous investment to restore the ecosystem that we allowed to escape to other countries in that period. Once you’ve got it, it’s hard to lose it, and once you lose it, it’s hard to get it back. Not so much with services. This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture . I am a Fellow with CAF. Sign up here for the CAF daily summary .

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Jared Bernstein: A Debate on Inequality, Opportunity, and Politics

April 13, 2012

Had a rousing debate on inequality last night with Scott Winship from Brookings, moderated by Reihan Salam, both of whom lean conservative, and both of whom brought generally interesting and provocative views to the discussion. The conservative take on the issue tends to fluctuate from mild denial (Winship, not Salam), to which I strongly object, to “is it really that big a deal?” with which I disagree but find interesting and challenging. On the denial front, what you mostly get is the “if-you-just-adjust-it-this-way-or-that-way-it-all-goes-away.” Scott raises immigration, incarceration, family structure, employer-provided health insurance, deflators, to name just a few. Some of these don’t affect inequality, like deflators (although Scott cited research that finds prices grow more slowly for poor people); others cut “the other way” — incarceration disproportionately takes lower earners out of the mix, so putting them back in would widen the gap between lower and middle-wage earners. Most of these are dealt with in the CBO data shown in the figure below, including health care, family size, taxes and transfer payments. So, yeah, there’s a lot more inequality and forgive me if I won’t swim in de-Nile on this point. More interestingly, both Scott and Reihan raised questions about how much all this inequality matters. The first argument is that there’s nothing zero-sum about the rise in inequality. Romney’s or Buffett’s or Gates’ or Zuckerberg’s gains are not anyone else’s losses. That’s hard to accept, given that it’s not just that most people’s real incomes kept going up like they used to, just not as fast as those at the top. Income grew more slowly for middle- and low-income households and poverty rates were stickier (i.e., less responsive to growth) in times of rising inequality. The divergence of median compensation from productivity suggests that in the age of inequality, the typical worker is simply not capturing as much of their contribution to growth as was formerly the case. In economese, some of what these and other rich guys and gals capture are ” rents ,” which are not zero-sum. We see this most commonly in the growth of financial markets as a share of the American economy, an important factor in not just the growth of inequality but in the bubble-bust cycle that’s done so much damage of late. In the 2000s, the median income of working-age families stagnated and poverty went up, even as the economy grew and the capital-gains powered income of the top 1% soared (see figure). Since the current recovery began, profits have soared, inequality is back on the rise , and the pay of average workers has stagnated of late. My own longer-term analysis of the factors responsible for the diminished elasticity of poverty with respect to growth finds inequality to be the most important factor (see figure here ). The latter 1990s provides a very useful counterexample. With true full employment upon the land — my favorite inequality antidote — inequality actually diminished between the middle and bottom (the top continued to pull away — cap gains, again), low wages grew with productivity for a New York minute, and poverty rates fell sharply. Inequality, at least in the bottom half of the wage scale, compressed and a lot more growth reached a lot more people. Similarly, Scott doesn’t buy that inequality negatively affects opportunity, despite all the arguments here . From that post, I keep coming back to this anecdote, because I think it’s so emblematic of the problem: …once you start looking for these linkages between inequality and opportunity, they show up everywhere. Here’s a great example from this AM’s WaPo, where public schools facing budget cuts–the disinvestment in public goods noted above–turn to parents to raise funds, and not for one-off trips to Mount Vernon, but for science curriculum, guidance counselors, smaller class sizes, music classes, etc. Of course, the affluent parents can raise hundreds of thousands; the poor parents, barely hundreds. It’s a classic example of inequality reinforcing itself through educational opportunity. One of the problems, admittedly, is that, as noted, this is anecdotal. And most of the other evidence that inequality thwarts opportunity is too, showing that, for example, the inequality of enrichment expenditures on kids or college completion rates grew as income inequality grew. It’s evidence but it’s circumstantial. But it’s convincing to me, and to most others who’ve looked at this closely, so I don’t for a second buy the argument that inequality is economically benign. More challenging was their point that income concentration is a lot more politically benign then I’ve been thinking. As I argue in this deck (slides 16-18), hopefully well known to OTEers, while money in politics has long been a problem, it’s gotten a lot worse as there is so much more income at the top and so much more leeway for that income to “buy” the politics it wants. Read Hacker and Pierson’s book , and you find it awfully hard to avoid the conclusion that we’re stuck in a nasty feedback loop, where the increased concentration of money in politics locks and blocks–it’s locks in policies that perpetuate its growth, and blocks policies that would ameliorate it. An egregious example of late is that one person -Sheldon Adelson, whose net worth according to Forbes in $25 billion (yes, that’s with a ‘b’)-by dint of the Citizen’s United decision, was able to keep a candidate in a national primary for months on end. That strikes me as profoundly undemocratic, and is a potent symbol of how corrupt our political system has become. But Reihan and Scott argued that perhaps this was less portentous than all that. It was basically just a rich guy wasting some money, indulging a fantasy or something (hey, whatever turns you on, I guess). As Scott put it, if Gingrich wins the election, I’ll have a point. And of course he won’t. That’s interesting, although it’s a bit weird to contemplate that allegedly smart investors would make such foolish investment. But are they really that foolish? They’re using their unimaginable riches to steer the ideology, and they’re doing it throughout the system, from local school boards to national elections. This is scary and damaging to America. I’m open to good arguments from smart people like Scott and Reihan. But I simply don’t see how these extreme economic, social, and political imbalances are so benign. I fear they’re cancerous, and if we allow ourselves to be distracted by adjustments to deflators or we over-discount correlations because we haven’t yet determined causality, that cancer will metastasize and America will be in real trouble. Added bonus/penalty : here’s Scott and me debating this stuff on the radio yesterday.

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Jan Mazurek: The Climate Post: U.S. Energy Department Says Peak Travel Season Could Cost Drivers 6% More

April 12, 2012

Gasoline prices have edged off the pedal in recent days, but the Energy Information Administration this week released new data showing motorists will pay about a quarter more per gallon during peak travel season — April through September. Prices will top out at $4.01, on average, in May. The last time gasoline spiked to such levels was 2008, causing a much different reaction from motorists in part because prices had shot up 35 percent in just six months. While escalating gasoline prices are driving some folks to hybrid dealerships , only a few models offer a speedy return on investment . With the exception of the Prius and Lincoln MKZ, and the clean-diesel Volkswagen Jetta TDI, most clean-car technologies take more than a decade to pay owners back. Rising oil prices are feeding a population boom in North Dakota, with the town of Williston holding the distinction of fastest-growing town after its population rose 8.8 percent in about a year. Economists surveyed by CNNMoney say the economy can handle the current high oil prices of around $100 a barrel, but that a further spike in oil prices triggered by a confrontation with Iran could be one of the biggest threats to the economy . Smoggy City Makes Strides in Clean Air Mexico City only a few years ago rivaled Los Angeles and Houston as a smog capital, but thanks to air-scrubbing innovations such as vertical gardens and a popular bicycle sharing program , the city is becoming a leader in green efforts. Although California is slipping in the smog and air toxics categories, the state topped a list ranking states’ preparedness to address such challenges as rising sea levels that a warming world portends. Alaska, Maryland, Massachusetts, New York, Oregon, Pennsylvania, Washington and Wisconsin also ranked high. Realclimate.org reports that scientists’ predictions about human-caused climate change pushing the mercury up were on target. What’s more, a warming planet may be bad for bunnies threatened by the loss of sagebrush habitat and snow, where they hide from predators. Tennessee, meanwhile, enacted a law that would let teachers challenge climate change and evolution in the classroom. Energy vs. Environment A new slate of clean and renewable energy initiatives — part of the long-term “Operational Energy Strategy” aimed at reducing the military’s dependence on fossil fuels — was announced this week . The Obama administration aims to build three gigawatts of solar, wind and geothermal power capacity on U.S. military installations by 2025. The Army, meanwhile, is building fuel cell and hybrid vehicles . Actor Matt Damon has signed on to The Promised Land a film critical of hydraulic fracturing, or fracking. Meanwhile, promoters of the pro-fracking film FrackNation are raising funds on Kickstarter . Outside of Hollywood, the Department of the Interior is poised to propose guidelines governing fracking on public lands. For those opposed to fracking for fear that natural gas will diminish demand for renewables, the Center for American Progress says that in the long term, the two are not necessarily in opposition, with renewables becoming increasingly competitive as natural gas production nears a peak sooner than some might predict. A new energy poll says 61 percent of Americans said they’d be more likely to vote for a presidential candidate backing more natural gas. The same study concludes many Americans — six out of 10 — are unfamiliar with hydraulic fracturing. Payouts related to the BP oil spill, the largest in history, have recently increased four-fold . Texas, a recipient of some of the funds, announced plans to spend its money on long-term coastal conservation . Oil drilling in the Gulf is expected to see its biggest year since the 2010 spill, with predictions for eight more oil rigs, even though signs of the disaster’s effect on the environment still remain. India has forbidden its airlines from complying with a European Union law that went into effect Jan. 1 that charges airlines using European airports for their carbon emissions. Indian Environment Minister Jayanthi Natarajan called the requirement a “deal-breaker” for global climate change talks. Scientists have finally extracted sunlight from cucumbers. No, not really, but in a 2011 essay Vaclav Smil used the fictional cukes from Jonathan Swift’s 1726 novel Gulliver’s Travels to make a point about today’s serial infatuations with “it” technologies — simple solutions to complex energy problems. Bloomberg’s Eric Roston suggests that President Obama’s “all of the above” strategy — which consists of various “it” technologies — would do well to “focus not on our infatuations with particular energy sources but on the market in which they operate.” The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions .

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Wray Herbert: The Surprising Benefits of Corporate Disunity

April 12, 2012

I love reading accounts of the West Wing’s inner workings, because they are studies in the predictable quirkiness of human psychology. Presidents and their trusted staffs always arrive in the White House with a unified message and team spirit, and they inevitably disintegrate into factions — ideological purists and pragmatists, seasoned vets and young Turks. It’s just as true of Obama’s West Wing today as it was of Nixon’s and FDR’s, and probably every presidency back to the founding. The common wisdom is that such factions are a bad thing, not just for the White House but for any complex organization. Internal bickering takes key leaders off message and saps energy and hurts job performance. But Margaret Ormiston isn’t so sure. Ormiston is a psychological scientist at the London Business School, and together with Elaine Wong of the University of Wisconsin — Milwaukee, she has been studying the consequences of such organizational fragmentation. Her work suggests that disunity may actually have some hidden benefits, including the promotion of more ethical business practices. The scientists’ theory goes like this: As unified leadership teams splinter into factions, the key players become more competitive and more vigilant in monitoring one another. Competition and monitoring have downsides, but they can also influence organizational decision making in positive ways. Specifically, factions foster intense scrutiny and discussion of competing agendas, which in turn lead to more ethical choices and judgments. To test this idea, Ormiston and Wong examined existing data on leadership teams at about 50 Fortune 500 companies. They ranked each leadership team’s degree of fragmentation, based on tenure and education as well as the homogeneity of competing factions. They also measured how centralized, or decentralized, the decision making power was in each company — figuring that disunity would be more beneficial in organizations where decision-making power was dispersed. Finally, they examined each company’s ethical record over a three-year period — measures like charitable giving, for example, or disregard for the local community economics. When they crunched all the data together, the results were unambiguous. As reported on-line in the journal Psychological Science , the more fragmented a company’s upper management was, the more ethical its record — but only in organizations where decision making was decentralized. In companies that consolidated power at the top, fragmentation did not lead to more ethical decision making. It just led to fragmentation. That’s a lesson for any organization, whether its business is business or governing.

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Ben Cohen: Why Wanting to Be Rich Is a Form of Mental Illness

April 12, 2012

In modern society, we are conditioned from an early age to want things we don’t need. An entire industry has been built around manipulating us into buying products we believe will make us more attractive, happier and respected. Children watch other children on TV play with newer and better toys, and they automatically want what they don’t have. When adults see good-looking people driving superbly designed cars, the subconscious message is “Buy this car, and you will become more attractive.” Of course if you can’t afford it, implicitly you are a loser. As we get older, the manipulation becomes more damaging — life choices are made in order to fulfill an implanted image of what we think we should be — we work unfulfilling jobs to pay for the products we think we must own, or worse, go into debt and spend a life time paying it off. The cycle is vicious. As the wealth divide gets wider, those less fortunate want what the rich have. And in today’s society, they can, as long as they go into debt. And that is the point — feel inadequate because you don’t make enough money, buy stuff you don’t need to compete with people you don’t actually know, go into debt then work all the hours God sends to pay it off. This is our definition of a functioning economy, as eloquently articulated by George Bush after the terrorist attacks on 9/11. “Go shopping,” he told Americans in response to the faltering stock market. Consume and all will be well. The desire to become rich is seen by some psychologists as a form of mental illness. Oliver James wrote a brilliant book Affluenza about the corrosive effect of capitalism on people’s mental health. The desire to be obscenely wealthy, he argues, is a sickness caused by advertising and spiraling wealth inequality. And it has spread around the Western world like a virus. And even if you do happen to be wealthy, it turns out that isn’t actually all that great either. The effects of rampant materialism are, according to research, pretty damaging to the human psyche. An international survey of over 90,000 people published in the journal BMC Medicine found a direct correlation between wealth and depression. Wealthier countries recorded higher levels of mental illness, while citizens in poorer countries were happier and better adjusted. Despite being told that being rich should make you happy, it in fact does the opposite. In Britain, mental illness levels have been soaring for years, in direct tandem with economic growth. A 2004 report by the Nuffield Foundation found that “Rises in mental health problems seem to be associated with improvements in economic conditions.” The richer we are it seems, the sadder we become. It is no wonder, then, that so many people resort to anti-depression drugs to get them through their lives. I personally cannot count the number of people I grew up with who had everything handed to them on a plate, yet were incapable of leading normal, happy lives. Some of them turned out OK, but most now work jobs they hate in order to buy things they don’t need to impress people they don’t really even like. Fighting the system is next to impossible. There are too many entrenched interests to make any sort of meaningful difference because our society is geared toward making us feel isolated, fearful and greedy. The solution? In my opinion, don’t fight it, just ignore it. Turn off the television, talk to your neighbors, join a club, play a sport and interact with other human beings as much as possible. It’s a lot more rewarding than buying an ipod. Ben Cohen is the editor of the recently relaunched TheDailyBanter.com .

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William S. Becker: Children v. Dirty Business

April 11, 2012

On May 11, a group of children will face off against the Obama administration and the National Association of Manufacturers for the latest round of a David vs. Goliath battle in federal court. The kids filed a lawsuit last year against the administration, arguing that common law requires governments to protect critical natural resources on behalf of current and future generations. In this case, the kids argue, the government has an inherent duty to protect the atmosphere from greenhouse gas emissions, and all of us from the impacts of global climate change. In their lawsuit, a group called Our Children’s Trust filed against a who’s who of administration officials including EPA Administrator Lisa Jackson, Interior Secretary Ken Salazar, Agriculture Secretary Tom Vilsack, Commerce Secretary Gary Locke and Energy Secretary Steven Chu. Earlier this month, U.S. District Judge Robert Wikins ruled that the National Association of Manufacturers (NAM) and several California businesses could intervene against the kids, based on the argument that limiting greenhouse gas emissions would lead to a “diminution or cessation of their businesses” — in other words, jeopardize their profit margins. Now, NAM and the administration have asked the judge to dismiss the case. That’s the motion to be considered in May. Blogger Ben Jervey has done a good job describing the lawsuit’s background , including who the kids are and why they’re doing this, so I won’t go into it here. But I am curious about an argument attributed to one of the attorneys for the businesses, that companies have a “legally protected cognizable interest to freely emit CO2.” Of course, what is legal is not necessarily moral, but morality is the province of the clergy, not the courts. More to the point, it would seem that the public — present and future — has a “cognizable interest” to live without the natural disasters, health hazards, humanitarian tragedies and threats of war that are the likely results of climate change and that already are in evidence today. Further, as unofficial co-plaintiffs in this case, we might all point out that while companies can resolve this problem by installing better emission controls, or using cleaner fuels, or changing the nature of their operations, the damages from greenhouse gas emissions are not so easily avoided. In fact, scientists tell us that some of the damages are irreversible. At the heart of this case, it seems to me, is not whether current law permits corporations to willfully alter the atmosphere with their wastes. If we depend solely on political bodies to protect the climate, for example, then we will politicize the atmosphere as well as polluting it. The health of oceans, forests, fresh water supplies and soils — and consequently human beings — all will be subject to the whims and prejudices of politicians. The real issue is whether the health of the natural systems and resources that all of us “own” is protected by a doctrine that transcends the interests of any one industry, the statutes of any one Congress, the actions of any administration, or the abdication of responsibility by any of them. As a 65-year-old, I must admit some embarrassment that our children now feel obligated to face off against the giants of industry and government and all their lawyers. These kids are stepping in where their elders in Washington and the international community have feared to tread. But it’s also heartening and none too soon. What could be established as a result of this lawsuit is that protecting a global life-support system from irreparable harm is a higher priority than corporate profits — profits derived in part from making the rest of us pay the god-awful price of greenhouse gas emissions. It’s our kids who will have to live with the court’s ultimate decision, but it’s in the interest of all of us for Judge Wilkins to allow the lawsuit to proceed.

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Robert Teitelman: Facebook, Instagram and the Disciplines of Mergers and Acquisitions

April 11, 2012

For years, it’s been a popular pastime to decry the use of mergers and acquisitions (M&A) as a colossal, ego-inflating, comp-expanding, waste-of-shareholder-money exercise. Most of these charges are either wildly exaggerated or absurdly simplistic. M&A is a necessary means for companies to grow, particularly in a world so driven by change. Failures are unavoidable — it’s not easy — although measuring what’s exactly a failure or a success given the complexities of large corporations is pretty difficult. But it’s very true that in overheating markets, when currency in the form of shares is highly inflated, lots of lousy, value-destroying deals can get hatched. This is particularly the case in intensely competitive technology industries, where the value creation of a given deal may lie not in the current organization but in a technique, a process, a piece of intellectual property still undergoing gestation: that is, in an opaque future. Thus the truism beloved of Warren Buffett: In M&A, there’s nothing riskier than tech deals. And then there’s Facebook and Instagram. Facebook is famously paying a cool billion dollars for the two-year-old app-based photo service. Instagram has 13 employees, 30 million users and no revenues. Facebook’s Mark Zuckerberg decided the social media giant absolutely had to have the startup, and took a year’s worth of cash flow and offered it up, about twice Instagram’s recently closed Series B venture round valuing the company at $500 million. There was no indication of other bidders, though everyone seems convinced that a Google or an Apple was lurking out there ready to make its own pre-emptive bid. In the developing meme about the Instagram deal, Zuckerberg didn’t have a choice: He had to strike. It was eat or be eaten. The sheer uncertainty of the social media landscape can’t tolerate hesitation; it demanded action. In California, venture capitalists, investment bankers and analysts can’t praise the deal highly enough (of course, they all profit from the resulting euphoria). Zuckerberg showed brilliance, they said, by recognizing Instagram’s potential and making the bid — despite the fact that this will further complicate Facebook’s enormous and much-hyped IPO in a month or so. That alone should cause one to pause along with the profound faith in a young CEO who hasn’t done much dealmaking. The issue here is not that Zuckerberg made a good decision or not. We’ll find out in time whether Instagram is a PayPal or a Skype (both eBay acquisitions: the former, as The New York Times lays out today , a big success, the latter, a big loser) or a Flickr (a Yahoo! bomb) or a Flip (which Cisco, a regular and expert user of M&A, shut down last year). Instagram most closely resembles some of the giant telecom deals from before the bubble burst in 2001, particularly in the size of the deal and the tiny number of employees. Billions of dollars in those deals were written off when the market collapsed. And let us not wallow in AOL-Time Warner again. No, the issue with these sorts of deals is how any investor can make a rational judgment about a) whether this deal makes strategic sense, or b) whether the price makes any sense at all. The two are related, of course. The view from Silicon Valley seems to be that Facebook had the money so why not spend it. Cutting-edge tech companies need to bet big and make “strategic deals,” that is, deals that can’t be be valued — the feeling is that Zuckerberg is a genius and if he doesn’t know what Facebook needs, then nobody does. Facebook isn’t even public so Zuckerberg can spend his money any way he wants and the reaction of users and the tech community seems to be so positive it can’t go wrong. Well, of course, it can go wrong. Crowds change their minds, and Instagram’s users in the Twittersphere don’t seem to want to be enveloped into Facebook world, though this is about as scientific as a finger in the breeze. Apps (and social media sites) come and go. Instagram has very few employees, all of whom are now loaded with dough. They may stay and develop the product — though no one seems to know how it’ll make money — or they may drift off to start new companies or go into politics or try venture capital. There seems to be few barriers to entry in the app world, and it’s hard to imagine that Instagram, as nifty as it is, is unassailable. Moreover, it’s unclear whether Instagram boasts the kind of network effects that makes PayPal, YouTube, Google, Microsoft, Apple and Facebook so formidable. Remarkably, few seem to be asking. Again, this could turn out to be a fabulous deal. But this is the kind of deal that gives M&A a bad name. The notion that Zuckerberg can spend “his” money any way he wants is not only wrong — it’s not really his — but about to become a real problem when public investors buy shares. (Substitute, say, Bank of America for Facebook and see how that works.) A billion dollars remains a big number, no matter the market cap. Moreover, it’s pretty clear, as the Financial Times ‘ Lex column pointed out Tuesday, that despite Zuckerberg’s statement that this is a one-off deal, what it really suggests — and that the tech crowd confirms in its comments — is that there could well be other Instagrams to be scooped up. Facebook is implicitly admitting that in a burgeoning and remarkably fluid app world, it can’t really go it alone: It needs to buy and buy and buy. Again, that’s not a shock (Google has been a busy buyer) — though Zuckerberg, prepping for public company status, should be more careful with statements about one-offs he may have to take back, and that will hurt him with investors once he goes public. Will this deal hurt Facebook if it never works out? Not really. It’s just a write-off, which Facebook can shrug off. By then there will be new hot apps, racking up millions of grazing users. But what this deal tells us most clearly is just how risky the Facebook enterprise is. For Zuckerberg to make a pre-emptive bid that’s twice the venture valuation from two weeks ago — and one a month before a public offering — suggests two things: either he’s undisciplined with all that money (were there negotiations or due diligence? what’s the breakdown of cash and shares?) or that the powerful network effects that keep users coming back to Facebook may not be as strong as a relatively obscure two-year-old startup’s app. Is this a sign of a bubble? I don’t believe that , unless you define bubble in a very narrow sense. Social media is clearly heating up, but for rational reasons: new devices, new services, new apps, an exploding audience. Instagram might look like an old dot-com — lots of users that may come or go, no viable revenue model — but Facebook does not: Like Google, it has found a way to make a lot of money. But you don’t have to have a full-blown bubble to lose your discipline as a buyer. You just need the sudden appearance of a lot of cash. Which is how M&A gets a bad name. Robert Teitelman is editor in chief of The Deal magazine.

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Brad Reid: The Supreme Court Applies Immunity to Prevent Suits

April 10, 2012

A significant preliminary issue in any suit against governmental bodies is the application of sovereign immunity. Sovereign immunity, historically phrased as the king can do no wrong, early became a part of the U.S. legal system. Governments may only allow suits to proceed against themselves by some affirmative action (waiver) of sovereign immunity. The U.S. Supreme Court recently has once again addressed immunity in two decisions with Justice Alito writing the opinions. In one recent case, a licensed pilot sued the Federal Aviation Administration, the U.S. Department of Transportation, and the Social Security Administration for mental and emotional distress for revealing his confidential medical information (FAA v. Cooper). The federal Privacy Act allows suits for “actual damages” if the government intentionally or willfully violates it. In discussing giving up sovereign immunity (waiver) the Supreme Court majority noted that the Government is entitled to the most favorable interpretation of protection. Since “actual damages” in the Privacy Act is somewhat unclear, the Court understood the phrase to mean a “proven precuniary loss,” not mental or emotional distress. Justices Sotomayor, Ginsburg, and Breyer dissented finding a broader meaning of the phrase “actual damages,” and stated that the narrow meaning was contrary to the purpose of the Privacy Act. These three Justices also dissented in a 2004 Privacy Act decision. The majority opinion in 2004 interpreted “entitlement for recovery” to require damages beyond a willful or intentional violation being proven (Doe v. Chao). A second recent unanimous Supreme Court decision granted absolute immunity from suit to a federal grand jury witness (Rehberg v. Paulk). The plaintiff alleged that an investigator for a district attorney’s office had presented false testimony in violation of a federal civil rights statute (42 U.S.C. Sec. 1983). The Court explained that this immunity from suit was the same protection already granted trial witnesses. Furthermore judicial precedents, the need for witnesses not to fear retaliatory litigation, available perjury remedies, and secrecy considerations for grand jury witnesses favored this result. Related but distinct from sovereign immunity is the “government contractor defense.” This defense broadly prevents military equipment manufacturers from being sued when equipment is constructed to government specifications. It was famously applied in 1988 by the Supreme Court in litigation involving a Marine helicopter crash to end a suit brought against the manufacturer (Boyle v. United Technologies). There were four dissenting justices. In January, 2012, a three judge panel of the Federal Court of Appeals for the Fifth Circuit decided that the legal remedies for the heirs of civilian convoy drivers who were killed in Iraq were those remedies granted by the Defense Base Act and Longshore and Harbor Workers’ Compensation Act (Fisher v. Halliburton). These statutes grant workers’ compensation type awards. Federal law preempted state law tort claims of negligence and fraud against the Army contractors that the heirs had sued. Consequently, the public policy question to consider is how broadly to extend immunity from suits? The general arguments in favor of immunity are that retaliatory or frivolous lawsuits will be time consuming and detract from official duties, individuals will be deterred from seeking careers in public service or exercising their best judgment for fear of litigation, and burdensome and lengthy suits will waste public resources. The general arguments against immunity are that injustices will not be remedied, immunity discourages due care, and individuals or entities are exempted by immunity from the standards that apply to the rest of society. There are numerous additional forms of immunity from suit not discussed in this brief comment that are further subdivided into absolute and qualified.The general legal trend presently seems to expand immunity from suit based upon strict statutory interpretation of waiver provisions. Under this view statutory language is very precisely, and critics would say too narrowly, defined to prevent suits.

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Ian Yolles: Contributing to the Greater Good by Being Selfish

April 10, 2012

“Doing well by doing good.” The phrase has been overused, but fortunately it is no longer a novel concept in business. Employees, shareholders, and customers are increasingly expecting companies to focus on their social and environmental performance hand-in-hand with their financial performance. In fact, recent studies by companies such as Edelman Financial Group and WPP indicate that when choosing between brands of equal quality and price, social purpose ranks as the number-one deciding factor for global consumers’ purchases, above design, innovation, and brand loyalty considerations, and 75 percent of U.S. consumers want to buy from green brands. Failure to listen, given the means in the digital age to stand in judgment of brands, will result in business being withdrawn. The reverse is also true. Consumers will reward brands for their behavior with passionate advocacy enabled by the same social media tools. At its core, the phrase “doing well by doing good” means that growth, revenue, and profit should be the byproduct of making a positive difference for multiple stakeholders, not the ultimate goal. This approach becomes more interesting when applied to the most microcosmic “business unit” possible: the individual consumer. If we could imbue this philosophy into our culture — at an individual level — collectively we would catalyze a broad positive impact previously thought unattainable. Businesses that embrace this philosophy focus on the connections between creating societal and economic value and are motivated by generating benefit for multiple and diverse stakeholders — for their employees, supply chain partners, customers, investors, and the health of their brand. Many individual consumers are similarly motivated. Our choices are heavily influenced by self-interest; we want to have enough resources to support ourselves and be able to provide for and protect our families, while at the same time wanting to leave a positive mark on our communities and even the world. The ROI of “doing good” for businesses is pretty easy to understand: improvements to the bottom line, increased customer satisfaction, and often a more visible, measurable environmental impact due to the larger scale. The return on making sustainable lifestyle changes at the individual level, however, isn’t always as clear or pronounced. Given the magnitude of our environmental issues, we cannot always “see” the impact of our behavior. To get a critical mass of consumers to change their behavior, you have to make the return relatable and valuable on a personal level. So which are the most effective motivators of behavior change? I believe there are three key pillars: Show me the money: If certain behavior changes can influence one’s personal financial position and that of one’s community, it forges a personal connection and increases the chance that the behavior is maintained over time. The consumer becomes invested, if you will. The opportunity to save or even make money taps into every person’s desire to better provide for themselves and their family. Get social: We now live in a world of hyper transparency and constant connectivity; people don’t hesitate to head online to seek out information around sustainability efforts, share their own thoughts, and promote the positive steps they are taking to live more sustainably. This public sharing contributes to our definition of our sense of self and provides social status and recognition, which adds an additional motivational factor. Incorporating elements of competition and personal reaffirmation into our efforts to inspire a mass shift towards more sustainable choices and behaviors is an effective way to use social currency as a catalyst for positive change. Make it measurable: The global environmental issues that confront us are so large, complex, and interconnected that they seem impersonal and impossible to do anything about at the individual level. By making the actions you are requesting people to take measurable and trackable, you can show individuals the tangible impact that their actions have in the context of the collective action of others. If you can show them how their actions are contributing positively to their own community as well as the natural environment, then you can catalyze social activism and commitment. If we’re going to navigate our way toward a sustainable future, we’re going to have to think and behave differently. It’s not about doing good for the sake of doing good. It’s really about self-interest. By engraining this into both business and consumer behavior, we can more effectively move society toward a sustainable future, and, in the process, help people understand the connection between the environment, economics, and the well-being of our communities.

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Susan Harrow: James Bond Brand Shaken Up: Swigging Heineken in New Movie Skyfall

April 10, 2012

James Bond drinking beer? Not a suave move Bond. James Bond swilling beer is a huge branding bomb. We know and love this sophisticated spy for his elegance, savoir-faire and swagger, not for sipping the foam from a heady Heineken. Famed for his signature beverage of a vodka martini “shaken, not stirred,” Bond has caved to down the brew for a purported 45 million dollar marketing deal from Heineken. Picture this: a beautiful Bond girl approaches the current James Bond guy, Daniel Craig, at a bar in some sensual island hoping to be seduced by him — and then eyes his drink — a can of beer. Game over. Lesya Lysyj, a representative of the Dutch brewer says, ”James Bond is a perfect fit for us,” Maybe he is, but beer isn’t a “perfect fit” for his brand. She adds, “He is the epitome of the man of the world.” Not after this commercial caper. According to Ad Age the Heineken brand has had a partnership with the film for 15 years, but this is the beermaker’s most visible move to capitalize on the Bond name. This unfortunate decision has caused quite a stir among fans and inspired jokes from the likes of Peter Sagal and his guests on the popular NPR Show, “Wait Wait…Don’t Tell me.” In this week’s show Sagal quipped, “His tuxedo is just printed on a T-shirt now. We’re looking forward to having him sidle up to the bar in his tuxedo T-shirt and he’s going to order a brew.” Guest panelist Adam Felber added, “He’ll be Jimmy Bond now.” Sorry, but beer is bad for the Bond Brand. Say it ain’t so James. We want our Aston Martin, Rolex wearing, martini drinking man to stay true to his elegant, womanizing ways, not throw one back like the rest of us working stiffs. Susan Harrow is the author of Sell Yourself Without Selling Your Soul . She runs a Media Consultancy where she helps everyone from Fortune 500 CEOs to celebrity chefs, entrepreneurs to authors grow their business through media coaching and the power of PR. For more information please contact Susan .

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Mark Steber: What to Know If You Owe

April 10, 2012

According to the Internal Revenue Service (IRS), approximately three out of four taxpayers who file an annual tax return receive a refund. That’s good news for 75% of consumers, but not ideal for the remaining 25% of taxpayers who find they owe money at tax time. In fact, it’s one reason why some Americans will drag their feet, and wait until the last minute to get their tax return filed. If you are someone who has, or expects that you may have, a tax liability to pay, it’s important to be aware of the rules regarding tax payments and to manage your time wisely in advance of the April 17 tax deadline. Perhaps the most important thing to remember, and something that still surprises people when I remind them, is that while you can request a six month extension for filing a tax return, you still need to pay your taxes by April 17 in order to avoid interest and potential penalties. The additional six months (until October 15, 2012) may help some taxpayers breathe a sigh of relief, but more often than not it’s better to buckle down and file by the deadline, even if it requires paying. There are several ways to make payment on a tax liability. For those who wish to pay what they owe in full, they can send a check made payable to the United States Treasury, being sure to note the taxpayer’s social security number or employer identification number, tax period, and related tax form number. If you want to pay with cash, that’s an option, as well, though you must pay in person at a local IRS Office. Some people prefer to work with the IRS to set up an installment plan and pay down their tax debt each month in a predetermined amount based on the amount owed. However, there is a one-time fee charged by the IRS for this arrangement (at present, $52 for direct debit agreements and $105 for non-direct debit agreements). Similar to most installment payment plans, you will be charged interest on the unpaid amount of the debt, as well as potential penalties. You will also be expected to repay the full debt amount within 72 months. Another option for paying a tax burden is to pay by credit or debit card through an IRS e-pay service provider. This can be done via phone or electronically, though consumers should be aware that there is a fee charged by service providers to facilitate the transaction. Keep in mind that you can file your return at any time and wait until April 17 to pay, if desired. If no effort is made to pay, you could be subject to collection action, such as having your wages, bank accounts or other assets garnished. The bottom line is, plan ahead to find out if you owe, and to determine the best way for you to pay Uncle Sam based on your current financial situation.

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Richard Barrington: Are Money Market Rates Poised for a Comeback?

April 10, 2012

Is your money market account stuck in a rut? If so, you’re not alone. Money market rates have been locked into a long and steady descent for a few years now, resulting in average money market rates of just 0.14 percent as of the end of March. Finally, though, there are signs that this could change in the months ahead. Treasury bond yields trended upward in March, in reaction to a streak of positive economic news. This could ultimately start to affect money market rates, but there are still some obstacles to overcome. Higher Treasury Bond Yields After spending most of January and February below 2 percent , 10-year Treasury bond yields broke through on the upside in March, reaching a much-higher 2.3 percent before falling back a little. As this is written, they are still holding onto ground in a range around 2.2 percent. If they don’t slip back again, this would represent the first sustained upward progress for bond yields since late 2010. This is largely in reaction to positive economic news on the domestic front — in particular, a string of encouraging employment reports. Adding jobs has the potential to generate continuing economic momentum, which would eventually create an environment that could support higher interest rates. The Impact of Inflation Unfortunately, the rise in bond yields may not be entirely due to positive economic developments. The most recent Consumer Price Index report showed a 0.4 percent increase in February, which, if continued, would project to an inflation rate of nearly 5 percent a year. So far, this is a one-time uptick in inflation, and the rate for the last 12 months remains a moderate 2.9 percent. However, the high inflation reading for February is troubling in the context of rising oil prices , which have a way of spreading inflation to other segments of the economy. Higher inflation could push interest rates higher without really helping money market accounts. The Fed, and Other Obstacles to Higher Rates Besides inflation, there are a few other obstacles for money market accounts. Specifically, here are three things that could derail money market accounts on the way to higher interest rates: 1. Federal Reserve policy. The Federal Reserve has somewhat painted itself into a corner with a multi-year commitment to low interest rates. Money market rates can rise without the Fed, but it will be more difficult. 2. A European recession. For some countries in Europe, the question isn’t whether they will go into recession, but how deep it will be. The resulting reduction in global demand will hold interest rates back. 3. Slower growth in China. When it comes to China , the issue isn’t one of recession, but simply of a more moderate rate of growth. However, the effect is the same as with the prospect of recession in Europe — an incremental drop in world demand growth. When balanced against signs of job growth in the U.S., it is difficult to tell from day-to-day which of these factors might be gaining the upper hand. However, bond market yields provide a continuous assessment of economic developments, and based on recent moves, those yields seem ready to break out of their low-rate rut. The next question is, how soon will money market accounts follow? The original article can be found at Money-Rates.com : ” Are money market rates poised for a comeback? ”

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Russell C. Smith: Reinventing Capitalism: Strange Currencies in the Marketplace

April 10, 2012

As a species, human beings have excelled at hedonistic adaptation. It’s one of the main reasons we’ve become the dominant species on the planet, and have survived over the past 12,000 years, when many other animals that roamed the Earth far longer didn’t accomplish anything resembling modern civilization. Dinosaurs had millions of years to evolve, but they never got around to developing a Gap Outlet, much less online shopping. Adaptation, altering behavior on a reward/punishment basis, and always staying ahead of the competition — enabled humanity to create civilization and all the institutions, organizations, and social structures that evolved along with us. When coins and paper currency overtook the barter system, societal structures adapted and those with the gold wanted to hold onto the gold. Modern capitalism and economic theories have only been around for a brief time in the history of humanity. And when it comes to economics, most of what’s been written, argued about, and speculated upon was done so before the Internet Age. As the Internet continues to expand and morph into its next iteration, helping to reinvent and demolish one industry after another, one can easily imagine the Internet soon altering huge segments of how capitalism works in the digital age. It’s safe to say there’s been no other time in the history of the world when so much information on peoples’ purchasing habits has been gathered, stored, catalogued, and most importantly… used. Impulse buying is done quickly, with a swipe of a credit or debit card, without much thought as to how a person’s overall buying timeline connects back to every other purchase ever made. Buying everything on credit or debit is now the norm in our society, and people who still use cash on a daily basis will soon become an anachronism, similar to those odd individuals who don’t always carry a mobile communication device. If the constant tracking of one’s buying habits already has a decades-long history, and everyone in society is now expected to be on-call and constantly tethered to a mobile phone, how does this consumer surveillance and over-connectedness play out in the long run? One of the easiest ways a mega-corporation can change your behavior is to offer reward points to you for every purchase you make. And with smart phone and microchips becoming more prevalent in our daily lives, don’t be surprised if you’ll soon be able to accumulate points automatically, even in your sleep. You already receive points for special deals, so why not for regular daily purchases — having your morning Starbucks Latte, drinking a Coke at lunch, or filling up at the same Shell station every afternoon. You’ll get more and more points for buying, choosing, picking anything, anytime, anywhere. You’ll become a walking preferred card for hundreds of global brand that will embed themselves into your behavior. And eventually, you may receive real rewards for your loyalty, not just rewards the corporation chooses for you. Eventually a person could accumulate far too many points to spend in a lifetime, similar to the way some frequent flyers have racked up so many miles they just don’t have enough time to use them all. Internet sites specializing in point trading could easily become the next big online business. Individuals could sign up and trade reward points with others, which would go toward buying tangible items on eBay or Swap.com. In the near future, it’s easy to imagine companies like Facebook or Google creating their own brand of currency. A far fetched idea? Not really. Just ask anybody who’s spent money on Second Life currency so they could buy virtual products or experiences. In a few years you might be buying Starbucks coffee with Star Bucks. It’s often be said by politicians that small businesses are the driving force of a healthy economy, and right now further growth of small businesses are what will create a more sustainable economy. Small businesses have struggled through these hard times, and adapted to the harsh economic realities. The complete failure of trickle-down economics has been apparent for some time, and new methods of achieving successes are tried daily, in every city in the country, online, and in every possible way. One proven method has been for small communities to invent their own currency exchange. In Traverse City, Michigan, the community developed a local currency known as Bay Bucks in 2006, and it’s billed as a the “homegrown local currency.” And Ithaca, New York has been using Ithaca Hours as a form of local small business currency since 1991. In the pioneering, can-do spirit, their website proclaims Ithaca Hours “promotes local economic strength and community self-reliance.” More than one economic seismic shift could happen over the next several decades. Finding inventive ways to get off shaky ground and move toward a more a sustainable economic climate is certainly on everyone’s mind. If capitalism has proven anything, it’s that it serves our hedonistic sensibilities well — providing citizens with everything they desire, all the time, if only they can pay for it. When a majority of the population agrees it’s finally time to reinvent capitalism so that it works for the majority and not just the ultra-wealthy, the super rich may decide to openly condemn the same system they’ve championed for so long. Witness the voices of mega-rich capitalists who realized it was time to promote a better future and change the world. Bill Gates aimed higher, began a charitable foundation, and decided to use a portion of his sizable wealth to rid the world of Malaria, and Warren Buffett has suggested to other billionaires they should set an example by giving more, or at the very least be taxed appropriately to their wealth, while also using their riches to transform the state of the world. After all, the one formidable task huge amounts of capital can be used for is to improve lives on a global scale.

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Christina Gagnier: Facebook’s Instagram Play Could Be Unpopular With Users and Their Privacy

April 10, 2012

It would have been hard to miss the deal read about around the Internet yesterday: Facebook’s buying Instagram for $1 billion dollars. The comments around the deal have largely centered around the valuation amount, arguably inflated, and the pending doom of the often talked about “bubble” in Silicon Valley. Yet, there is another undercurrent that is likely far more important to the two parties in the deal: the prospective recalcitrance of Instagram users to continue their use of the photo social network now that it is linked to Facebook. The user conversation around the deal demonstrated several concerns, some relating to the fact that the platform would now suddenly become less “cool,” and others relating to the simple fact that they liked Instagram because it was just photos, not anything else. Likely the biggest criticism was that many Instagram users signed up for Instagram because they just wanted to use Instagram. While some users like to integrate all of their social tools together, others like to keep their web experience siloed. Many Instagram users loved the application for its simplicity; in the words of one user, “It made everyone feel like a professional photographer.” When talking to people casually about it at a concert I attended last night (certainly not hard research), many people said they were likely going to stop using it. One new user, who had just downloaded the Instagram application, said now he was not going to use it since it was owned by Facebook. Even if people are not ardent privacy advocates or display everyday concerns over such issues, they know Facebook does not play well in the sandbox with its users. Some people don’t want to share everything they do on every single platform. The reason why Instagram was so popular was its simplicity and that it allowed users to make choices where their photos would go. While we have yet to see operationally how this deal with play out, we may see more quickly in the court of public opinion what happens. For now, if users are unhappy with this recent move, maybe it’s time to try Hipstamatic?

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Chris Weigant: Occupy’s Next Crossroads

April 10, 2012

The movement that Occupy Wall Street began is at another crossroads, it seems. It isn’t the first such fork in the road, and it certainly won’t be the last. What happens next is anyone’s guess. Is the Occupy movement poised for a comeback? Or is it about to be co-opted altogether? Can both, in fact, happen simultaneously, and would that be a good thing or not? This week kicks off an effort known as “The 99 Percent Spring” by an impressive coalition of groups with solid lefty credentials (labor, Van Jones, MoveOn.org, etc.). The goal is to hold a series of “teach-ins” that will train 100,000 people (half in person, half online) in nonviolent protest techniques. The Huffington Post reports on the details: The organizing is not aimed at any one event, rally or issue and the effect will be unpredictable. Training tens of thousands of people in arrest techniques to make a political point tends to inspire people to put that training to use. Each training session lasts a full day and covers a lot of ground. The curriculum is broken into three basic areas: explaining broader economic issues such as income inequality and attacks on workers’ rights, encouraging participants to tell their stories of economic injustice and hardship, and teaching the nuts-and-bolts of nonviolent direct action. If the phrase didn’t have such militaristic overtones, I would call it “boot camp for protesting.” Lefties have decided that the Occupiers were onto something and are looking to expand and build on what Occupy Wall Street set in motion last fall. The 99 Percent Spring folks aren’t organizing any one protest over any one particular issue; they are merely training people how to go about doing so for the upcoming election year. They’ve even got some Occupiers teaching their seminars. But, as with all things Occupy, some purists are already charging that it’s all an attempt to “co-opt” them, their message, and their movement. The Occupy movement is planning a very concrete (and ambitious) event for May 1: a nationwide “general strike.” They fear outside groups will dilute their message and taint them by association, somehow. This is, to a large extent, silly. Here’s a quick question: is the Occupy movement inclusive or exclusive? As with all things Occupy, there is no one clear answer; it is both at the same time, in a way. The movement is inclusive, as evidenced by the fact that to join, all you had to do was show up. Anyone could be part of the “General Assembly,” if physically present when the group met. But Occupy also has a creeping sense of exclusivity to it, as well, mostly in fear of the dreaded fate of being “co-opted” by others (up to and including their biggest worry: being co-opted by the Democratic Party). “Being co-opted” is defined differently depending on whom you talk to, but it generally means some outside group would somehow hijack the Occupiers’ pure message and bend it to their own aims. At the same time, the Occupiers are attempting to encourage (one might say “co-opt” if one were being ironic) other groups to support their cause in a visible way — labor groups, especially. The re-launch of Occupy Wall Street (Occupy 2.0?) is slated for May Day, and the Occupiers would love it if they brought the country to its knees for a day as workers everywhere walked off their job in solidarity. That’s really the only way a general strike could work. The May Day plans and the 99 Percent Spring don’t seem to be mutually exclusive but complementary. If the folks who attend the 99 Percent Spring turn out in force on May Day in cities across the country in support of the Occupy protest, how can anyone involved in either see that as a bad thing, especially if the 99 Percenters teach others what they’ve learned, and so present an image to the media of peaceful, nonviolent protest techniques that are time-tested and proven? Any successful movement needs both dreamers and doers. If composed of mere dreamers, nothing ever gets accomplished. If composed of mere doers, things may get accomplished, but without any real direction toward any goal. A prudent mix of both is required not only to move but to move forward toward something. This requires both a lot of people out in the streets and the discipline that people trained in the art of protest and street theater can bring. The Occupiers should be proud of what they’ve achieved already: the change in the conversation in Washington and on the nation’s airwaves. The phrase “99 percent” is used in the discussion now, and the ideas behind that simple phrase have gotten enormously more attention than they did before anyone set foot in Zuccotti Park. That is not easy to do in American these days. Compare the coverage pre-Occupy and post-Occupy in the media on the subject of jobs, for instance. Pre-Occupy, the entire conversation was about slashing the federal budget. Post-Occupy, the conversation has at least shifted somewhat toward the economic plight of millions of Americans. It’s hard to remember now, but pre-Occupy this was deemed “old news” or “not news” by national news directors and editors, and now it will likely be a centerpiece of the upcoming presidential campaign. That is a big victory, even if a bit intangible. The problem of the Occupy movement has always been defining a path forward. Seeing the utopia at the end of the rainbow is always easier than trying to figure out how to get there, to put it another way. Asking Occupiers what they would change about the system brought forth many admirable goals: ending the power of Big Banking, getting rid of lobbying and money in politics, solving the student loan crisis, and many other worthy ideas. But when asked how to achieve those goals, many Occupiers shied away from working within the existing political system altogether, seeing it as so corrupted and ineffectual as to not be worth the effort. But how else is any of this stuff supposed to happen? Overturning the Citizens United decision, just to pick one, would likely (at this point) require an amendment to the Constitution. This would be an enormous achievement, and a fundamental realignment of money in politics, but it would also require an almost Herculean effort to pass. That effort would have to take place not only on the national political level (Congress) but also in statehouses across the land (ratification), and it would take years and years of very hard work to accomplish. That’s not to say it isn’t worth such an effort, but absent such effort it is never going to happen . All movements face this ultimate dilemma: work within the system, or work to create an entirely new system. But creating an entirely new “paradigm” would be even harder than passing an amendment to kill the Citizens United decision — and getting large groups of people to agree on what that new system would be seems (at this point) to be an almost impossible task for the Occupiers. The Occupiers need to ask themselves some very bedrock questions about what it is they are trying to do, and how exactly they plan to get there. Here is how I would compose such a self-examination: Do you want to get something done? Or do you just want to get on television? Do you want to take steps, however small, toward your ultimate goals? Or do you just want to make a certain point, and make it as loudly as you can? Can you accept the fact that in order to achieve any change at all, it will likely have to come from the same corrupt system you are protesting? Or will you remain pure and not change anything in any concrete way? Will you welcome fellow travelers along the path you foresee, even those who might have their own ideas about what to push for next, or will you exclude any group that doesn’t share your ideological purity? What is the point of your movement, and how do you see yourselves getting there? These are important questions, and I am quite obviously biased in the way I have framed them. I do believe that “the system” needs a good grasp by the collar and a healthy shakeup every now and again, but I also believe that ending “the system” and building a new one from scratch on better, more utopian lines is simply not going to take place in my lifetime. Call me a cynic if you must, but there it is. Working within a corrupt system to achieve even incremental change is hard: it takes a long time, and it takes a monumental amount of effort (and some luck). It is not easy. The only easy thing is getting frustrated by the glacial pace of change and giving up on “the system” altogether. The other thing change requires is numbers. Taking over a park — even in every city in America — is one thing. But getting millions of Americans who likely largely agree with your basic goals to influence politicians is another. Achieving even that is going to require some helping hands, which is why the 99 Percent Spring and the Occupy Wall Street folks would do far better to march forward hand-in-hand than worry too much about being “co-opted” or about anyone’s ideological purity.   Chris Weigant blogs at: Follow Chris on Twitter: @ChrisWeigant Become a fan of Chris on The Huffington Post  

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Jacqueline Corbelli: Insights on Tech as an Agent for Transformative Change, on Madison Avenue and Beyond

April 9, 2012

When you think about advertising, it’s not likely that the latest tech gadget immediately leaps to mind. But, new technologies and digital devices play a vital role in how today’s digitally connected consumers engage with and experience life, and as an extension brands. Over the past ten years, technology has helped redefine the way businesses in most industries add value. From online banking to internet advertising, the business landscape has been reshaped by the ways consumers discover, interact with, and absorb information and content. And there’s a pattern — when technology proves it can enhance our experience as consumers, it tends to catch on. Pure technology solutions on the other hand (‘technology for the sake of technology’), most often, do not. From advising CEOs on how to best harness and capitalize on the promise of technology, to my current role leading the TV advertising company I founded and architected off the same premise back in 2003, I consistently find that true technology solutions feed our desired behaviors and preferences as consumers, rather than simply change or replace them. Smart phones, tablets, mini-laptops, connected TVs — the value to us of this ever-increasing array of devices lies in the ways we combine our use of them to specifically fit our life; our decisions are most often guided by choice, ease of use and control. As part of my new contributed blog series, I’m going to cover the various ways technology is influencing our behavior, what and why we adopt and the impact of true technology solutions on the world — from mental models to business models, economic development to keeping a business relevant to consumers. All with a persistent focus on the winning formula: a sustained commitment to increasing the impact and quality of the end consumer experience. I’ll begin with one of my latest passions, advertising. Digital Killed the TV Star? Digital media reporters have asserted that Silicon Valley is the new Madison Avenue. With so much focus on digital and social media, you would have expected technology to successfully kill the 30-second TV commercial. Not true. In fact, TV advertising and how you experience it has been going through a decade of gradual transformation that allows your favorite brands to build an interaction and relationship with you, through deeper engagement and an ongoing dialogue. It’s a widely held belief that as consumers we hate advertising; many point to our desire to skip commercials in favor of a TiVo or VOD experience. However, the latest statistics on the topic show there is a place for advertising in consumers’ lives. That, indeed, when made enjoyable and to fit seamlessly with the way we prefer to watch television, ads not only “break through” the clutter and noise of our busy lives, they actually can inspire us to voluntarily watch and interact with them — at a rate of millions per week, to be exact. As a result, major consumer brands — and the country’s top advertisers — have set their sights on the latest in interactive TV advertising as a way to build an ongoing dialogue with their target consumers. Here are just a few of the brands running the newest, most innovative forms of interactive TV ads that viewers can watch right now: Axe, via Xbox and iPhone iAd Degree for Men, via Xbox Dr. Pepper, via Xbox, DIRECTV and Dish GM Chevy Sonic, via DIRECTV and Xbox Hellmann’s, via Dish and Verizon FiOS Suave Keratin Infusion, via DIRECTV, Cablevision and iPad iAd Tresemme, via DIRECTV and Dish Red Bull, via Xbox What’s most shocking to some is the results these interactive campaigns are generating. iTV ad campaigns average 3 to 5 percent click rates. For some perspective, this compares to best performance benchmark online of just less than one percent. In addition, TV viewers are spending up to 15 minutes playing custom branded games, downloading recipes, entering sweepstakes, ordering products and more, all with their remote control. According to Nielsen, these interactive campaigns consistently outperform traditional TV and online advertising in generating awareness, engagement and ROI. I’ll touch more on these compelling figures in my next blog post, “New Digital Technologies Set to Advance Interactive TV Advertising.”

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Joan Michelson: Innovation Requires Risk, but… Government Risk?

April 9, 2012

What is the government’s role in driving innovation? Listening to Senators during the recent Senate Energy and Natural Resources Committee hearings on the Energy Department loan guarantee program (specifically loans to the now-infamous Solyndra), you’d think the federal government has no role in American innovation. The lawmakers love it when they can show up at a ribbon cutting or jobs creation announcement at a successful company they supported, but are quick to criticize when the pendulum swings the other direction (especially for the other party). Clearly, there is a role for government in innovation, or there would be no DARPA , no ARPA-E , no National Institutes of Health, no NASA, no Small Business Innovation Research (SBIR) grants and no Congressional Committees on the topic, such as the Subcommittee on Competitiveness, Innovation and Export Promotion. Even the Department of Energy’s mission statement pointedly refers to “ensuring America’s security and prosperity… through transformative science and technology solutions.” “There isn’t the financial incentive for industry to take on certain risks,” Dr. Mark Rohrbaugh, Director of the NIH’s Office of Technology Transfer told me, adding that the NIH “assumes the risk until the invention is ready for industry to take it over.” He added that the NIH’s investments are “more likely than those from industry to be meeting unmet needs.” In an email follow-up Dr. Rohrbaugh added, “NIH funding is complementary to research funded by the private sector in that it generally involves research that is too high risk for the private sector to conduct on its own.” This is precisely why those who say we need to “leave it to the markets” are dead wrong. Here are a few facts about the federal government’s investments in innovation: 1. The Small Business Innovation Research/Small Business Technology Transfer program (SBIR/STTR) disbursed grants through 11 federal agencies, and is very popular across party lines. The March 2012 issue of Hawaii Business cuts to the chase : “SBIR has always been a politically popular program. After all, it’s a way to direct federal funds into almost every congressional district under the cover of helping innovation and improving the economy.” According to the SBIR website, “Through FY2009, over 112,500 (SBIR/STTR) awards have been made totaling more than $26.9 billion.” In 2010, another $2 billion-plus was invested, and the program has been funded through 2017. This includes 11 agencies, each of which is required to allocate 2.5% of their annual research and development budget to SBIR/STTR grants: the USDA, Department of Commerce, Department of Defense (and DARPA), Education Department, Department of Energy (and ARPA-E), Health and Human Services (and the NIH), Department of Homeland Security, Department of Transportation, Environmental Protection Agency, NASA and the National Science Foundation. According to the New York Times : “The consensus view is that S.B.I.R. is probably the best R&D program in the federal government,’ said Jere Glover, executive director of the Small Business Technology Council, an affiliate of the National Small Business Association. A 2008 study by researchers from the University of California found that S.B.I.R. recipients accounted for between 20 and 25 percent of top American innovations since 1997,’” By the way, an SBIR-grantee company, MicroStrain, saved the Liberty Bell when it was discovered to have a hairline crack that would be exacerbated by the Bell being moved. 2. The DOE-Environmental Protection Agency Energy Star program provides another example of successful government innovation, as it turns 20 years old this year. The Energy Star program now “include(s) nearly 20,000 organizations from every sector of the economy. More than 80 percent of Americans now recognize the Energy Star label. American families and businesses have saved nearly $230 billion on utility bills and prevented more than 1.7 billion metric tons of greenhouse gas emissions, with help from Energy Star.” “Americans, with the help of Energy Star, saved enough energy in 2010 alone to avoid greenhouse gas emissions equivalent to those from 33 million cars — all while saving nearly $18 billion on their utility bills.” 3. Revenue generator: Many of these patents and inventions have resulted in royalties from licensing agreements, for example, Dr. Rohrbaugh told me they generated $97 million in 2011 for the NIH. It’s when the experiments and investment don’t turn out as hoped that suddenly there’s a “problem” with government’s role in supporting them. “We can’t put taxpayer dollars at risk” seems to be a rallying cry for some lawmakers. Yet, they bemoan that China is overtaking the U.S. in important markets for the future, such as in solar panel manufacturing, which was originally developed in the U.S. (and subsidized substantially by the Chinese government). The lesson that seems to be lost in the discussion on Capitol Hill these days is that it’s not about “picking winners.” It’s about keeping America competitive. It’s about hedging bets by investing in a number of innovative technologies knowing that some will thrive and others will lead to new ones that thrive. All “mistakes” or “failures” are merely lessons to be applied in the next go ’round. As Benjamin Franklin once said, “I haven’t failed. I just found 10,000 ways that do not work.” Isn’t keeping America competitive the federal government’s responsibility?

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Neil McCarthy: Radical

April 9, 2012

Time to go radical. Reasonable is not working. If I hear one more politician or ersatz journalist rail about the need to find bi-partisan common ground in the sweet spot of a centrism where immediate deficit reduction and job growth live in some sort of economic harmony, I am going to get sick. It isn’t going to happen. It can’t. Over the last thirty years, conservative orthodoxy has simply pulled too much demand out the economy. That is what happens when (1) wages stagnate, the result of unions collapsing and globalized wage arbitrage taking over, and (2) bankers get unregulated free rein to peddle “products” that put consumers in long-term hock, which is what they accomplished when everyone was allowed to use their home as a credit card. Once those same bankers turned mortgages into cash for speculators via the now-infamous mortgage-backed securities, the con was complete. The ensuing real estate bubble created the impression that there was a free lunch (in the form of ever rising asset values). And then the bubble burst. Today, consumers are still over-leveraged (thanks to that explosion of private debt over the last decade), but banks can’t lend enough (given the shakiness of their balance sheets — where all those mortgage-backed securities are still being held at par — and the perceived need to adhere to credit standards that were ignored in the run up to 2008). So private spending is still weak. The March jobs report was a big disappointment. The private sector produced a mere 120,000 jobs that month . Wall Street (and just about everyone else) expected the number to be in the 200,000 range and it wasn’t even close. The recovery from 2008 continues unabated. But its pace is anemic and uncertain. In this world, conservatives continue to talk about immediate deficit reduction, business confidence and fears of inflation, certain that dealing with the first and the second is necessary to curb the third and produce jobs. All of this, however, is pure economic bunk. As Paul Krugman has continually pointed out to anyone willing to listen, we have not begun to put a dent in the job losses that came in the wake of 2008. The percentage of “prime age” workers who are actually employed — a real number, unlike the unemployment rate, which is distorted by failing to count those who stop looking — went down by about five points during the collapse and has gone up by less than one in the “recovery.” At the same time, our nominally low inflation rate (about 2% overall, even with the recent gas price hike) shows no sign of precipitously rising any time in the near future. Businesses are not hiring and producing because there is not enough demand (unemployed debtors don’t have a lot of walking-around money), not because they are worried about the tax and regulatory environment. The near term solution to all of this was a sufficient stimulus and some inflation. The conservatives, however, made the former impossible, and the chattering classes (including a lot of professional economists who should know better) have scuttled the latter. What we have, therefore, and have had for some time now, is an economic crisis that our political culture seems powerless to confront and solve. The problem here is not a lack of ideas. We have known how to pull ourselves out of depressions and severe recessions for at least 80 years. You do it by getting the government to increase consumer demand given that the private sector can’t or won’t. This typically involves some form of government spending — either on infrastructure (which creates both an immediate bump up in demand and also helps with long term productivity), welfare spending (food, housing, etc., which just increases demand), or targeted tax cuts (which increase demand so long as they are properly targeted to those who will spend the money rather than bank it). None of this, however, is politically possible now. A deficit which could create problems in the medium and long term is being used to eliminate any rational economic response to demand problems in the short term. It is also being used to eliminate any policies which could devalue private debt, which is what inflation and/or various forms of foreclosure relief would do. And the folks manning the barricades as deficit hawks circa 2012 are the same people who brought you the Bush tax cuts of 2001 and the two unpaid-for wars of the last ten years, which cumulatively turned the Clinton surplus into Bush’s sea of red ink. But hypocrisy has no cost in American politics. So it is practiced with abandon. I am a believer in incremental progress. I understand that American federalism is very slow. It is far easier to stop something than it is to pass anything. And that was the Founders’ collective intent. Over our two hundred plus years of history, therefore, progressives have always had to fight a two-steps-forward-three-steps-back war against reactionaries and the status quo. Their opponents changed — from slaveholders to industrialists to stock speculators to sexists. But the process rarely changed. Except when it did. Because, from time to time, progressives have abandoned the marble temples of incremental American federalism and… Gone radical. They’ve raised hell, hit the streets, jumped to the front of the bus, crossed the bridge, burned the draft cards, or camped out on the Mall. Unable to change the conversation from within, they altered it from without. Unwilling to defer to authority, they defied it. And underestimated by a smug establishment, they created a new one. That is where we are today. The system isn’t working. Twenty years ago, in his presidential campaign, former Massachusetts Senator Paul Tsongas made a point of admonishing unreconstructed New Dealers and trade unionists to stop bashing business. And the Democrats heard him and stopped. But now the other side has turned bashing labor… or women… or gay people… into a cottage industry. And that has to be stopped too. Progressives have to hit the streets. The kids have to vote like they did in 2008. The Wall Street occupiers have to return to Zuccotti Park. The conversation has to change. The people who change it will not be the bankers, hedge funders, or politicians checking out the “internals” on their polls. Because we have to stop talking just about margin… or return on investment… or individual responsibility… or the swing voter. And begin talking about redistribution… and economic fairness… and justice. We need to rediscover what it means to be a citizen in a democratic republic. Rather than just a consumer in a capitalist economy. We need to go radical.

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Penny C. Sansevieri: The Power of a Pin: Why Pinterest Is a Game Changer

April 8, 2012

About ten months ago, I listened to Gary Vaynerchuck talk about this new site called Pinterest. He was really excited about it, though at first I didn’t get it. “Get on Pinterest now!” Gary encouraged. I didn’t listen, thinking, “Oh, dear, not another social network!” But Pinterest has proven to be anything but another social network. First off, its growth has been extraordinary. According to several reports, including a blog post shared on Mashable , from September 2011 to December 2011, unique visitors on Pinterest increased by 429 percent. That kind of growth has never been seen in a social network and while it’s still early for Pinterest, we’re seeing a lot of staying power, especially with established brands like Macy’s, Land’s End and magazines such as Real Simple — which got more traffic from Pinterest in October 2011 than from Facebook. For those of you who haven’t been on Pinterest, the concept is almost deceptively simple. You sign up for an account (there’s a waiting period right now as Pinterest tries to manage traffic and new accounts; once you sign up it should take about a week before you can get in). The site is a collection of boards, sort of like virtual bulletin boards that you name and add to your page. You can have as many boards as you want and name them whatever you want (though make sure to read through the Pinterest terms of service so you know you’re not violating any of their regulations). The boards can describe your brand, book, message, or business. We’ll look at some board ideas in a minute but for now, think bulletin board. So, that said, how can you make the most of Pinterest? Like any social network, I recommend that you poke around, follow a few people in your industry and see what they are posting about. There are a lot of creative boards and a lot of companies using Pinterest as a unique brand extension. Check out Chobani’s Pinterest page ; they have all sorts of boards that tie into their brand including Chobani Champions, recipes, spoons, and sans yogurt which is a board about all things non-yogurt related. Picking your Boards First off, it’s important to come up with creative and interesting board names. Keep in mind that these board names get shared whenever someone repins you so make them catchy! When you first start on Pinterest, you are a completely blank slate. It’s up to you to fill your new Pinterest page with exciting boards. But where to start? Well, your business, product, message, or book will often determine the boards you put up. You should consider your audience first and what they would like to see. Here are a few ideas: If you do a lot of speaking or other offline events, create a board that captures the excitement of these by posting pictures and videos. This is especially great if you have a conference or other big event you’re planning. You could put the board up early with “teaser” content to encourage sign-ups, too! Create a customer or reader board that has pictures and/or videos of happy customers. I often talk about capturing endorsements or reviews on video when you see someone at an event, these can be posted to this board. How-to boards are great as well. You can create a board (or several) around how-to’s related to your product or service. Company boards are great too, you can create one that showcases your company, sharing your core values, and also highlights your team. Thank you boards are great, too. Consider creating a thank you board for clients. If you’re promoting a new book, product, or campaign you can also create a board to support that. The board can have tutorials on it, or videos of the new product. It can be a combination of how-to and showcasing what you’re offering. Tutorials are big for our company, so we plan to offer tutorial boards to help walk our clients through how to use social media, how to continue reaping the benefits from our campaigns once they are done, etc. Trends and seasonal stuff make great boards, too. So don’t hesitate to create a holiday or trend board if you think your audience will be interested. You can also let your customers work on a board with you. Create a user-generated content board and invite customers or readers to pin away! Marketing Ideas If the idea of Pinterest is still intimidating, consider the following marketing ideas for your boards: Videos: Pinterest loves videos. What videos can you pin to a board? Keywords are big on Pinterest, so be sure to think carefully about what you name your picture and what words you use in the description. You can even use hashtags on Pinterest and if you’re trying to get the attention of another Pinner, use the @ followed by their Pin-name to tag them. You can also use a dollar sign to add a “ribbon” to your pin that will immediately show pricing. This is great if you’re selling a product. When you add your pin, don’t forget to tweet it and add it to Facebook; you can do this as soon as the pin is loaded. When you blog, be sure to add great pictures to your blog so that when you pin your blog post to your board, you can capture a great image. Images on Pinterest are obviously important! Click the “popular” link on Pinterest to see what’s hot and what’s trending. You might be able to make this part of your content strategy. Be sure to promote your Pinterest account on Facebook, Twitter, on your website, and in your email signature line, of course. A Few Final Points Be sure to add a catchy description to your profile and when you’re setting up your Pinterest account, link it to your Facebook and Twitter accounts. This will help you gain followers, and add the icons to your profile page so you can direct people there, too. Make sure to engage on Pinterest. Repin pins you love, comment on pins and since you can see pins on the site from folks you aren’t even connected with, be sure to broaden your reach when networking. You never know where the next follower will come from. Pinterest is a fun, if not highly addictive way, to start marketing. Still not sure what to do on Pinterest? Then get started by following others in your industry and get a sense of what they’re doing. While the future of Pinterest is still uncertain, one thing we know is for sure. The site has grown at rates that no one expected and continues to do so. It’s been the quickest site to monetize (to give you perspective, it took Twitter five years to monetize) and has already become a staple for many businesses. Happy Pinning! Other boards we love: http://pinterest.com/societysocial/ http://pinterest.com/pulpwoodqueen/

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Bernard Starr: Corporations Plan for Post-Middle-Class America

April 6, 2012

American corporations have pretty much written off the middle class. Their actions declare that the middle class is moribund. And they should know since they have been in the front lines shooting down and decimating the middle class. Indeed, American business has dismantled much of its manufacturing and has eliminated untold numbers of other middle class jobs, sending them overseas where cheap labor fattens corporate profits at the expense of American workers. That’s why the employment and housing markets are struggling on life support, food stamp use is at an all-time high and the ranks of the working poor are swelling — while corporate profits soar and the S&P 500 stocks show the best first quarter since 1998. In view of the assault on American jobs and workers is it any wonder that a Stanford University study reveals a dramatic drop in American families living in middle class neighborhoods — from 65 percent in 1970 to 44 percent in 2009. Robert Borosage, President of the Institute for America’s Future, adds this alarming note : “The broad middle class — the triumph and strength of America’s democracy — is sinking. Unless we change course dramatically, we will become even more a nation of haves and have-nots.” Brookings economist Ron Haskins dismisses the notion of a suffering middle class. In his Washington Post commentary on March, 29th, “The Myth of The Disappearing Middle Class,” he argues that “when the insurance value of health care and the value of certain government transfer payments are included in income… the disappearing middle class appears pretty healthy.” Doesn’t this sound like Mitt Romney’s comment — “I’m not concerned with the very poor because we have safety nets there” — applied to the middle class? So I guess we don’t have to worry about anyone. Let’s break out the champagne! But Jared Bernstein, Senior Fellow, Center on Budget and Policy Priorities, disputes Haskins rosy picture and insists that the middle class has been “squeezed” by the economic downturn. “Squeezed” doesn’t adequately capture the dire state of the middle class though, confirmed by the actions of U.S. industries that are revising their business plans. What is corporate America’s response? Rather than mounting crash programs for generating solid middle class jobs they have figured out how to profit from the sinking ship. Corporate America is shifting its focus in product development and marketing to serve the “hourglass economy.” The hourglass has two chambers connected by a slim channel. Translated into economic terms, or better yet, the emerging picture of America, the two chambers represent rich and poor, with virtually nothing in the middle. Worse, while the traditional hourglass has two equal chambers, the economic hourglass does not. One chamber contains a small percent of the population and most of the wealth and the other is filled with the bulk of Americans, who have little access to resources and diminished hope for prosperity. The hourglass economy has become so entrenched that Bloomberg News credits it with dividing Americans and defining U.S. politics. Leading the rush into the hourglass economy are some icons of American industry, like Proctor and Gamble. Here’s what Melanie Healey, group president of P&G’s North America business, said to the Wall Street Journal about what her company did when it started losing market share to competitors who were catering to the low end market: “It has required us to think differently about our product portfolio and how to please the high-end and lower-end markets …That’s frankly where a lot of the growth is happening.” P&G is not alone in catering to the top and bottom of the hourglass and ignoring the middle, according to WSJ columnist Ellen Byron. H.J. Heinz Co is expanding its offerings of lower-priced products to celebrate the hourglass model. And shooting for the high-end, Saks, Inc. is growing its line of pricier products to serve the deep pocketed consumer segment that accounts for most of its growth. Many other retailers are generating impressive year-to-year gains by marketing to the top and bottom consumers including Coach, Lululemon Athletica, Whole Foods, Family Dollar and Costco. The hourglass economy is even impacting the “green” industry. Eco-friendly products are typically costly and, therefore, appeal to wealthier consumers. Green marketers are struggling to find strategies for making their products appeal to a cash strapped low-end market. Citigroup was quick to notice the hourglass trend that was taking root in 2009. To help investors cash in on the demise of the middle class Citigroup recently issued an hourglass investment advisory that highlights 20 stocks of companies targeting low-end consumers and 15 companies targeting the high-end ones. Showing that the hourglass economy is real and gaining momentum, Citigroup’s hourglass index posted a whopping 56.5 percent return between Dec. 10, 2009 and Sept. 1, 2011, according to financial reporter Patrick Martin. Since business models are projected well into the future, corporate America’s hourglass strategy forecasts a long grim road ahead for the middle class. Yet politicians continue to express their heartfelt concern for the middle class, pledging to shore up this segment of the population. Are they just placating us while secretly supporting the hourglass strategy of their corporate sponsors? Is it possible that you and I know that corporate America has abandoned the middle class but that politicians are ignorant of this stark reality?

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Jennifer Hamady: Reevaluating Ownership

April 6, 2012

I was on a train this morning, where I saw an advertisement — in Spanish — for attorneys offering to secure compensation for the victims of accidents and malpractice. The number to call was: 1-888-MARGARITA™ Setting aside the word choice someone thought appropriate for promoting legal services to New York’s Spanish-speaking community, I’d like to take up the pervasive use of the trademark in our culture today. My interest in the subject has been growing for a while, given that everywhere I look — on the internet, in magazines, on television, and in newspapers — the ™ and ® symbols (trademark pending and registered, respectively) abound. They’re becoming as common as commas, yet with a far greater impact than often overused punctuation. For those of you unfamiliar with what those little symbols mean, they mean that you can no longer freely use whatever comes before them. Those words, common as they may be, are now effectively the business property of someone who has chosen to link up their professional ambitions, services or products with them. This issue came to a head for me on a recent walk in midtown. I gazed up to see a mural of Sean “Puffy” Combs promoting his new Vodka. Under the name were the words: Perfectly Smooth. With a big fat ® after them. Are you kidding me? If I’m a baker, I can’t write on my website that my cake’s texture is perfectly smooth? I can’t — if I’m an auto-detailer, a plastic surgeon or a floor sander — describe my work this way. Can I? In my own field of voice, the trend to lock in language has also blossomed. There are thousands of trademark applications and successful registrations each year for companies, websites and services that include the words voice, vocal, tone, breath, breathing, body, note, notes, support, sing and singing, to name only a few. Mix them up, throw a ™ after them, and everyone else is left unable to say much of anything. I’m not saying companies shouldn’t be able to protect the unique titles and content that distinguish their brand. Service and trademark laws were created for this reason and thus, why Nike, lululemon, and Wikipedia — deservedly so — have been granted trademarks. These companies have earned the right to utilize the laws created to protect imagination, hard work and commitment to a corporate and cultural identity. Yet this law, appropriate as it is, also serves to protect — and in the process, prevent others from using — monikers and phrases that are in no way original or imaginative. Even those who are neither in, nor yet successfully in, business may — with little more than a simple website and a dated pamphlet — take national and even worldwide professional ownership of words and phrases that have for centuries been used in the common vernacular. It is interesting that the legal lockdown of conversational language is progressing while copyright law and rights are being so thoroughly challenged. While “perfectly smooth” and “margarita” are now effectively off the professional English-speaking market worldwide (as well as, in translation, in many others) entire albums, books and movies are being publicly shared without acknowledgement of or compensation for those who created them. For some — particularly those from younger generations — this doesn’t seem like such a big deal. It’s not only appropriate, but fair, to get songs, movies and books for free. These boys and girls weren’t around when copyright laws were put in place to protect the creations — and livelihoods — of men and women who spent entire lifetimes generating high quality literary, cinematic, theatrical and musical works for the rest of us to enjoy and benefit from. To these kids, while their laptops, iPhones and clothes are decidedly theirs , so too are the blood, sweat and tears of every composer, author, director and screenwriter that has ever lived. Before you argue the theoretical or legal specifics of creative ownership, hear me out. I’m not saying that the rules should never change. Certainly they do and certainly we must embrace them, lest we are to be left in the proverbial and technological dust. But we also have the right to question — beyond our comfort and our convenience — why the rules are changing. Is the expansion of free access to musical, literary and artistic creations in order to inspire and educate people of all ages, nations and means? Or to serve the greed that may be so easily fulfilled by technology that happily, if not legally, makes everything freely accessible? Similarly, is the expanded use of trademark law in order to serve and protect inspired business owners and their unique ideas and brands, or to provide an economic boon for that branch of government, as well as for the lawyers that profitably interface with it in the filing and fighting of claims? Penalties for using trademarked words and phrases — even in personal blogs — are already on the books, including words and phrases you used long before someone chose to submit a check for $375 to the patent and trademark office in Washington, D.C. Some would argue that the path we’re on is inevitable, thanks to our historical and current cultural notions of “ownership.” Land, people, animals and now language… is there nothing — or no one — that we are unable to intellectually convince ourselves that we have a right to own ? Our inability to see ourselves as an interdependent and collective whole leaves us with a view of the world as scarce and therefore, we are determined to grab rabidly — desperately — for what we want. It’s like the sandbox all over again, only now instead of screaming “Mine!” at each object we want, we type up on-line applications, hire lawyers and file and cease-and-desist orders. Certainly there needs to be protections for creators to ensure that their brands — and content — may be fairly delivered to and received by the public. But with respect to common words and phrases, we’ve gone too far. Unless, that is, you don’t mind your local bar advertising that their “popular tequila-based drink” is “flawlessly even.”

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Ron Ashkenas: Rejection Is Critical for Success

April 6, 2012

There are few experiences more painful than being rejected . We vividly remember the hurt of not being picked for a sports team, not being invited to a social event, or not being accepted to university. Our basic human need to belong causes these incidents to stick with us through the years. Even as adults, at various times in our careers we’re not selected for jobs , promotions, or projects; or even less significant benefits such as parking spaces, preferred offices, or new computer equipment. Whether it’s fair or not, the hard reality is that everyone cannot have everything. Accepting rejection however is not an easy process — for children or adults — and many of us handle it poorly. When this happens repeatedly, it often leads to two types of dysfunctional patterns in organizations: entitlement and resignation. Entitlement is when someone feels that he deserves certain benefits, no matter the reality of the situation. For example, I recently worked with a company that reduced costs by moving staff members into smaller offices and having them share meeting rooms, printers, and other services. A few people refused to accept the new standards, arguing their unique needs for privacy, space, and administrative support. They felt entitled to these benefits and considered anything less to be a rejection of their status and personal self-worth. At the other extreme is resignation , when people avoid situations where they might be rejected. In the example above, some people resigned themselves to the reduced space by not engaging in conversations about how the design of the office would work. By passively accepting the new constraints, they made sure that none of their ideas were rejected (because they didn’t offer any). This may have been psychologically comfortable, but the organization didn’t benefit from their contributions and their buy-in to the new facility was minimal. In light of these behaviors, leaders need to encourage a more conscious and healthy toleration of rejection. While all employees should feel comfortable offering ideas, raising issues, and making observations — they should do so with the knowledge that they may be rejected. If they get discouraged or angry about not having their ideas accepted, they might shut down and stop contributing. Similarly, if employees feel so self-important that the organization should never turn them down, their sense of entitlement will make it difficult to drive constructive change. It’s easier to talk about learning from rejection than to actually experience it. Rejection often triggers painful emotional doubts about our own competence and self-worth, so we either try to avoid it or pretend that it doesn’t matter. A more constructive approach is to remember that rejection can be beneficial: It can force us to come up with more ideas, redirect us to different paths, and keep us humble and open to learning. How has rejection helped or hindered your career? Author’s Note: The original draft of this post quoted the Rolling Stones song ” You Can’t Always Get What You Want ,” but my HBR editor deleted the reference because she thought it “would detract from the ideas.” It seems that even regular HBR bloggers get rejected from time to time. Cross-posted from Harvard Business Online .

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Lynn Parramore: Capitalism’s Dirty Secret: Corporations Don’t Create Good Jobs Anymore, They Destroy Them

April 6, 2012

Co-authored by William Lazonick and Ken Jacobson Corporations are not working for the 99 percent. But this wasn’t always the case. In a special five-part series, William Lazonick, professor at UMass, president of the Academic-Industry Research Network, and a leading expert on the business corporation , along with journalist Ken Jacobson and AlterNet’s Lynn Parramore, examine the foundations, history and purpose of the corporation to answer this vital question: How can the public take control of the business corporation and make it work for the real economy? For the last four decades, U.S. corporations have been sinking our economy through the off-shoring of jobs, the squeezing of wages, and a magician’s hat full of bluffs and tricks designed to extort subsidies and sweetheart deals from local and state governments that often result in mass layoffs and empty treasuries. We keep hearing that corporations would put Americans back to work if they could just get rid of all those pesky encumbrances — things like taxes, safety regulations, and unions. But what happens when we buy that line? The more we let the corporations run wild, the worse things get for the 99 percent, and the scarcer the solid jobs seem to be. Yet the U.S. Chamber of Commerce wants us to think that corporations — preferably unregulated! — are the patriotic job creators in our economy. They want us to think it so much that in 2009, after the financial crash, they launched a $100 million campaign, which, among other things, draped their Washington, DC building with an enormous banner proclaiming “Jobs: Brought to you by the free market system.” But the truth is that unfettered corporations are just about the worst thing for creating decent jobs. Here’s a look at why, and where the good jobs really come from. Taming the Wild Horses Corporations are kind of like wild horses. They can run you down. Or sweep you around in circles till you’re exhausted. And in today’s world, they’ll surely run off and take your jobs to China or someplace else if you don’t learn how to tame them. Bad things happen when corporations are unconstrained by strong national policies that force players to think long term, behave decently, and refrain from dumping their short-term costs on the rest of us. They tend to focus single-mindedly on maximizing profits for shareholders at the expense of all else — including jobs. Executives set their sights on a path to short-term boosts in share prices paved with layoffs, wage cuts, and jobs moved overseas, while slashing research and development and investing in the skills of their employees. The U.S. Department of Commerce found  that from 2000 to 2009, U.S. transnational corporations, which employ about 20 percent of all American workers, cut their domestic employment by 2.9 million even as they boosted their overseas workforce by 2.4 million. The result was an enormous loss of jobs nationally, as well as a net loss globally. In the 1990s, these companies added more jobs at home than abroad. What changed? 1) The rise of India and China, with 37 percent of the world’s population, as hotspots for off-shoring; and 2) the availability of tens of millions of workers in these places, many with college degrees, to do the jobs previously done by American workers. In India, indigenous companies like TCS, Infosys and Wipro along with transnationals like IBM, HP and Accenture employ hundreds of thousands of college-educated workers to perform IT services, in large part for American firms. In China, the electronics contract manufacturer Foxconn (headquartered in Taiwan) barely existed a decade ago, but now employs about 1.2 million workers, with Apple its single biggest customer. And yet Big Business still trumpets itself as the American Job Creator Fairy. Apple has released a report claiming to have created half a million domestic jobs — a highly dubious number which takes credit for everything from the app industry to FedEx delivery jobs (never mind that drivers would be hauling someone else’s gadgets if Apple went out of business). It’s true that in the U.S. managers, engineers and other professionals have found good jobs at Apple. But the non-professional employees are just barely scraping by. A study of the iPod value chain in 2006 calculated that among Apple’s domestic employees, professionals earned around $85,000, not counting stock options, but the retail workers in Apple’s stores earned only $26,000. This is troubling because as Apple has grown in size, most of the employees it has hired in the U.S. work in retail. Are these jobs paths to long-term, stable careers ? Quite likely they are not. While a company like Apple whistles “God Bless America”, executives are not going to talk about the job losses induced by off-shoring, nor the horrifically abused foreign workforce that moving jobs to China has produced. And they’re not going to tell us about Apple’s preference for hiring part-time employees who can’t afford to buy health insurance. When such uninsured people have health emergencies, someone has to pay, and the burden falls on the taxpayers. Here is what Apple executives tell us instead : “We don’t have an obligation to solve America’s problems.” The Real Deal Corporate executives have lost the sense that they owe anything to the public. They have forgotten that the 99 percent, as taxpayers, have made huge investments in them. They fight to lower taxes as if all the money “belongs” to the companies. They fight regulations as if the public doesn’t have the right to interfere in their business. All nonsense. Despite the anti-government rhetoric from conservative leaders, the truth is that the government, elected by the people, plays a critical role in creating the conditions in which companies can succeed and good jobs can flourish. The government is able to invest in human capital through key services like education. What’s the point of a job if you don’t have an educated worker to fill it? The government also creates job-friendly conditions by investing in infrastructure. How can you get to work if your roads and bridges are falling apart? And it boosts job creation through investing in technology. How could Google create its amazing search engine without state investment in the creation of the Internet? When the government invests in the knowledge infrastructure, businesses can then employ and train people who can, in turn, engage in the kind of organizational learning that leads to that wondrous thing called “innovation.” We learned this once before. After Wall Street financiers ran amok to cause the Great Depression in the 1930s, the government responded by putting in place regulations on banks and corporations, a highly progressive tax system, and a robust social safety net. President Franklin D. Roosevelt created the conditions in which good jobs were possible with programs like the Civilian Conservation Corps and other New Deal initiatives. He focused on the development of highways, railways, airports and parks, investing in the future rather than focusing solely on short-term profits. The GI Bill, rather than leaving graduates with big debts, left them well educated and therefore with a chance of to provide a middle-class life for their families and to retire with dignity. After victory in World War II, America was able to emerge as the world’s most powerful nation because it had a large middle-class and a strong industrial and technological base. The horses of Big Business were tamed, and they could be harnessed to do useful things for society. Then came the Reagan Revolution and Big Business freed itself from the regulations, unions and taxes that had curbed its worst instincts and it began to shred the nation’s economic and social safety net. The gap in income inequality grew, and jobs were eliminated and outsourced. Long-term investment in innovation and human capital slowed down, while fraud and financial speculation took off. Today, corporate executives ask for more special treatment and freer rein in calling the shots in our economy, and they threaten to pack their bags if we don’t agree. Some politicians and policy makers respond to this blackmail by saying that we have to create a “friendly business climate” to convince them to stay. But what makes a “friendly business climate” — low wages, minimal taxes and so on — creates a very hostile climate for the 99 percent, which is ultimately bad for everyone — business included. The state of Mississippi and Rick Perry’s Texas, where city and state officials bent over backwards to lure Big Business with subsidies and other perks, are hardly bursting with good jobs. Many researchers have concluded that tax rates are actually not terribly important to where a company locates. Further, a common rule of thumb for business headquarters location is that quality of life for key personnel is decisive. True, vastly different levels of regulation in the U.S. and China is a problem for which there are no easy answers. But there are real costs to ignoring the environment and keeping workers in a state of misery. If you want job growth, you have to have demand growth: profits and consumption go hand in hand. That’s why the best way to unleash America’s job-creating potential is to support rights and protections for ordinary people. A climate friendly to the 99 percent is not just fair, it makes the best sense for the economy. We need to remember the complementary roles that government and business have to play in creating well-paid, stable employment opportunities and then ensuring that people can access these opportunities over the course of their careers. To get corporations working for the 99 percent on the job front, we have three major challenges: 1) Education : Young people from low-income groups (especially black and Hispanic people) need schooling and training to move to good career jobs. 2) Incentives : Corporations must have incentives to retain educated and experienced workers instead of laying them off or off-shoring their jobs. (To do so forces valuable workers into low-skill jobs and wastes their human capital, which was expensive to acquire.) 3) Investment : Executives of financialized corporations who want the government to invest in the knowledge base have to make complementary investments in people that can keep the U.S. economy innovative and generate good jobs. That would mean changing the single-minded focus on boosting company stock prices through buybacks and other financial manipulations that serve the 1 percent but no one else.

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Dan Mulhern: What Steve Jobs Got Wrong — and How You Can Get It Right

April 5, 2012

Two things evoke anger in me in leadership theory and in leadership life. I despise lies (a topic for another day). And I will always resist the jerk-as-leader and those who apologize for him. By jerk, I mean the person whose ego is chronically inflated, who acts as if their opinion is worth more than others’, and perhaps most important, who overtly or covertly demeans other people. We’re all fallible and hurt others, sometimes even intentionally. But any account that says you can be a great leader and not accept responsibility and struggle with the tendency to be a jerk is simply wrong . If you justify the jerk — in your dad, boss, spouse, CEO, among your team, or worse, in yourself — I implore you to think again. Walter Isaacson’s acclaimed biography Steve Jobs has refueled the debate about jerks in management. Isaacson, in this month’s Harvard Business Review , comes to the defense of Jobs as “great man,” and rejects those who take his biography as grounds for concluding otherwise. In Isaacson’s alliterative explication: “His petulance and impatience were part and parcel of his perfectionism.” In his view, because Jobs had great products and accomplishments in mind there almost had to be collateral damage. He marshals two types of evidence to defend his claim. Apple’s extraordinary leadership — in a literal sense — revolutionized seven different industries. How can you not say he was an amazing leader? Second, the biographer challenged Jobs about his rough style and Jobs replied “Look at the results… These are all smart people I work with, and any of them could get a top job at another place if they were truly feeling brutalized. But they don’t.” The success of Apple is incontrovertible. It is utterly astounding. And, as Isaacson persuasively argues, it was Jobs’ personal passion for perfection that was at the core of that culture. Remove his personal drive and you lose not only remarkable product breakthroughs but the culture that relentlessly developed great products. Again, awesome. I would go further to say that perhaps the greatest reason people were so loyal to Apple/Jobs was the repeated feeling of winning, of delivering, of innovating. It was worth the suffering and public humiliation that Jobs doled out and openly admitted was his style. So, why not cut him slack, and just accept there are always downsides to results-focused leadership styles? Two reasons. First, high standards — even perfectionism — are not inconsistent with respecting people as people. You can care for people and therefore set a high bar, and you can lead by example demanding superlatives of yourself. You can and should reject poor work (but not workers); and at some point you can and should fire poor workers (yet not humiliate them as as people). Having loyal workers who are not “truly feeling brutalized” is hardly proof that it’s okay to be a jerk. The truth is we know people stay with abusers, but that doesn’t make the abusers’ behaviors justified. The notion that people sometimes need to get beat up or publicly embarrassed to really perform at their best is a wrong-headed idea made up by jerks. Finally, I would suggest that Jobs’ own philosophy must incline us towards more humane business leadership. If you would pursue perfection in products, then why not in how you deal with people? How does not “truly feeling brutalized” stack up on the perfection scale? Why are people exempt from the drive for elegance, simplicity, and perfection. Lastly, Isaacson credits Jobs’ experience sitting in Zen meditation with giving him extraordinary focus and discipline. Yet it seems elemental (in my reading and experience with meditation) that meditation generates presence of mind, such that if you experienced the urge to take someone’s head off, you could choose not to be enslaved to that “instinct” of perfectionism. With self-discipline you can still be honest, corrective, high-bar setting yet not fire hose the person whose efforts have inflamed you. Deal with your inner-jerk to lead with your best-self! Cross-posted at the Everyday Leadership blog .

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Danny Schechter: It’s Tax Time: Is It Also a Time to Occupy the IRS?

April 5, 2012

Every year I trek down to a nondescript office building near Wall Street with a bag full of receipts and a belly full of anxiety. When it’s tax time, I always hope for the best but… I also had an accountant who I trusted to keep me on the up and up. He was recommended years earlier by the Yippie activist Abbie Hoffman, who wanted to avoid the Al Capone problem. Abbie had been busted enough for his political activities and didn’t want more jail time for non-payment of taxes. So he had to be like the driven snow to withstand any audit. And he was. He was a revolutionary who held his nose and paid the man. Back in the day, the government used IRS investigations to threaten political activists and intimidate activists that paid their taxes as opposed to those who became tax resisters to refuse to pay for wars. They prosecuted them or seized their property. Those war tax resisters seemed to always get special attention from the IRS enforcement division that wanted to make an example of a few often religious people challenging the agency for fronting for a “Defense” budget that never stopped growing, and has had little to do with real defense. I admire their bravery and defiance but haven’t had the guts to join them. In some countries, tax defiance is growing against new taxes imposed in the aftermath of repugnant cutbacks in the name of austerity. The New York Times reports from Ireland that there’s a massive boycott underway of a new property tax: “Anti-austerity protesters are claiming victory after the government acknowledged that around 50 percent of Ireland’s estimated 1.6 million homeowners failed to pay a new, flat-rate $133 property tax by the March 31 deadlines.” Today, especially thanks to Occupy Wall Street, we know how economic inequality had grown while the people with the most money in society work the hardest to not pay their fair share. They have been resisting for years, “legally,” they claim. Those armed with lobbyists and pricey tax firms have never seen a deduction they don’t like or a sleazy maneuver they wouldn’t try. As Chuck Collins writes in his new book 99-1 : “In 2010, 25 of the 100 largest U.S. companies paid their CEO more than they paid in U.S. taxes. This is largely because corporations in the global 1 percent use off shore tax havens to dodge their U.S. taxes.” The “experts” who have looked at the taxes we pay look away with disgust. This is from Ezra Klein’s blog in the Washington Post : Those in the middle-income quintile, for instance, can pay anywhere between 1.7 percent and 23.5 percent of their income in federal taxes. About a quarter of the wealthiest Americans, meanwhile, have a lower average tax rate (17.4 percent) than many of those in making far less money. What explains the wild variation? Part of it is that some Americans — Mitt Romney is the most famous example — get a sizeable chunk of their income from capital gains, taxed at a lower rate than salaries. There are also a variety of deductions and credits in the tax code that only certain people either can or do take advantage of. No surprise here, as we have never watched the Republicans cut the tax breaks of the richest Americans. Americans For Financial Reform is trying to make the tax issue into a political controversy without much help from our tepid and complicit media, writing: “With tax Day just around the corner, and so many Americans struggling to make ends meet, we can’t help but notice that Wall Street is still not paying their fair share. Yesterday, we sent out a press release announcing that prominent bankers now supported a financial speculation tax. Of course, that was an April fools joke. They don’t. And they won’t. Which is why its so important for all of us to take action. This April, send a message to President Obama, It’s Time to Tax Wall Street. They add : “A small tax on financial transactions has the potential to raise significant revenue and simultaneously limit reckless short-term speculation that can threaten financial stability. We are writing to ask you to support such a tax for the United States. We are also asking that you put an end any Treasury Department opposition to the implementation of the tax in Europe. Many European countries are moving ahead with this idea, and so should the United States.” The Democrats are legitimately attacking Republican Paul Ryan’s “budget” that will ensure more tax breaks for the rich while at the same time backing a law that undercuts financial regulation, as former Labor Secretary Robert Reich explains : And then there’s the “Jumpstart Our Business Startups” or “JOBS” Act, which President Obama is expected to sign into law Thursday. It allows so-called “crowd funding” by which people whose net worth is less than $100,000 can gamble away (invest) up to 5 percent of their annual incomes in any get- rich-quick scam (start-up) that any huckster (entrepreneur) may sell them. Forget the usual investor disclosures or other protections. In the interest of “streamlining,” Congress has streamlined the way to fraud… The bill was sold to Congress as a way to promote jobs (note the acronym) on the supposition that small start-ups create huge numbers of them. Wrong. That assumption comes from research by the Kauffman Foundation, which counted as a “start-up job” every laid-off worker who morphed into an independent contractor. This may be the year for OWS to consider Occupying the IRS, or at least finding a dramatic way of challenging the lack of fairness in our tax codes as well as the “priorities” the tax money currently funds including wars and subsidies for those that don’t need them. You don’t have to be, or have, an accountant to know the score. Death and taxes will always be with us but this current tax regime is so skewed and disgusting that it demands to be challenged and junked. News Dissector Danny Schechter writes the Newsdissector.net blog. His most recent book is Occupy: Dissecting Occupy Wall Street (Cosimo) and film Plunder (Pluderthecrimeofourtime.com). Comments to dissector@mediachannel.org.

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Neda Talebian Funk: Fitness: The New ‘It’ Bag

April 5, 2012

Remember when dinner conversation between friends was once all about kids, fashion, and where you were traveling next? Today, the topic in vogue is fitness. It may start with, “Who is your favorite spin instructor and what class are you taking tomorrow?” and an hour later, the group is likely still talking about where and how they get their sweat on. Fitness is the new fashion, and — not surprisingly — it is quickly taking a greater portion of wallet share. At over $20 billion, the U.S. fitness market continues to grow at a solid clip. Further, the introduction of “a la carte” group fitness classes has created a growing market of fitness-goers who spend north of $300 per month on their group fitness classes alone. The boom in boutique studios and fitness apparel is proof. Fitness is not only what people are talking about, but it’s what they are doing. As Technogym’s Nerio Alessandri so perfectly once said, “Fashion is looking good outside; wellness is feeling good inside. It’s the new frontier of luxury.” What makes getting your heart rate up with a sweaty workout the new luxury? The Rise of the Boutiques. Let’s face it: The gym has not changed very much over the years. The big box format offers everything — its cardio machines, group fitness classes and locker rooms — all under one roof, and has remained pretty standard. Thanks, Jack LaLanne. Yet, in recent years, there has been a proliferation of “boutique” fitness studios offering a specialized workout. These workouts embody the “3 E’s,” as coined by fitness consultant, Jonathan Fields: efficiency, effectiveness, and engagement. Boutique studios also tend to be upscale: think $30+ per class in major cities. In fact, over the last three years despite the economic downtown, the NYC market has seen an incredible rise in the boutique studio — up over 30 percent, according to FITiST internal research. Chanel, Oscar de la Renta… and Lululemon. Walk down the street in NYC, LA, or any other metropolitan city and you will see more women in yoga pants than jeans. It’s a fact and a lifestyle. Fashion fitness brands such as Lululemon have revolutionized the fitness apparel industry. Remember working out in baggy soccer shorts and big t-shirts? Not anymore. Flattering, formfitting and highly technical sportswear is being worn not only in the gym, but to lunch, on weekends and even in the office. Want proof? Lululemon has posted over 30 percent year over year sales gains for the past nine quarters, and now boasts a market value of $10.4 billion… Yes, that’s billion. In the last quarter, the company’s sales per square foot were over three times that of luxury retailer, Neiman Marcus. And fashion designers themselves are mixing sportier styles into their lines and even doing collaborations with sportswear labels. Stella McCartney’s collaboration with Adidas has been among the more prominent designer athletic lines to date. The Celeb Factor. Simple truth: Thanks to the likes of Us Weekly , our culture is obsessed with celebrities’ every move, including how they sweat. Why do we all know Tracy Anderson? She trained Madonna and now Gwyneth. And who doesn’t want to look like Gwyneth Paltrow? People are more likely to fork over $35 for a class at a studio when they know it’s where Kelly Ripa gets her sweat on, Lady Gaga spends her birthday, or Matthew McConaughey blows off steam. In conclusion, fitness is simply the new “IT” bag, the season’s most talked about story — “seen in” is now “seen at.” For more by Neda Talebian Funk, click here . For more on fitness and exercise, click here .

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Jenny Kassan: JOBS Act: Crowd Funding Could Give a Boost to Small Business

April 5, 2012

Today the President will sign the Jumpstart Our Business Startups (JOBS) Act in to law, a complex and by no means perfect bill that contains at least one ‘no-brainer’ win for both businesses and investors: crowd funding. This bipartisan legislation fulfills the President’s call to reduce regulatory burdens that prevent many small and young businesses from raising capital — specifically by allowing crowd funding and expanding mini-public offerings. The legislation is remarkable, as it (rightly) reverses more than 90 years of restrictions on raising capital at the grass-roots level. How we got here is historic as well — it illustrates what power lies in everyday individuals. An impact that will now be felt around the country as small businesses and startups look to crowd funding and other non-traditional means of raising capital. The movement began in 2009, when author and economist Michael Shuman wrote an article for Community Development Investment Review , a publication of the San Francisco Federal Reserve Bank. In it, he wrote: “Existing laws place huge restrictions on the investment choices of small, ‘unaccredited’ investors — a category in SEC vernacular that includes all but the richest 2 percent of Americans. The regulations prohibit the average American from investing in any small business, unless the firm is willing to spend $50,000 to $100,000 on lawyers to prepare a private placement memorandum or public offering — thick documents with microscopic, ALL CAPS PRINT that no human being has ever been observed actually reading.” The good news is that local businesses could get a huge investment boost with some modest securities reforms that would cost little or nothing. That simple idea gained momentum in the summer of 2010, when the Sustainable Economies Law Center (SELC), a nonprofit based in Oakland, California, wrote a letter to the Securities and Exchange Commission (SEC) requesting an exemption for crowd funding. The SEC received approximately 150 letters of support for the proposal. SELC volunteers then talked to staff at the President’s Office of Technology about the idea and the President supported the idea of an exemption for small securities offerings, which he announced in his jobs speech in September 2011. Legislation creating an exemption for small “crowd funded” investments passed the U.S. House of Representatives in November by an overwhelming majority — almost a unanimous vote of approval. With the final law being signed today, it reverses laws restricting investments that date back to the 1930s. What impact will this have on Main Street? The opportunity for growth, new startups and entrepreneurs whose ideas never make it past the dinner table due to lack of funding is vast. The impact on local business is undoubtedly also going to produce more resilient communities and cities where investors can now invest their money to build real wealth in the communities they care about. The vast majority of the American public, the 99 percent of us who are “unaccredited” investors, will soon have the opportunity to keep their money local. The half of our economy made up of small, independent businesses will now have access to capital that previously could only go to giant public companies. Americans have $30 trillion dollars invested in securities — imagine if even 10 percent of that went from Wall Street to Main Street. What could $3 trillion dollars do in our communities? Of course there is the potential, and frankly the likelihood, for abuse and failure. Investors who don’t proceed cautiously can (and some will) lose money on failed investments. There will be a rush of companies offering portals that will potentially fleece customers by charging unnecessary fees. But while some will try to make a quick buck, the broader opportunity gives me cautious optimism. There are some mechanisms in place that protect consumers from losing everything (they cannot invest more than 10 percent of their net worth for example) and there will be opportunities for savvy networks of small businesses to connect and create their own portals thereby owning an even bigger piece of the investment market. Next month I’ll be leading a conversation around how to accelerate community capital for small entrepreneurs at the Business Alliance for Local Living Economies (BALLE) Conference in Grand Rapids, Michigan. The topic of crowd funding will no doubt dominate interest and hopes for many. While crowd funding alone isn’t a silver bullet, it does play an important role in revitalizing the entrepreneurial small busines ssector of the economy. Its simplicity and ingenuity is American capitalism in its finest form.

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James Doran: Keeping It in the Family Is Not Always the Best Business Policy

April 5, 2012

A business partner must be chosen with extreme care. No amount of due diligence is enough when entrusting someone with half your fortunes. Family, on the other hand, cannot be chosen. It is forced upon us whether we like it or not. A financial decision requires cold calculation, an almost Vulcan absence of emotion. Such a state of mind is virtually impossible to attain in the company of a sibling, a spouse or an offspring. Particularly the latter. It seems odd, then, that the idea of a family business has always been so popular. In the Middle East and India, family and business are almost synonymous. The wealthiest and most successful business people in both regions — the Tatas, Mittals, bin Talals, Al Futtaims and the like — are all from long lines of equally successful and wealthy forebears. In Russia and China, meanwhile, family business is almost unheard of, chiefly because until very recently there was no wealth to pass from one generation to the next. In the U.S., individuals tend to make fortunes and spend them or give them away. Look at Warren Buffett and Bill Gates, two of the world’s richest men, who are in the process of doing precisely that. Europe still has a fine tradition of family businesses, particularly France but Britain has hardly any at all. Société Générale, the French investment bank, recently studied the fortunes of more than 1,200 billionaires from all over the world to determine how big an influence family ties had on their commercial endeavors. The broad results of the global study are fascinating, not least because they reveal how the world is divided into differing business cycles dependent on the political and historical development of a region or country. The report also reveals that families, despite the large number of successful business dynasties in the world, don’t seem to be the best at running commercial affairs. The Middle East is a fine case in point. As The National reported last week, fortunes among the wealthiest families in the Middle East have fallen by an estimated 33 per cent since the beginning of the financial downturn in 2008. The survey studied the fortunes of 21 billionaires from the UAE, Kuwait and Saudi Arabia with closely held family business empires. Businesses run by wealthy individuals in the same countries without the inclusion of an extended family in the boardroom only suffered a 3.6 per cent decline in fortunes. A huge difference. But this fact should come as no surprise. Family adds another layer of complication and opacity to affairs that business can well do without. Examples abound all over the world. Rupert Murdoch has plenty of problems running his British newspaper publishing division. The fact that his son and heir James was at the helm of the division only added to his woes. There is nothing to say that James Murdoch is an inherently bad manager or necessarily swayed by his father’s opinions but that is how his leadership was perceived. Inevitably he had to fall on his sword. Closer to home the Abdullah brothers, the founders of Damas, one of the region’s biggest jewellery groups, provide another example. Born into a family of jewelers, they ran their business privately and very successfully for years. But when it became a public company their traditional way of doing business on a handshake and paying themselves using funds and assets without seeking permission from investors did not go down well and led to regulatory censure and dismissal for all three of them. Although worlds apart on many levels, Damas and News Corp have something fundamental in common. They are both good businesses that have outgrown the dynastic model. As public companies there is no room for the inherited loyalties and understandings only a family can provide. Instead, transparency, good governance and independence are needed. Family businesses are like children. There comes a point when they must fly the nest if they are to continue to flourish and become successful enough to keep their parents in their old age. For more Middle East business news and comment visit www.thenational.ae

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Rana Florida: Your Start-Up Life: Dan Pink on Why "Passion" Doesn’t Matter

April 5, 2012

Thursdays at the Huffington Post, Rana Florida, CEO of The Creative Class Group , will answer readers’ questions about how they can optimize their lives. She will also feature conversations with successful entrepreneurs and thought leaders about how they manage their businesses, relationships, careers, and more. Send your questions about work, life, or relationships to rana@creativeclass.com A conversation with Dan Pink , author/speaker/journalist Photo credit: Jerry Bauer Several of you have asked for advice on how to find a job or career that gets you excited to go to work every day. I was there myself, trapped in a dead-end 9 to 5 corporate job, forcing myself to get out of bed every morning. It drove me crazy when people would tell me I just had to look for a job that I could be passionate about. How does one get there when living pay check to pay check?! I decided to ask Daniel H. Pink, the New York Times best-selling author, speaker and former chief speech writer for Vice President Al Gore. Ten years ago he launched a revolution with his book Free Agent Nation: The Future of Working for Yourself . His latest book Drive: The Surprising Truth About What Motivates Us gives us a path to achieve high performance. Q. How do you advise people to find purpose and meaning in their jobs when their career is going nowhere and they can hardly make ends meet? That’s difficult. If you’re struggling for survival, the search for transcendence is a second order concern. But lots of people still manage to find moments of meaning in their day-to-day jobs. The key sometimes is to take a step back and examine what you’ve contributed — an elderly person cared for well, a child delivered safely to school, a customer whose life is a little better. That’s not always easy. And it’s not a magic bullet. But it can help. Q. So how do we turn our careers into our passions? You know, I’m not a huge fan of the concept of “passion” when it comes to careers. Instead of trying to answer the daunting question of “What’s your passion?” it’s better simply to watch what you do when you’ve got time of your own and nobody’s looking. That will give you the deepest insights into what you should be doing with your life. If people tap their strengths, and use them in the service of something larger than themselves, passion will take care of itself. Q. What kinds of programs can managers and companies put into place to motivate their workforce? Assuming companies are paying people fairly, they should do what they can to foster autonomy, mastery, and purpose. One of my favorite specific ideas is this: The Australian company Atlassian conducts what they call “FedEx Days” in which people work on anything they want for 24 hours and then show the results to the company the following day. These one-day bursts of autonomy have produced a whole array of fixes for existing products, ideas for new ones, and improvements to internal processes that would have otherwise never emerged. For creative tasks, the best approach is often just to hire great people and get out of their way. Q. Are you suggesting that offering someone a 50 per cent raise won’t motivate him or her to work harder? I don’t know anybody, myself included, who wouldn’t love a 50 per cent raise. But I defy you to find an organization taking that approach. Instead, most organizations dangle what I call “if-then” rewards — as in, “If you do this, then you get that” — bonuses, commissions, and like. Fifty years of social science tells us that “if-then” rewards are great for simple, routine, algorithmic work — whether turning the same screw the same way on an assembly line or adding up columns of figures in a white-collar office. However, the same research shows that “if-then” rewards don’t work very well at all once you start asking people to do things that require complexity, conceptual thinking, or creativity. The best use of money as a motivator is to hire great people and then pay them enough to take the issue of money off the table. For the sorts of artistic, empathic, inventive, non-routine work people in North America are doing today, reducing the salience of money is smarter than increasing it. By the way, even that juicy, non-contingent 50 per cent raise has some serious limits. People will be thrilled in the short-run, but over the long term (say, the third paycheck) the thrill will become the status quo — in much the same way that people quickly get used to a shiny new car. Q. In my previous careers, I hated performance reviews. A year’s worth of work was diminished to 30 minutes of interview questions. What is your view? Are they important? Are they accurate or useful? Traditional performance reviews have passed their sell-by date. Big time. There’s research showing that roughly two-thirds of performance appraisals have either no effect — or a negative effect! — on employee performance. That said, making progress in one’s work is enormously motivating, as Harvard’s Teresa Amabile has shown. And the only way to make progress is to get feedback on your performance. But giving people that feedback once a year — and in an awkward, kabuki theater-style meeting with their boss — is a joke. One of the key challenges of organizations today is to make the feedback that people get inside the organization as rich, relevant, and frequent as the feedback they get outside of the organization through their smartphones, games, and social networks. Q. If you asked your parents if their jobs were rewarding, purposeful and motivating, they probably would laugh. What caused the generational shift? One cause is rising affluence. Even in tough economic times like these, material living standards — deep into the middle class — are breathtaking by historic and international standards. People who grew up in that world — at least some of them — often seek meaning as well as money. Another, which is often overlooked, is the changing nature of jobs themselves. When jobs were routine, when we were simply following a set of rules — either with our bodies in a factory or with our brains in a white-collar office — they weren’t that interesting. Today, we’ve got less algorithmic work and more work that requires judgment, discernment, creativity, and other things people actually like to do. In economic terms, we’ve always thought of work as a disutility – as something you do to get something else. Now it’s increasingly a utility — something that’s valuable and worthy in its own right. Q. Can high schools and universities better prepare students for career decisions? If so, how? Absolutely. But the issue reaches deeper than most of us recognize. Education in general and higher education in particular is on the brink of a huge disruption. Two big questions, which were once so well-settled that we ceased asking them, are now up for grabs. What should young people be learning? And what sorts of credentials indicate they’re ready for the workforce? Taking on those issues is far more important than adding a few career counselors or buying extra copies of What Color is My Parachute? or The Adventures of Johnny Bunko . Q. You’ve interviewed a lot of free agents; how do they keep themselves motivated? It’s actually easier to stay motivated working for yourself than it is working for others. First, if you don’t get stuff done, you don’t earn anything — and therefore can’t pay the mortgage or feed the children. Second, most people working for themselves are doing things they enjoy. They’ve got autonomy in day-to-day efforts and a deeper connection to the work itself. Q. What has changed about the way we work since you wrote Free Agent Nation 10 years ago? One of the biggest changes that I’ve seen since writing FAN is the blurred boundary between who’s a free agent and who’s an employee. More and more risk is shifting to individuals, even individuals who hold regular jobs. They’ve got 401k’s rather than traditional pensions. They’re paying a much larger share of their health insurance and medical costs. They don’t expect to be with their employer forever. They’re in charge of their own education, training, and professional development. That makes them quite free agent-like in spirit — if not under US labor law and the IRS tax code. What’s more, I see more and more people moving across the borders of Free Agent Nation and Corporate America with considerable ease. It’s almost as if people have become dual citizens. Q. Will the increase in free agents affect our society? Or has it already? During a big swath of the 20th century, corporations acted as something of a de facto welfare state — providing health insurance, pensions, and other benefits. But with more people working for themselves, and with more large companies operating globally and shedding both explicit nationalities and broader obligations to their workforces, that arrangement is becoming obsolete. That means America will have to reckon with some seriously outdated systems. For instance, even after Obama’s health care reform, it’s still considered the norm to get health insurance from an employer. Yet there’s very little economic or moral logic behind that approach.

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Richard (RJ) Eskow: Good Guys Win One: With ALEC, Things Go Better Without Coke

April 4, 2012

Score one for the good guys: After being pressured by Color of Change and other progressive groups, Coca-Cola has left ALEC — the cynical corporate coalition that has pushed a bevy of anti-democratic, anti-middle class, and anti-consumer initiatives. Now that Coke’s come around, next up is Walmart. Their response on the ALEC issue was equivocal and unacceptable. And the issue needs to be raised directly and firmly with the other companies that back the organization – a list that includes AT&T, Bayer, Coca-Cola, ExxonMobil, GlaxoSmithKline, Johnson & Johnson, Kraft Foods, Pfizer and UPS. Standing Up This weekend on The Breakdown we interviewed Rashad Robinson , Color of Change’s executive director, about the Trayvon Martin case and the role of ALEC in “stand your ground” laws like Florida’s. He indicated that ALEC’s member companies were going to be a leading target of the campaign for greater political and economic justice. A few days after that interview aired, Color of Change sent an email to its mailing list that read in part: You and more than 85,000 Color Of Change members have called on corporations to stop supporting the American Legislative Exchange Council (ALEC) because of its role in voter suppression. We contacted Coca-Cola to make sure they understand that through their membership in ALEC, they are supporting racially-discriminatory voter ID… They told us they recognize the importance of voting rights but claimed that they weren’t responsible for ALEC’s voter ID legislation. But it doesn’t matter whether the company had a direct role in the legislation — by funding ALEC, Coca-Cola is supporting an effort to disenfranchise African-Americans, Latinos, students, the elderly, the disabled and the poor. Eventually, representatives from Coca-Cola stopped responding to our emails and phone calls. Will you help us hold Coca-Cola accountable for supporting voter suppression? No Defense It’s true that ALEC is like the United States Chamber of Commerce, in that many of its member companies don’t realize what it really stands for. But the ones who have consciences (or understand the power of consumer anger) will eventually respond, just as they have for the Chamber. (Many leading corporations have left that organization as it moves to the extreme right.) So the role of activists in this situation isn’t just to exert pressure, but to educate. Companies like Coca-Cola need to understand the real nature of the organization they’re supporting. These corporations do bear moral responsibility for the actions taken with their funding and support, and they should be held accountable. (We’ll be airing an interview this weekend with Zaid Jilani, who wrote an excellent piece on The Five Most Despicable Laws Passed by ALEC , which Zaid lists as “banning living wages,” “crippling collective bargaining,” “privatizing our schools,” attacking voter rights,” and “selling prisons to the highest bidder.” We asked Zaid about laws that didn’t make the top five, and they were pretty bad too.) A Coke and a Smile Coca-Cola responded either to the information or to the persuasion. As Think Progress reports , Coke officials told the Washington Examiner today: The Coca-Cola Company has elected to discontinue its membership with the American Legislative Exchange Council (ALEC). Our involvement with ALEC was focused on efforts to oppose discriminatory food and beverage taxes, not on issues that have no direct bearing on our business. We have a long-standing policy of only taking positions on issues that impact our Company and industry. As Think Progress notes, the withdrawal came just five hours after Color of Change sent its email. In other Coca-Cola news, the company just signed a deal with Dunkin’ Brands to make its soft drinks available at Dunkin’ Donuts, Baskin-Robbins, and other Dunkin’ facilities. If you ask me, it’s a good day for a Coke (classic only, if you ask me), along with a donut or a couple scoops of ice cream. Attention Shoppers Coca-Cola’s retraction came in the Examiner ‘s ” Secrets ” blog. Blogger Paul Bedard’s interpretation of the facts comes with a strong ideological bias, but the facts are clear: The good guys won. By contrast, Wal-Mart told the Examiner : Our membership in any organization does not affirm our agreement with each policy created by the broader group. Wal-Mart has a long history of supporting voter rights, and we continue to be a strong proponent of this issue. In fact, Wal-Mart was an active supporter in 2006 of the renewal of the Voting Rights Act of… One of Wal-Mart’s basic beliefs is respect for the individual, and Wal-Mart will continue to stand with all Americans in ensuring our right to vote. Not good enough. If you support people who are attacking the right to vote, financially and with your reputation, then you are supporting injustice. Attention Sellers : This could affect your bottom line in a big way. There’s a large majority in this country that feels disenfranchised from the political process — and is. They’ve been, in the crude words of bar patrons everywhere, “screwed, blued, and tattooed.” They’ve lost their jobs, or their wages have stagnated, while organizations like ALEC strip them of organizing rights and the chance for a job at a living wage. They’ve also been disenfranchised by voter laws like the ones ALEC supports, and by a money-driven, corporate political process. But that disenfranchised majority has enormous economic power — and it’s learning how to use it. One of our most effective tools for responding to the power of corporate money is by cutting off the source of that money. Heads up, Wal-Mart. Know who does a lot of shopping in your stores? People who have been victimized by ALEC policies: Poor people, minorities and people who are working more and earning less. They’re getting wise, they’re getting angry — and they’re getting involved. Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America’s Future and the host of The Breakdown, broadcast Saturdays nights from 7-9 p.m. on WeAct Radio, AM 1480 in Washington, DC.

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Gene Marks: Prospective Employees: Please Show Me Your Facebook Page

April 4, 2012

We call her Aunt Dolores but she’s really not our Aunt. She is… now see if you can follow me… the 70-year-old sister of my sister’s father-in-law. We see her a lot at family functions. A year ago Aunt Dolores got on Facebook. And so that she could live up to her reputation as the “fun” aunt, she “friended” my teenage kids. They accepted. What happened next is no surprise. She saw pages that shocked her. Girls and boys trash talking each other. Lewd and racy photos. Profane and filthy comments. Inappropriate postings on each others’ walls. And that was just in her Bridge Club group. The activity on my kids’ pages was even worse! And then Aunt Dolores committed the ultimate Facebook faux pas: she commented on my son’s wall in response to something stupid another kid wrote. Grandparents and older relatives heed my warning. If you want to have an online relationship with your younger relatives remember this: stay silent! Aunt Dolores violated the code. Her reward: instant un-friending. My wife and I aren’t bad parents. We’ve sat through excruciatingly long middle school plays, listened without comment as 22-year-old teachers gave us advice on raising children and endured endless drives to Virginia, Maine and parts of Pennsylvania where most inhabitants have one eye and are married to each other’s cousin — just so that we could cheer on our kids as they played soccer, baseball, squash and track. Yes, squash. But we’ve drawn the line at Facebook. We don’t go there. The amount of dribble, trash talk and mostly undecipherable nonsense exchanged between middle and high school-aged kids would make any grown man’s brain melt after an extended period of exposure. When it comes to their online activities I have to cross my fingers and trust that my kids use judgment. I am being incredibly naive. But this is a battle I’m not up to fighting. You would think I would feel the same about Facebook privacy for prospective employees. But I don’t. In fact my stance, as a small business owner and employer, is different. When someone applies to work at my company I want to see what they’re up to on Facebook. Recently the House of Representatives voted down a bill that would restrict employers’ access to prospective and current employees’ Facebook pages. In a blog published last week, PCWorld ‘s Tony Bradley argued that he does not want employers to have any access to his Facebook page saying it is an invasion of privacy and a breach of security. “The practice is at least unethical, if not illegal,” he wrote . “There is simply no valid reason for an employee to give you his or her Facebook credentials — or any other password for that matter.” I respect Tony’s opinion on this issue. He’s a good writer and I’m a fan of his. But he’s not an employer. I’m an employer. And if you want to work for me, then I want to see what you’re up to on Facebook. I understand if this upsets you. It would upset me if I was applying for a job too. I wouldn’t want anyone digging into my Facebook activities. If you’re anything like my kids you probably have lots of things on your Facebook timeline that do not do you proud. As a parent that concerns me even more. You can’t be responsible for others writing on your wall or tagging you in pictures when you’re out having fun. You’re human and like all of us you’ve written things that you now regret. And maybe you’d prefer not to share the fact that you’re a member of the Maroon 5 fan group. Believe me, I wouldn’t want to reveal those details either. But as a prospective employer I want to see what you’re up to on Facebook. I don’t want your “password.” I don’t want to be able to go onto Facebook and be you. I don’t even want to monitor your activities on Facebook once you’re hired. All I want is to be “friended” for a short period of time while I’m evaluating you as a prospective employee. Because if I’m going to be a “friend” to you by giving you a job and allowing you to enter into my company, my community, my life, my employees’ lives… is it not so unreasonable to ask to be your friend in return? I may not even look at your page. It may not even be necessary. And if I do visit your site I doubt I’d even spend much time there. Like most employers, I get it. We know that our employees have personal lives and do goofy things. You should see the moronic exchanges I still have with my fraternity brothers… and we graduated college more than 25 years ago. I don’t really care about that stuff. But there are some activities that would raise my antenna. I’m no human resources expert, but I am looking for extreme issues. Is your online behavior severely inappropriate? Do you belong to any groups or participate in any activities that could be construed as harmful, racist, demeaning or offensive? Are you a member of the KKK, the Nazi Youth or the New York Mets fan club? Are you crossing a professional line in your personal life that I can’t ignore? This is my livelihood. Why do I care? Because before I hire someone I want to know as much information about that person as possible. And there are three reasons why. For starters, I have to consider the welfare of my existing employees. I can’t bring someone into the company who is disruptive or abusive or just not a good fit. At the age of 47, I am still the world’s worst judge of human character. I need all the help I can get. A simple interview doesn’t suffice. Checking references is never enough. A resume doesn’t tell me everything I need to know. If Facebook helps me determine that a prospective employee may be offensive to others in my office I want to know that. Whenever I hire someone I feel like I’m taking a gamble. Any information that can help me reduce this risk is welcome. Access to a candidate’s online activities would be very helpful. Secondly, for most small businesses hiring a new employee is no small matter. It’s a large risk. We are investing our time, resources and money in a new person. This is a person who will be representing my company to my customers, suppliers and partners. Who I hire says a lot about me and my company. If, after six months, it turns out to be a failure the result could be a major setback. We want to avoid this from happening. I hire someone with the intention of employing them for life. I don’t want to have to do this all over. So, again, the more information I have during the review process the better. Finally, in a close contest with another candidate, access to Facebook could turn out to be to a prospective employee’s benefit. Maybe there’s some educational activity that wasn’t on a candidate’s resume. Maybe the candidate is part of a group or has friends that I know who could serve as that extra little reference that I need. Maybe that candidate is doing something special online, like writing poetry or recommending books that sets that person apart or serves as a deeper connection to me. I’m not looking at just a piece of paper. I’m looking to invest in a person. I want to know everything about that person. I want to feel right about that person before I open up my life to him or her. And make no mistake: for any small business owner, our business is our life. And what if, as I was asked recently on MSNBC’s “Your Business,” a candidate refused my request to give me access to his or her Facebook page? Would that impact my decision to hire that person? It may. I wouldn’t be upset with that person because, like I wrote earlier, I wouldn’t be thrilled about giving up my privacy either. But, if by refusing to share with me information that other candidates are sharing, I may not know enough about this candidate to hire him or her. Is LinkedIn enough information? Maybe. But I always want more. It’s 2012. Most of us evaluate employees like it’s still 1960. We look at resumes and have an interview and call up a reference or two. Times have changed. The process for hiring people is changing too. Social media is now a deep part of our culture. And it should also be part of the hiring process. Another version of this post appears on The Philly Post .

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Dan Solin: Comparisons to Other Mutual Funds Can Be Misleading

April 3, 2012

The mutual fund industry is highly competitive and very lucrative. Fund managers earn fees through “expense ratios” charged by their funds. These fees add up to big bucks. According to one report , in 2010 there were thirty stock fund classes with assets greater than $10 billion. Collectively, those funds would collect a whopping $3.9 billion in fees for the following year, assuming an average expense ratio of 0.548 percent. With revenues like that, it is not surprising that publicly traded funds have huge pretax margins. The same report noted that T. Rowe Price had a pretax margin of 37.1 percent. Federated Investors was 27.7 percent and Gamco (which offers the well-known Gabelli Funds) reported 35.6 percent. In an effort to capture more assets and keep those profits flowing, fund families engage in extensive advertising, intended to demonstrate how well their funds performed. I was struck by this statement on the web page for T. Rowe Price : “100 percent of our Retirement Funds beat their 5-year Lipper average as of 12/31/11.” That does seem pretty impressive. As regular readers of my blogs are well aware, I advocate purchasing index funds and avoiding actively managed funds (where the fund manager attempts to beat a designated benchmark). My views are based on the overwhelming research indicating that actively managed funds are statistically likely to underperform index funds over the long term. This research is summarized here . All of the retirement funds offered by T. Rowe Price are actively managed funds. Its web page extols the ability of its “global research team” to engage in “bottom-up research” in order to “enhance returns”. Since 100 percent of its retirement funds beat their 5-year Lipper average, investors could believe that T. Rowe Price has found a way to consistently “beat the market”. Is this accurate? Not if you understand how the use of benchmarks can be misleading. Lipper mutual fund averages are benchmarks that measure the performance of funds in a given category against other funds in that category. The fact that all of the retirement funds managed by T. Rowe Price beat their Lipper averages means they were better than the average performance of the other funds measured by Lipper. While interesting, it tells you nothing about how those funds performed against their benchmark indexes. Morningstar assigns a benchmark index to each mutual fund it rates. This is the index against which the performance of a given fund can be measured. These indexes are assigned by the Morningstar fund analyst team, based on its Morningstar category. It is the index the Morningstar analyst team believes is the most appropriate benchmark for the Morningstar category. The performance of a fund against its appropriate index is a more accurate way to evaluate the performance of a mutual fund. Think of it this way. If the average 8th grader can run a 100 yard dash in 20 seconds and your child took 40 seconds, you might be concerned. However, if the only information you had was that your child was better than the average in his class (and the average in his class was 45 seconds), you might believe he was in great shape. Using data from Morningstar (for example see here ), Index Funds Advisors calculated the returns for the five-year period ending December 31, 2011 of the T. Rowe Price Retirement funds against their analyst assigned benchmark. This was the same period used by T. Rowe Price to measure performance against the Lipper average. We measured the performance of all 33 T. Rowe Price Retirement Funds. The results were surprising. None of them equaled (much less beat) their Morningstar analyst assigned benchmark. Underperformance ranged from 0.84 percent to 1.73 percent (annualized). Only twelve of these funds are available for direct purchase by individual investors. Representatives for T. Rowe Price disagree. They believe the Lipper results give investors “… a valid apples-to-apples comparison.” They also note you can’t purchase the Morningstar benchmarks so the use of them doesn’t represent a valid comparison. Finally, they quarrel with the benchmarks assigned to their funds by Morningstar and believe their custom benchmarks are more accurate. Their funds outperform their customized benchmarks. If fund families want to brag about the performance of their funds against their peers, that’s fine. But you should insist on knowing how they did against an appropriate benchmark (whether you believe that benchmark is the one set by a third party like Morningstar, or the fund family itself). Otherwise, your portfolio could be out of breath at the finish line. Dan Solin is a senior vice president of Index Funds Advisors. He is the New York Times bestselling author of “The Smartest Investment Book You’ll Ever Read,” “The Smartest 401(k) Book You’ll Ever Read,” “The Smartest Retirement Book You’ll Ever Read” and “The Smartest Portfolio You’ll Ever Own.” His new book is “The Smartest Money Book You’ll Ever Read.” The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.

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D. Sidney Potter: More Smoke and Mirrors From the Bank of America Pilot Program

April 3, 2012

For my inaugural posting for the formidable Huffington Post, let me get this out there for the record. Firstly, I am a card-carry registered Independent and proud of it. In terms of politically leanings, I adhere to the 80/20 rule. What is that you may ask? As a former commercial real estate broker, all sales guys will know what I’m talking about. As for which way I lean (Is it to the Left of Right?), follow my musings on the current state of economic despair of this great country of ours and it should be somewhat evident. As a clue, if I were a true rhino I would likely be a donkey! First up to bat for critical analysis, is Bank of America’s new pilot program, titled “Mortgage to Lease.” Rolled out last week with splashy headlines, the program is structured to assist its mortgage customers that are in current default on their loans. Sounds well-intentioned, right? (Not!) When you read the fine print, its got more holes than a piece of rotting Swiss cheese. Don’t believe me. Per the Bank of America website , note the following: · Have loans owned by Bank of America. · Are delinquent for more than 60 days. · Have exhausted modification solutions or have not responded to alternatives to foreclosure, including short sale and deed-in-lieu. · Have high loan balances in relation to their current property value. · Face considerable risk of ultimate foreclosure. · Have no junior liens. · Are still occupying the home. · Have adequate income to make an affordable rent payment. And I almost forgot, the program is limited to 1,000 customers, and to the states of Arizona, Nevada (two of my former stomping grounds as a new tract home investor), and the great state of New York. In addition, the 1,000 customers have to be “invited.” Which I must admit, I’m not certain what that means. “This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support,” Ron Sturzenegger, legacy asset servicing executive of Bank of America said in a statement . “This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.” Translated (and in code): We’re doing this program to stave off criticisms that we really don’t care for our customers when in fact we don’t… excuse me… I mean we do care. In all fairness to the banks, wherein most that work for them are taxpaying, God-fearing Americans that simply want to put food on their table, a pilot program of this non-magnitude is at least a start. Albeit it’s a ‘day late and a dollar short’ — figuratively and literally speaking. Kinda like offering a terminally ill patient medical assistance while their being filled with embalming fluid on a cold metal slab. It is however freakishly similar in scope (or lack thereof), of other “pilot programs” that are meant to quell criticism that the banks are not doing enough to assist their customers out of this scorched earth environment. The fact is, they aren’t, and this program isn’t helping. Three and a half years into this mess — or four and a half, depending when you start the clock as the ” beginning of the end” — many banks are still resistance to “change.” Why are most banks resistant? Because it’s difficult, primarily. It’s not that complicated. Making a cultural and organizational change to a cataclysmic financial meltdown is fairly difficult. Remember, at 35,000 feet it takes a 747 jumbo jet five miles to make a u-turn. Imagine a bank culture steeped in decades of entrenched resistance to anything different then what their use to. And this just doesn’t go for banks; it goes for the butcher, baker, and candlestick maker. Defining new paradigms is difficult – but not forgivable. As one example, and in 2008 when the banks started to realize that the rules would have to change and that they might have to play the game differently – in what I like to call the 1st Inning in the Game of Darkness, some mid-sized commercial banks in Los Angeles started to institute partial loan forgiveness and interest rate reductions for nearly all its loan. I repeat, for nearly all its loans. Even though the market capitalization rate for small to mid-size banks, community thrifts and credit unions are substantially different – kinda like a single prop Cessna idled next to a 747 Jumbo jet, they are still from the same aeronautical tribe – and in this case, similar banking tribes. The distinction between the variant response between large banks and their more nimble sized counterparts – is the culture stupid. In short, it all comes down to culture, organizational bandwidth and accountability to shareholders. Banks too big to fail are so fortified with bureaucratic layers of Brooks Brothers suits and “yes men” that expecting a reasonable degree of change is a Herculean task. Many of the changes bandied about over the past three to four years have been promulgated through the Home Affordable Act, which gave birth (some say prematurely), to the “alphabet soup” programs, such as HAMP, HARP, HAFA, etc — some of these programs I can proudly say I was a consultant on. America has witnessed the failure of these alpha programs as a result of the alpha male — and their inherent resistance to change. Try talking about the reasonableness of a “cram down” (aka principal loan reduction), to a banking operations manager, and you would think you were taking their first-born. And believe me, I’ve had these conversations at operation sites across the country. It’s not a popular topic. Nor are “pilot programs” for consumer advocates, who in short view there negligible efforts of the banking industry, as another attempt to disguise itself again in sheep’s clothing.

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Aaron Hurst: Working for a Good Company vs. Doing Good Work

April 3, 2012

Introduction: Based in London, Jenny Davis-Peccoud serves as the global leader of Bain & Company’s Social Impact Practice. Having spent most of her career at Bain, Jenny has been able to watch the evolution of the firm’s investment in social impact from the incubation and subsequent launch of Bridgespan in 2000 to the significant expansion of Bain’s own Social Impact practice and corresponding activities over the past 10+ years. Jenny and I spoke recently about Bain’s partnership with Bridgespan and Bain’s social impact investment strategy. With the 2000 spin-off of Bridgespan as an independent social change consultancy, what pro bono work does Bain continue to do? We’ve continued to do a lot of pro bono work and invest in major partnerships at Bain & Company. And we have a strong, collaborative relationship with Bridgespan, including ‘externships’ and shared partners. We believe as a firm in reinventing our industry. Our investment in Bridgespan was one way we did that – and it was created as a separate organization, as a nonprofit that understands what nonprofits need. But we also continue to invest in our own pro-bono work with organizations committed to driving change in their sectors. So, how much pro bono does Bain do each year? Bain does about 80 pro bono projects a year, and 60% of those projects have people 100% allocated for at least several months. We provided over $40 million of pro bono consulting services in 2011 alone. How do you know you’ve been successful in your pro bono engagements? Even for our corporate clients we systematically go back and ask if they were satisfied with Bain’s work. We use the same process with our pro bono clients as well, and see high satisfaction rates. Secondly, Bain tracks its success by results, and so we are driven to try to understand the impact and outcomes of our work. I’ve personally been involved in many homeless projects in the UK and we’ve had 5,000 homeless people return to full time employment over 10 years. If I’m a nonprofit leader interested in engaging Bain, how do I do that? We select our pro bono clients as we select our corporate clients. We look for bold, ambitious leaders who are looking to challenge the status quo, have big aspirations for major changes, and are keen to see results. As a firm, we work with Fortune 1000 companies and mid-market firms that have potential to be those leaders over time. To give you an example, in our education practice we work with TFA (Teach For America) – which is like the Fortune 100 of corporate America. But we also work with Students First, with a bold ambitious leader like Michelle Rhee, and it’s more like a start up. We believe both of them have tremendous capability. Beyond education, we’ve partnered with Endeavor, an innovative organization focused on using entrepreurship to effect change on a global scale. And these are just a few. Do they come in through a partner at the firm? Again like our corporate clients, we’re very intentional about who we want to work with and who has the most potential to make a tremendous impact in this field. While we do have organizations introduced to us through partner relationships, we still put them through the same screen of “will they have an impact?” We are drawn to organizations that are passionate about driving change in innovative, meaningful ways. What are you seeing in terms of the demands of current employees? It is very important for our staff to use their business training to benefit the community. While Bain’s focus is on for-profit clients, we encourage social impact and work to make sure that it can be an integral part of the Bain experience. Something very appealing to our people is that they can, for example, take leadership roles in nonprofit organizations early on in their careers through our pro bono work, or they can do externships to get hands-on experience with non-profits. Our employees are very proactive about their involvement as well. We provide a lot of opportunities to get involved, but it isn’t all top-down: much of what we do is ‘grassroots’ and driven by an individual’s passion. What roles does social impact play in the decisions of recruits? We’ve done some research on importance to employees of CSR and sustainability. About 20% will proactively make a decision on these things and will be involved when they’re here – so they are deciding where they want to get the best opportunity. The rest want to know that the company does these things and is making a difference in the world. Either way, we hope that recruits see that Bain is a place in which they can have impact in the social sector. Speaking of the 20% who want to personally engage, what are they looking for specifically? When we go out to business school campuses, we talk a lot about the various ways that people can get involved at Bain. The majority of people in the room are excited about pro bono and externships, and others want to get involved in our internal “green team” environmental efforts or work directly in the community. At Bain & Company, we provide many opportunities for our people to engage in the social impact work that they are passionate about while continuing to further their professional career in consulting. How do you see pro bono evolving globally? The US is clearly ahead, and that gets back to the historical anchoring of philanthropy in the American cultural mindset. Asia is quickly catching up. Europe is developing more slowly – with the London office as our most developed office in the region. All of our offices believe in the importance of social impact, however, and I’d expect our pro bono efforts to continue growing.

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Rev. Dr. James A. Forbes, Jr.: Resurrecting The Cause For Which King Died

April 2, 2012

44 years after Dr. King’s death, jobs are still the No. 1 issue in America April 4 will be the 44th anniversary of the day Dr. Martin Luther King, Jr. stepped out on the balcony of the Lorraine Motel and was cut down at the age of 39. He had just asked that his favorite hymn, “Precious Lord, Take My Hand,” be sung at the event he was to attend that night; instead it was sung by his friend Mahalia Jackson at his funeral. Most people know the King remembrances. First, the day in January set aside as the Martin Luther King, Jr. Birthday Celebration; and second, the April observance of his death date. King’s name is most frequently associated with civil rights, integration and nonviolent protest. What we should be thinking about, however, is what this preacher also was preaching: economic justice. In other words, jobs . It’s true that Dr. King had a dream about racial integration — hallelujah for that. Today I think he’d say: “Can’t you all get over this color thing?” In King’s speech against the war in Vietnam at the Riverside Church one year before his assassination, he said we cannot fulfill the American dream if we are using up all our resources in war, not just making that a dream deferred, but of the sin-sick soul: “A nation that continues year after year to spend more money on military defense than on programs of social uplift” he said, “is approaching spiritual death.” Integrate? Fine. Stop the war? Fine. But economic redistribution? Economic justice? Spreading the resources so that all God’s children have a place at the table? All good, all important. But neither racial discrimination or segregation nor war in Vietnam got him killed. It was the issue of economic justice. Oh sure, you could talk about economic justice, but King was getting ready to do something about it. The very week he died, he was in the process of planning the Poor People’s Campaign to go to Washington, D.C. to document that poor people in this nation are citizens just like everybody. He was reminding us about the Constitution of the United States that talked about inalienable rights, among which are life, liberty and the pursuit of happiness and all God’s children ought to have food to eat and clothes to wear. They ought to have jobs and opportunity and some place to stay. All God’s children have a right. He was organizing to come to Washington and he said we will tie up the legislative process–we will bring white poor people from Appalachia, Latinos from the border states, bring poor people from the urban centers and say to our nation, “We are Americans too and we have a right to all of the wonderful bounty which God has bestowed on our great nation.” Dr. King was still committed to “I have a dream” when his life was cut short, but it wasn’t a black folk’s dream. It was an American dream — “a dream yet unfulfilled” — that is, the dream of reaching the Promised Land of economic justice as well as equality and peace. I would like to challenge citizens of today with this admonition. Every time you hear, I have a dream , please make sure people understand it’s not just about black folk and white folk getting together. Every time you hear it please make sure that folks know it’s not just about a war in Vietnam, Afghanistan, Iraq or possibly Iran or North Korea. Please make sure that it’s a dream about King that has to do with economic justice. On April 4 this year, a group of us leaders on the Upper West Side of Manhattan are convening a coalition of local and national legislators; interfaith, labor and civil rights activists and leaders; and an esteemed panel of journalists and newsmakers for a symbolic evening of history, re-enactment, riveting discussion and healing songs. Our dedicated interfaith, inter-disciplinary group will pick up the piece of King’s mantle that people have let die — jobs. With more than 12.8 million Americans unemployed, jobs, economic freedom, living wage and worker justice remain the greatest challenges this country faces. The timing is prophetic. Dr. King was slain in Memphis where he had travelled to show his support for striking black sanitation workers. He was about jobs. We will mobilize churches, mosques and synagogues throughout the country, public and private industry, local governments and Congress to create jobs and to lobby for a comprehensive jobs solution by August 28, 2013 — the 50th anniversary of the March on Washington. We will make jobs a priority in the American consciousness. We heard the “I have a dream” speech, but here is a speech not often heard, but deeply reflective of King’s commitment to economic justice: “This will be the day when we shall bring into full realization the American dream — a dream yet unfulfilled. A dream of equality of opportunity, of privilege and property widely distributed; a dream of a land where men will not take necessities from the many to give luxuries to the few, a dream of a land where men will not argue that the color of a man’s skin determined the content of his character; a dream of a nation where all our gifts and resources are held not for ourselves alone but as instruments of service for the rest of humanity; the dream of a country where every man will respect the dignity and worth of human personality — that is the dream. And as we struggle to make racial and economic justice a reality, let us maintain faith in the future. We will confront difficulties and frustrating moments in the struggle to make justice a reality, but we must believe somehow that these problems can be solved.” (December 11, 1961) RESURRECTING THE CAUSE FOR WHICH HE DIED Call-to-Action Wednesday, April 4, 2012 – 5:30 p.m. – 8:00 p.m. (Specific actions at 6:02, when Dr. King was shot, and at 7:04, when he died) Riverside Church, 490 Riverside Drive @ 120th Street, New York, N.Y. 10027

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Beverly Macy: How Social Media Helps the 401(k) Investor

April 2, 2012

How many of you did not look at your first quarter 401(k) statement on March 31? Even though the stock market is rising, most Gen Xers and many Baby Boomers with a 401(k) are still feeling the pinch from the financial free fall that began in 2008. And most everyone with a 401(k) is scratching their heads trying to figure out the ‘undisclosed fees’ associated with their dwindling accounts. In the past, you’d sit at your desk, statement in hand, and wonder alone. No more. Social media has changed nearly everything we do and 401(k) questions are no exception. These days, when something doesn’t seem right, savvy investors take to Twitter, Facebook, and blogs to discuss and get answers. Never mind that financial advisors have their hands tied when it comes to using social media… these socially connected consumers are all over it. In late 2011 The Spectrem Group released a study entitled “Use of Social Media by 401(k) Plan Participants” that showed that more than a quarter of plan participants today rely more on social media for communication than on traditional channels such as the telephone. Beginning next quarter, 401(k) participants will receive quarterly statements showing the dollar amount of fees and expenses deducted from their account and a description of what each charge is for. These fee disclosures are required by new Department of Labor rules and could provide shocking new information to 401(k) participants. Just wait until grandma finds out! Did you know that a recent AARP survey found that 71 percent of 401(k) participants think they don’t pay any 401(k) fees at all? So while Facebook, Twitter and LinkedIn are historically a tool of younger investors, older investors are beginning to use these mediums as communication tools as well. And they are a loud bunch. Many investors who receive the new 401(k) fee disclosures will have questions about what they are paying for managed accounts (in real dollars) outside company retirement plans. Smart portfolio firms are getting ahead of the curve. Mark Cortazzo, founder of Flat Fee Portfolios , and named to Barron’s listing of “America’s Top Financial Advisors” again in 2012 says, “The middle-income investor may be surprised about what he or she is paying for asset management. Investors with accounts under $500,000 could be paying 50-100% higher advisory fees than accounts over $2M.” By the time the underlying fund expenses are factored in, investors could be paying close to 4%. That’s why his firm provides institutional-quality asset management at a low, fixed rate. Something fully transparent that the investor can easily understand. So get ready, financial advisors. That big OUCH! you’ll be feeling is the wrath of Grandma taking to her Facebook page and the GenXer posting on Twitter about how much of their nest egg has been eaten up by 401(k) fees. Once again, social media will help save the day. Beverly Macy is the CEO of Gravity Summit and the co-author of The Power of Real-Time Social Media Marketing . She also teaches Executive Global Marketing and Branding and Social Media Marketing for the UCLA Extension. Email her at beverlymacy@gmail.com.

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Caroline Dowd-Higgins: This Is Not the Boss I Ordered

April 2, 2012

Whispered water cooler conversations about bad bosses used to surface sporadically in work environments. These days, the complaining seems to be getting louder and less clandestine since lack of leadership is a growing frustration for professionals in a myriad of career sectors. Forbes blogger Erika Andersen summed it up nicely, stating in a recent post, “Top talent leave an organization when they’re badly managed and the organization is confusing and uninspiring.” I have been fielding numerous questions on my CBS radio show: Career Coach Caroline from people who are at their wits’ end dealing with an incompetent boss. Sadly, the good bosses are harder to find than those who wind up in leadership positions because of the Peter Principle where in a hierarchy employees tend to rise to their own level of incompetence. We aren’t teaching enough leadership skills at university and in a tough economy, professional development budgets have been slashed or eliminated. Well-meaning individuals who land roles as leaders often make your work life hellish because as nice as they are (and some are not!), they are inept at leading. So what’s a professional to do? Take Control I’ve seen many professionals leave great companies and wonderful jobs because of bad bosses. While leaving is always an option, in a tight job market you should consider a few other things first. Take control of how you operate in your work environment and how you communicate with your boss. Figure out your boss’s work and communication style and deliver your message accordingly. For example — does your boss respond better to verbal or written communication? Does he need specific details or a big picture overview? Is she a planner or more spontaneous in implementing the mission of the organization? Most conflicts in the workplace come from differences in personality, communication, and work styles. Understanding how your boss operates may alleviate some of your stress and give you and your boss better clarity of expectations. So watch and listen, and ask others who have some institutional history to share their strategies for dealing with your boss. Manage Up In many workplaces, the boss does not notice what their staff is doing unless they are on fire (literally!) or if something goes terribly wrong. If you are chugging away, producing great results, chances are your boss will focus more on his work since you don’t appear to need anything. While the autonomy may seem liberating, you must make sure that you manage up so your boss and her boss know the value you bring to the organization. If you don’t tell the powers that be what a great return on investment you are — you may stay a well-kept secret and that will stunt your professional growth within the organization and beyond. Don’t wait for an annual performance review to showcase what you do well. Schedule a periodic check-in or send written updates documenting your results and initiatives. Consider creating a portfolio that illustrates exactly how you impact your organization positively. This evidence will also help you plead your case when you are seeking a raise or promotional opportunity. Boss from Hell While some bosses just need leadership training — others are beyond repair. If your boss behaves unethically, egregiously, or harasses you — get yourself to human resources immediately. There are labor laws to protect you and you deserve a healthy and safe work environment. Don’t worry about being the bad cop; let the human resources people advocate on your behalf and document the unacceptable behavior of your boss so you have a record. What I have seen over and over again in my consulting practice is that many naïve bosses simply don’t know what their team needs — so take the boss by the horns , as it were. Have a frank conversation with your boss and tell him what you need. Tell her what your purpose is on the team, your goals, and the culture you believe will enhance productivity. If you can clarify your aspirations for the future of your organization and be a solution provider, instead of a complainer, then your boss may learn from you and appreciate your leadership insight. Of course that utopian concept doesn’t always work and sometime bad bosses are also jerks. If your boss is beyond repair and you have an unhealthy work environment that prohibits you from doing your job successfully, you may want to consider moving on. After all, you deserve to work in an environment where you are valued, appreciated, and recognized for your accomplishments. Having a boss who will mentor you, or even sponsor you would be an added perk but you may need to work elsewhere to find this. So start a stealthy job search since you are much more employable when you are currently employed. No matter how bad it gets, your bad boss is not worth being unemployed for so stick it out until you find a non toxic environment and let their shenanigans roll off your back. Don’t Diss Your Bad Boss As tempting as it may be to announce to the social media masses what an ass your boss is — take the high road and keep all communication professional. The network is small and you will need a recommendation from your current boss if you move on. Never throw your boss under the bus and develop talking points for why you are looking to move on. In many cases, a bad boss’s reputation is far reaching so you need not say a word in order to be understood by a prospective employer. When you are on the job hunt be sure to interview your prospective bosses wisely. Don’t assume that your next boss will be better. Here are some questions to ask during an interview: • What is your leadership style? • How do you mentor or sponsor your team members and encourage their professional development? • Of all the people who have worked for you, who are you the most proud of and why? • Can you describe a conflict between you and your team and how it was resolved? • Why did the person who left this position move on? • What are your future goals for the team? Know When It’s Time to Go If your new boss passes these interview questions with flying colors then you may be lucky enough to land in a healthy new work environment with a great boss who will give you an opportunity to grow and prosper. But if the new boss seems worse than your current boss, it may be a deal breaker and force you to extend your job search for a better fit. It’s worth waiting for a functional boss so never underestimate your boss’s role in your success and happiness in the organization. You should be looking for a multiplier boss who will optimize your strengths and give you an opportunity to take on new challenges, debate decisions, and invest in the organization with direct buy-in and accountability. The perfect boss may be difficult to find so in the meantime capitalize on your expanded network within and beyond your organization to find mentorship, leadership, and the professional respect you deserve. Caroline Dowd-Higgins authored the book “This Is Not the Career I Ordered” and maintains the career reinvention blog of the same name ( www.carolinedowdhiggins.com ) She is also the Director of Career & Professional Development and Adjunct Faculty at Indiana University Maurer School of Law. She hosts the national CBS Radio Show Career Coach Caroline on Tuesdays at 5pm http://sky.radio.com/shows/coach-me/

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Peter Smirniotopoulos: Education Reform: Why a Bachelor’s Degree Still Matters

April 2, 2012

This is the third installment in a three-part series on the need for education reform in the United States. The first installment, “Doubling-Down on Dumb: The GOP War on Being Smart,” explored the emerging political discourse criticizing public education and being well-educated, and how the toxic environment it creates makes real reform even more problematic. The second installment, “We Need an Education System that Promotes Creativity, Innovation, and Critical Thinking,” argues in favor of a paradigm shift in primary and secondary education, away from an over-reliance on rote learning and standardized testing . “For cities to have sustained success, they must compete for the grand prize: intellectual capital and talent.” New York City Mayor Michael Bloomberg. “Cities must be cool, creative, and in control,” Financial Times , March 27, 2012. Assuming, as was argued in the second installment in this series, that the U.S. reforms its public education system and our high schools are graduating students who are creative, innovative, and critical thinkers, then college becomes the first opportunity where these capabilities can be applied on a much larger, and more-challenging, scale. One of the many benefits of attending college — and, to a somewhat lesser extent, a two-year community college (because of its narrower geographic market area) — is that the universe of students, and their respective life and academic experiences and attendant perspectives, are greatly expanded. The student body at a college with 2,500 students or a university with 25,000 students, respectively, will be exponentially less homogenous than a student’s high school graduating class of 250, all coming from the same community. Moreover, the teaching talents and credentials of the faculty at the college level offer additional intellectual challenges. Anecdotally, when I attended Georgetown University as an undergrad, my philosophy professor, Wilfrid Desan , was an internationally recognized expert on Jean Paul Sartre and Existentialism, and authored the pioneering, three-volume work The Planetary Man. My political philosophy professor, Jose Sorzano , went on to become ambassador and U.S. Deputy to the United Nations, serving with U.N. Ambassador Jeane Kirkpatrick, also a Georgetown government professor during my matriculation. Such distinguished faculty is not, of course, limited to private universities. But regardless of how good a high school may be it is highly unlikely the faculty will include such luminaries. And finally, the college environment will most likely be the last place where a person can truly enjoy learning for learning’s sake, taking intellectual risks along the way that might otherwise be thought to be “career-ending” if exercised freely in a traditional workplace. As Sir Ken Robinson points out in Out of Our Minds, it is only in an environment where people are free to make mistakes that creativity and innovation truly flourish. Teaching for creativity aims to encourage self-confidence, independence of mind, and the capacity to think for oneself. In teaching for creativity, teachers aim to: • promote experiment and inquiry and a willingness to make mistakes , • encourage generative thought, free from immediate criticism , • encourage the expression of personal ideas and feelings, • convey an understanding of phases in creative work and the need for time, • develop an awareness of the roles of intuition and aesthetic processes, • encourage students to play with ideas and conjecture about possibilities , and • facilitate critical evaluation of ideas. The aim is to enable students to be more effective in handling future problems and objectives; to deepen and broaden awareness of the self as well as the world; and to encourage openness to new ideas. Robinson, Ken (2011-06-28). Out of Our Minds: Learning to be Creative (pp. 270-271). Capstone. Kindle Edition. [Emphasis added.] Very few work environments encourage such risk-taking behavior, despite the fact that numerous studies have shown that it is exactly such an environment where the best solutions are forged (with a nod to management guru Tom Peter’s “do it, try it, fix it” principal). More often than not, in the working world making a mistake is often the last thing an employee does before being shown the door. Regrettably, in these tough economic times, there is little chance of gaining much traction for the idealistic notion of “education for education’s sake” without dovetailing that noble concept with the windfall benefits for economic recovery. Returning, then, to Mayor Bloomberg’s Financial Times op-ed from last week regarding how cities compete in a global marketplace, the mayor wrote: I have long believed that talent attracts capital far more effectively and consistently than capital attracts talent . The most creative individuals want to live in places that protect personal freedoms, prize diversity and offer an abundance of cultural opportunities. A city that wants to attract creators must offer a fertile breeding ground for new ideas and innovations. [Emphasis added.] In an essay published in the monthly journal of the Urban Land Institute almost ten years ago entitled “Matriculation Reloaded: University town centers can fuel local economies” ( Urban Land , October 2003), I wrote: In a knowledge-based economy, colleges and universities will be the factories of the 21st century. They are the primary source of “knowledge workers” — the smart, creative, and skilled people forming the foundation of successful companies. [Emphasis added.] This statement is even more relevant today than when I wrote it almost ten years ago. The only things that have changed are 1) the extent to which these domestically produced knowledge workers will remain in the United States, thereby contributing to its economic resurgence, versus being attracted to better opportunities overseas, and 2) whether recent college and university grads, in the current economic climate, can find meaningful, remunerative career paths in the U.S. To the extent that these “career paths” include using their creativity, innovation, and knowledge as the impetus for start-up companies, rather than merely going to work for someone else, the country’s college graduates could be at the forefront of leading the U.S.’s economic resurgence. Our current economic hardships notwithstanding, the correlation between a student’s level of educational attainment and lifetime earning potential has never been greater. This runs contrary to the emerging criticism that the value of a four-year bachelor’s degree has become somewhat diluted in the marketplace by graduate degrees becoming the “entry level degree” for some careers. In a 2002 Special Studies report by the U.S. Census Bureau entitled “The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings” researchers Jennifer Cheeseman Day and Eric C. Newberger concluded: Adults ages 25 to 64 who worked at any time during the study period earned an average of $34,700 per year. Average earnings ranged from $18,900 for high school dropouts to $25,900 for high school graduates, $45,400 for college graduates, and $99,300 for workers with professional degrees (M.D., J.D., D.D.S., or D.V.M.). [W]ith the exception of workers with professional degrees who have the highest average earnings, each successively higher education level is associated with an increase in earnings. To further make the economic case for the importance of higher education in the domestic competitiveness of the United States in a global marketplace, the scholarly research and prolific writings of Dr. Richard Florida are illuminating, to say the least. Dr. Florida is perhaps best known for his first book, The Rise of the Creative Class (Basic Books, 2000), in which he argues that those cities in the United States that attracted and retained “creatives” would fare the best economically in the domestic economy. In The Flight of the Creative Class: The New Global Competition for Talent (HarperCollins, 2005), Dr. Florida extended to the global economy his analytical approach to regional competition for “Creatives” and their economic output. As one might expect, the role of higher education figures prominently in Dr. Florida’s work. However, his sophisticated research and analysis into what makes a particular city “sticky” in terms of attracting and retaining Creatives is truly multi-faceted, addressing everything from competing cities’ arts and music scenes, to opportunities for active recreation, to correlating his research with that of Carnegie Mellon colleague Gary Gates and his “Gay Index.” However, there is no escaping the fact that without a strong system of higher education in the U.S., we would have an incredibly weak “Creative Economy.” In this sense, universities and colleges don’t serve just the economic winners of the creative age. They represent the key building blocks that cities such as Cleveland, St. Louis, and Pittsburgh can use to rebuild. Kevin Stolarick, and our research team have also found that the “higher education — knowledge — learning cluster” is always among the top employers of both creative class workers and service-sector workers in major U.S. regions. I was once asked what I thought might be one of the keys to saving Detroit’s economy. My answer was simple: Ann Arbor… that the future of the Detroit region in the creative age lies more with the technology, talent, and tolerance engine that is Ann Arbor than in stadiums and a refurbished Renaissance center in downtown Detroit. Flight of the Creative Class, page 252. On Friday, March 28th, Dr. Florida posted “Why Some Cities Lose When Others Win” on The Atlantic Cities Online , which is also directly on point. In that blog entry Dr. Florida argues that the competition for intellectual capital will define the success of the world’s — and not just the U.S.’s — greatest cities . In 1950, the world’s largest urban areas were New York and London, both with more than 12 million people, followed by Tokyo (8.4 million), Moscow (7 million), Rhine-Ruhr (6.9 million), Paris (6.7 million), Shanghai (5.8 million), Chicago (5.6 million), Buenos Aires (4.6 million), and Calcutta (4.6 million). By the mid-2000s, the ranking had changed substantially. Cities in emerging economies dominated the list of the world’s largest urban areas. Tokyo topped the list with more than 35 million people, followed by Mexico City and Mumbai with roughly 20 million each. Meanwhile, New York had dropped to fourth, followed by Sao Paulo, Delhi, Calcutta, Jakarta, Buenos Aires, and Dhaka. Los Angeles was 12th, Paris 22nd, Chicago 25th, and London 28th. [Emphasis added.] Obviously, if cities like Tokyo, Mumbai, and Shanghai continue to figure prominently among the world’s largest — and most-economically successful — urban areas, chances are that manufacturing and service companies in their respective spheres of influence (i.e. primarily in Asia) will prosper as a result, and the U.S. will see little, if any, economic benefit from such growth. If, however, U.S. cities such as New York, Washington, D.C., Los Angeles, Chicago, and Boston, as well as second-tier cities such as Pittsburgh, Cleveland, and St. Louis, are successful in attracting and retaining Creatives regardless of their respective countries of origin, then the domestic economy will benefit from the U.S.’s collective aggregation of global, intellectual capital. It is regrettable, at best, that at a time when the U.S. should be making an even-greater investment in higher education — as well as in primary and secondary education — so that we might compete much more aggressively for Creatives on a global scale, local and state governments, as well as the federal government, are succumbing to short-sighted pressures to cut education spending as a means of balancing budgets and reducing government debt. It would be truly unfortunate (but it is not even close to being outside the realm of the possible) if twenty years from now we woke up to the realization that the U.S. prominence in the world’s economy had dropped even farther from where it stood today, because we made the mistake of shortchanging our educational systems at precisely the time when we needed to do the exact opposite.

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Greg Voakes: Capitalizing on the Internet: From Meme to Marketplace

April 2, 2012

Sometimes described as an “internet phenomenon,” memes have been a staple to setting the standards in popular culture. Memes have been with us long before the internet became another key ingredient in today’s society. Often designed for spreading original jokes with friends and having them gain momentum, memes are now the ultra popular bits of content that provide us with the occasional stifled laugh from our cubicle. Memes in nature are a statement in everything and anything in regards to our struggles with modern life, also known as “first world problems,” our unsavory lifestyle choices represented through “advice animals.” As with most sweepingly successful online trends, the unknown sources that these silly creations originate from set a business plan in action for part-time entrepreneurs to capitalize on. Ben Huh for example, capitalized off of the success of Christopher Poole’s image board 4chan — a user-generated content site that hosted original pictures, drawings and illustrations, ranging from the good, the bad and the ugly. Startup veteran Ben Huh created microsites based around 4chan’s most popular trend — LOLCats , and ran with the idea. Currently the Cheezburger network boasts over 50 humor blogs, including an online store they’ve dubbed “LOLMart” which sells meme related clothing and accessories. Other startups like CatchKuma are also taking advantage of the marketability of modern meme’s by turning the web’s most lovable bear and his friend Longcat into novelty clothing and “key charms.” Images courtesy of CatchKuma.com. You can find the featured key charms here .

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