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Viacom Revives Lawsuit Against YouTube

April 5, 2012

April 5 (Reuters) – A U.S. appeals court has revived lawsuits by Viacom Inc, the English Premier League, and various film studios and television networks accusing Google Inc of allowing copyrighted videos on its YouTube service without permission. The 2nd U.S. Circuit Court of Appeals said on Thursday that a reasonable jury could have found that YouTube knew of specific infringing activity on its website. As a result, it said a lower court made a mistake in dismissing the case. Viacom had no immediate comment. Google and both the companies’ lawyers did not immediately respond to requests for comment. The original $1 billion lawsuit filed by Viacom in 2007 went to the heart of a major issue facing media companies, specifically how to win Internet viewers without ceding control of TV shows, movies and music. It was seen as a test of the Digital Millennium Copyright Act, a 1998 federal law making it illegal to produce technology to circumvent anti-piracy measures, and limiting liability of online service providers for copyright infringement by users. The plaintiffs in the cases before the 2nd Circuit collectively accused YouTube of improperly broadcasting about 79,000 copyrighted videos on its website between 2005 and 2008. Viacom had contended that Google and YouTube did nothing to stop the infringements relating to such programming as “The Daily Show with Jon Stewart,” “South Park” and “SpongeBob SquarePants.” The 2nd Circuit found that while Google and YouTube were entitled to a “safe harbor” provision of the copyright law, it was an open question as to whether they had “actual knowledge or ‘red flag’ awareness” of specific instances of infringement. It also said the lower court should consider whether YouTube demonstrated “willful blindness” in allowing copyrighted videos to remain on its website. The cases are Viacom International Inc et al v. YouTube Inc et al; 2nd U.S. Circuit Court of Appeals, No. 10-3270; and The Football Association Premier League Ltd et al v. YouTube Inc in the same court, No. 10-3342.

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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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Will ‘The Hunger Games’ Sink ‘Titanic’?

April 5, 2012

He may be King of the World, but the odds aren’t necessarily in James Cameron’s favor. Although the 3D re-release of “Titanic” is expected to gross as much as $25-30 million by Sunday , it might not be enough to unseat current box-office queen, “The Hunger Games.” According to Deadline.com, “Titanic” took in $4.5 million on Wednesday . That’s inline with pre-release expectations, but doesn’t guarantee Cameron’s classic a box-office crown. Regardless of final results, this is expected to be a big weekend for Hollywood. Many schools and businesses are closed on Friday for Good Friday, meaning parents and children could flock to theaters. The only other major new release besides “Titanic” is “American Reunion,” an R-rated comedy that is expected to compete for the runner-up position at the box office. The original release of “Titanic” earned just (“just”) $28 million during its opening weekend in December of 1997. It was a slow-burn success at the box office , however, topping the charts for 15 consecutive weeks, a record that still stands. The film earned $600 million at the domestic box office and another $1.2 billion internationally, for a grand total of $1.8 billion worldwide. It currently sits in the No. 2 slot on the all-time box office list behind Cameron’s “Avatar,” which earned $2.7 billion worldwide . “The Hunger Games” is no slouch either. The adaptation of Suzanne Collins’ best-selling book series has earned over $258 million since its release last month. “The Hunger Games” is the sixth fastest film to hit $250 million, ahead of both “Titanic” and “Avatar.” [via THR ] PHOTOS: “Titanic” Red Carpet

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Clifford W. Smith: Meddling in Banks Causes Its Own Perils

April 4, 2012

After four of the 19 biggest financial institutions failed Federal Reserve’s stress tests, it drew a line marking the industry’s “winners” and “losers.” Winners got to raise dividends and buy back stock, driving up stock prices. The losers remained in a position where the Federal Reserve was making their decisions about what to do with their capital. This sort of regulation and oversight poses a great hazard to the banking industry. While there is a duty to prevent fraud and offer oversight on the part of the Federal Reserve, the Federal Deposit Insurance Corp (FDIC), Comptroller of the Currency and other regulators, intrusive actions could stifle financial innovation. The more that the government does to take the decision making away from people running the banks and substitutes its own judgment, the greater the risk that the banking industry emerges into something resembling the U.S. Postal Service, which is struggling to adapt to change but is constrained by a combination of government oversight and an array of legacy costs. During the past 40 years, financial services has been one of the industries in which the United States has a competitive advantage that has been exported to the world. These stress tests came about after $245 billion in federal funds was provided to the banking industry under the Troubled Asset Relief Program during the financial crisis of 2008. According to Bloomberg News, The Fed had committed $7.77 trillion in financing as of March 2009 to rescue the financial system with funds largely going to a small group of the largest banks. Yet, stress tests prior to 2008 failed to detect weakness at the banks. A column that appeared on Bloomberg.com by Jonathan Weil points to flaws in the Fed’s approach to the stress tests, which were designed to test what would happen during an economic downturn, leading to higher unemployment and a drop in housing prices. The column found the government’s approach to the stress test to be window dressing to boost confidence rather than perform reliable measures of financial health. The stress test didn’t take changes in liquidity or market conditions into account when looking at potential losses on securities. The scope of the Federal Reserve and federal government’s intervention to support banks as “too big to fail” has created its own set of problems. The perception is that a safety net is available to big banks anytime they get overextended and the taxpayers will be dragged into saving them. We are creating monumental problems down the road from regulators pursuing this disruptive, counterproductive and dysfunctional course of protecting the banks and also intervening with their operations. If there is a crisis with these banks that are regarded as too big to fail, there are tools in place to place them into receivership to protect depositors and other creditors. The proper way to do it would be to replace management, ensure liquidity with counterparties and place more of the onus on equity holders to bear some of the risk for failure. The bailouts had been too lenient on equity holders, despite the requisite drops in share price since 2008. The banks that received bailout funds without making management changes shows a degree of failed governance, as well. Poor governance can also be punished by the marketplace, since those companies will suffer from stagnant or declining share prices if they continue to keep underperforming, but entrenched management. At the heart of this matter, regulators need to realize that banks are too important of a part of America’s economy to micromanage. Regulators should just assure that investors are not being defrauded and that the banks are being transparent about their performance to investors and prospective investors, meaning they should not be dictating how balance sheets should look and how capital should be deployed. When regulators overstep their role and take too great of control, investors and ultimately the customers will be hurt by poorer service, a lack of innovation and unmet needs when it comes to managing risk or raising capital necessary to expand businesses or purchase goods. The American public then becomes the big loser from regulatory meddling. Clifford W. Smith is the Louise and Henry Epstein Professor of Business Administration and Professor of Finance and Economics at the University of Rochester’s Simon School of Business.

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Stephen Robert Morse: Tracking the Success of Seed Accelerators

April 4, 2012

As a Tow-Knight Entrepreneurial Journalism Fellow at the CUNY Graduate School of Journalism, I am one of 16 lucky new media entrepreneurs who have access to world class mentors, financial opportunities, industry leaders, venture capitalists and like-minded thinkers. It is difficult to classify the program as a seed accelerator (because no seed funding is provided from the get-go), an incubator (because of the aforementioned relationships and opportunities that go beyond free office space), or an intrapreneurship for in-house academic experiment (because we have no obligations to continue our relationship with the university after the program ends). What I had not considered before embarking on this adventure was that a major benefit of having the Tow-Knight Center housed at CUNY is that all intellectual property that my colleagues and I create is our own. We don’t have to fork over any percentage of future revenues that we may derive from our forthcoming ventures to the institution or our advisers. I consider us lucky and rare to have this combination of resources without the potential of buyer’s remorse if a project grew but some equity was already distributed. This morning, I read an interesting INC article that provides an insider’s look into TechStars , the popular and fast-growing startup accelerator. While TechStars and YCombinator are generally considered the Harvard and Princeton equivalents of the accelerator world, I wonder whether the rest of the pack, essentially startups themselves, has equal value. While I enjoyed the INC piece, I was somewhat disappointed to learn that some TechStars applicants are accepted because of their relationships with the organization’s leaders, despite having severely underdeveloped or non-existent products. But on the other hand, I recognize that this is the way the world works. In private business, democracy has a very limited role. And merit may have even less. In the startup world, a frequently heard maxim is that venture capitalists invest in personalities and founders, not companies. With seed accelerators proliferating all over the world , one wonders if the talent pool at each individual accelerator will become severely diluted. Though it is impossible to gain data about the success of companies grown from seed accelerators that have not yet had the opportunity to flourish or flop, one can surmise that more startup accelerators will mean fewer success stories from each specific program. When YCombinator had less competition, it meant that they got their pick of the litter. Nowadays, founders may not want to schlep to Silicon Valley if they are confident that they can still make it in their home cities or countries. Jed Christiansen , a London-based American who works at Google, keeps track of seed accelerators through a spreadsheet on his personal blog . He defines seed accelerators as follows: The following are required to be a “seed accelerator” Open application process; anyone with an idea can apply Accelerator invests in companies, typically in exchange for equity, at pre-seed or seed stage Cohorts or ‘classes’ of startups; not an on-demand resource Programme of support for the cohorts, including events and company mentoring Focus on teams, and not individual mentoring Examples of what isn’t a seed accelerator: Programme where the startup pays for mentoring Incubator where the startup pays (discounted) rent in return for equity and/or discounted business services Programme where applications are restricted to certain groups (like students from a particular university) Because of the rapid growth of seed accelerators, now would be an ideal time for someone (an academic, perhaps, hint, hint) to create a more comprehensive database that keeps track of the success to failure ratio at each of these accelerators. I can already guess that firms that are only given $20K in seed funding in exchange for 7% of their company won’t have the same advantages that firms who are given $100k for an equal stake. In this sense, it will also be important for entrepreneurs to report back on any seed accelerators that are disorganized, don’t deliver on what they promise, or steal intellectual property — all issues that I foresee arising in the near future. But at the end of the day, one must think about Facebook, YouTube, Groupon and countless other uber-scalable companies that weren’t working within any set of rules at a seed accelerator when they launched. The investors flocked to them when their products were proven to be hits. So while some people wonder, what comes first — the chicken or the egg — I wonder what comes first — the seed or the flower that creates its own seeds to spread.

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Lenwood Brooks: Government Spending on Autopilot: Prepare for the Crash

April 4, 2012

Last summer, a Federal Aviation Administration advisory committee study on the use of autopilot inaircraft drew a sobering conclusion: too much reliance on automation and technology are degrading pilots’ flight skills. Indeed, reports indicate autopilot malfunctions were a contributing factor in numerous airline accidents in recent years. Perhaps members of Congress should consider the implications of those findings as they take up this year’s federal budget and appropriations process. Because with a majority of federal spending now running on autopilot, we’re setting ourselves up for a fiscal crash. What do I mean when I say the budget is “on autopilot”? Right now, vast swaths of government spending are classified as “mandatory.” That means certain programs are funded automatically. In other words, they are funded outside of the yearly congressional budget and appropriations process. Most Americans don’t realize it, but more than half of federal spending falls into the mandatory spending category: think Social Security, Medicare and Medicaid. (To be exact, 56 percent of all federal spending was spent on mandatory spending during the government’s last fiscal year.) Meanwhile, as of last year, just over a third (37 percent) of the federal budget is categorized as “discretionary” spending. This is the part of the budget over which Congress has decision-making power through the yearly budget and appropriations process. In the last year, Congress has attempted to tackle spending in two ways. First, in August 2011, Congress passed the Budget Control Act, which laid out steps to reduce the deficit over ten years in exchange for an immediate increase in the national debt ceiling. But if you look closer at these numbers, many of the “cuts” are not actual reductions in spending — they simply represent a slower rate of spending growth — and entirely come from the discretionary spending category, the smallest part of the federal budget. The Budget Control Act also established the so-called super committee to identify further potential deficit reduction targets. However, the committee failed to arrive at an agreement by its November deadline, so a series of scheduled automatic cutstotaling $1.2 trillion are now slated to go into effect in January of next year (and will be spread out through 2021). According to the non-partisan Congressional Budget Office, of these cuts triggered by the super committee’s failure, 71 percent — almost three-quarters — come from discretionary spending categories. Getting a serious handle on growing spending in Social Security, Medicare and Medicaid, some of the biggest programs in mandatory spending? It won’t happen under this plan. Worse yet, after the bitter trench warfare and brinksmanship of the 2011 debt ceiling deal, not only have we failed to achieve serious budget savings, it’s probable we’ll hit the debt limit again this year, sooner than was originally expected. That means Congress is likely to find themselves in a new debt ceiling showdown before a single cut triggered by the super committee’s failure has taken effect. Do you see a pattern here? Congress has repeatedly abdicated its responsibility for effective oversight and decision-making on critical questions of how the federal government spends money. At a House Oversight and Government Reform on March 21, Representative Trey Gowdy (R-SC) proposed an interesting hypothetical question to Treasury Secretary Tim Geithner. If the upcoming debt ceiling increase could be “the last debt ceiling increase you could ask for — the final one — and you had to make it large enough for all current and future obligations, what would the request need to be?” “I just can’t do it in my head,” Geithner eventually said when pressed on the question. But the number “would make you uncomfortable.” There is a reason the number causes an uncomfortable feeling: autopilot spending is driving this nation into bankruptcy. President Obama has shown little inclination to step up and show real leadership on this issue. Meanwhile, the budget proposal from Rep. Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee, is an improvement. Credit Ryan for seeking to preserve the Medicare guarantee while keeping costs down and personalizing Medicare for seniors. However, his budget proposal doesn’t address the growth in Social Security spending. What should Congress do? Take a cue from the world of aviation. One recommendation stemming from the FAA autopilot study cited above is that pilots should devote more time to manual flying, rather than relying on automated systems, so they are better prepared at recognizing the warning signs of an emergency. “We’re forgetting how to fly,” explained the committee co-chair, a pilot himself. There’s a lesson for Congress there: enough with the autopilot spending. Congress must take control of the federal budget process, which means taking responsibility for all spending programs to get the deficit under control. If Congress doesn’t start relearning how to fly, we all need to be prepared for a fiscal crash. Lenwood Brooks is policy director of Public Notice, an independent, nonpartisan, nonprofit dedicated to providing facts and insight on the economy and how policy affects our financial well being.

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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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Janet Tavakoli: MF Global: JPMorgan Produces Smoking Gun

April 3, 2012

When New York-based MF Global collapsed on October 31, 2011, its $41 billion in assets made it the eighth largest bankruptcy in U.S. history and the biggest financial firm to implode since Lehman in September 2008. Then Chairman and CEO Jon Corzine is connected to the head of one of his key regulators, the Commodity Futures Trading Commission (CFTC), through his former protégé at Goldman Sachs, Gary Gensler. He also knows the Fed’s William Dudley, a key member of the Fed’s Open Market Committee, from their days at Goldman Sachs. The Fed approved MF Global’s status as a primary dealer, a participant in the Fed’s Open Market Operations, less than one year after Jon Corzine took its helm. Corzine is also a former New Jersey governor, a former New Jersey U.S. senator and was a major campaign contribution bundler for President Obama. MF Global failed because of a disastrous leveraged bet on weaker European sovereign debt made by Jon Corzine. The problem wasn’t that the debt defaulted, rather that he didn’t have the money to throw in the pot when it was his turn to ante up. The firm filed for bankruptcy protection Oct. 31 after dipping into customer accounts. Around $1.6 billion of customers’ money is still missing. Probable Shortfalls of Customer Money Throughout 2011 MF Global reportedly employed 30:1 leverage — some reports are higher — against a portfolio of European sovereign risks including Belgium, Italy, Spain, Portugal, and Ireland. According to Bloomberg News, Corzine’s position on these sovereign trades was a gross position of around $11.5 billion , and the risk was only partially offset by short positions in stronger European credits. MF Global’s March 2011 report showed a net position, including offsets, was around $6.3 billion. According to Bloomberg’s information from an unidentified source: “At multiple meetings, Corzine reassured directors that the trades would work out… Corzine said the European countries he selected wouldn’t default before the bonds matured, and that the market was mis-pricing the debt.” (” Corzine Pushed Bet on Europe Debt to $11.5B ,” by Miles Weiss, Cristina Alesci and Matt Leising, Bloomberg News, Nov 28, 2011.) The accounting board, FASB, allowed Jon Corzine to characterize his trade as a “repo-to-maturity.” The problem with that is repo transactions are on balance sheets, and Jon Corzine’s trade was an off balance sheet transaction. In substance Corzine’s trade was a “total return swap-to-maturity,” a funding that includes a type of credit derivative, and Corzines trade received the off balance sheet accounting treatment of the total-return-swap-to-maturity. It allowed Jon Corzine to make a highly leveraged bet on fixed income securities that were going down in value and it allowed him to make that bet off balance sheet. In 2011, this trade was moving against Corzine. His reassurances to the board were empty, because his chief problem wasn’t default, it was not being able to come up with the cash to meet margin calls with his trading partners on this large leveraged bet. MF Global would have had several trading days in 2011 with moves of 5 percent to 10 percent on this sovereign risk. MF Global was so thinly capitalized that this trade alone could eat up half of its capital. Any of MF Global’s other asset positions moving the same way in 2011′s highly correlated markets would have put MF Global in a position of negative equity. From a risk management point of view, examiners have to consider the very strong possibility that MF Global had several negative equity days throughout 2011. An investigation into money flows throughout 2011 is in order. August 2011: MF Global Agrees to a $90 million Settlement In early 2008, a rogue trader racked up $141.5 million in losses in unauthorized trades that exceeded his trading limits. It seems he accomplished this in under seven hours. In August 2011, MF Global and the underwriters of its 2007 initial public stock offering (IPO) agreed to pay around $90 million to settle claims by investors that they were misled about MF Global’s risk management prior to the rogue trader’s actions. Since 2008, MF Global’s financial condition has been nothing to brag about. Now the settlement is in jeopardy due to the bankruptcy. In August, customers started pulling billions of dollars out of their segregated accounts with MF Global. It was the biggest outflow of funds since January 2009. The bankruptcy trustee may claw back transfers of funds from MF Global as it was teetering, because it is likely that employees within MF Global were well aware of the problems and tipped off key customers. Also in August of 2011, FINRA seemed to catch on that MF Global’s transactions were riskier than it previously thought and asked for more capital against these trades. Investigators Examining Possibility of Illicit Transfers in August According to the New York Times , “investigators are now examining whether MF Global was getting away with illicit transfers as early as August.” The illicit transfers refer to the use of customer funds to make up for MF Global’s own shortfall of funds needed to meet its margin calls and other expenses. As noted previously, it would be reasonable for investigators to look at MF Global’s accounts even earlier in the year. (” A Romance With Risk That Brought On a Panic ,” by Azam Ahmed, Ben Protess, and Susanne Craig, NYTimes’ Dealbook , December 11, 2011.) Wednesday, Oct 26, and Thursday, Oct 27, 2011: “Substantial Deficit” in Customer Accounts Christine Serwinski, MF Global’s chief financial officer for North America, testified in last Wednesday’s congressional hearing that she was told on October 27 of a “substantial deficit” in customers’ accounts for October 26, the previous day. She was on vacation when she was informed of the shortfall and claims she was told the shortfall was only in the “cushion” that MF Global had in customer accounts. She claimed the deficit didn’t violate rules — which is implausible given other events of that week (see MF Global’s check kiting below). Obviously there was a huge problem at MF Global and this would have gone to the top of the house, to CEO Jon Corzine, in a firm that had any sort of reasonable corporate governance. Serwinski further testified that on October 30, she was told of a nearly $1 billion deficit in customer funds. Regulators weren’t told of deficits until October 30. The firm collapsed into bankruptcy on October 31. (” MF Global exec cites early worry on risk to funds ,” AP, March 27, 2012.) Thursday October 27: MF Global Breaks Custom of Wire Transfers and Writes Rubber Checks Instead Jon Corzine claims he didn’t know about improper transfers of customer funds and of shortfalls in customer accounts until October 30, yet on Thursday, October 27, four days before the bankruptcy and again on Friday, October 28, three days before its bankruptcy, dozens of MF Global customers asked for wire transfers when they closed accounts, and they didn’t get them. Instead, MF Global wrote paper checks, sent the checks via snail mail. The checks bounced, since customers received them after MF Global declared bankruptcy on Monday, October 31. (” Clients Raise Questions About MF Global Checks ,” NY Times Dealbook, April 1, 2012, by Azam Ahmed and Ben Protess, and ” MF Global and the Rubber Check ,” by Matthew Goldstein, Reuters, November 5, 2011.) October 28: Edith O’Brien writes of Corzine’s “Direct Instructions” to transfer $200 million By now every officer of MF Global should have been on red alert that MF Global was short of cash and was at risk of using customer funds to meet its daily needs, and this is prohibited. On the morning of Oct. 28, three days before MF Global’s bankruptcy, JPMorgan contacted MF Global about an overdraft in London. A Congressional memo circulated March 23, 2012, quoted an email from Vinay Mahajan, MF Global’s global treasurer. Vinay wrote JPMorgan was “holding up vital business in the U.S.” and called for funding “A.S.A.P.” Bloomberg News reported that on October 28, Edith O’Brien, an assistant treasurer for New York-based MF Global, wrote an email saying that a $200 million transfer of funds was “Per JC’s direct instructions.” It turns out that part of that money was customer money, and the transfer was impermissible. ( “MF Global’s Corzine Ordered Funds Moved to JPMorgan , Memo Says,” by Phil Mattingly and Silla Brush, Bloomberg News, March 23, 2012.) October 28′s Smoking Gun: JPMorgan Doesn’t Buy Corzine’s Story Jon Corzine testified before the Senate Agriculture Committee in December: “I never gave any instructions to misuse customer money, never intended to give any instructions or authority to misuse customer funds, and I find it very hard to understand how anyone could misconstrue what I’ve said as a way to misuse customer money.” But that isn’t the standard to which Corzine is held. If investigators can show he knew of the risk that customer money might be included in the $200 million transfer he ordered, Corzine faces potential legal liability. (” MF Global’s Corzine May be Liable if Customer Risk Known ,” By Linda Sandler and Phil Mattingly, Bloomberg News, Mar 25, 2012.) Money went from a U.S. customer account to a U.S. MF Global account, and then it was transferred to a UK account. Even those who wish to claim Corzine slipped through a dubious loophole in the UK are out of luck. The original impermissible transfer of money occurred from a U.S. customer account to a U.S. based MF Global account. In my opinion, Corzine knew or should have known there was a strong probability that customer funds would be transferred. As it happens, they were. On October 28, JPMorgan didn’t buy Corzine’s story, either. Having been a risk manager myself, I believe Barry Zubrow, JPMorgan’s chief risk officer, did exactly the right thing. He called Jon Corzine to get him to verify that the funds belonged to MF Global and that none of the money was customer money. Zubrow, an outsider, was well aware of the possibility that customer funds had been transferred. It’s implausible that Corzine wasn’t aware of the potential impermissible transfer of customer funds when he gave the authority to make the transfer. By doing its job, JPMorgan removed Corzine’s ability to credibly deny knowledge of the potential problem. October 28: JPMorgan Asked for Written Assurances and Didn’t Get Them According to the NY Times , Jon S. Corzine, the former chief executive of MF Global, was told during the brokerage firm’s final day of business that a crucial transfer of $175 million came from the firm’s own money, not from a customer account, according to an internal email. The email, sent by an executive in MF Global’s Chicago office, showed that the company had transferred $175 million to replenish an overdrawn account at JPMorgan Chase in London. The transfer, the email said, was a ‘House Wire,’ meaning that it came from the firm’s own money. The email, sent at 2:20 p.m. on Oct. 28 to Mr. Corzine and two of his assistants in New York, says the transfer came from a ‘nonseg’ account, industry speak for a noncustomer account. (” E-Mail to Corzine Said Transfer Was Not Customer Money ,” by Ben Protess and Asam Ahmed, NY Times Dealbook, March 25, 2012) The problem with the NY Times report is that the email never said that the original source of funds wasn’t from a customer account, and a ‘house wire’ just means an internal transfer of funds. The email only verifies that the money was eventually transferred from a ‘nonseg’ account. It doesn’t rule out that money was transferred from a customer account to an MF Global account, which as it happens — and the NY Times later reports within the same story — it was. The New York Times bolloxed up the title of this story, and even within the story it acknowledges: “But it is unclear whether someone at the commodities brokerage firm told Mr. Corzine the origins of the money during a phone call or in person.” To be clear, the email in no way exonerates Jon Corzine and it in no way proves that he was unaware that the original source of funds was from a customer account and that the transfer included customer money. The email only suggests that the eventual transfer to the UK was from a U.S.-based MF Global account. But MF Global was short of funds, and the money that seemingly magically appeared in its ‘nonseg’ account was first transferred from a customer account. According to his December Congressional testimony, Jon Corzine said he spoke with Ms. O’Brien, who confirmed that the transfer was proper. “I had explicit statements that we were using proper funds, both orally and in writing, to the best of my knowledge.” But “proper funds,” could just mean funds from a ‘nonseg’ account that gave the appearance of being proper. Corzine knew or should have known that MF Global’s U.S. account only had funds because customer money from a U.S. account had been transferred into it. Ms. O’Brien has asked for, but not yet been granted, immunity. Last week she invoked her Fifth Amendment rights at a Congressional hearing. As for JPMorgan, it asked Jon Corzine for a signed letter stating that the transfer was legitimate. He reportedly responded : “Send me the letter and we’ll have our people look at it.” It was disingenuous of Jon Corzine to pass JPMorgan’s letter to Edith O’Brien to sign given that it asked for a sign-off that all “past, present and future” transfers complied with the law. Ms. O’Brien would have been asked to take responsibility for all transfers without having the authority over them. Jon Corzine had the broad authority to sign the letter, but by passing it on, he effectively stalled. JPMorgan sent additional versions of this letter in response to MF Global’s requests for revisions, but JPMorgan never received a signed letter back. On October 31, 2011, MF Global Admitted to Impermissible Transfers MF Global’s officers admitted to federal regulators that before the collapse the firm diverted cash from customers’ accounts that were supposed to be segregated: MF Global Holdings LTD… violated requirements that it keep clients’ collateral separate from its own accounts… Craig Donohue, CME Group’s chief executive officer, said on a conference call with analysts today that MF Global isn’t in compliance with the rules of the exchange and the Commodity Futures Trading Commission. (” MF Global Probe May Involve Hundreds of Millions in Funds ,” Bloomberg News, November 1, 2011, by Silia Brush and Matthew Leising.) Yet on November 1, Kenneth Ziman, a lawyer for MF Global, relayed information from MF Global to U.S. Bankruptcy judge Martin Glenn in Manhattan: “To the best knowledge of management, there is no shortfall.” If that sounded like a cover-up, it was: According to a U.S. official, MF Global admitted to federal regulators early Monday [October 31, 2011] that money was missing from customer accounts. MF Global acknowledged a shortfall in a phone call amid mounting questions from regulators as they went through the firm’s books. (” MF Global’s Collapse Draws FBI Interest ,” by Devlin Barrett, Scott Patterson, and Mike Spector, Wall Street Journal , November 2, 2011.) The initial bankruptcy estimate was a shortfall of around $600 million. As of Monday November 21, MF Global’s liquidating trustee believed the shortfall may be as much as $1.2 billion and later estimates put the shortfall of customer money at $1.6 billion. MF Global Debacle Damages a Key Global Market Even if all of the money is eventually clawed back and recovered, this remains an impermissible act. Moreover, full recovery — even if it is possible — is not the same as restitution. People have been denied access to their money, and businesses and reputations have been tarnished. The futures market is a globally connected market and it is a key mechanism for farmers, metals miners, and metals fabricators (among others) to hedge their risk. Confidence in the futures market has been shaken. No one knows if their money is safe, but what is more disturbing is the appearance of crony capitalism once again giving favored treatment, lax regulation, and absent oversight to a crony capitalist that abused all of these perks to blow up a large financial firm and damage a key global market. So far, no one has been held accountable. On March 26, 2012 , I discussed these issues with Lauren Lyster on RTTV’s Capital Account :

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Michael Martin: To Invest Like Warren Buffett, Learn How to Sell

April 3, 2012

If you want to learn how to invest like Warren Buffett, you’ve got to learn how to sell investments effectively. So says Steve Sears, the long-time Barron’s columnist and author of the new book The Indominable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails . Throughout his career, Sears has always been struck by what actually happens on Wall St. and how it’s perceived on Main St. — based in no small part upon his own observations and from the reader feedback he gets from his Barron’s column, The Striking Price . “Bad investors think of ways to make money. Good investors think of ways to not lose money,” he says during a recent podcast interview. Professionals tend to be hyper-vigilant about what’s not working in their portfolio, as opposed to falling in love with the investments that are working. “Most investors think of Warren Buffett as the man with gift for picking stocks, which he surely has, but he’s also a great seller of stocks as well. But because of Buffett’s public persona and cult of personality, unless someone has read the fine print of the Berkshire Hathaway annual reports, no one really ever hears about what he sells.” Selling in this case can mean selling to take a profit or selling to take a loss to free up the cash and to emotionally move on. The point Sears is making is that you’ve got to pull your weeds in order to let the flowers bloom, something that Buffett does as a matter of course. This is true for those Huffington Post readers who still may own Research In Motion (ticker: RIMM), seen above, maker of the BlackBerry… which many think could be on its last Berry. RIMM traded at $144 in June 2008, not four years ago. Since then, it’s been Research In Downward Motion. Even if an investor sold RIMM at $72, after a 50% decline, that would have been almost 5 times where it closed yesterday at $14 per share. The odds of anyone seeing 10 times their investment in RIMM anytime soon are poor at best. Could you have sold it at $72 after having owned it at $144? It’s true Buffett is not known for owning technology within his holding company Berkshire Hathaway, but the point is this: Buffett’s portfolio ultimately burgeons the way it does because he divests of a stock that behaves like RIMM usually long before it becomes troublesome, a key tenet of eventually becoming an indominable investor. The Downside of the Information Age As noted in The Indominable Investor , we are fed an endless stream of information online via social networks such as Facebook, LinkedIn, finance blogs, and Twitter. That’s in addition to the Huffington Post, Wall Street Journal , the New York Times , and Barron’s . According to Sears, a person must learn to become what is known as a contrarian. “You have to be skeptical of everything you hear and everything you read. You have to consider the source and how the data could be tainted or biased.” In other words, you have to think for yourself. A contrarian is someone who thinks for him or herself, but in doing so often goes against the grain of what the crowd is thinking. Thinking with the crowd could be part of the downside of investing during the information age. Don’t forget television’s endless stream of infotainment. There are no shortage of shows and guests who will tell you where to put your money. Rarely, if at all, will they delineate where and when to sell at a loss when they’re wrong. During information overload, investors lack the ability to separate the good information from the bad. Even if they do, they oftentimes don’t act because they are overwhelmed with a cacophony of statistical noise — information that has no value. How do you get started? Consider what the benefit might be of your going on a financial information diet. For those of you using Twitter, what would be the value of an “Un-Follow Friday”? Instead of looking to add new Twitter users to follow, how about deleting some? Doing so would be thinking like a contrarian… and it might be worth more to you than you know.

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Vanity Fair: Four-Wheeled Future: All Hail the Taxi of Tomorrow

April 3, 2012

The latest version of our city’s only private form of public transportation — the yellow cab — will be unveiled this week at the 2012 New York Auto Show. By Brett Berk , Vanity Fair After exhaustive evaluation by all manner of stakeholders — taxi drivers, fleet owners, transportation bureaucrats, the mayor, and the notoriously cranky New York City public — the Nissan NV200 has been selected to replace the venerable Ford Crown Victoria as the Big Apple’s official cab. This so-called Taxi of Tomorrow will be unveiled to skeptical residents for the first time at this week’s New York Auto Show. Intimate Portraits from the 2012 Vanity Fair Oscar Party Booth Like many of Gotham’s unique antediluvian artifacts — intelligent theater, human interaction, walking — the creaky Crown Vic is beloved. So what will the Mexican-made mini-minivan offer to win over nostalgic urbanites when it begins being phased into the city’s 13,200-yellow-cab fleet next year? Well, in addition to besting its two rivals for the job — the wee and equilateral Ford Transit Connect micro-van and the lunky and unproven Turkish Karsan V1 rolling doorstop — the city’s first purpose-built cab will host myriad bespoke features calibrated to the distinctive needs of New York’s taxi users. These include a standard driver’s navigation system that will preclude ever again having to explain which numbered streets precede and follow West 17th, a panoramic glass roof for staring up at the young men on those Hollister billboards, a low-annoyance horn tuned to a frequency that’s only audible to other cabbies (or so we hope), one 12-volt and two USB charging ports so all your batteries will be as fresh as the scent inside the cabin, fuel-economy numbers that double those of the neolithic Ford, and antibacterial pleather seats that provide lower rates of Ebola transmission than most other fabrics. Also baked into the compact new cab: space. And not just inside the cabin, where a flat-floored, “no hump” rear seat and lengthy wheelbase will provide ample legroom for drivers and passengers. On the streets, too: “When all of the Crown Vics are replaced with NV200s,” David Reuter, Nissan’s V.P. of global communications, told us, “there will be five acres of real estate given back to the city of New York.” During its 10-year reign, the Nissan will also replace the other, non-Vic models now on the road. Later this year, when an advance-production version of the Taxi of Tomorrow is available for us to manhandle, we plan to assemble a diverse dream team of New York passenger types — a magazine girl, a Wall Street broker, a fireman, and a clueless tourist — and put our yellow-journalism skills to the test by taking them on a marathon ride through all five boroughs (literally: over the course of the N.Y.C. Marathon). Until then, you’ll have to make do with the images herein, and our admonishment to check out this vehicle, and all the other fabulous world premieres, at the New York Auto Show this week. The show is open to the public April 6-15 at the “Convention Hall of Yesteryear” — the newly refaced, but still underwhelming, Javits Center — all the way over on 11th Avenue in the West 30s. Take a cab. More from Vanity Fair: The Fashion of Mad Men’s Season-Five Premiere Lady Gaga’s Most Talked-About Looks A Look Back at Vintage Playboy Bunnies

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Annie Duke: Where’s the Free Lunch?

April 3, 2012

A lot of our decision making stems from the need to protect ourselves emotionally. It is really hard to admit when you made a mistake, that you might have done something wrong to lead you to a bad outcome. Accepting the possibility that you might be at least in part responsible for a bad outcome is hard. Just listen to any poker player after they lose a hand. “I got so unlucky.” If luck causes bad outcomes, then it is not our fault. We don’t need to examine our bad choices. And we protect our fragile psyche. Of course, in taking the route of short-run protection, we sacrifice the long-run upside to honest assessment of ourselves. Learning from mistakes is what makes us better decision makers and, ultimately, ensures better outcomes in the future. And nowhere is this more evident than in our assessment of others. Honesty assess your reaction to other people’s successes. We all know the phrase “failing upward.” When someone gets a promotion it seems we never allow that perhaps they earned it. The knee-jerk reaction is that they schmoozed the right people, that you deserved it more. Rarely do we allow that perhaps someone else might have actually done things better than you, deserved the job more. That you didn’t just get unlucky to not have the success of someone else. That they didn’t just get lucky to have succeeded. At the poker tables, this tendency is so clear. One of the most memorable moments in poker television is when Phil Hellmuth lost a hand in the World Series of Poker Main Event and then declared, “If it weren’t for luck I’d win every one.” Hellmuth was just saying out loud what pretty much every poker player thinks. If they lose a hand the other player got lucky. It is rare to see a poker player admit that perhaps they got outplayed, that their opponent is actually better than they are. When others have success, it emotionally protects us to attribute it to luck because then we don’t have to admit that maybe they are doing something better than we are. That would be hard. That might be honest. That might mean that maybe we aren’t as smart as we like to think we are. This dismissal of others’ successes to avoid cognitive dissonance might have short term psychological benefits but in the long run is disastrous because assessing and learning from others is generally free. At the poker table, if I get in a hand and make a mistake, I might lose my whole chip stack. There is a high cost to learning from your own missteps. But if I watch other people play and honestly assess what they do better than I do, I get that information at no cost because I get to watch them play hands that I am not in, where I am risking zero dollars. But I only get this no cost feedback if I am willing to honestly and properly assess my opponents’ actions. Business is no different than the poker table. Watching other people fail and, more important, watching other people succeed and learning from those success and failure is almost always free. But it is on you to not assume that every failure means the person played poorly or that every success means the person got lucky. Sometimes the best learning experiences come from understanding outcomes that have absolutely nothing to do with you because those don’t cost you anything. But if you dismiss a success as just luck then you are rejecting the free gift that comes with purchase. Yes, there is a free lunch. You just have to be willing to pay attention to when it is offered.

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Anne Sinclair: 2012, Bleak Wilderness

April 3, 2012

Just like the child in Hans Christian Andersen’s The Emperor’s New Clothes , who cried out the truth when all the court did not dare, Daniel Cohn-Bendit has summed up the fog enveloping this campaign: “we are bored,” he said. It was a sentence that would be inconceivable in other times, uttered just three weeks before France will decide if it will renew the mandate of a president whose office has been highly contested or elect for the first time in 24 years a socialist president, one who can’t seem to galvanize the electorate. But it was an understandable sentence, as so much of the substance of this campaign has all but disappeared. The two main candidates bear the main responsibility for this happening: Hollande released a 60-point program two months ago at Le Bourget — but who really remembers any of the key measures, apart from his 75 percent tax rate proposal? Meanwhile, Sarkozy has promised to announce and quantify his proposals this week — and it’s about time, just over a fortnight before the first round of the election! — after having imagined a new law almost every day, and already suggested four referendums. So why would the French, who are suffering the worst crisis since World War II, feel involved in a campaign that isn’t even addressing the many choices that we could make to mitigate or even reverse the slump we’re currently in? When we see, that like Greece, Spain is sinking into a serious social crisis that threatens to choke the country into unbearable austerity, the question we need to answer is how to contain the debt that is strangling us while reviving growth and keeping unemployment in check. How do we fight abyssal deficits while maintaining employment opportunities? This is the center of all concerns. But instead of trying to answer this question, the presidential contenders are playing an entirely different game. Sarkozy has his head in the stars. His morale is high, and he’s become intoxicated with good news from the polls. He’s relaxed in his meetings, and playing the role of the comedian who simply mocks his opponent’s lack of depth. Holland, by contrast, has been too quiet where Sarkozy has gone too far, saying that the calmer he his the less he will open himself up to attack. He is playing it safe. But hasn’t he learned the lesson of 2002, that betting on only one second round and the rejection of the outgoing candidate can be a deadly risk? Where voters expect to hear his voice, they feel him holding back, playing a minimalist strategy to coast in on the momentum of the primary. As for Nicolas Sarkozy, to whom the attacks in Toulouse presented an opportunity to regain the position of head of state, he could have seized the opportunity to become a true leader — one to guide the French into the uncertain future they are concerned about. Instead, he has simply inserted one socially liberal sentence into the middle of a markedly right-wing discourse. We hoped to hear his take on the severity of the situation, but were treated instead this week to the consciously and deliberately publicized arrests of Islamic militants. The timing was so perfect that the TV crews were ready for the assault and that the Figaro — or the Pravda, as some overly cheeky journalists like to call it — was able to announce it before anyone else. To make us believe in his sincere desire to protect the nation from an impending attack, Sarkozy should have required that the intervention take place earlier and that the press not be invited. In short, he shouldn’t have taken the French for suckers. In doing so, in between jokes and mocking the “the small club of happy navel-gazing socialists,” he engages in ever more visible foot calls to the far right, which he hopes to woo for the first round before attempting to recenter for the second. Just this last weekend, Nicolas Sarkozy continued to harden his speech on immigration, by questioning not only the issue of integration but also of assimilation. And he was pleased to repeat on Saturday — against the advice of all legal professionals and in defiance of all traditions of the law — that victims should have a say regarding the inmate’s parole. The seduction of the right-wing electorate is becoming an everyday activity. Moreover, in addition to the major issues affecting the lives of everyone, one would have hoped that topics on civil liberties or the rule of law would be addressed. But… no. François Bayrou has tried to cast “suspicion on the very large financing of Nicolas Sarkozy’s 2007 election campaign,” concerning the continued detention of Patrick de Maistre. But there has been no response. Senators, after the controversy over the effectiveness of the DGSE and DCRI, have claimed the ability to hear the police officials of these institutions, but the ministers of Interior and Defense have raised an estoppel. So the electorate will know nothing about everything that is important. As the crisis destabilizes those who are most fragile, as social unrest in Spain begins to indicate other shocks elsewhere in the world, and as, in the words of the cheeky economic journalist at le Huffington Post Alexander Phalippou , who tweeted, “after the fall in rising unemployment, the huge deficit is less massive than expected,” we have been treated to a complacently triumphant right-wing candidate and a half-reaction from the Socialists. The suitor has neglected the fact that we expect him to show us a path, a method, a means. The incumbent is trying to forget that he has been in power for five years and that he is accountable to his citizens and owes them coherent proposals. There remains only a few days to mobilize the French. And as the result of several stupid decisions, there will be no more televised debates in the weeks before the elections — abstention has become more of a threat than ever. I rarely agree with Nicolas Dupont-Aignan, but when he says that television producers should organize debates with all of the candidates, as was done successfully during the Socialist primary, he’s right. I welcome his denunciation of the laziness of both the networks and the candidates. This is the campaign of 2012: how to waste the opportunity of a beautiful and great national debate.

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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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Tom Samph: A 122-Year-Old Start-Up? How Post University Reinvented Itself for the Modern Educational Era

April 2, 2012

Fewer organizations today are able to stay in existence for more than 100 years. Business needs are changing rapidly across myriad industries, and in many cases what was relevant yesterday has been rendered obsolete today by new technologies and new ways of thinking. Colleges and universities have a better track record than most businesses, but even these bastions of longevity sometimes fail to keep pace with market pressures and demands. A number of schools have shuttered their doors in recent years due to increased expenses, declining enrollments, dried-up revenues and dwindling endowments. Post University was about to be one of these schools in 2004. It was 18 months from closing when a new management team took over and started upending everything from basic infrastructure to campus culture. Fast forward to today. Post University is now on firm financial footing, and is becoming known as one the most innovative and vibrant schools in the Connecticut region. If you ask members of the senior management team what they have been doing for the past five to seven years, they will tell you they have been building a “122-year-old start-up.” We have reinvented Post to meet the needs of today’s students, which are increasingly adult learners . That’s why we have a start-up culture and mentality, yet are rooted in 122 years of experience in providing higher education to students around the country. We wanted to share how we’ve made Post University’s offerings relevant to the evolving educational needs of our students, and what we’ve learned along the way to help other educational institutions grow their organizations to better meet their students’ needs, too. First, some background for context. In 1989, Post University was acquired by Teikyo University in Japan. The school became a destination for Japanese students to learn about American culture and language. But as the Japanese economy and demographics changed, fewer students came to Post. Revenues naturally declined. University management in the U.S. did not respond to this issue. As a result, the Japanese decided to sell Post. In 2004, Teikyo Post University became Post University once again, and a new, experienced, metrics-driven group of senior managers took the helm. The team’s primary goals were to 1) create a university that could deliver educational services to students in whatever format was most suitable for them, and 2) make a Post University degree more valuable with each passing year. The team also had a strong interest in restoring the school to its featured role as Waterbury’s hometown university, which it has been since 1890. To achieve these goals, the team realized its initial focus had to be on establishing financial stability. As is true with any business, you can’t do much if you can’t keep the lights on and make payroll. Post’s management team turned to one of the school’s historical strengths: distance learning. Post University has had a distance learning presence since 1976, and several members of the senior management team had experience in this area as well. Post began building up its online education operation by offering the academic programs from its main campus to adult learners in a fully online, asynchronous format. It also started adding graduate programs, including the state’s first fully online MBA degree program . Today, the Online Education Institute of Post University is a leader in providing online accelerated degree programs for working professionals. Looking back on how we got here, there are a couple of takeaways that stand out. We hope you’ll be able to pull out some ideas from this list that you can try in your own educational institution: • Use technologies to meet student needs. Much of our recent growth has come from using technology to expand our academic offerings beyond our campus. For instance, online discussion boards are an integral part of all our online courses. Our students have told us that online discussion forums foster greater interaction with their peers and instructors , and as a result, enrich their learning experience. This technology and others have enabled us to provide flexible online learning opportunities to the growing number of adult learners, which in turn has helped boost enrollment. In 2004, 98 percent of the University’s 150 online students were from Connecticut. Today, about 65 percent of our more than 10,000 online students are from outside our home state. • Be a data-driven organization. We rely on a variety of metrics to assess the effectiveness of our operations, programs and strategies. This gives us greater quality control and fiscal accountability. We continually measure the impact of our academic programs and student support services through methods such as student surveys, responsive data and a host of financial indicators. The insights, challenges and opportunities we glean from our metrics enable us to dynamically make organizational improvements. Our process for collecting and tracking metrics also lets us share a status update with our stakeholders. We are one of the few educational institutions that provide our board of trustees with weekly metrics reports on the progress of the institution. • Operate like a business. Because you are. Without multi-billion-dollar endowments and/or significant state or other outside funding, we’ve found that operating more like a business has enabled us to evaluate our processes and make needed changes, and measure our progress against a well-defined strategic plan. This operational model includes relying on metrics-driven decision-making, having strong financial accountability, continually improving and innovating your product offerings and providing the ultimate in customer service. Through heavy investments in technology, renovations to our Waterbury campus, the addition of new athletic programs and improvements in the quality and breadth of our academic offerings and teaching staff, we believe Post is in a position to thrive throughout the education industry’s evolution. And so can other organizations, by focusing on improving the quality, affordability and flexibility of their educational opportunities for traditional and non-traditional college students. Continuing to do what has been done in the past is rarely a successful formula for sustainable growth or quality improvement. Nurturing a start-up culture is a first step in fostering ongoing innovation to meet the changing needs of our students.

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Jamin Raskin: The Ghost of Lochner Sits on the Supreme Court and Haunts the Land

April 2, 2012

Philosophical “conservatism” on today’s Supreme Court has nothing to do with constitutional method. It does not mean that the Justices defer to Congress or the states. It does not mean respect for precedent or existing doctrine or the original meaning of constitutional language. All it means is that the five Justices who imposed Citizens United on our country find a way to line up with the political arguments being advanced on Fox News, by the Heritage Foundation and by the most right-wing forces in the Chamber of Commerce. This is a Court that isn’t just dominated by the politics of the Republican Party; this is a Court dominated by the politics of the Tea Party. What an embarrassment. The Supreme Court’s performance on the bench in the health care case last week is instructive. The remarkable thing is that everyone, including the conservatives, concede that the mammoth health care industry, which represents one-sixth of our national economy, substantially affects interstate commerce. This is all that needs to be shown under the 1995 U.S. v. Lopez decision, which found that Congress under the Commerce Clause can regulate the channels of interstate commerce, the things moving in interstate commerce, and any activity that has a “substantial effect” on interstate commerce. With 40 million uninsured people whose uncompensated health care costs the rest of us billions of dollars a year, it’s a simple case. This is why intellectually honest conservatives, like my first-year Contracts professor, Charles Fried, a serious conservative at Harvard Law School who was President Ronald Reagan’s Solicitor General, are declaring that the current constitutional attack on Obamacare is “just a canard that’s been invented by the tea party, and I was astonished to hear it coming out of the mouths of the people on the bench.” In truth, this has nothing to do with the Commerce Clause. What right-wing conservatives are saying now is that the individual insurance mandate (which they concocted at the Heritage Foundation and put into practice in Massachusetts under Governor Romney, all with the enthusiastic support of Newt Gingrich) goes “too far.” It threatens a “fundamental shift in the relationship between government and the individual.” It actually “makes people do something.” It forces people to “enter into a contract.” No, these “don’t tread on me” arguments have nothing to do with the Commerce Clause and everything to do with the revival of the 1905 Lochner v. New York decision. In Lochner , a similarly Right-leaning Supreme Court struck down a law regulating the working hours and condition of bakeshop employees in New York. The theory was that the Due Process Clause creates a sacrosanct invisible shield around business and employment contracts that cannot be pierced by economic and social legislation. For decades the Lochner Court proceeded to wipe out legislation regulating child labor, occupational safety, the right to organize, collective bargaining, and consumer rights, all in the name of protecting the Due Process freedom of contract. Justices would give the thumbs-up or thumbs-down depending on whether they felt a law had gone too far in regulating commercial activity. The Court’s self-appointment as a super-legislature reviewing the wisdom of laws affecting business provoked the famous political clash with President Roosevelt, who advanced a plan to change the composition of the Court. Although FDR did not succeed in changing the size of the Supreme Court, the Court did change its ways and abandon the radical doctrine that government could not regulate private contracts affecting employment and consumer rights. The ghost of Lochner is alive and well on the Roberts Court, which has been busily dismantling laws that stand in the way of total corporate freedom. Just last Term, Justice Breyer dissented sharply in Sorrell v. IMS Health, Inc. (2011), in which the conservatives invalidated on free speech grounds Vermont’s Prescription Confidentiality law, which provided that health insurance companies and pharmacies could not, without doctors’ consent, sell information to pharmaceutical companies about what drugs their patients were using and what illnesses they were facing. The majority ruled that this confidentiality protection violates the First Amendment rights of corporations involved in the buying and selling of patient information. Justice Breyer observed that the Court was using the First Amendment in the same way that the Lochner Court used Due Process: to strike down ordinary laws regulating economic life and business, shifting the locus of real power from the legislative branch to the judiciary. Justice Breyer, who has never been a Ralph Nader-style radical when it comes to consumer rights, admonished the Court for opening up a ‘Pandora’s Box’: Given the sheer quantity of regulatory initiatives that touch upon commercial messages, the Court’s vision of its reviewing task threatens to return us to a happily bygone era when judges scrutinized legislation for its interference with economic liberty. History shows that the power was much abused and resulted in the constitutionalization of economic theories preferred by individual jurists. — See Lochner v. New York , 198 U.S. 45, 75-76 (1905) (Holmes, J., dissenting). The health care case threatens a full-blown revival of Lochner under the guise of the Court preventing some vaguely identified “overreach” by Congress under the Commerce Clause. This rhetoric is phony-baloney because the idea that government never forces anyone to do anything is laughable, as anyone who recalls the existence of military conscription, compulsory public education, and forced deduction of Social Security taxes might realize. It does not improve the new right-wing argument to say that the (Republican) individual insurance mandate is unprecedented or a radical break from prior tradition because it “forces people to buy something or to enter into a contract.” That, too, is a familiar design for government laws, as you will know if you are forced to buy auto insurance in order to drive. Indeed, most of the landmark Commerce Clause decisions that establish the lawfulness of Obamacare involved people being forced to enter into contracts they would have preferred not to enter. In NLRB v. Jones & Laughlin Steel Corp. (1937), the Court upheld Congress’ power to pass the National Labor Relations Act, which forbade the dismissal of employees for organizing unions and forced business employers to rehire (and repay) workers who had been unlawfully fired for that reason. What is that if not forcing someone into a contract? In Wickard v. Filburn (1942), the Court affirmed a $117 penalty imposed on an Ohio dairy farmer who harvested 16 bushels of wheat more than he was allowed to under a wheat harvesting quota set by the Agriculture Secretary under the Agricultural Adjustment Act of 1938. Filburn the farmer made an especially compelling case (and a far more sympathetic plaintiff than the politically driven AGs bringing the Obamacare suit), since the wheat he harvested went not to market but to feed his livestock and family and to create seed for planting. Yet Justice Jackson wrote for a unanimous Court that it was perfectly reasonable and valid under the Act to seek to increase the price of wheat by limiting the volume produced. Home-consumed wheat, he wrote, “would have a substantial influence on price and market conditions.” Even if the farmer’s wheat never goes to market, Justice Jackson wrote, “it supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market.” In this sense, home-grown wheat “competes with wheat in commerce” by keeping people who would otherwise be consumers from purchasing wheat on the open market. That is, Congress essentially wanted to force people in Filburn’s situation to go out and buy wheat. Furthermore, even if Filburn’s individual “contribution to the demand for wheat may be trivial by itself,” the key point from the Commerce Clause perspective is that “taken together with that of many others similarly situated,” his contribution to demand “is far from trivial.” This kind of analysis is what has given rise to the “aggregation” approach to analyzing the substantiality of effects on interstate commerce; what matters is not the economic effect on interstate commerce of a single actor who wants to opt out of a national regulatory scheme but the “aggregate” effect of all persons or businesses similarly situated. In the case of health insurance and uncompensated care, that aggregate effect is many billions of dollars a year. Take the final example of the public accommodations provisions of the Civil Rights Act of 1964, which the Supreme Court upheld under the Commerce Clause in Heart of Atlanta Motel v. U.S. (1964). The Act compelled white restaurant, lunch counter and hotel and motel owners to serve and do business with African Americans and other racial minorities over their diehard opposition. In other words it forced people into business contracts. Similarly, Title VII of the Civil Rights Act forbids race and sex discrimination in hiring, thus forcing racist and sexist employers to hire people they would prefer not to. Every case is different, and what lawyers get paid to do is distinguish this situation from that. But what has really changed today is the political culture of conservatism, which is so shameless that it can invent a health care policy — the individual insurance mandate — and promote it widely as the alternative to the clearly superior single-payer plan that prevails in most of the world, and then come back later and declare that the whole idea is really unconstitutional the minute it is adopted by a political opponent seeking a compromise with conservatives. But, since everyone concedes that it relates to interstate commerce, if it is going to be struck down, the individual insurance mandate will have to be declared unconstitutional because government cannot go “so far.” Yet, if government cannot go so far at the national level because it violates individual rights, surely it cannot go so far in Massachusetts, either. Does this mean that Romneycare in Massachusetts is unconstitutional, too? Will the Republican standard-bearer in 2012 have to run against the constitutionality of his own plan?

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Woman Denies Buying Hundreds Of Dollars Worth Of Pay-Per-View Porn

April 2, 2012

Porn on the cable bill can be embarrassing enough, but imagine being forced to pay up for lewd movies you didn’t even watch. That’s exactly what Vicki Hart of Woodbridge, New Jersey claims she’s dealing with. Hart says Comcast has charged her for hundreds of dollars for pay-per-view adult movies that Woodbridge says she never ordered, nj.com reports . Comcast has reimbursed Hart twice for the allegedly false porn movie charges but says it’s not going to credit her account a third time. The root of the charges remains somewhat of a mystery considering that the movies were often ordered when neither Hart nor her boyfriend of nine years was at home. According to experts interviewed by nj.com , it’s possible that Hart could be the victim of cable box hackers. Still, additional porn movies or not, charging customers for services they didn’t buy is nothing new for cable providers. The few extra hundred bucks on Hart’s bill is pittance compared to one Ohio man who discovered Time Warner Cable once tried to charge his credit card $16.4 million due to human error . Even without mistaken charges, most Americans are still paying more for cable than they did in the past. Over the last ten years, the average cable bill has almost tripled to about $128 per month in 2011, up from $48 in 2001. Cable companies could be at risk of losing customers if prices continue to go up, according to the Los Angeles Times . That’s partly because of the lower cost of using services like Netflix and Hulu. And it’s not just cable companies that are making mistakes when it comes to customers’ bills. It wasn’t until Alina Simone, a Sprint customer in New York, cancelled her automatic bill pay that she discovered the company had been charging her for texts, even though her contract guaranteed 1,000 texts free of charge each month. Simone spent hours on the phone with Sprint, eventually earning an $800 refund, before the company again started overcharging her for texts, The Huffington Post reports . Banks have also faced scrutiny for charging their customers money that they don’t owe. CitiBank reportedly charged some customers twice when they attempted to make bank payments using the company’s iPad app.

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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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Lisa Gilbert: Spending Spotlight

April 2, 2012

This week has showcased the need for a spotlight on the money overwhelming our democracy, as reform groups, investors, state elected officials and more have demanded that Congress and federal agencies do their jobs and make elections transparent to the people voting in them. First, on Monday morning, organizations and investors gathered to urge the Securities and Exchange Commission (SEC) to require publicly traded companies to disclose contributions when they engage in electoral politics. Then this Thursday, the DISCLOSE Act came up for a hearing in the Senate. Both SEC rules and congressional action are critical to close the gaping loopholes in our system left by the Citizens United decision and ineffective FEC regulations on the disclosure of political spending. Polls show the public overwhelmingly supports disclosure. According to a New York Times article on a New York Times /CBS News poll released on October 28, 2010, Americans significantly, ” favor full disclosure of spending by both campaigns and outside groups.” When it comes to investors, it is the job of the SEC to pull them out of the dark and create a rule on political spending. In his opinion in Citizens United , Justice Anthony Kennedy incorrectly stated that shareholders would be in the know on political spending, but there’s actually no mechanism to give them the information. This is particularly troubling because companies can now give unlimited amounts to nonprofits and trade groups playing in elections that don’t have to disclose their funders. Groups on both the right and left, like the U.S. Chamber of Commerce, Crossroads GPS, and Priorities U.S.A. can now receive unlimited gifts from companies without the knowledge of the corporation’s investors. A company’s political spending is relevant information to current and potential shareholders who are deciding where to invest their money. One SEC commissioner, Luis Aguilar, has already said publicly that he would support a disclosure rule. Only two more votes are needed to promulgate a rule via the SEC, and they should quickly move the ball forward on this key disclosure measure. Another important avenue for disclosure is the subject of this Thursday’s hearing, the DISCLOSE Act. Parts of this bill would ensure that citizens know on a timely basis the identities of the large donors that fund tax-exempt organizations spending money on elections. The legislation would also fix the problem of untimely disclosure of the donors to super PACs supporting presidential candidates, instead giving the public information in time to act on it. The slow super PAC disclosure problem was highlighted sharply in the Republican primaries, when the disclosure of most of the super PAC donors didn’t even happen until after the pivotal Iowa caucus and New Hampshire, South Carolina and Florida primaries were long over. This bill is practical, problem-solving and popular. Opposition to either the DISCLOSE Act or a new rule-making on disclosure at the SEC in the face of overwhelming public support can only mean one thing: the opponent thinks that large donors should be hidden from the American people and we should forget about spotlights on spending. Lisa Gilbert is the Deputy Director of Congress Watch. This post was originally posted on AlterNet.

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Mary Ellen Biery: The Hottest Industries To Start A Business In

April 2, 2012

Last year, three out of every 1,000 American adults chose to start their own businesses, according to a study out this month by the Kauffman Foundation. And while that’s slightly below the entrepreneurship rate of 2010, it’s still among the highest levels of entrepreneurship over the past 16 years — a byproduct of the Great Recession’s high unemployment rates, according to the foundation. There are, of course, many considerations to starting your own business. But if you’ve been wondering what fields might be fertile for a new business, a good place to start is the Bureau of Labor Statistics’ new employment projections for 2010 to 2020. Sageworks examined several businesses that entrepreneurs might consider as they look to tap into the trends cited in the government’s employment outlook. Based on a financial analysis of privately held companies’ results in 2010 and 2011, we’ve generated some key operating metrics that may be helpful in evaluating and planning your options. These metrics show some of the routine costs associated with running that type of business. Cost of sales, which covers the direct costs involved in producing a product or delivering a service, could include auto parts for a mechanic’s shop, for example. Overhead, or operating expenses, typically includes things like office-employee salaries, rent and advertising. Average annual revenues for the businesses were derived from the 2007 Census data on taxable establishments. We used taxable entities because Sageworks’ metrics are based on financial statements for for-profit companies. A day care center, an assisted living center or a consulting firm might be options, considering the BLS expects that the health care and social assistance sector, as well as the professional and business services sector, will generate nearly half of the job growth in the current decade. That’s not too surprising, said Libby Bierman, an analyst with Sageworks, a financial information company. “The aging population and growing technological efficiencies will keep demand for these industries fairly strong,” she said. For example, the growing pool of elderly seeking to maintain some level of independence is expected to help make nursing and residential care facilities one of the biggest job boosters, with annual employment growth of 2.4 percent. And the management, scientific and technical consulting services industry should add 575,600 jobs, or 4.7 percent growth annually, as businesses increasingly use consultants to keep up with the latest technologies, government regulations, and management and production techniques, the BLS says. If you’re thinking of hanging out your own shingle, other industries expected to see stronger employment: computer systems design, automotive repair and maintenance, and various non-physician health fields, including massage therapy and chiropractic care. As shown in the chart below, many of these growing industries are labor-intensive. “Personnel play a large role in operations and in the value they deliver to clients,” Bierman said. “That is why these industries–especially day care centers, assisted living residences, and consulting firms–have relatively high payroll costs and overhead expenses more generally.” Day care centers and assisted living residencies must closely watch the number of workers they have relative to clients, often because of various laws or regulatory oversight. “Keeping that ratio high is a also selling point, which makes adding workers a good investment,” Bierman said. “Given the variability in rent or mortgages, a company’s working space and its maintenance can hugely impact the company’s profitability,” Bierman said. Rent expense is more critical for some industries than others, she noted. “Businesses that typically pay out a lot in rent, like day care centers that need playground areas, may try to buy a space while real estate is less expensive or may begin the operation out of a residence,” Bierman said. Other start-ups, like a massage therapist or a management consultant, may be able to set up and maintain their business in a smaller space, allowing more of the revenues to fall to the bottom line sooner.

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Daniel Burrus: A Lesson From Google: Why Innovation Is the Key to Your Company’s Future

April 2, 2012

I’ve always said that innovation is a key driver of business success . We saw this in action with Google. Back when Google was a startup, they focused heavily on innovation in search. As a result, they created a major source of income and a name for themselves as the dominant search engine. Google was able to accomplish this in a relatively short amount of time because they kept the pipeline of innovation going and encouraged their engineers to spend 20 percent of their time coming up with new ideas. As a result, they gave us Gmail, Google Maps, Chrome, and a host of other advances. One of the hard trends happening right now is that the main computer people use is shifting from a laptop/desktop to a smart phone and tablet . This shift started two years ago and was fully predictable. Just look back over my previous blogs and you’ll see I was talking about this shift long before it happened. When the trend started to emerge, what did Google do? They saw the iPhone and its success and they introduced the Android. It was a bit more copying than innovating, but they did still innovate (albeit just a little bit). Where Google dropped the innovation ball was with social media. They saw Facebook grow incredibly, so they introduced Google+. Was much innovation involved? Not really. It’s definitely more copying than anything else. They simply made their own version of Facebook. No wonder Google+ is having a hard time taking off. Here’s the problem: When you focus on your competition and copy them, you end up competing with them. However, when you focus on innovation, you become the competition and others try to copy you. That’s a huge difference. Realize that no matter how hard you try to copy someone, you can never catch up because the leader is innovating. In fact, the only way to really catch up is to jump ahead. Unfortunately, Google became so focused on social media that they lost their original spirit of true innovation. I even heard that the engineers who spent 20 percent of their time on innovation were told to focus that time on innovation within the realm of social. That, of course, dilutes the innovation engine. Moving forward, I’d like to see all companies, not just Google, get back on the innovation bandwagon. For any company to thrive in the future, innovation, not copying, is the key. Remember that we’re in a world of exponential transformational change. With bandwidth, processing power, and storage accelerating so rapidly, it’s truly a time for every company to innovate at new levels. Technology has leveled the playing field, and the game is changing.  It’s time to stop playing the old game and start defining the new one. Article first published as  A Lesson From Google  on Technorati.

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Jerry Jasinowski: Manufacturing Is Different

April 2, 2012

” Do Manufacturers Need Special Treatment ,” was the headline of a commentary by Christina D. Romer, who chaired President Obama’s Council of Economic Advisors, in the New York Times earlier this year. An economist, Romer made it clear she regarded manufacturing as just another sector of the economy. “American consumers value health care and haircuts as much as washing machines and hair dryers,” she wrote. “And our earnings from exporting architectural plans for a building in Shanghai are as real as those from exporting cars to Canada.” That myopic view is all too common among economists. I surmise this is what comes from getting lost in data on spreadsheets, and losing contact with the real world. But I too am an economist and I am here to testify that Romer’s interpretation of the data simply does not reflect reality. Manufacturing is different from other sectors in three key ways: First, manufacturing is where real wealth is created. Manufacturers take raw materials from the earth, apply copious amounts of energy, mix in creative human genius, and voila, out comes the myriad of wonderful products and technologies that enhance human life. Second, manufacturing has an extraordinary “spillover effect” supporting more peripheral jobs than any other sector. This is why the states compete so vigorously to attract new manufacturing plants. And third, manufacturing is where technology is put into practice through innovation. A brilliant idea and $5 will get you a cup of coffee at Starbucks. It is the manufacturing shop floor where the potential of creative ideas is proved or disproved. Manufacturing accounts for 70 percent of private sector R&D and 90 percent of patents. For more than a decade we have stood by while foreign competitors employing predatory trade practices have absconded with major portions of our manufacturing base. The persistent weakness in our economy today, and especially the stubbornly high unemployment, is the result. The time has come to recognize this challenge and rise to meet it. There is a reason our competitors are so committed to manufacturing — they recognize that manufacturing is the foundation of a modern nation’s economy. “The world power that loses its manufacturing base,” said Akio Morita, founder of Sony, “will cease to be a world power.” The good news is that Romer has returned to academia. President Obama and his Assistant for Economic Policy Gene Sperling are highlighting the importance of manufacturing to the country, as is the presumptive Republican nominee Mitt Romney. According to political consultant Mark Mellman, there is overwhelming public support for a national manufacturing strategy focused on bringing jobs back from overseas, retraining U.S. workers, and enforcing fair trade rules. The American people fully understand the importance of manufacturing to the country, even if many economists do not. Change is coming. Jerry Jasinowski, an economist and author, serve d as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.

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Raymond J. Learsy: Shell Supports Iran’s Murderous Mullahs. Should We Be Supporting Shell?

April 2, 2012

The callous greed in the oil patch seems to know no limits. Here we have a company, Royal Dutch Shell, bursting with earnings, at the apogee of its yearly returns, going after the last dollar or Euro to make things fatter still. This to the cold dismissal of the brave Iranians who rose en-masse in 2009 to rally for free elections only to be put down brutally by the Mullah’s goon squads financed in large measure by the plenitude of oil revenues streaming from Iran’s export oil loadings. The world was outraged, but helplessly stood by as the slaughter continued. From far and wide came calls to impose sanctions on Iran and to impose embargoes on Iran’s products. One would have thought any responsible organization would have desisted its activities with what had now evolved into a murderous regime. Clearly conscious of the public outrage that would result from its moral turpitude continuing to enrich the Mullahs, Shell did all it could to hide their transactional baseness with the Iranian dictatorship. As example in March 2010 the Wall Street Journal (“Oil Trade With Iran Thrives Discreetly” 05.20.10) reported that the tanker ‘Front Page’ left the port of Fujairah, U.A.E.to sail on to Saudi Arabia. All well and good. But wait, tracking information revealed a very different course. The ‘Front Page’ made an unreported stop along the coast of Iran to load a cargo of Iranian oil. Who was the charterer of this brazen attempt to hide their continuing ‘business as usual’ with an Iranian government in the midst of imposing draconian oppression on its people. Yes, Shell Oil. Since that time very little has changed, if not in becoming more grotesque. Shell’s gorging on Iranian oil continued ongoing. Just this past week CNBC reported that “Shell Scrambles to Pay Huge Oil Bill for Iran Oil” (03.25.12). We learned that Shell is struggling to pay off $1,000,000,000 that it owes the National Iranian Oil Company, the equivalent of about 8 million barrels of oil. Apparently Shell has become Iran’s second biggest oil buyer, having been outdistanced only by France’s Total, who however has ceased its Iranian oil purchases at the end of last year. But it seems Shell toils on, now having to navigate through the labyrinth of financial sanctions in order to placate their Iranian pushers. And as the CNBC report would have it, “Shell is working hard to figure out a way to pay NIOC.” All of which of course raises the question, given Shell’s willingness to help sustain the murderous Iranian regime, should we as consumers exercise our individual initiative in solidarity with the oppressed people of Iran (one needs remember the deeply poignant death of Nedā Āghā-Soltān[ on the streets of Teheran on June 20, 2009). In our daily lives perhaps it is now necessary to decide where and from whom we buy our gasoline! Oh yes, by the way, another point of focus. Should we be comfortable with the imminent ruling our government agencies, especially the U.S. Department of the Interior, are about to make permitting Royal Dutch Shell to drill off Alaska’s Beaufort and Chuckchi Seas? Vesting that responsibility with a corporation of such vacuous concern?

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Stephan Chambers: What It Takes to Change the World

March 31, 2012

Good afternoon ladies and gentlemen. Welcome to the closing plenary of your amazing forum. It’s not really the closing, of course. Eliot again, “In my end is my beginning.” Your forum ends today only in the sense that you leave Oxford and go back to work. It carries on in that work all through the year, it carries on in the relationships you have with each other, it carries on in the renewed energy you give each other and in the difference you make. The Forum isn’t an event, it’s a stream. And if you think I’m going to step into the same quote twice, you’re wrong… As some of you know, I’m not new to this family… but I hadn’t really, really understood until this week how much your comparative advantage is each other and the trust you place in each other. Every single conversation, suggestion, and story was premised on really staggering amounts of trust. It’s been hugely impressive to see. You do really brave things. You focus on where we’re going not what’s in the way. You’re crazy in the ways that Eve Ensler would have you be crazy. You are, above all, generous. You share your luck and your energy. 
We have a wonderful final discussion for you now. I have been reading Zoe Williams’ work for years. It’s amazing in its breadth and in its depth. When we met on Wednesday, Zoe challenged me to an arm wrestle. This augurs well for your panel. Zoe will introduce her very distinguished panel. It is my pleasure to introduce her to you. Zoe… I don’t know about you, but I don’t always experience our Forum in an entirely linear way. I can’t quite remember if Hans Rosling predates Gordon Brown or whether George Soros is one of the world’s greatest singers. If you’d like a quick reminder of what you’ve been doing, here’s a short film to bring back some memories. What a forum it’s been. I don’t know about you but I’m a little giddy with exhilaration and maybe some exhaustion. We’ve been warmed by the sun and each other. We’ve been in plenary, in workshops, in convenings, in panels, in moderations, in connections, in the Colab, in receptions, and at dinners. We’ve seen films and still photographs, graphs and slides. Heard at least one cello, a string quartet, seen dancers and been to a jam. And we heard Annie. I learnt a lot from you this week. I’m not sure I can do justice to what I’ve learnt but here’s a highly selective list of some things that stand out: I learnt that impossible problems aren’t impossible. They’re just very hard. I learnt that we should all get more sleep. I learnt that the global village needs elders. I learnt that voles are more interesting than I thought. I learnt that being outrageous matters. I learnt that the cracks are where the light gets in. I learnt that we must tap into the timeless to solve the urgent. Around these fragments I also felt a collective belief that we must link the fact-based world with the meaning-based world — that some of the mechanistic models we’ve built are no longer adequate. We look at the world as if it’s chess when it’s Jackson Pollock, as Carne Ross puts it. And I felt that mass mobilization, in person, in dance, in technology, is on your agenda. I have cried every day this week. Remember as I tell you this, that I’m male. And British. And from Oxford. I cried when I heard Nick Danziger. I cried when I heard Eve Ensler. I cried when I heard Annie Lennox. I cried in Pat Mitchell’s panel and when I saw the film clips at yesterday’s awards ceremony. I’ve also smiled a lot. I smiled at the Olympic torch, I smiled at Larry’s socks, I smiled at the images of the survivors of trafficking. I smiled at you all and your demonstration that what it takes to change the world isn’t, in the end, mostly about facts or money. In the end, it’s mostly about people and collaboration. As Debra Dunn said yesterday, “If the stakes are high enough you have to collaborate.” We know the stakes are high. Imagine if this event gave us back mass mobilization. That would be harnessing flux. It is time now for me to thank you for being here and to wish you safe journeys home. I look forward very much to seeing you next year and will leave you, not where we began with TS Eliot but with the theologian Reinhold Niebuhr. “Nothing is intrinsically good,” he wrote “except goodwill.” You have goodwill and I’m grateful to you for sharing it this week. Thank you and goodbye.

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Bob Edgar: Citizens United, the Supreme Court, and Our Independent Judiciary

March 30, 2012

I’m not a lawyer but I’ve spent the better part of my adult life working with and often admiring lawyers. There are some bad ones of course, but I’ve always been impressed by the devotion almost all lawyers share to the law and our system of justice. So I’m perplexed these days as I consider how justices of our Supreme Court — lawyers at the pinnacle of that system — have opened the door to an unprecedented assault on judicial independence. Millions of Americans now understand how the high court’s Citizens United decision, along with other campaign finance rulings, has opened a financial floodgate that leaves government vulnerable to corruption. They see the enormous potential, indeed the likelihood, that the millions of dollars being invested in the 2012 campaign will be repaid in government contracts, laws and policies crafted to benefit a relative handful of campaign donors. But I also fear that most folks, including many lawyers, haven’t yet grasped how money, and the strings attached to it, also is pouring into judicial elections. And as in races for president, Congress, governorships and other offices, much of the money is being spent by groups that take pains to shield their donors from view. While our few hundred federal judges enjoy lifetime appointments that protect their independence, there are thousands of state court judges who must periodically face the voters. That means they’re vulnerable to negative ad campaigns, often financed by business interests or ideological groups angry about past rulings, and that they must busy themselves raising money from people and groups who may need or want something from them in the future. “Outside forces are becoming a bigger deal,” Georgetown University law professor Roy Schotland, told the Washington Post in a story published Friday. “We’re seeing more takeover of the races from the outside.” State court judges, he added, “are like sitting ducks.” Florida Tea Party activist Jesse Phillips told the Post that he hopes to raise more than $1 million to unseat three of the state’s Supreme Court justices this fall; he has no intention of disclosing his donors, Phillips indicated. Two years ago, in the first round of judicial elections of the post-Citizens United era, three Iowa Supreme Court justices were swept from office by voters angered over the court’s ruling upholding same-sex marriages. A few anti-gay groups poured about $1 million into the campaign to unseat them. There were similar uprisings across the country, often financed by individuals and groups asserting that judges should pay more attention to public opinion and less to their views of what the law and the Constitution require. That’s scary. “We can make all the strides we can make in the executive and legislative branch, and we can have all that thrown out if we don’t have a court that’s responsible to the will of the people,” Phillips said. This is the leading edge of a movement that could transform our courts from guardians of the Constitution into subsidiaries of corporations and ideologues. We’ll have the Supreme Court to “thank” for it.

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Scott Bittle: Is Regulation Really Strangling Start-ups, and How Much Would the JOBS Act Do to Keep It Under Control?

March 30, 2012

Here are two facts that should be attracting a lot more attention than they are. Over the last decade, nearly two-thirds of new jobs in the U.S. economy came from businesses less than five years old. That’s a big hint on how to rev up job creation. Opening up an ice cream parlor in San Francisco can cost $20,000 in fees and include a 2-year wait for the city to approve permits. All the while, the owner is incurring rent and other expenses while waiting for the powers that be to say it’s OK for the business to operate. According to the New York Times , Juliet Pries, the owner of The Ice Cream Bar, had to hire a lawyer and pay $11,000 to get the water turned to make it through San Francisco’s marathon approval process. Her business is up and running now and she has 14 employees. That one owner persisted where others might have failed is a small step forward on job creation, but her experience raises the question of exactly who benefits by making the process so slow, cumbersome, and difficult. A lot of people try to make this issue simple: It’s government regulation versus business start-ups and job creation. That’s the way the issue is being framed in the debate over the JOBS Act , designed to exempt “emerging companies” from certain financial disclosure requirements, while opening the door to online “crowd financing.” But the reality is that for many businesses, such as The Ice Cream Bar, the problem isn’t about Sarbanes-Oxley, where the debate has been largely defined by lobbyists, and mostly lobbyists for big businesses that can take care of themselves. The reality of regulation demands a more careful assessment of what’s wrong and a set of well-thought-out remedies. Here are some points to consider. It’s not all about Washington. In the simplistic world of political campaigns, Washington is the mega-villain. But the truth is that most businesses, small businesses in particular, spend a lot more time dealing with other levels of government. Most states require someone starting a business to get a license. If you’re in a specialized field, whether you’re an accountant, barber or mortician, you probably need occupational licenses, as well. If you’re hiring people, you need unemployment insurance, and depending on what you’re selling and where, you may need a license to sell your product and another to charge your customers sales tax. Local governments often require environmental, health, building and other permits , and you’ll have to obey zoning laws as well. Is regulation the problem or is it its complexity? Just about every regulation starts for a legitimate reason — and sometimes, sadly, they emerge from horrific tragedies like New York City’s Triangle Factory fire. No one wants unsafe buildings where workers are in danger. But sometimes even good regulations seem to go bad. New York City has a seven-step process for getting a building permit — one that’s replete with admonitions to file under “Directive 14″ or “Directive 2″ and consult other documents and agencies. In Step Number 5, the department “perforates the plan.”Apparently, when you’re nearing the end, you need to bring your folder to the “Record Room,” where the “Record Room clerk perforates the plans and forms and returns them to the applicant.” Then you microfilm the plans, and return them to the Record Room so they’re “now ready for permit.” OK, we’re bewildered (And are they actually still using microfilm?) We certainly invite New York City’s Record Room clerk to weigh in and explain it to us. Maybe some periodic housecleaning is in order . Every regulation exists for a reason, usually a good one. But the reasons change long before the regulations do. Maybe we need to start thinking about a regular review process, either allowing regulations to sunset or requiring a re-examination every 10 or 20 years. And we need to look at the accumulated impact on businesses and employers, along with the need to protect employees, consumers, and the public in general. At the federal level, businesses have to comply with a whole host of regulations ranging from the Fair Labor Standards Act to OSHA to the Family and Medical Leave Act to Veteran’s Preferences. Each one fulfills a mission most Americans support, but each is also detailed and complex. Taken together — well, this is why there’s a thriving market for compliance officers. The problem with regulation is that it all adds up, and no one is really in charge of looking at the full sweep of regulation an industry faces and seeing whether it’s reasonable or not. Whether regulation is hampering business and stymieing job creation is just as important as whether the public interest is being served and what would be lost if the regulations were rolled back or pruned. In the end, there’s not much point worrying about the issues surrounding complex federal laws while still making small business owners run around City Hall with folders of perforated papers looking for someone who still handles microfilm processing.

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Daniel Wagner: Carbon Taxes and Global Decision-Making

March 30, 2012

Co-written by Joshua Wallace The European Union’s decision to impose a carbon levy on air travel to Europe had the best of intentions but has provoked howls of protest from some of the world’s largest economies, with both China and India having stated they will not comply. The conundrum now facing the EU — whether to double down on the idea, modify it, or withdraw the concept altogether — serves to emphasize the myriad of interdependencies and impacts that today transcend borders. The EU carbon levy on air travel became effective from January 1st, though airlines will only be billed next year after 2012′s carbon emissions have been calculated. The EU insists that the cost of the tax is manageable for airlines and is necessary to help it achieve its goal of cutting carbon emissions by 20% by 2020. China and India consider the tax a unilateral trade levy disguised as an attempt to fight climate change. Fears have surfaced that the deadlock over this issue could spark a trade war resulting in retaliatory measures that would damage all sides. The issue has served to epitomize the brewing battle between the developing and developed worlds over supremacy of the emerging global financial and regulatory structure. The carbon tax has captured the changing dynamics of global decision making. For many years the West has assumed de facto leadership by determining the framework of global standards and norms, as it has been uniquely positioned to do so, given its resources and capacity to drive its vision of the future forward. However, with western countries slipping from the economic and political pedestal they have long held — by virtue of their lacklustre growth rates and failure to adapt to the new realities of the 21st century — the pendulum has been shifting in favor of emerging countries with greater rapidity over the last decade. With the pendulum shifting, the economic, political and financial clout of the developing world has risen in tandem, and the unilateral decisions taken by western nations have begun to prompt emerging countries to coalesce into unified blocs. Brazil made it clear that at this week’s BRICS summit that it will be seeking a united response to the manner in which the EU and US have reacted to the Great Recession, which they believe has damaged medium-term growth prospects for emerging markets. The World Bank has just announced that it plans to partner with a new development bank to be created and jointly funded and sponsored by the BRICS countries. And China is in the process of creating an offshore bond market for the renminbi, to facilitate its internationalization. This may ultimately position the RMB to become a meaningful alternative to the dollar and euro as a global currency in due course. Unilateral and collective actions by emerging countries will undoubtedly afford them greater bargaining power, which will become manifest sooner than many realize. The Bretton Woods institutions (the IMF and World Bank) — historically led by the US and Europe — are also beginning to be impacted by the shifting pendulum, with more and more emerging economies demanding a greater say in how the institutions are run, and by whom. China has demanded a say in the selection of the next World Bank president, and the BRICS nations have all threatened to withhold a portion of the additional financing requested by the IMF to avert a European sovereign debt crisis unless they gain greater voting power. While Christine Lagarde managed to maintain the European monopoly of IMF directorship, Jim Yong Kim — the US candidate to head the World Bank — faces fierce competition from a range of candidates from across the developing world — and rightly so. The rise of the BRICS nations as viable alternative donors to the developing world, and the idea of an alternative development bank being touted by the BRICS nations, underscore the possibility for meaningful change led by the emerging world. If the institutions that have governed the world economy since their post-war inception are unable to adapt to the new realities, then the emerging world will not wait for them. The flip side of that is that those countries which no longer truly possess ‘developing’ country status — such as China, with its immense economy and foreign exchange reserves — should no longer claim that status and continue to receive funds from multilateral development institutions. Doing so takes precious resources away from truly needy countries and takes credibility away from the collective emerging economy argument that the system must change. How the EU will respond to its carbon tax conundrum remains unclear, but what is becoming increasingly obvious is that the days of unilateral attempts to impose developed country will on the developing world are numbered. The world already finds itself at a crossroads. The developed world would be wise to embrace the ‘rise of the rest,’ for it is a force that is unstoppable and has already manifest itself in surprisingly effective ways. If you want a vision of the future, look no further than the important action the BRICS countries have taken this past week. *Daniel Wagner is CEO of Country Risk Solutions, a cross-border risk consulting firm based in Connecticut (USA), Director of Global Strategy with the PRS Group, and author of the new book Managing Country Risk (www.managingcountryrisk.com). Joshua Wallace is a research analyst with CRS. Daniel can be followed on Twitter at: http://twitter.com/countryriskmgmt . Joshua can be followed on Twitter at: http://twitter.com/JLP_Wallace .

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Raymond J. Learsy: The Price of Oil: Saudi Hypocrisy, Our Gullibility

March 30, 2012

One is compelled to pull out that old ‘chestnut’, “There he goes again.” The face of Saudi oil, and de facto senior voice of the OPEC cartel, Saudi Oil Minister Ali Naimi entertained us to one of his seminal dissertations (“Saudi Arabia will act to bring down high oil prices” Financial Times 03.29.12} expounding on Saudi Arabia’s concerns for the well being of all mankind. Stating the case clearly, that Saudi Arabia “…remains the world’s largest producer and the country with the largest proven reserves, so it has a responsibility to do what it can to mitigate prices.” No argument here. Yet that bit of wisdom is prefaced by the oldest of canards, “Needless to say Saudi Arabia does not control the price: it sells its crude according to international prices.” A truly bizarre declaration coming from the leading protagonist of the cartel, OPEC, whose primary function is to limit the supply of oil to world markets to control, and within the limits of the world’s tolerance, to maximize the price of crude oil in the market place. Clearly their efforts have been so successful that the limits of tolerance have now been reached and letting off a little steam has become part of the ritual. The ritual is encapsulated in the mantra repeated in Mr. Ali Naimi’s pronouncement: “The bottom line is that Saudi Arabia would like to see a lower price . IT WOULD LIKE TO SEE A FAIR AND REASONABLE PRICE, that will not hurt the economic recovery, especially in emerging and developing countries…”. A statement that automatically elicits our well inculcated and programmed hosannas whenever such mumblings come out of Riyadh. The trouble is we have heard this babble before and now again. In December of 2008, with oil prices teetering below $40 a barrel and gasoline prices accordingly restrained, our now benevolent Saudi Oil Minister Al Naimi would pontificate, after King Abdullah himself had ventured that $75/bbl was a fair and reasonable price, enlightening us “You must understand that the purpose of the $75 price is for a much more noble cause . You need every producer to produce , and marginal producers cannot produce at $40 a barrel.” (please see “OPEC’s Noble Cause” http://www.huffingtonpost.com/raymond-j-learsy/opecs-noble-cause_b_151961.html). This coming from a producer whose production costs veer toward $1.50/bbl or possibly less according to a pronouncement made by none other than Mr. Ali Naimi at a Houston oil conference in the late ’90s Well, several months after the December 2008 statement giving us the parameters of oil price ‘nobility’ the price touched and quickly breached Mr. Al Naimi’s $75/bbl. As it went shooting on to $100/bbl and well beyond with barely a word of discomfiture coming from OPEC’s or the Saudi Oil Ministry’s headquarters. As the price veered to $100 and higher the International Energy Agency had the presumption to criticize OPEC for holding back production only to be roundly reprimanded by OPEC’s the Secretary General El-Badri blaming high prices on speculation and “technical means”, whatever that means (please see “Noble’ OPEC Criticizes the International Agency” 1.19.11)Energy Speaking of speculation, or worse, manipulation- given the lack of transparency in the trading of oil futures in the world’s commodity markets, it would be interesting to hear from Mr. Ali Naimi whether the Saudi Oil Ministry, Aramco, the Saudi Sovereign Wealth Fund or whatever Saudi or OPEC designees are currently holding oil futures contracts and to what purpose. Certainly not to lower the price of oil? Anyway, thankyou Mr. Ali Naimi. Your sincerity and good deeds are appreciated.

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Efraim Chalamish: Lets Talk About Trade

March 29, 2012

Trade policies are not a sexy business. Customs, anti-dumping, subsidies are just some of the concepts international investors are trying to avoid. Yet, recent weeks reminded all of us that trade can make headlines. And make or break industries around the globe. The subsidies to the aerospace industry in the EU and USA, the limitations on Indian cotton, and the World Trade Organization, or WTO, claims against China by the U.S., Europe, and Japan for export control of rare earth metals all have a dramatic impact on the respective industries. We cannot avoid them. How should we explain the recent hyper-activity in this area? And what are the ramifications? First, it is important to understand the story in light of the trade-investment nexus. The foreign investment boom of the ’80s and ’90s replaced global trade as ‘the’ economic engine, with global trade being au-courant post- World War II. While the world saw a quadrupling of trade in goods between 1980 and 2008, before the global financial crisis, global investment has risen more dramatically. Global stock of outward investment, for example, grew from $550 billion in 1980 to almost $19 trillion at the end of 2009. The years since the global financial crisis of 2008 have reversed this trend. Credit crunch, a slowdown in mergers and acquisitions activity, lack of faith in the future of globalization, and regulatory reforms — all made it ever-more challenging for multinational corporations to do business abroad through foreign investment and their subsidiaries. Hence, trade is becoming a crucial element of the ‘new globalization’ and its policies even more so. Moreover, since emerging markets are the real forces behind the current recovery post-financial crisis and the developed world has traditionally led cross-border investments, it is clear why emerging markets’ exports and trade policies towards them are critical. Second, trade legislation and disputes are clearly a reflection of foreign relations and protectionist sentiment. Lack of trust and economic competition make even right wing governments think that certain market-based trade policies should be reconsidered. Recent disputes in India can exemplify that. Third, this is a big year for those who follow the link between politics and economics. France, the United States and several other developed markets are going to the polls. We tend to think about general elections as an internal event with external consequences. In other words, the nation decides on its political and economic future but it is the international community and global markets that pay part of the price. Yet, watching the current elections’ campaigns carefully, it seems like the trend is reversed. These elections become an external affair with internal consequences, at least when it comes to trade, foreign investment and growth. Foreign investment traditionally attracts very little attention in elections season. Speaking about the need to bring foreign investors is usually perceived as a threat to local industries and a trigger for unemployment. Additionally, investors would shy away from markets that may experience a political change with a potential impact on foreign investors. French candidate, Francois Hollande, for example, is talking about taxing high the super rich (75 percent) and increasing local subsidies. Some investors interpret his policies as anti-foreign investment. This kind of talk is risky. Trade, however, allows politicians to communicate to their voters without risking their standing vis-à-vis the global investment community and their supporters. Obama’s active participation in the fight against China in the WTO is a case in point. Finally, this dramatic shift that I describe is a reflection of the broader agenda of the WTO. A decade ago, when world leaders met in Cancun to negotiate trade agreements as part of the Doha Round, also known as the development round, any attempt to include non-core topics with trade impact, such as investment or trade facilitation, failed. These topics, the “Singapore Issues,” have been perceived as a barrier to trade negotiations. Recently, however, politicians and trade negotiators refer to the WTO as a weapon of last resort for dealing with strategic macroeconomic disputes, such as the old-new currency wars. While formal international institutions were part of the problem just a few years ago, now the world is looking at them as the solution. While investors will have to watch trade policies and disputes more carefully, it will also require them to develop the know-how to understand the essence of the policies and their impact on markets. The next decade will look differently. An earlier version appeared on Economonitor.

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Robert Teitelman: A Sermonette on Prediction and Its Discontents

March 29, 2012

In the Financial Times yesterday, Stein Ringen, a professor of sociology at Oxford, takes a lash to forecasting-happy economists , this time over the eurozone. Ringen believes economists “with remarkable unanimity” got it wrong, while “against the storm stood a remarkable woman, Angela Merkel, insisting no quick fix was available.” (Ringen is a little promiscuous with his “remarkables.”) He then goes on to decry, or perhaps defame, economists as a class, suggesting that some pent-up academic score-settling is going on: “They fell victim to an exaggerated confidence in themselves. Most of us in the social sciences are aware of our limitations. Economists, for their sins, have worked themselves into a frenzy about being ‘scientific.’ Overconfidence leads to hubris.” Now let us confess, this kind of attack does get the schadenfreude agitated. Many economists, perhaps even the mainstream of economists, do have sins to bear, like just about everyone else gathered around the bonfire of the financial crisis. I have complained about them regularly. Their belief in the underlying “science” of economics has led them astray, as a new and so-far provocative book by Harvard’s Jonathan Schlefer, The Assumptions Economists Make , points out (a review will follow once I get the time). They have proved, over many years and many crises, to be lousy (meaning just as fallible as everyone else) forecasting either markets or macroeconomies. When they are right, they are declared to be seers, until they get things wrong. They also demand — and are often enough afforded — a deep expertise into the political economy. Many of them trade off their technical skills and professional résumés to speak broadly about areas well beyond their expertise. Generally, they employ their rudimentary models, driven by their mostly financial — and thus quantitative — incentives to analyze, predict and shape the political economy. They are more like sociologists than physicists. That said, Ringen may significantly overstate their advocacy role in the eurozone crisis (and their unanimity) and may well exaggerate Merkel’s salvational policies as well. I use the chickenhearted “may” because no one really knows; I certainly don’t. Ringen, in fact, is indulging in the same error as economists: To criticize their penchant for certainty and prediction, he indulges in both himself. He assumes that the Merkel-led policies on Greece and the eurozone are both wise and effective. Despite a few caveats tossed in at the end of his column (“Europe is still in deep economic trouble”), he insists that “Europe’s leading politicians have performed admirably. They have done their job by staying levelheaded and trusting themselves. One lesson is clear: beware the experts who come bearing advice… and in particular economic experts.” But is the eurozone crisis really and truly over? Could Greece blow up? Could austerity drive Greek politics to greater extremes? Could Italy or Spain reject the enforced technocratic solutions to their woes? Could the markets, still fragile, drive up the price of sovereign debt again and put serious pressure on the European Central Bank and the various rescue mechanisms? And what about the seriously hobbled banks? How can anyone be confident that they know the European future? Can anyone know any future? Moreover, Ringen’s dichotomy between economists and politicians (he moves from Merkel to “politicians”) is far too simple and sharply drawn. The eurozone technocracy is a mix of both. Mario Monti in Italy is an economist, a technocrat and, now, a politician. Jean-Claude Trichet and Mario Draghi at the ECB and Dominique Strauss-Kahn and Christine Lagarde at the International Monetary Fund are both high-level technocrats and veteran politicians. Merkel herself is surrounded by economists and bankers as advisers; look at the gang from the Bundesbank. To draw conclusions about “economists” by reading the predictions of economists in the media is not to recognize how the demands of punditry tend to be self-selecting, exaggerated and often inflammatory. That said, it’s hardly unanimous. The FT alone, which provides a steady diet of eurozone commentary, has featured a wide array of solutions and schemes and views, including Ringen himself — so much it was often bewildering, particularly from an American perspective. Ringen’s column does provide a lesson in how difficult it is to resist the allure of prediction and the appeal of the simple dichotomy. That makes him just like the economists he decries. Robert Teitelman is editor in chief of The Deal magazine.

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Murdoch Declares War On ‘Enemies’

March 29, 2012

By Georgina Prodhan LONDON, March 29 (Reuters) – An angry Rupert Murdoch on Thursday declared war against “enemies” who have accused his pay-TV operation of sabotaging its rivals, denouncing them as “toffs and right wingers” stuck in the last century. Separate reports by the British Broadcasting Corporation and the Australian Financial Review newspaper this week said that News Corp’s pay-TV smartcard security unit, NDS, had promoted piracy attacks on rivals, including in the United States. NDS and News Corp had already denied the allegations, but on Thursday the media conglomerate mounted a concerted fight back as a corruption scandal that has plagued its British newspapers began to encroach on its far more lucrative pay-TV business. “Seems every competitor and enemy piling on with lies and libels. So bad, easy to hit back hard, which preparing,” News Corp Chief Executive Murdoch, 81, tweeted. News Corp, whose global media interests stretch from movies to newspapers that can make or break political careers, has endured an onslaught of negative press since a phone-hacking scandal at its News of the World tabloid blew up last year. At its height last July, Murdoch told British parliamentarians: “This is the humblest day of my life,” after meeting the family of a murdered schoolgirl whose phone News of the World journalists had hacked. On Thursday, it appeared that Murdoch had had enough of apologising. “Enemies many different agendas, but worst old toffs and right wingers who still want last century’s status quo with their monopolies,” he tweeted. For an avowed republican such as Murdoch, describing someone as a rich and upper class “toff” is a damning insult. The BBC has a long history of ideological clashes with BSkyB, which is 39 percent owned by News Corp, and both Rupert and his son James Murdoch have publicly attacked the British public service broadcaster over the years. The Australian Financial Review is owned by Fairfax Media , the main rival to Murdoch’s News Ltd newspaper group in Australia. “INACCURATE CLAIMS” James Murdoch sits on the board of NDS, which News Corp and co-owner private equity firm Permira agreed to sell for $5 billion to Cisco this month. He is also non-executive chairman and former CEO of BSkyB. The younger Murdoch has been criticised for not uncovering the scale of phone-hacking at the News of the World, though he had not yet joined the UK newspaper operation when the hacking took place. He has since moved to New York after being promoted within News Corp to deputy chief operating officer, and has severed all ties with the British newspapers. His focus is now the company’s international pay-TV operations, where he made his career. Chase Carey, News Corp’s COO and James Murdoch’s immediate boss, issued a statement late on Wednesday in which he condemned both the BBC Panorama documentary and other media worldwide who had reported its claims. “The BBC’s Panorama program was a gross misrepresentation of NDS’s role as a high quality and leading provider of technology and services to the pay-TV industry, as are many of the other press accounts that have piled on – if not exaggerated – the BBC’s inaccurate claims,” he wrote. NDS has complained that it was not asked for its side of the story before Monday’s Panorama, which claimed NDS had leaked secret codes that allowed rampant pirating of BSkyB rival ITV Digital, which went bust in 2002. On Thursday, NDS’s Executive Chairman Abe Peled published a detailed letter to Panorama accusing the documentary of using manipulated emails to support its allegations, and demanding that the programme retract the claims. The BBC said: “We stand by the Panorama investigation. We have received NDS’s correspondence and are aware of News Corp’s rejection of Panorama’s revelations. However, the emails shown in the programme were not manipulated, as NDS claims, and nothing in the correspondence undermines the evidence presented in the programme.” Also this week, the Australian Financial Review published a story claiming that NDS had allowed piracy to thrive at its client U.S. satellite broadcaster DirecTV, which Murdoch had ambitions to buy, even though it had a fix. It reported that NDS ran a secret unit in the mid-1990s to sabotage its competitors. The stories were the result of a four-year investigation by investigative reporter Neil Chenoweth, who has written two books about Murdoch. The AFR’s Editor-in-Chief Michael Stutchbury told Reuters on Thursday: “We fully stand by our reports in the paper and by Neil Chenoweth’s extraordinary investigation.” “We are not motivated in any way by any desire to damage any financial rival to the company that runs the Financial Review. We are simply following the story and publishing what we have uncovered,” he said. None of the evidence presented by Panorama and the AFR this week suggests that the Murdochs or any other News Corp executives were aware at the alleged practices at NDS. NDS has won several court cases brought by rivals accusing it of promoting piracy, while others have been dropped – in one case because News Corp bought a subsidiary from the rival, Vivendi, which at the time was struggling with debt. News Corp made $3.8 billion in revenues and $232 million in operating profit from satellite TV in its last fiscal year. It does not detail financial results for its newspapers but its UK titles bring in less than 3 percent of group profit.

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David Fagin: Flying The Unfriendly Skies

March 29, 2012

From the cheerful way United’s CEO, Jeff Smisek, virtually greets you at your seat before takeoff, you’d think everything was just peachy in the newly-merged, friendly skies. More routes are being added, new planes are being bought, the online reservation system is supposedly getting easier and cabins are being modernized with wireless Internet access. So, how come everyone you talk to now refers to it as “United F#&*n Airlines?” That’s easy. Just pull back the first-class curtain and you will see the “friendly skies” aren’t so friendly after all. First off, it’s no secret, when it comes to customer service, United is commonly regarded as one of the worst airlines in the business. They may brag about their “most admired” status in the industry, but that survey , conducted by Fortune magazine, only polled industry insiders, not consumers. A look at the recent data compiled by consumer research company the Temkin Group paints a different picture. While almost every airline in the business enjoyed a bump in customer satisfaction last year, only two dropped significantly: American and Continental. At this point, you’d expect it from American, as it’s in bankruptcy. But what even Continental employees seem to be saying about their chipper CEO, is that he’s well on his way to guiding the nose of this once-proud airline down to where United currently is, and, at the same time, betraying the legacy of former Continental chief executive Gordon Bethune. One senior flight attendant in Houston even went as far as to coin the phrase, ” It’s all Jeff’d up! ” — referring to Continental’s current day-to-day operations. When Bethune, a former Boeing executive, took the reigns of Continental back in the early ’90s, the airline was at rock bottom in almost every category. Within a few years time, he took the struggling carrier from worst to first. After his departure in 2004, Larry Kellner stepped in as the new CEO and maintained the above-average experience Continental customers had grown accustomed to. (It was Kellner who introduced DirectTV, lie-flat seats and other amenities in a post-9/11 industry.) No one can say for sure why he chose to resign as CEO, but insiders say he was against the merger with United from the start. While, on the opposite end, Smisek, then president, was eager to become CEO of the world’s largest airline. Whatever advancements Mr. Smisek has been touting for the past year-plus in his welcome message, ask most customers and they’ll agree, it sure seems like they’re heading in the wrong direction. For example, one change not welcomed by its lower-tiered elite passengers is the change to the Economy Plus seating policy. Used to be, extra leg room seats were made available to elite members when booking the flight. Since the merger, that policy has been scrapped, and United now only offers whatever seats may remain at check-in. In order to ensure an extra leg room seat for a long journey, loyal elite members must purchase the seat like everyone else. Strike one. Next, is United’s new pet policy . On one hand, the airline says it has made it “safer” for pets to travel, requiring they now be labeled as “cargo,” rather than “baggage,” which allows them to be placed in a climate-controlled space in the plane’s hull. On the other, instead of costing a few hundred dollars to ship a dog overseas, it now costs several thousand . This rule, in particular, has been financially crippling to our servicemen and women in the military who routinely need to move from base to base and are now being forced to find other means of transport. It also has everyday passengers with pets up in arms. Strike two. Last, but definitely not least, is United’s overall customer service. A glimpse of the airline’s Facebook page shows a staggering number of negative comments on a variety of issues, with dozens of additional comments supporting the criticism; i.e., one man who earned a million-mile status with Continental was put in coach and denied an upgrade because the agent said his ticket was “too cheap.” A first-class passenger had condensation from the AC dripping on him the entire way to LAX. Another woman states she recently returned from a trip to Florida with her 80-plus-year-old mother who was just out of the hospital and needed special assistance, and, she said, when they tried to board early, she was literally yelled at by the attendant at the gate and told to “Wait her turn!” It may be old hat for United travelers, but Continental customers are simply not used to being treated in that manner. Yet, all signs point to the fact that they better get used to it fast. Strike thr- wait, that was a foul ball. If you’ve flown United/Continental coast-to-coast recently, you know you’d be lucky to get a power adapter at your seat, as the planes they use for the long hauls are inexplicably much older. Why? Not even customer service reps seem to know. Rumor has it it, it’s because the older planes are apparently bigger. This obviously allows United to book more seats, but, meanwhile, the smaller planes, fitted with power adapters, DirectTV and everything else you’d expect on a cross-country flight, are used for short hops up and down the East Coast. Forget about Wi-Fi. If you’re flying from L.A. to New York, it’s a crap shoot if you’ll even have your own video monitor. And, this, supposedly, is from the “most admired” airline in the business? Strike three. Yer out. It definitely seems, instead of raising United to the level where Continental used to be, Mr. Smisek is content in lowering the expectations of Continental’s employees and customers to that of United’s employees and customers. And, that just doesn’t fly .

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Dr. Serena Reep: Meaning of Work: What For-Profit Corporations Can Learn From Non-Profits

March 28, 2012

According to PricewaterhouseCoopers’ 2010 data , 33 percent of the U.S. workforce is highly disengaged from the work they do as compared to 20 percent in 2008 and 10 percent pre-2008. Gallup 2010 also reports that 33 percent of employees in world-class organizations are either not engaged or actively disengaged and 67 percent of employees in average organizations are either not engaged or actively disengaged. What is the cost of this disengagement to the U.S. corporations, you ask? About $292-$355 billion annually, according to Gallup. What gives? Why is there such disconnect and dissatisfaction with the work we do? We spend the largest portion of our wakeful moments at work; if these precious moments are spent in emotional detachment, it speaks volumes about our quality of life. The way the corporations “run” their business with the “profit first” philosophy ignores the fundamentals of human nature. When people have the opportunity to develop trusting, caring and mutually supportive relationships and form a sense of community with the people they work with, they have a stake in the outcome of the individual and team performance. When this is lacking, however, it becomes “just a job that pays the bills.” They will trade their bodies and time for the paycheck but not their hearts and souls. Contrast this with Martha’s story — a clear example of what “employee engagement” looks like in everyday life. I’ve been honored to work for a short time with breast cancer awareness charities. I can’t get one particular lady, Martha, out of my mind. She was the most pleasant, vibrant, and positive woman that I’ve ever met. She was a volunteer; she didn’t make a dime from her work but somehow you knew her sentiment was worth more than a paycheck. She helped, she advised, she rolled up her sleeves, she marched, raised money and answered the phones when needed. Martha was the perfect employee who wasn’t hired. I couldn’t help but think about why more people like Martha weren’t actually working at a for-profit company. How can we bottle her incredible attitude and infectious optimism? Why is the nine-to-five worker largely unhappy and disengaged from work while this unpaid woman is eager to get to work every morning? Why? There is clearly a lack of meaning and passion, lack of relevance, in their jobs, compared to Martha’s. Everything Martha did as a volunteer had meaning and was fueled by inspiration. She had beaten the breast cancer that took her mother. Her motivation was not only personal but positively vengeful. After seven years of intense chemo, losing all her hair, her confidence and her marriage, she had one chance left. The chance came in the form of a little known alternative cancer treatment used widely in Asia. She traveled there as a last resort, and this became her saving grace. Now back in the U.S., Martha had made it an obsession to have alternative remedies approved by the FDA, so other woman can have access to treatment options. She is passionate and unrelenting. She squeezes more productivity out of one day than most people do in a month, because she found meaning for her remaining days here on earth. When your work makes a difference in the world, you will never fully grasp its true influence. The magic of passion is that it lights the passions of others in areas outside of your purpose. When was the last time you saw someone doing something with such passion and intensity that you could only think about what lies dormant in your own life? Martha not only affected those passionate about research and development of cancer treatments but also lit the fires of anyone whose dreams were covered by hesitation and disbelief. The point is this — when you find meaning in your life’s work and lean into it with all that you have, others cannot help but be inspired and lean into their own dreams. When corporations can replace process with passion, and re-engineer the workplace to sustain a culture of caring and trust, there is much better likelihood that employee engagement statistics will improve and so will their bottom-line.

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James Doran: Free Trade Like Manna From Heaven for Middle East Entrepreneurs

March 28, 2012

A colleague staggered into the office a couple of days ago weighed down by a rather large, ornately designed cardboard box. Inside it were dozens of brightly wrapped candies, each the size of a bantam’s egg. They were, she told us, a delicacy from her native Iraq, recently delivered by her mother who had just returned from a brief trip to Baghdad. The gold-and-purple wrappers peeled away — eventually, as the heat of the journey had taken its toll — to reveal a beige mass of toffee studded with pistachios. They were scented with rose water and a hint of saffron. Al man wa salwa is a heavenly treat for many Iraqis, especially those, it seems, who are far from home. The term translates into English as “manna from heaven” and is borrowed from a sura in the Quran. With such credentials, and such a following, it is a wonder that the delicacy is not an international marketing success story, with al man wa salwa sold at every street-corner candy store the world over. Perhaps it could be. Why would an Iraqi manufacturer not use such a household name as the foundation to create the region’s own Hershey’s or Cadbury? The truth is politics, geography, conflict and red tape conspire to make life tough for entrepreneurs all across this region. But it could be so different. As expatriates in the UAE, we are surrounded every day by friends and colleagues from every country in the Middle East and North Africa. Each one of them holds a product from their homeland so dear they would go to the ends of the Earth and pay handsomely for a ready supply. The examples are endless and each one underscores a vast untapped potential for regional and international trade. A friend from Yemen loves his Yemeni honey — Sidr honey, to be precise. It is harvested just twice a year in the Hadramaut mountains. A single kilogram of the rare nectar costs Dh3,500 ($952) or more today as supplies are restricted by continuing unrest, making it more expensive than caviar. Palestinian olive oil is recognized by gourmands the world over as the finest available. (Don’t tell the Italians, though.) The fair-trade community has made substantial progress over the past year branding and selling Palestinian olive oil on international markets. Members of the Canaan collective, for example, were last year paid twice the going rate for their olives and secured contracts with J Sainsbury supermarkets in the United Kingdom and Whole Foods in the United States. Canaan, the company that markets the oil, says it works with more than 1,500 farmers from 43 villages across the Palestinian Authority, accounting for more than half of all West Bank olive oil exports. Sales are expected to hit $5 million this year, with a profit of at least $600,000 to be shared among the farmers. Canaan was started by Nasser Abufarh, a young entrepreneur with a relatively small $100,000 of seed capital. Mr. Abufarha’s international success is notable, sadly, as it is an exception, despite a recent surge in bilateral free-trade agreements between countries of this region and counterparts all over the world. The path to such free-trade agreements has long been hindered by familiar obstacles. A lack of transparency, corruption, political instability and unreliable supply chain management are the most common problems cited by organisations such as the U.S.-Middle East Free Trade Coalition. Not all countries are equal in this regard, however. The UAE has used the free-zone model to encourage international trade, and to facilitate trade from other countries in the region. Within zones such as Jebel Ali in Dubai and the nascent Kizad free-zone in Abu Dhabi, entrepreneurs from all over the world, large or small, can find a haven for trade. Campaigns are under way in the U.S., Latin America, Asia and Europe to strike fresh trade agreements with new governments in Egypt, Tunisia, Libya and hopefully one day with Syria, Yemen and others. The free-zone model should be given equal consideration by the new governments as they forge important new ties. If they succeed, perhaps one day we will all enjoy Iraqi manna from heaven, wherever on Earth we happen to be. For more Middle East Business, News and Features visit www.thenational.ae

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Ethan Rome: Paul Clement Calls for Tax Hike in Supreme Court Arguments Against Obamacare

March 28, 2012

In Tuesday’s oral arguments at the Supreme Court about the Affordable Care Act, the attorney representing the 26 states challenging the law called for a new general tax to pay for the costs of ending the private insurance industry’s discrimination against women and people with health conditions. It appears to be a thus-far overlooked moment that revealed that the law’s opponents don’t have any other ideas for how to guarantee that all Americans have access to quality, affordable health care that they can count on. So Paul D. Clement, legal icon of the conservative movement, found himself suggesting a tax hike that violates every fiber in the political body of congressional Republicans as well as the Grover Norquist pledge to never raise taxes in any way or for any reason — ever. In the two hours the court devoted to the individual responsibility provision, or the so-called mandate, there was a frank discussion about the cost of providing care for people without insurance. It was acknowledged that the insurance industry discriminates against sick people — by refusing to cover them and charging them more, and dropping people when they get sick — because that’s how they make money. Obviously it would be more cost-effective and efficient, and would make people healthier, if we had a mechanism to ensure that everyone had insurance. That would also eliminate uncompensated care and more broadly spread the costs of ending insurance company discrimination. But that’s the Obamacare law that the Republicans want the court to strike down. They’re also against Medicare for all because that would be socialist and put the private insurance industry out of business, although it does have the virtue of being unquestionably constitutional. So that leaves dealing with the problem on the back-end of the process in the way America’s conservatives know and like best: add up the private costs and use public funds to pay for them. Specifically, in an exchange between Justice Ginsberg and Clement about how to pay for the costs of requiring insurers to accept all comers and not discriminate in coverage and price against people who need health care, Clement said the following: I think there are other options that are available. The most straightforward one would be to figure out what amount of subsidy to the insurance industry is necessary to pay for guaranteed issue and community rating. And once we calculate the amount of that subsidy, we could have a tax that’s spread generally through everybody to raise the revenue to pay for that subsidy. This is as objectionable as it is ironic. I suspect that Clement’s national health care tax may not be what the political opponents of the law had in mind when they hired him. Clement’s tax hike is certainly not what organizations like the Koch Brothers-funded Americans for Prosperity are trumpeting on their website and in their public statements. Clement’s tax hike suggestion also blurs the most basic fact about their case and their approach to this issue: the Republicans aren’t interested in doing anything to address America’s health insurance crisis. It’s not an accident that they don’t have any real alternatives — they just don’t appear to care.

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Daniel Franklin: Why Now is a Good Time to Be Thinking About 2050

March 27, 2012

“Never prophesy, especially about the future.” That nicely captures the perils of predictions – so nicely, indeed, that the saying or a version of it has been credited to numerous people, from the movie mogul Sam Goldwyn to baseball’s Yogi Berra. But in practice, we do have to prophesy, however imperfectly. Take climate change, an issue that involves assessing what could happen decades ahead, and how to respond to it. Or take defence planning: despite the difficulty of forecasting the nature of future conflicts, decisions have to be taken today that will affect how wars are fought for years to come (the F-13 Joint Strike Fighter, for example, the most expensive defence-industrial project ever, is planned to be a mainstay of American and Western air forces until at least 2060). Similarly long horizons are involved in planning for our energy needs and our pensions. So we need to look at the long term. Where to begin? A good place to start is with population trends – which is why this is the subject of the first of the 20 essays brought together in Megachange: The World in 2050 , a book published by The Economist this month. The world’s population is changing very fast. It took 250,000 years for it to reach 1 billion, around 1800. The latest billion, taking the number of people on the planet to 7 billion, took just a dozen years (a landmark the United Nations said was reached last October). By 2050 the global population will have risen to a little over 9 billion, according to the UN’s central projections. And by then the global population will be older (the median age will rise from 29 to 38) and more urban, with nearly 70% living in cities and towns, compared with just over 50% today. It will also be more African: about half the extra 2.3 billion people on the planet by 2050 will be in Africa. In 1950 Europe accounted for over a fifth of the world’s population, and Africa for a tenth; those proportions are on their way to being reversed. By 2050, there will probably be nearly as many Nigerians (close to 400 million) as Americans. Very broadly, from the point of view of population patterns, the world will fall into three groups between now and 2050. The first consists of younger-than-average countries where the share of the economically active population relative to that of dependent children and elderly will be very favourable. These countries will potentially enjoy a ‘demographic dividend’, if there is enough productive work for their large numbers of working-age people (or they could face instability if jobs are scarce). In this group are India, the Middle East and Africa. In the second category of countries are those where the average age is rising, but not by much, and where the share of the working-age population relative to the young and old is deteriorating, but only modestly. The United States is in this group, as are Latin America and South-East Asia. The third group – and the big losers from the demographic changes in the next four years – includes Europe, Japan and China. Japan will be the oldest society ever known, with as many dependents as people of working age. And China, thanks not least to the legacy of its one-child population, will start to age rapidly. By 2050 its population will be older not only that America’s, but even than Europe’s. China really is in a race to grow rich before it grows old. All this has big consequences: for the economy, business, security, migration, health and the demands on resources, not to mention for culture and social change. It should inform many of the policy decisions taken today. The sooner we start preparing for the coming demographic changes and all that flows from them, the better our long-term prospects will be. Megachange: The World in 2050 is available now.

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SaraKay Smullens: Mad Men Was Beyond Maddening: A Season Five Betrayal

March 27, 2012

OK, fellow lovers of nostalgia. We know just who we are. We are those who love to put our feet up for terrific diversion — knowing in Mad Men we will experience phenomenal style and extraordinary period accuracy over substance — and so what! For four seasons we have lived with cardboard figures who manage to typify a time when many believed that barriers finally broken could lead to a more humane population. We visit the furnishings and fashions of this time, kicking ourselves for not saving that brooch, lamp, chair, dress or those shoes or earrings. Those of us with daughters in their twenties and beyond call to discuss all about Mad Men or watch it with us. They scream out in mock horror when we say that we had a dress we did not keep which was exactly like Betty Draper’s, and have the photos to prove it. Oh, what fun! Oh, what luxurious diversion!! And these discussions sometimes even lead to substance: How has America evolved? How have we addressed our challenges? How should we? What has changed, and what has not? And even — Can ideals ever become more important than materialistic emptiness? Then finally Sunday evening, March 25th arrived, our “supposed” two hours of the beginning of Season Five’s Mad Men . This was an evening we have been anticipating for 17 (we counted!) months. We would finally see Joan with her wee one, not fathered by her baby/bully surgeon husband, but instead by her baby/bully Madison Ave. boss. We would learn at long last learn about Betty and Sally and Pete and the rest. We would once again be whisked away to this particular time capsule of adultery, identify theft, betrayal, racism and sexism, as well as the impact of imposed cultural norms on family relationships and individual fulfillment. There we were in anticipation, feet up, pillows propped, popcorn popped, mother and daughter and friend to friend conversations waiting. And what did we get? Relentless commercials, growing into every five minutes as the second hour progressed. The intrusions were merciless, causing what was a dull two-hour experience seem even duller. Those in charge surely know the precise timing of this degrading insult to loyal viewers. There we sat, like the manipulated buyers of the products foisted by the “I don’t give a damn just so the money rolls in” crew at Sterling Cooper Draper Pryce. Yes, considering the realities of corporate life, on the screen and off, perhaps we were naive to expect respect for our long and loyal wait. Still, shame on those who developed and allowed this financial strategy. They would have been far wiser to curtail their greed, understand that enough can and should be enough, and that on screen and off people can get angry, very angry, when taken for granted and manipulated. Follow SaraKay on twitter at SaraKay1710

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David Macaray: Three Ways Labor Can Fight Back

March 27, 2012

There’s no denying that, in the world of commerce, slogans are gold. A catchy, cleverly written slogan, no matter how illogical or misleading, has an excellent chance of attracting customers. Take Nike’s “Just Do It” campaign from some years ago. That catchy slogan was a huge hit, despite no one actually knowing what the phrase meant, or what, precisely, it had to do with Nike products. In the world of politics, slogans are poison. Smearing a candidate as a “liberal,” as a “tax-and-spend Democrat,” attacking national health care as “socialized medicine,” portraying government assistance as a “nanny state,” calling fixed time-tables for leaving Iraq or Afghanistan “surrender dates,” using “death panels” to frighten the elderly — all of these emotionally charged appeals have worked in the past and continue to work. But rather than rise above this sordidness, America’s labor unions need to join the club. This on-going battle between labor and management is not about anything so noble as political ideology. Not hardly. It’s all about money — about who has it, who wants it, who needs it, and, if Jesus were alive, who deserves it. Convincing people who make $120 million a year that they can actually live on $105 million won’t be easy. But as the man said, If you’re serious about winning, you don’t bring a knife to a gunfight. Here are three approaches: (1) Sponsorship. The term “middle-class” still resonates with Americans, and because the notion of a shrinking middle-class is a source of dread, labor needs to exploit that dread. It needs to remind people that not only is the middle-class slipping away, but since the 1880s organized labor has been the sole defender of the American worker. Not the government, not the church, not charitable organizations. Only the unions. When union membership was high (in the 1950s), people prospered; when it was low (like now), people struggle. Simple as that. Stop labeling opponents as “anti-union.” That tepid accusation won’t win supporters, not in today’s anti-union climate. Instead, give these anti-union groups a good smearing by referring to them as “anti-middle-class” or “anti-people” or “anti-family” or “anti-American.” Merge this campaign with prevailing anti-government sentiment. Turn it around and accuse those states that are eliminating the right to collective bargaining of trying to crush the American dream. Make sure the public knows that police, firefighters, nurses, and teachers are not only the good guys in this battle, they’re our neighbors, friends, and benefactors. And while nobody took those modest jobs to get rich, they did take them in the hope of breaking into the middle-class. What’s our government telling them? That while there’s no limit to what the wealthy can accumulate, belonging to the middle-class is a pipe dream? (2) Patriotism. Present these anti-worker zealots as “traitors.” Remind people that if they want to see some old-fashioned American patriots, they should visit a union hall, because that’s where they’ll find them. Emphasize the fact that unlike investment bankers and CEOs, many union members and their children are military veterans. And be sure to mention that countries that are/were America’s enemies (e.g., Cuba, North Korea) have outlawed labor unions. That’s what dictatorships do. They ban unions. Appeal to national pride. Wave the flag. Show proud union members wearing military uniforms or union colors, marching in parades, demonstrating that labor and democracy go hand-in-hand. Bring up the fact that labor activists all over the world are being intimidated, imprisoned and even murdered, and remind people that — unlike Wall Street bankers, who invest in foreign markets — union members not only earn every nickel in America, they spend every nickel here as well. Indeed, patriotism could be the locus point where the Tea Party and labor intersect. Those anti-government TP’ers who say, “Give me back my country!” need to know that Big Business is playing us for suckers, maximizing their international profits while cheating working men and woman who live right here the U.S. Clearly, corporations have launched an all-out offensive. And the only entity with the will and the resources to mount a counter-offensive is organized labor. (3) Economics. Remind everyone that there is, and always has been, strength in numbers. Without the muscle supplied by an organized collective, workers become isolated — marginalized, fragmented, reduced to “lone wolf” status — susceptible not only to being picked off, one by one, but to having management play them off against each other. It’s been done throughout history. Also, remind them that the people who want to destroy America’s unions (the Koch brothers come to mind) are the same people who oppose the minimum wage. Even as the gap between rich and poor, and rich and middle, continues to widen, America’s fat cats stubbornly cling to the view that the federal minimum wage ($7.25/hour), meager as it is, is still too high. It’s time for organized labor to demonstrate not how reasonable they are, but how mean they can be. It’s time for an all-out fight. Worst case? We get ridiculed and humiliated, we lose the support we already have, and we get our rear-ends handed to us in a sling. Best case? We save America. David Macaray, a Los Angeles playwright and author (“It’s Never Been Easy: Essays on Modern Labor”), was a former union rep. He can be reached at dmacaray@earthlink.net

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Donna Larner Lavery: Extending the Olive Branch: Consumer Conflict Resolution — US Bank

March 27, 2012

The illusion within our system of being able to care for ourselves and our family’s well-being, health and safety is begging my consideration this week. Until people demand community rights as citizens joining collectively with others in our democratic process, to change anything that may arise to challenge our health and safety, we will continue to have our homes and communities fall prey to big business and government. Certainly within our own community, I felt it was vital for us to participate and get involved. What I am finding, even in Boulder, Colorado, when large agribusiness want GMOs to be planted on a fraction of open space land, they come out in a full court press to commandeer the public proceedings away from the locals. And you know what? They — Monsanto, Syngenta and Bayer, along with our elected officials — have made a sham of our political process here as they take their brand of politikin’ all over this land. As municipalities continue going broke, they succumb to the highest bidder in obtaining money to continue operating. We all know who the highest bidders have been and continue to be. JP Morgan, for one, is making huge loans to local cities — and those loans come with a price. Oil and gas exploration companies are buying drinkable “access” water from municipalities because they will pay a premium to obtain it for their use in fracking. They need huge volumes of water, which they mix with five hundred or so highly toxic chemicals, forcing this sinister concoction of poisonous sludge deep within the earth below the drilling site to coax the gas to the surface. The remnants of this slurry mess are then trucked to a toxic landfill site. Another example of corporate environmental rape: GMO crop proliferation by companies that have a revolving door into the very agencies within the government that are supposed to either regulate and/or legislate them. The bottom line: everything is for sale in America. But, are we, as individuals, for sale too? Or can we find our commonalities and come together to work together for our health, safety and well-being? Can we champion the efforts of those who are attempting to work within the system to bring about small course corrections? Think about what many small course corrections can accomplish over time. In just a few blogs here, we have already been able to collect and/or save our readers $93,300! And we do it gently, one reader at a time. In this blog, I hope to assist you in resolving your consumer issues. Please email me at help@thelistonradio.com Explain in your email (in no more than about five sentences) what your issue is, the company in question, and what resolution you’re after. If I email you back about your issue, please respectfully get back to me in a timely fashion for follow-up correspondence. I will work on fixing your legitimate consumer issue — insurance, healthcare, phone or cable service, construction, automotive repair or purchase, elder care, child care, real estate, banking, airlines, travel, hotels… in short, purchases of product and/or services of just about any legal sort. Example: Tim is a holistic dentist living in a small town in northern California. He entered his local US Bank branch to deposit some checks on December 15, 2009. As he was standing in line about three feet in front of the teller, he was shot in the back of the head by a gunman who had entered the bank from behind. The bullet exited near his ear, taking out a portion of his lower ear lobe. He fell forward hard onto the tile floor. That is where most of his damage occurred, as he sustained five skull fractures. The teller was sprayed by his spinal fluid and fragments of bone. Another customer of the bank, an elderly woman, was also hit in the wrist as she put her arm up. One of the tellers was also hit by a ricocheting bullet as the gunman continued shooting the place up for nearly three hours. I have been told the gunman was a disgruntled US Bank customer who lived as much as one hundred and fifty miles away. He took public transportation to get there that day and carried a couple of handguns and hundreds of rounds of ammunition. I have been told he was angry because he felt the employees at this branch had messed up some paperwork that caused his vehicles to be repossessed in a foreclosure by the bank. My primary question to US Bank is, why haven’t they stepped forward and assisted those customers that have been victimized within their facility? Isn’t that the reason we carry insurance? I also asked whether the gunman was a customer of the bank, because “an unforeseeable criminal act” leaves questions about how the bank handled his issues prior to his perpetrating this desperate act. In Tim’s case, he was admitted into the ICU and a cat scan was administered. He refused to take much of what the hospital was trying to administer for pain, trauma, etc. Instead, he had his wife bring him his natural products that he knew would assist him. He checked himself out of the ICU approximately forty hours later. The hospital bill was roughly $100,000 (to save you the math, that’s $2500 per hour). He continues to deal with dental issues and vertigo. Tim had no medical insurance. I asked Tim: in a perfect world, what would he like US Bank to do? He said that he would like to see them take more stringent measures to protect their employees. He cares about these people, as he sees them often in his small town. Additionally, of course, he would like the bank to cover his medical expenses. Is there anything unreasonable about this man’s requests? Wouldn’t each of us expect the same? Due to pending litigation, US Bank cannot comment on this case. However, they have stated that there was an insurance claim, yet it was denied. If that’s true, is US Bank simply going to let its insurance company dictate terms? What about taking the insurance company to court? No one at US Bank will say. Tim, the shooting victim, has no recollection of the involvement of any insurance company. He sent the bank a demand letter for his medical coverage and was told this was an unforeseeable criminal act and, therefore, the bank is not liable. Tim’s one-man-office attorney could not continue to take this case into litigation, because he couldn’t afford to take on the bank with its deep pockets and its many corporate attorneys. Tim, representing himself, filed a lawsuit at the eleventh hour, after nearly two years, in order to procure his statute of limitations protection. A hypothetical question: If Tim had not possessed extensive homeopathic knowledge, would that hospital bill have been even higher? Perhaps hundreds of thousands of dollars? And even if he had medical insurance, would the usual twenty percent not covered add up to some incredible amount owed? What do you think about this case? Do you think the bank is responsible for covering the expenses of those customers injured while conducting business in their establishment?

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Marc Stoiber: From One Virgin, Countless Social Entrepreneurs Are Born

March 27, 2012

Richard Branson is an entrepreneur who understands how business can shape a more sustainable world. Consider this quote from his book Screw Business As Usual : “Never has there been a more exciting time for all of us to explore this great next frontier where boundaries between work and purpose are merging into one, where doing good, really is good for business.” It’s an exciting message made real by people like Jean Oelwang, CEO of Virgin Unite. The company , working with Branson and 200 Virgin businesses across 15 countries, has a mandate to “connect amazing people and great ideas to make positive change happen in the world.” At the GLOBE 2012 Conference , Oelwang and I chatted about how Virgin is spreading both its infectious brand of entrepreneurial zeal and its mission to lessen our impact on the planet. One example that sparked my imagination was the company’s unique take on an incubator for entrepreneurs. In holiday destinations like the Caribbean, authentic experiences are becoming the new currency. But local entrepreneurs with great ideas seldom have access to the capital, training or leadership skills that would give their innovations the credibility tourism operators demand. To counter that, Virgin Holidays, Virgin Unite and local partners like Chris Blackwell built the Branson Centre For Entrepreneurship Caribbean . The Centre’s goal is to create local economies that sustain themselves as they protect both social equity and the environment — building a valuable supply chain of smart, proud local entrepreneurs in the process. The end effect is a Caribbean that remains an authentic, vibrant destination, filled with interesting businesses, a thriving sense of community, and a protected environment. “A focus on people is core to our brand” says Oelwang. “Our challenge is finding the great entrepreneurs wherever we are, and levering them to create entrepreneurial solutions to big problems.” Oelwang understands that people want to change their own community for the better, instead of having someone do it for them. By harnessing this insight effectively, Virgin Unite is creating benefits that radiate on a global scale. A Global Entrepreneurial Idea Jam A few years back, IBM conceived the idea of Global Idea Jams . These online events connected creative thinkers around the world to work out solutions to pressing issues. The events were brilliant showcases for IBM’s formidable networking know-how. But they also generated tremendous volumes of ideas – the lifeblood of any forward-thinking company. Oelwang believes Virgin Unite’s work in seeding successful entrepreneurs in places like the Caribbean will have a similar effect on Virgin. “We’re breaking down silos and reaching out to entrepreneurs around the world. And they’re rewarding us with solutions that have a true global perspective.” Not only is an innovation funnel filled with unique global ideas a boon to the brand — it’s also key to survival in a culturally chaotic world. In my writing on futureproof brands, I describe five factors that enable brands to survive an uncertain future. The key is mining insights developed from real consumer needs. These needs must be universal, and pressing. Virgin can tap a world of these insights through its global network of budding entrepreneurs. Lessons To Marketers 1. One idea good, many ideas better — There is no ego in innovation. Creating a powerful network of idea generators is your guarantee of relevance into the future. 2. Think holistic — Virgin’s Branson Centre For Entrepreneurship Caribbean builds strong local communities and economies – vital to a thriving tourism industry. Are you protecting your golden egg, or leaving its survival to chance? 3. Do good, do well — The world of business is evolving into one where you do well by doing good. As Jean Oelwang and Virgin Unite prove, this perspective can also help build a potent brand.

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Kendrick Nguyen: Does Good Business Make Bad Presidents?

March 27, 2012

Among the current crop of candidates for president, several have tried to sell their business experience as relevant to their future success in leading the federal government. Let’s look at the best and worst presidents in light of their earlier careers . All opinions are valid, but not all are valuable. The votes of presidential historians should count more than public opinion polls. C-SPAN conducted their Survey of Presidential Leadership among presidential historians over a 10-year period. The consensus was that the best presidents were Abraham Lincoln (postmaster), George Washington (surveyor) and Teddy Roosevelt (soldier). Basically, scholarly opinion breaks down to Mount Rushmore. And among the worst? Warren Harding (business man), Andrew Johnson (business man) and James Buchanan (professional politician). It’s no surprise that the historians’ pick for both the best (Lincoln) and the worst (Buchanan) presidents were also lawyers. It is the most common early career of presidents. Understanding law, building a solid case and mastering persuasive speaking are necessary attributes for any politician. On the other hand, lawyers have a well-deserved reputation for moral ambiguity, which can destroy a president surrounded by fiercely competitive special interests. But why have so few presidents, and successful politicians in general, been businessmen? The answer lies in the stark and significant differences between running a government and running a business. The public understands this on a visceral level and election results tend to reflect that. Businesses are run as an autocracy, whereas government in a democracy requires consensus. The economy of the federal government dwarfs any company’s balance sheet, regardless of how large the business may be. The government has over two million employees — most of whom do not answer to the president — with Congress and the Courts empowered to act independently, often against the president’s wishes. A president obviously cannot fire Congress for poor performance. The participation of people who would benefit when he fails is often necessary to implement his agenda. In contrast, any Fortune 100 chief executive should have a great deal more freedom in running her comparatively little enterprise. With near absolute control over her employees and taking home many hundred times the pay of an average worker , the modern CEO is much closer to a dictator than a democratic leader. Dictators, of either the business or political variety, generally don’t make good presidents. Corporate successes do not necessarily lend themselves to successful political leadership because the government and private enterprise have entirely different missions. Profitability is the main focus of a successful business leader. A business can, and should, restructure itself to get rid of unproductive workers and outsource its production to increase profits. The ravages of closed factories, long unemployment lines, foreclosed houses and broken homes are not stains on the record of a business executive. Nor should they be when the primary objective of a business is measured by the financial returns to its shareholders. But the prosperity of a nation, and the focus of a president, means much more than the financial interest of a particular group. History rightly measures presidential success by the broad improvement in living standards, national security and social justice. A business leader’s key to success is the ability to select the best offered by society, whether it’s personnel or opportunity, while rejecting the rest. A successful president, on the other hand, must lift the entire population; he must provide opportunities for the disadvantaged and the unskilled without dragging down the whole nation. A businessman thinks about moving his company to another country with a better-trained work force; a president must consider how to pay for retraining and investments in education. A businessman can improve his cash flow by shutting down unprofitable operations; a president cannot outsource his army even in a more peaceful time. Empathy and persuasiveness are essential qualities of a successful president. Bill Clinton’s famous uttering , “I feel your pain,” in its sincere manifestation is the drive to lift the disaffected, the hard-pressed constituencies and, therefore, the wealth of a nation. This quality of empathy plays a part in many aspects of a presidency. Raymond Wolters , Professor of History at the University of Delaware, spoke about this quality in responding to a Wall Street Journal survey in 2000. He said that great presidents shared one thing in common: “They lifted the spirit of the nation.” In a time of crisis, a president can secure his role in history by inspiring the country “to pay any price , to bear any burden” and find more fertile ground for all its people — rich and poor, capable and unproductive. With profitability as her singular mandate, a business leader needs neither empathy nor persuasiveness to succeed. Cold, hard cash is not motivated by empathy. And persuasion may not be necessary when the job comes with the power to issue pink slips. It is not surprising, then, that history tends to judge businessmen turned U.S. presidents poorly. Will Romney, should he prevail this November, be the exception?

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Brad Reid: May the Supreme Court Declare Actions Unconstitutional?

March 27, 2012

The oral argument of two combined cases (U.S. Department of Health and Human Services v. Florida and National Federation of Independent Business v. Sebelius) before the Supreme Court concerning the “Patient Protection and Affordable Health Care Act of 2010″ focuses national attention on the powers possessed by the Supreme Court. Where does the Supreme Court obtain the power to declare actions by the other branches of government unconstitutional? Article III Section 1 of the U.S. Constitution states ; “the judicial power of the United States shall be vested in one Supreme Court and in such inferior Courts as Congress may from time to time ordain and establish.” Noteworthy is the fact that Congress creates all federal courts except the Supreme Court. Article III Section 2 of the U.S. Constitution provides a broad grant of judicial powers but does not expressly state that the Supreme Court may declare actions unconstitutional, hence unenforceable. In fact, the early Supreme Court did not have the prestige that the modern court enjoys. The Eleventh Amendment ratified in 1795 overturned a 1793 Supreme Court decision addressing state sovereign immunity (Chisholm v. Georgia). However, the landmark Supreme Court decision, Marbury v. Madison, in 1803 was to dramatically change the role of the Court. In Marbury v. Madison Justice Marshall wrote : “It is emphatically the province and duty of the judicial department to say what the law is… .If two laws conflict with each other, the courts must decide on the operation of each. So, if a law be in opposition to the constitution … the court must determine which of these conflicting rules govern the case. This is the very essence of judicial duty. If, the courts are to regard the constitution, and the constitution is superior to any ordinary act of the legislature, the constitution, and not such ordinary act, must govern the case to which they both apply.” In other words, the Supreme Court may declare legislation unconstitutional. Thomas Jefferson, Andrew Jackson, and Franklin Roosevelt are three notable presidents who have been critical of this asserted power. Nevertheless the Supreme Court’s power to decide constitutionality is a basic feature of U.S. law. As recently as March 20, Marbury v. Madison was cited by Justices Scalia and Thomas (Martinez v. Ryan). It is unlikely to be overturned without a major realignment of the federal government. Indeed many wondered if President Nixon would create a crisis by ignoring the Supreme Court’s order to turn over subpoenaed recordings (United States v. Nixon). He obeyed the Court. Consequently under current understanding, the two ways to reverse the Supreme Court are to amend the Constitution or persuade the Court itself to change its decision. Over many years numerous proposals to curb the power of the Supreme Court have included allowing a super-majority vote of Congress to overturn a decision, limiting the jurisdiction of the Supreme Court, electing justices, limiting their terms in office, or impeaching justices. President Roosevelt’s proposal to increase the number of Supreme Court justices died after the Supreme Court stopped declaring New Deal legislation unconstitutional. The Supreme Court’s power to declare actions unconstitutional is frequently perceived as desirable or undesirable depending upon reactions to a given ruling. Whatever the Supreme Court decides in the current health care cases will be controversial. The resulting commentary concerning the Supreme Court’s powers will doubtless sound familiar. What does the classic statement, rule of law and not men, mean when it comes to constitutional issues?

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Gary M. Krebs: The Mentor’s Mentor

March 27, 2012

I have what I refer to as “farsighted memory”: I can recall the red carpet from my family’s apartment in Brooklyn when I was less than 2 years old; I remember all my childhood friends’ telephone numbers; and I can even cite how much money I made shoveling snow for the first time when I was 10 ($79.50, mostly in quarters, which weighed my snow pants down to my knees). In spite of all this, I sometimes can’t remember the most obvious things, like when I drew a blank at a doctor’s office the other day when prompted for my age. Either I’m getting old or my brain needs memory glasses. When it comes to work, however, I pride myself on being detail-oriented and rarely forget a thing. Many work memories and details are as vivid to me as those previously mentioned from my childhood. The one that stands out most is my first day as an editorial assistant at Facts on File publishing company. Gerry Helferich, my boss, who was then VP and Editorial Director, said these words: “Feel free take on whatever responsibility you can handle. Anything you see you want to do, just ask. You can manage my books, edit books, acquire books — anything you want.” At the time I had no idea how rare it was for assistants in the book business — or in any business — to hear those words from a supervisor. I’ve since heard horror stories of assistants who waited years to even be able touch a manuscript (which was possible then, because it was still paper), much less be able to put red ink on an author’s copy. Yet there I was, 21 years old with very little experience, and the man in charge had trusted me with the responsibility of managing all his books. Gerry’s word was good: I handled all 50 of his projects through production, several of which became award winners and great sellers; he gave me a few manuscripts to edit; and, incredible as it may seem, helped (or, more accurately, spoon-fed) my first book acquisition, less than three months into joining the company. I had found a lifelong mentor. There isn’t a thing I know about the business that can’t be traced back to Gerry: he showed me how to choose the right trim size (format) for a book; how to run (and manipulate) a P&L (profit/loss statement); how to pitch a book to a room full of people; how to negotiate; how to write great copy; and on and on. Gerry never raised his voice, made a crack when I asked a dumb question, or dismissed my crazy ideas (in fact, he welcomed them). The only time I ever remember seeing him disappointed was when he asked me to water his office plants while he was away on vacation. In my zealousness, I overwatered and killed them all; I still feel guilty about that, two decades later. I was distraught when Gerry left Facts on File for a better opportunity: how could I possibly survive without him? To my astonishment, although he had moved on to much larger organizations, he always returned my calls and spent time with me when I needed his advice. He came to my aid on numerous occasions — helping me figure out job challenges, offering me references, and even counseling me on terms for my book deal. When I became a leader myself in the industry, Gerry continued to be a significant influence, even though our schedules rarely matched up. For years the most we could arrange was the two-minute catch-up at his company’s booth at Book Expo (the largest book convention in the U.S.). On one such occasion, I was drowning in employee issues, author problems, and overbooked meetings, and babbled to him in an over-caffeinated way that probably suggested I was about to implode. He stopped me mid-sentence, floated his hands up and down, looked me in the eyes, and said, “Calm down.” Those two words not only got me through that event, but they have guided me many times since: I just hear Gerry’s voice in my head, and I know everything will be OK. I felt more than just a tinge of grief a few years later when Gerry told me he was leaving the industry and moving to Mexico with his wife so that they could become full-time authors themselves. What a loss for the industry, I thought, but on a more selfish note, I knew there was no replacing him as my mentor. I would have to fend for myself during crises. No matter the situation, I would ask myself the question: “What would Gerry do?” Just imagining the answer got me through many complex challenges. I even made a list of the top six attributes that made his leadership style so effective: Empower others: Gerry let you run with the ball. He was never threatened by anyone else’s success. Stay calm under pressure: He didn’t overreact to anything. The worst problems were figured out in the same laid-back style as the easy ones. Don’t piss anyone off: He never yelled at anyone, burned a bridge, or insulted anyone. He knew that even the most difficult colleague has the potential to become an ally. Make time for people: He assisted everyone — direct reports, indirect reports, colleagues in other departments, and even people who threw axes at his back. He always stopped to listen and didn’t offer an opinion unless asked. Take the chance: Gerry was collegiate and agreeable, but not to the point where nothing got done. Sometimes a leader needs to push an idea or innovation through, even if there are naysayers. It’s as brave to take a positive stand on someone else’s project as it is a negative one — especially when it means disagreeing with the hierarchy, spending money, or implementing a change. Admit to mistakes: Gerry had no qualms about saying when he did something wrong. It made the team admire him all the more. Over the years, I’ve had the remarkable opportunity to give back some of the above wisdom to quite a few talented professionals. Many of these individuals are now successful editors, agents, entrepreneurs, and even leaders themselves. At my last company, I was privileged to become a corporate mentor to a star employee in the U.K. office. “Uh oh,” I thought. “This guy is so much smarter than I am — what could I possibly hope to impart to him as his mentor?” It turns out that my mentee did have some challenges, and I think on a small scale I was able to support him by listening, sharing my experiences, and steering him toward decisions when he was straddling the fence. I couldn’t have been prouder when he earned a well-deserved promotion. I found that I may have gotten as much out of that relationship as he did; not only did we exchange work advice on both sides, but we even shared our scripts (he’s a talented playwright). The book I’m now delighted to read is The Stone of Kings: In Search of the Lost Jade of the Maya , by Gerard Helferich. Not only is my mentor the author, but the book was published by Lyons Press (Globe Pequot) — my former company. As I turned the pages, it was difficult for me to avoid being reflective and another memory hit me: Gerry’s last day at Facts on File. At his farewell party, his peers made teary-eyed speeches and wished him well. I couldn’t hold back any longer and stepped forward. It didn’t occur to me how ridiculous it must have seemed; I was his assistant — a mere 23-year-old, wet-behind-the-ears kid — making a speech in front of a whole room full of people about the company’s most revered leader. But I stood up and thanked him for everything he taught me and for all of his support. I closed by proclaiming, “You’re the best manager I ever had!” Gerry burst into laughter and remarked, “Of course I am — I’m the only boss you’ve ever had!” Well, I’ve had a few bosses since — some wonderful, some pretty awful — but Gerry is still #1. Someday I hope to have another leadership opportunity where I can create those magical memories with a new staff…

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Harvard Kennedy School Democrats: A New Name for Occupy

March 26, 2012

By Cassandra Nelson As Occupy activists take stock at the six-month mark and look for ways to make their movement sustainableby appealing to a wider audience, I offer one concrete suggestion: change your name. The Bush administration was smart enough to stay away from it. The war in Iraq lasted exactly six weeks — from the invasion on March 20, 2003 to the now infamous “Mission Accomplished” photo op on May 1 of that year. By that point, Iraq’s conventional armed forces had been defeated. What dragged on for eight more years was an occupation. Most Americans, though, thought of the conflict as Operation Iraqi Freedom or the War on Terror. Was it honest for President Bush and his staff to phrase it this way? Not entirely. Was it clever? Very much so. The word “occupation” suggests illegitimacy. It suggests force. It suggests a temporary and unfair arrangement. Occupiers in history don’t win: it’s the people whose land they occupied who are vindicated in the end. The Nazis occupied France. France once occupied Algeria. That’s not the side of the fight anyone wants to be on — not just because it’s the losing side, but because it’s the wrong one. The Occupy movement’s strategy up to this point has also made them look like squatters — squatters in front of buildings where people go to work and make money. And if there’s one thing a lot of Americans want to do right now, understandably, it’s to go to work and make money. They don’t want to sit in a park with people who perhaps don’t have the opportunity to bathe every day. It may sound glib and cruel, but living in a park is what homeless people do. I suspect that many people viewing the Occupy movement on television or in the news have made this connection, though not necessarily on a conscious level. Finally, the name Occupy suggests stasis, as if the goal were just to sit around in as many existing spaces as possible and point out what’s wrong with them. This spatially-oriented approach limits Occupiers’ agenda and also puts them on the defensive. They have to apply for permits; they have to shout over speeches others have organized; they have to explain their presence in a public space. It seems to me that the ones who really ought to be explaining themselves are the people who have turned the American dream into a nightmare. The people who have let the middle class go on thinking that hard work, strong will and a good education are all it takes to succeed in this country — that those elements alone are enough. On the one hand, maybe they never were. ZIP code, skin color, sex, religion, nationality and other factors largely beyond one’s control have long played a role in determining who succeeds in America, and how much. On the other hand, an individual’s chances for upward social mobility today are as good in the United States as almost anywhere on the planet. In between these two truths is a story of the ways in which the system has been increasingly rigged in the last half century. I don’t even pretend to know what happened exactly, but it had something to do with the growth of an increasingly complex, perilous and largely imaginary financial infrastructure; a decrease in government regulation of same; a cozy and mutually beneficial relationship between corporations and lawmakers; and trends in both executive compensation and federal income tax that can only be described as bananas. Fun fact: today, the richest people in America pay 35 percent of everything they make over $388,000 — or less . Under Reagan, they paid 50 percent of everything they made over $175,000. Under Eisenhower, they paid 91 percent of everything over $400,000. Ninety-one cents on every dollar above a certain amount! It’s admittedly a Gala to Red Delicious to Pink Lady comparison, but still telling. So even if we concede that the playing field was never perfectly level, and that it isn’t perfectly level in other parts of the world today, it remains safe to say that the opportunity of the average American to make a decent living — enough money, say, to raise a family, own a home and retire — has diminished substantially in recent decades. How we got here, and what we intend to do about it, is a conversation that we as a nation need to continue. To that end, I propose a new name for Occupy — a name that better expresses why people are upset right now, a name that appeals to everyone who’s not directly profiting from the unfair and corrupt system currently in place, and a name that puts those people responsible for the most incredible income inequality this country has ever seen on the defensive. Justify. Justify Wall Street. The Justify movement. It can be applied to any physical space or any institution, and it puts the pressure on the questionable party. On the CEO who makes an exorbitant bonus, for instance, or the Congressman who takes advantage of insider trading, or the local official who cuts education funding for the third, fourth or fifth year in a row. The image that the Justify movement would call to mind wouldn’t be its own supporters. It would be a split screen of sorts — with private jets on one side and food pantries on the other. It would be a picture of a yacht, alongside toys on the lawn of a foreclosed home. It would be the face of Stephen Helmsley, who took home $102 million last year as the country’s highest paid CEO , next to the face of an uninsured child . And it would ask how you can justify all of the things on one side of the screen when confronted with those on the other. It would cut through much of the current vagueness, apathy, and annoyance, and it would steer the conversation to what it’s really about: justice. Cassandra Nelson is a PhD candidate in English literature at Harvard University focusing on postwar American fiction. HKS Democrats leadership reviews and approves all op-eds that appear in this space.

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Trudy Bourgeois: Getting Past Stuck With Diversity & Inclusion

March 26, 2012

I fear that leaders of the business world today are like Moses and the Israelites. Wandering the wilderness for 40 years, going around and around the same mountain. It seems that’s where we are with D&I — stuck circling the same mountain for 45 years. But, just as the Israelites, we have hope. One day God said to them, “You’ve gone around this mountain long enough. Look up and see your promised land.” We are at that moment. We’ve gone around this mountain long enough. Let’s look up and see our promised land where leaders truly embrace diversity and inclusion as a business imperative. And, let’s connect to doing what it takes to get unstuck and make some meaningful progress. Over the years, I’ve come to loath the term “journey” as it is applied to D&I — and I’ve used it myself. I’m now taking a stand. Let’s remove the connection between diversity and inclusion and “journey.” People are constantly throwing this phrase around, “On this D&I journey… ” or “D&I is not a destination, it is a journey.” Those phrases are simply code for: “We’re not making much progress.” I recently heard what I believe is an honest assessment of where the business world stands with diversity and inclusion. Tom Greco, President of Frito Lay, opened the 2012 CPG Retail Diversity Forum (a conference that I design for the Network of Executive Women ) with the following comment. He said, “We need to acknowledge that we’ve made unbelievable progress on advancing D&I, but we have undeniable challenges and unbelievable possibilities that lie ahead.” It’s time to change THE CONVERSATION. We have indeed made progress since the inception of Affirmative Action back in the early 1960s — over 45 years ago. But we are challenged to make a breakthrough. Corporate America simply is not keeping up with today’s diverse world. And, despite the business case, leaders are not tackling the challenges with a purpose. So that leaves us where we are — stuck. On a journey. Making little-to-no-progress. And with no urgency to arrive at the destination. Corporate America’s leaders today will tell you that D&I is a business imperative for their companies. Unfortunately, a very small percentage of them truly mean it and walk it out. It is irresponsible for a business leader to not address the challenges that they know might render them irrelevant in terms of their ability to meet the consumer needs and provide shareholder value. If D&I truly were a business imperative, however, then WHY do we see so little actual progress? Like the progress we see, for example, in sales quotas being met? In bonuses being given for meeting set performance standards? And so on? If D&I truly were a business imperative, we would not tolerate NO progress. No SVP of Sales or CEO, when speaking of sales targets, will accept the reasoning or excuse for having NOT met them as, “It’s a journey… we’re making directional progress.” No way. That is just not the way it works. I worked in the consumer goods industry for 18 years in Sales and Marketing. We HAD to meet our sales targets — every single quarter. Period. If we didn’t, we’d lose our jobs. For diversity & inclusion to become the TRUE business imperative that it IS, that “sales target attitude” and no-failure-accepted expectation must be applied. EVERY leader — every member of the c-suite, every SVP and above, every manager — must pursue diversity & inclusion with and through accountability, responsibility and intentionality. Until the c-suite exemplifies and requires that demonstrated AUTHENTIC leadership behavior, and it is included IN the professional expectations — we will not see any progress. And WHY do we need to see faster progress with D&I? WHY does it matter? Here’s the cold, hard truth: Companies and leaders who “get it” will survive. Those who don’t – won’t. And that’s not just my opinion. Blame the population growth and research data. According to the U.S. Census Bureau , by 2050 over half of the U.S. population will be Asian, African American and Hispanic. Those groups will hold $520 billion of the buying power in the U.S. in the consumer packaged goods industry alone. That is growth of over 74 percent from their buying power today. In addition, according to Why She Buys by Bridget Brennan, women now account for 85 percent of all consumer purchases. They make up over 50 percent of the workforce, yet hold only 16.1 percent of Fortune 500 board seats, with women of color making up only 3 percent of those seats. And, according to additional recent research by Catalyst, at the current rate of our “journey,” it will take 40 more years for women to achieve equal representation in the leadership positions of the workforce. Companies today do not have 40 more years to get this figured out. They will HAVE TO change… or they will die. Why? Because this is a business imperative that is directly related to consumer buying power. In today’s global economy, an organization’s leadership MUST mirror the face of the consumer in order to be more profitable — and in order to survive. For example, in a recent study entitled, ” Women Matter 2010 ,” McKinsey & Company established the link between the presence of women in leadership and better financial results. Women Matter 2010 proves the case that women comprise a vital consumer base, provide a source of high-quality talent in a competitive market, and have a dramatic positive impact on organizational and financial performance. So… what to do? Get UNSTUCK. How to Get Unstuck: The Quick Hitlist 1. No more “journey.” Recognize that we must stop talking out of both sides of our mouths. No more “journey.” Only a vital BUSINESS IMPERATIVE. 2. Get intentional: Make D&I your DNA. Ensure that D&I is part of your company’s authentic DNA. Make it a baseline employment expectation. Be clear about the behaviors that you are expecting from your employees. 3. Infuse a high level of discipline. Set employees up for success by creating learning opportunities that support the ability to connect across cultures. 4. Hold ALL employees accountable. Measure representation, measure retention, measure culture, measure leadership behaviors. What gets measured gets attention . And not as a bonus. Set goals for each of these areas and adopt a black and white standard. Either a leader did it or they didn’t. The board should set goals for the CEO, and the CEO should cascade these goals down throughout the entire organization. If we want to continue describing diversity & inclusion as a journey, that is our choice. But if we do, we must be clear — this is a journey that has an extreme sense of urgency. It is a direct, non-stop flight. We WILL get unstuck, move beyond this mountain and enjoy our promised land!

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Terence Clarke: Butchershop Creative: You’ve Never Heard of Them

March 26, 2012

In American business, the mission statement is viewed as the core declaration that determines the course of a company. Much intellectual sweat pours from the foreheads of the leaders of businesses in their efforts to get their mission statement right. The trouble is that, in most companies, the statement ends up a somewhat colorless piece of business cliché. For example, the statement of one of America’s largest fast-food chains says this: “”To provide the fast food customer food prepared in the same high-quality manner worldwide, that is tasty, reasonably-priced & delivered consistently in a low-key décor and friendly atmosphere.” This statement plods. It is dull. After reading it, I would hesitate to enter one of their stores, for fear that their food would be as plain as their prose. But this sort of statement is the usual in American business. Any random sampling of the mission statements of Fortune 500 companies will be very similar in style. A San Francisco agency named Butchershop Creative has a different take on the mission statement. Here is theirs: “We promise to promote love forever and ever and ever. We are yours in partnership, in the total destruction of fear and disapproval. In the movement of love and joy, we celebrate success through the service of creativity and the annihilation of inner baggage that keeps us shut down, complacent, and afraid to move.” (L to R) Trevor Hubbard, Jackson, Misha Vladimirskiy, Aleksandr Vladimirskiy. Used courtesy of Butchershop Creative. Butchershop was founded in 2009 by Trevor Hubbard and brothers Aleksandr and Misha Vladimirskiy. I spoke with Hubbard recently, and asked him to elaborate on a remark he had made, in a previous conversation over coffee, that was almost a throwaway. Yet I had never heard it before, and wanted more detail. He had mentioned the importance of “passion and profession.” “When you’re young, it’s everyone’s goal or dream that, if you do what you love, you’ll have a life. Do what you love, and the money will come. But we were sold a little short on that, because it doesn’t mean you can sit back and relax. Doing what you love involves great participation, and to the degree that we participate, we formulate our values … our principles, and we find the things we love. And equally important, we find what we don’t love.” Most of us know what we are passionate about. But Hubbard reminds us that simple passion is not enough. “Many wonderful people fall short because they don’t understand the profession of it all. Any creative endeavor that you seek … you have to run it as if it’s your own miniature startup.” Actual startups are cool, in Butchershop’s estimation, because you can see the personalities of the people who founded them coming out in the startup businesses themselves. “That’s why you relate to them,” Hubbard says. “The best things are coming out right there, right in front of you.” Hubbard and the Vladimirskiys try to translate that notion into very real creative relationships with their clients. They eschew the idea of being the kind of company in which the client comes to Butchershop with a developed set of ideas and simply says to the crew — as the Butchershop team call themselves — “Do it!” What they like to hear is where you think you are, what your thinking is, where you think you can go, what roadblocks you are encountering, where things are going wrong. “From that,” Hubbard says, “it’s our job to cultivate a package that is a recipe for success, that emphasizes what we call ‘the main idea, the singular thing.’” After being in business for some time, Black Star Beer’s owner, Minott Wessinger, wanted to give the company a home, and he chose Whitefish, Montana. He built a brewery there sixteen years ago. Simple as that. No focus groups. They made good beer. They had a stellar re-launch in 2010, for which they brought in Butchershop Creative. “Minott did the singular thing,” Hubbard says. “Build the brewery and make the best product you can. If you want to sell that beer, then sell it yourself! Hustle, make it work, share the story.” Hubbard describes Black Star as nothing less than “an American tale. It is one person, one at a time, hand over fist, winning people over. It’s a struggle. It’s a journey. And that’s the kind of client we like.” Passion and profession. Butchershop seeks a 50-50 relationship with its clients. The client gives Butchershop the main idea, “and we give them our minds,” Hubbard says. Butchershop insists on a relationship in which they are not simply doing the client’s bidding. The agency was founded on the principle that “we say when, we say how much, we say how often, we say where.” “We’re not prostitutes,” Hubbard grins. “People want to work with us because we offer partnership. We try to understand where the client is coming from, and to provide an honest, no bulls**t solution that works for them.” There is, to be sure, an irony to be found in startup success stories. Growth can lead to bureaucracies that often lead, not so ironically, to a slowdown of real creativity. “All big companies started out quick and nimble,” Hubbard avers, “and the good ones don’t lose site of their original culture. They’re the ones that are wonderful to work with.” Few companies, however, when they are successful and growing, retain that quickness. “You have what I call ‘The Iceberg Syndrome,’” Hubbard says, his head shaking back and forth with considerable chagrin, “in which a company gets so big — still turning out good products, mind you — and somehow, somebody loses the reins, and they end up on an enormous iceberg, floating on the dark, deep blue.” Trevor Hubbard realizes the importance of this with regard to Butchershop itself. “We’re doing very well. And we could say in a clipped monotone, well, ‘we’re a boutique agency in San Francisco that specializes in design, innovative technologies…’ Things like that. But that has nothing to do with the annihilation of inner baggage or being shut down or afraid to move, like our mission statement says. It’s much more honest to say, as we do say, ‘Butchershop is the coolest company you’ve never heard of.’”

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Dean Baker: The Paul Ryan Rorschach Test

March 26, 2012

House Budget Committee Chairman Paul Ryan did a great public service when he released his budget last week. By throwing a piece of total garbage on the table and pretending it is a real budget plan, he allowed us to see who in Washington is serious about the budget and who just says things that will push their agenda. It is easy to see that Ryan himself could not possible be serious about the document he put out as “A Roadmap for America’s Future .” The Congressional Budget Office analysis of the plan, which was prepared under Representative Ryan’s direction, shows that all categories of government spending outside of health care and Social Security will shrink to 3.75 percent of GDP by 2050. This 3.75 percent of GDP includes defense spending, which is currently close to 4.0 percent of GDP, not including the cost of the war in Afghanistan. Representative Ryan said that he wants to keep defense spending close to its current level. This means that we have no money left to pay for the Justice Department, the State Department, support for education, roads and other infrastructure, the Park Service, the National Institutes of Health and all the other things that we expect the federal government to do. Essentially Paul Ryan is an anarchist who is proposing to shut down the federal government. This cannot be a misrepresentation of Representative Ryan’s agenda. He put out essentially the same budget last year at which point many people pointed out the fact that he shrank most categories of government spending to zero. If that was a mistake (albeit an incredibly foolish one) he has now had a full year to reflect on his error and redesign a budget to reflect his real priorities. Instead, he doubled down. In Representative Ryan’s 2012 Roadmap there is no room for federal funding for all the services that even conservatives expect the government to provide. Does the Republican right now want to shut down federal prisons and end border patrols as Representative Ryan’s budget implies. This is also not a case of pulling out long-term implications that have no serious meaning. It is a common and silly practice in budget debates to project out a trend for 75 or 100 years and show it leads to an untenable situation when everyone knows the trend will not continue for this long period. However Representative Ryan cannot make this complaint. He actually touts the budget surpluses that he is able to generate in 2040 and 2050 by getting rid of most of the government. His Roadmap budget document proudly compares his budget surpluses with the growing debt under the baseline path he attributes to President Obama. Even if the Roadmap lays out an absurd budget path for the years and decades ahead, Representative Ryan has nonetheless done us a valuable service with his budget. His proposal allows us to distinguish between people who are serious about budget and economic policy and people who are obviously a different agenda. Those who pretend that the Ryan budget is a real guidepost for thinking about the budget fall into the latter category. Foremost in this group is likely to be the various Peter Peterson funded groups — the Concord Coalition, Come Back America and the Committee for a Responsible Federal Budget — which last year awarded Mr. Ryan a “Fiscy” based on the commitment to fiscal responsibility in his 2011 budget plan. Of course many other prominent actors in Washington’s budget debate also applauded the 2011 Ryan budget for its serious approach to the country’s fiscal problems. These organizations and individuals may like Ryan’s plan to give more tax breaks to the rich by reducing the top tax rate for both individuals and corporations to 25 percent. They may be impressed by his plans to dismantle Medicare and Medicaid, and eventually Social Security. Or they may be attracted by his proposal to eliminate almost the entire federal government. But the advocates of the Ryan plan are obviously not thinking seriously about how to fashion a budget that provides basic social insurance and sustains a 21stcentury economy. By allowing the public to see clearly who is serious about the budget and governmental responsibilities and who is not, Representative Ryan has performed a valuable public service.

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Soren Petersen: ROI on Design and Risk Reduction

March 26, 2012

Co-written by Jed Simms. Creating innovative products is fraught with risk due to the inherent gap between the knowledge one has and the knowledge one needs to make good decisions. Usually one knows only 5 percent of what is needed at the stage where 70 percent of the product’s cost is determined. At this juncture, one has to make a qualified bet on the design team’s ability to close the gap faster than the money is being spent. Fortunately, there is some predictability, since return on investment (ROI) and risk go hand in hand. Small incremental investments in product improvements offer small rewards at a low risk where market and technology are known, while breakthrough innovations have the potential of offering huge rewards along with large investments and potentially scary risk. With only a vague sense of the odds, this may look like pure gambling. However, unlike roulette, product development has four winning strategies that, when combined, vastly improve the return on investment. Applying the four steps: (1) Business definition, (2) Portfolio management, (3) Hedging product concepts and (4) Managing process, ROI in design is effectively managed, execution and market risk is systematically reduced while real ROI becomes transparent, measurable and controllable. One — Stating and agreeing upfront on what the new business-as-usual end states are to be and how the results are to be made operational, in clear specific measurable terms is the most important step to optimizing ROI. This is accomplished though formulation of a dynamic and inspirational design brief for the projects considered, describing how projects fit with the corporation’s strategy. The briefs describe the desired outcomes of nine design quality criteria: strategy (philosophy, structure and innovation), context (social/human, environmental and viability) and performance (process, function and expression). Formulating the brief requires all stakeholders to convene and consider potential options in business outcome terms and then co-create a brief that is flexible enough to adjust to changes in assumptions, new learning as well as to solidify the team and inspire action. Creating a brief is actually a small design specification project in itself for management to conduct. Two — Product portfolio management, like any investment portfolio, is balancing one’s portfolio for long-term ROI, determining which projects to initiate in the first place. This can be accomplished by spreading the corporation’s investment into combinations of low and high market and execution risks. The right mix depends on the dynamics of the market and the strategy of the corporation. Three — Option management by segmenting the product development process into a number of phases, small steps where investment is made for one phase at a time, each phase reducing risk though prototyping and testing. In addition one can hedge one’s risks by investing in parallel alternative designs during a phase and then pick the most promising product concept at its end for further development. Four — Comprehensive risk/reward focused project management is the strategy for translating the brief into real-time decisions and actions — it is where the rubber hits the road. As with rally driving, mastering project management takes lots of practice in holding the original business outcomes in mind while continuously managing activities and optimizing the allotted time and cost to meet the expected quality. Besides doing all of the above well, the key to totally optimizing ROI and risk is to recognize when the team has discovered unanticipated hurdles or unforeseen game-changing opportunities. Communicating these changes to management is crucial so they can reassess their investment, take advantage of the situation and plan outcomes to optimize the resultant ROI. As in life, luck in new product development is when opportunity meets preparation. Not just once, but every month, week, day and sometimes every hour. Long-term superior ROI is achieved when direction, preparation and execution is consistent and is clearly communicated to all project participants. Special thanks to Jed Simms for researching and co-writing this article.

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David Isenberg: A Covert Mystery, Wrapped in Classification, Inside a Contractual Black Hole

March 26, 2012

Think about what we’ve experienced by doing oversight of private military and security contractors over the past decade in places like Afghanistan and Iraq. Think it was difficult? In fact it was very difficult, and in many cases it still is, despite a decade’s worth of learning curve. But at least we’ve learned from our mistakes and it can only be easier now, right? Well, actually not, Or as the old saying goes, you ain’t seen nothing yet, when it comes to overseeing contractors. That’s because we’ve barely begun to consider the use of private contractors in another critical, formerly primarily inherently governmental, national security realm. That would be, wait for it, the intelligence community (IC). Aside from the professional spook literature and the 2008 book, Spies for Hire , by Tim Shorrock, this remains a covert mystery, wrapped in classification, inside a contractual black hole, to paraphrase Winston Churchill. Don’t take my word for it. Instead, take a look at the article ” Outsourcing Covert Activities ” by George Washington University Law School professor Laura Dickinson and published in the Journal of National Security Law & Policy . She is the author of the 2011 book Outsourcing War and Peace: Preserving Public Values in a World of Privatized Foreign Affairs . When it comes to intelligence community’s use of contractors, it appears that at least sometimes the right hand doesn’t know what the left hand is doing. Dickinson notes that while the CIA and the Pentagon have now formally banned the use of contract interrogators and DoD has outlawed intelligence gathering by contractors, the lines appear to be blurred on the ground. Indeed, even after the military ban, former CIA agent Duane Clarridge reportedly established a private network of spies and information gathered by these agents to the U.S. government. Why does this matter? Dickinson writes: “Government privatization of covert activities is of particular concern. To be sure, reining in the excesses of government actors engaged in covert operations is a challenge even without outsourcing. This is because it is much harder to gather information about such activities, regardless of whether they are carried out by government employees or by contractors. And the tools of oversight and accountability we might deploy to control covert actors are especially limited because of the secrecy that these kinds of operations demand. Increased oversight by Congress and the general public through enhanced transparency laws such as an expanded Freedom of Information Act (FOIA), greater whistleblower protections, and agency reporting, may often be impractical.” Spoiler alert for those industry advocates who may think Dickinson is proposing to bar use of private contractors by the IC. She believes that outsourcing, even of covert operations, is here to stay, at least for a long time to come. “Most notably, a political culture that assumes the efficiency of the private sector (without necessarily accumulating data to prove it) makes the hiring of contract workers much easier politically than expanding the number of government employees or uniformed soldiers. Providing contracts to private employees serves the illusion that “government is not big” or “is getting smaller.” As a consequence, the starting point for my argument is that we should accept the reality of outsourcing and seek to control it better. We are in a brave new world, and we cannot ignore it. Accordingly, our best way forward is not to rail against the use of contractors in toto, but to provide better accountability for the contractors upon whom we increasingly rely.” She has various recommendations to improve oversight but given that we are talking about spy agencies after all, it is safe to say that expanding transparency (say what?) is not one of them. But she does have this rather novel recommendation: “Even for contractors conducting covert operations, we could require contract firms to install internal accountability agents with a role comparable to that of uniformed lawyers in the military. Such agents should be responsible for training employees, monitoring their actions, tracking abuses, and imposing sanctions in the case of such abuses. Perhaps the decision by Academi (formerly Blackwater) to appoint former Attorney General John Ashcroft as their lead ethics agent is a step in this direction.” Putting aside the fact that John Ashcroft and ethics are not normally words I use in the same sentence this might be something the congressional oversight committees might want to try implementing.

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Ralph Gomory: Making Corporate Actions Visible

March 26, 2012

In a recent article we wrote: “America today is very different from the country that fought the Revolutionary War and framed the Constitution. Then, it was a nation of farmers; today, it’s a nation of corporations.” Though we are today a nation of corporations, there is remarkably little discussion about corporate actions and the impact of those actions on our lives, even though it’s clear that what our corporations, especially our major corporations, choose to do affects in major ways wages, jobs, healthcare and the overall economy. There is even less discussion on what we want from our corporations. Is it, for example, enough that their sole goals are to maximize the return to their shareholders? This article suggests something citizens can do to spur these needed discussions and to make visible what corporations are actually doing and the effects of their actions. Here we are not calling on the government to mandate this transparency, rather we are calling on ordinary citizens and citizen organizations to act to make the actions of corporations more visible, more transparent. Labeling the Corporation We are used to the idea that many of the products we buy are labeled. For example, many processed foods are obliged to disclose their ingredients, and they are labeled so that we do not have to guess at what we are eating. Consumers are often encouraged to “read the label”, so they will know what they are buying. Similarly, let us now insist on labeling and making visible what corporations are doing. Corporations affect us and our country through their decisions on outsourcing and on wages and pensions, and by what their goals are. Do they consider in their actions the effects on customers, their own employees, the communities in which they operate, and on the country that sustains them with its laws? Or do they only consider shareholder value? Do they pioneer with new and valuable products, and if they do, how do they decide where those products are made? Or, in the realm of services, do they exploit the ignorance of their customers to either give them loans they cannot repay or investment advice more tailored to corporate profits than to the welfare of the customers. Let’s label corporations with labels that tell us what they are actually doing. How to Label the Corporation We are not talking here about physical labels attached to products that corporations make, but about electronic labels attached to the corporations themselves. But where would these labels come from? How would they be made? What would they look like? What would they do? An example of corporate labeling already exists. It was created by a cooperative effort between the Zicklin Center for Business Ethics Research at The Wharton School of the University of Pennsylvania and the Center for Political Accountability (CPA). While this is a label that only describes the political spending activities of corporations, the methodology can be applied equally well to other corporate actions. Together the two organizations developed a set of twenty-nine criteria by which the corporate approach to managing, overseeing and disclosing political expenditures could be judged. The criteria covered disclosure of the range of a company’s political spending — contributions to candidates, Party committees and ballot initiatives as well as payments to trade associations and other tax exempt entities organized for political purposes — and its policies and practices for associated decision making and oversight. They then scored the top 100 U.S. corporations on all twenty-nine criteria, and for each company the weighted scores for the individual criteria were combined into a single rating, specifically, the CPA-Zicklin Index of Corporate Political Accountability and Disclosure. Before the Index was made public each company was informed of its rating and had the opportunity to dialog with CPA about them. This also gave the company the opportunity to make changes in the policies and practices they were publicly posting on their website. Only after that was the rating made public. The result is that you can see today this well thought out rating of the top 100 U.S. companies on the CPA website and also, for those who want it, a detailed d e scription of how it was determined. We believe that something very much like this can be done for other corporate activities. The essential step is to work out criteria about which you want information, then see what information can be obtained for each company. It was important to the CPA-Zicklin effort, that a corporation not providing information to the public on a specific criterion would result in a score of zero on that criterion and thus a lower rating when the result is made public. We suggest that civic organizations with a particular interest, label corporations on that interest., whether that is the environment, how they treat their employees, the quality of their goods, or the degree of outsourcing. They should then develop their criteria, and gather information; not always only from the corporations.. They should then produce a publicly available rating that is easy to link to. Modern technology makes all this possible and more. People with a particular interest in a particular company could organize a Facebook page. There could also be Smartphone apps, similar to those that already exist for comparison shopping. Pointing the camera of a Smartphone at a product would immediately reveal the company that makes it and the rating given to that company by a selected website on a selected issue. Any and all of these actions will contribute to making visible, transparent and discussible what our corporations are doing. We are a nation of corporations, but our press and our conventional politics do not in any systematic way make visible the effect of corporate actions on the country. Let us as citizens make up for that significant omission.

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