science

David Yarnold: Big Oil’s Arctic Bet: A Fool’s Risk

by David Yarnold on April 17, 2012

Huffington Post…

“Fool me once, shame on you; fool me twice, shame on me.” We’ve all heard it — and lived it — as individuals and collectively as Americans. We’ve all had to confront someone who has fooled or even misled us. But when Big Oil repeatedly tells us a monumental lie, we’re struck with collective amnesia. Marking the second anniversary of the BP oil disaster in the Gulf of Mexico, which occurred April 20, 2010, we can’t help but remember the rage and heartbreak we all felt when 11 men died and we saw images of oiled Brown Pelicans flattened to the wet sand. Scientists are just now reporting ominous disruptions in the Gulf’s underwater food chain and we still don’t fully understand the long-term impact on birds and other wildlife. It was a case of “shame on you” in 1989, when the Exxon Valdez ran aground in Alaska, spilling tens of millions of gallons of crude oil into the pristine and achingly beautiful southern Alaska landscape. But there was plenty of shame to go around two years ago as the BP oil disaster unfolded in the Gulf, spewing more than 200 million gallons into what, from a bird and human standpoint, is one of America’s most precious ecosystems. William K. Reilly, a lifelong conservationist and moderate Republican, co-chaired the commission investigating the BP disaster. Reilly was EPA administrator at the time of the Valdez, and he was flabbergasted to find that nothing much had changed since 1989. Reilly concluded that the BP spill “evidenced a failure of management, and good management could have avoided the catastrophe … We are not dealing here with a sick or failing or unsuccessful industry but with a complacent one.” Reilly reminds us that we in fact dodged a bullet two years ago: “…there was a point in the management of this crisis when industry experts feared the entire 120-million-barrel reservoir might seep through the ocean floor and wreak total havoc… What would we be talking about today if the well couldn’t be canned?… We’d be having an existential conversation about whether offshore drilling should ever be permitted in US coastal waters again.” Bill Reilly is no bomb-thrower. At the time he co-chaired the BP spill commission he was serving on the boards of ConocoPhilips and DuPont. As we mark this anniversary, two immediate challenges leap to mind: First, we must restore the Gulf Coast. The BP spill was a major blow to a region already under stress from urban sprawl, wetlands loss and pollution. Congress is now weighing a measure — called the RESTORE Act — that would divert most or all of BP’s penalties to gulf cleanup. Bipartisan versions of this measure have passed both the Senate and the House; it’s time for Congress to finish the job and send a final bill to the president. Second, even as you read this, a drilling fleet under contract to Shell Oil is making its way to a patch of seabed less than 15 miles from Alaska’s Arctic National Wildlife Refuge. Incredibly, Shell has secured nearly all the government permissions it needs to begin drilling operations in a body of water that is ice-covered much of the year, in a place where the sun does not shine for months on end, and where extreme weather is commonplace. The U.S. Government’s own non-partisan watchdog, the Government Accountability Office (GAO) thinks this is a terrible idea . We agree. Cleaning up a major spill in the Arctic would make the BP disaster look like child’s play. Last month the GAO issued a report raising fundamental concerns about whether a major spill could ever be managed in icy conditions. If there is a spot on Earth as sacred or as critical to the future of our wild birds as the Gulf of Mexico, it is probably the unspoiled Arctic. Here, hundreds of bird species arrive every spring from all four North American flyways — the superhighways in the sky that birds use to travel up and down the Americas. Here, they mate, lay eggs and raise their young. Here also, many of America’s remaining polar bears make their winter dens along the coasts. The potential harm from a BP-scale spill is almost beyond comprehension. And, there is growing evidence that we simply do not need to take risks like this to meet our nation’s energy needs. Oil imports are down. Oil production from domestic wells is up thanks to new technology. We’re driving farther on a gallon of gas and using less. Energy independence is becoming a real possibility. Since those who cannot remember history are doomed to repeat it, the price of social amnesia has become unacceptably high. A workable balance between powering the nation and protecting our natural bounty is within reach, but only if we remember, learn, and not be fooled again.

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David Yarnold: Big Oil’s Arctic Bet: A Fool’s Risk

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Sarah Damaske: Equal Pay Day: In the Wake of the So-Called "Mommy Wars" Renewal and Partisan Attacks on Equal Pay Bills

by Sarah Damaske on April 17, 2012

Huffington Post…

Equal Pay Day comes this year in the midst of the renewal of the so-called “mommy wars” on the one hand, and a blatant attack on equal pay rights bills on the other. Last week, Hilary Rosen set off a media maelstrom when she said that Mitt Romney’s wife, Ann, “has never actually worked a day in her life.” Just a week before (and to much less fanfare), Wisconsin Gov. Scott Walker repealed Wisconsin’s Equal Pay law and one of the state senate Republicans, Glenn Grothman, was quoted as saying, “You could argue that money is more important for men, anyways.” Both have serious implications for the equal pay cause. The National Committee on Pay Equity started Equal Pay Day in 1996 to bring more public attention to the gender wage gap, the difference between what an average full-time, year-round, male worker earned and what the average full-time, year-round, female worker earned. In 1996, the difference was 73.8 cents to the dollar and, today, the difference is about 77.4 cents. Not a terribly huge improvement over the last 16 years. Researchers have long noted that a number of factors can partially explain the gender wage gap. Notably, women and men tend to work in different industry sectors and different occupations within industry, which can explain a sizable portion of the gap. But differences in pay for various occupations may be due to whether jobs are associated with women or men. In other words, while occupational differences may explain some of the gender wage gap, the pay scale for different occupations is connected to whether or not the occupations are made up of mostly men or mostly women. And as sociologist Paula England and economist Nancy Folbre found in their research , women are more likely to work in caring fields, which offer relatively poor pay given the skill and education necessary for much of this work. Devaluing the hard work of acting as a primary caregiver of children not only dismisses the unpaid labor done in the home, it also contributes to the struggle of the millions of paid female laborers who work in caring fields and find that their work is neither recognized nor justly rewarded. Calling this past week’s maelstrom a renewal of the “mommy wars” dodges the real issue: Caregiving, whether done unpaid in the home or for pay outside of it, is not particularly valued in this country and women (whether in the labor market or not) suffer the brunt of this. Differences in pay are likely also connected to bias. Having children often increases men’s wages, according to research from sociologist Rebecca Glauber , but it often decreases women’s wages and women working in low-wage jobs face the toughest wage penalties for motherhood, as sociologists Michelle Budig and Melissa Hodges found . When Grothman argued, “Money is more important for men,” he may have been tapping a generally unspoken belief — that a woman’s salary is less necessary to her family than is her spouse’s. But, these beliefs are a remnant of times gone by in which men were primary breadwinners and women were primary homemakers (although as historian Stephanie Coontz has noted, even during the 1950s, this gender divide was never as big a phenomenon as we remember it to be). Today, only 20 percent of children are raised in families with a traditional breadwinning father and stay-at-home mother. Most children, then, live in families that depend on the wages of women, and one-third of children live in single-mother households and are most at risk of living in poverty. The National Women’s Law Center reports that bridging the gender wage gap would give the average full-time working woman’s family the money to pay for an additional 4 months’ supply of groceries, 5 months’ of childcare, 3 months’ rent and utilities, 5 months’ health insurance premiums, 4 months’ student loan payments, and 5 tanks of gas. Addressing the wage gap would go a long way in increasing women’s economic security, as well as the financial security of their families. In 2010, all Senate Republicans voted against considering the Paycheck Fairness Act. As both President Obama and presidential hopeful Governor Romney continue to vie for women’s votes, it would be nice to see some serious proposals from the candidates about how to bridge the wage gap.

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Sarah Damaske: Equal Pay Day: In the Wake of the So-Called "Mommy Wars" Renewal and Partisan Attacks on Equal Pay Bills

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

April 16, 2012

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

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

April 16, 2012

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

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David Burwell: Of Oil Prices and Elephants

April 16, 2012

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

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Robert Teitelman: Stray Thoughts on the Rise of Shareholders

April 16, 2012

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

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

April 16, 2012

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

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Geri Stengel: Closing the Leadership Gap

April 16, 2012

What gives? As the Women Entrepreneurs as Economic Drivers, a report from the Kauffman Foundation shows, getting those women-owned businesses on a high-growth track would energize our sluggish economy. But it’s not happening. Why? I’ve been asking women who haven’t been stopped what they think the barriers are and here’s what they say: Dream bigger. When women start a businesses, they think too far ahead, to the day when they’ll be managing a family as well as a business.They opt for career paths that seem safer and more flexible than running a major corporation. Liz Elting, CEO and founder of global language service provider TransPerfect, advocates another tack: Go for broke when you are young and have nothing to lose. Don’t worry about what your life will be like in 10 years. Dream big and follow your dreams. When your business grows, so do your options for work/life balance. And being a high-powered CEO doesn’t mean you can’t be a good mom. “If you want to have a family and run a business, you can — and a growing number of us do,” says Elting. Be tough. Nice girls please people. CEOs have to make tough decisions, from firing people to cutting services. In a man, that’s being strong; in a woman it is seen as being bitchy. “If you want everyone to like you, you will have a hard time doing what is necessary,” Elting says. Wake up the men. At home, men must share in household responsibilities, recognizing that the woman’s career is as valuable as the man’s. At work, men need to be more inclusive. Networking events shouldn’t just be guy things. Deals are done in informal settings after the conference or out of the office — on golf courses and in the corporate box at the ball game. Yes, some women like sports, but a lot are left out of that schmoozing and dealing. It’s not that men are circling the wagons; they’re just not thinking it through. They’re losing, too, when possibly great deals get left at the clubhouse. Support each other. Whether in peer groups, such as the Women Presidents’ Organization, or through mentoring women starting out, women need to support and mentor each other. As Sheila Lirio Marcel, CEO of Care.com says, “We must lift as we climb, bring others along with us and collect talented people as we rise.” Men know how to network. Women seem to be falling behind . That needs to change. Change the way business is done. Let’s start firms that don’t follow the same old businesses model; let’s build a model that can accommodate the differing needs of GenY, parents, Type A workers and those who want to work reduced hours. You can retain and grow talent by being flexible — flexible about taking a year off for family without losing a rung on the career ladder; flexible in working hours; flexible about telecommuting. If we don’t restructure business culture, we’re going to keep losing the talented people we’ve paid money to train. Rosalie Mandel, principal of the alternative investments accounting firm Rothstein Kass, has changed the culture of her company. “Our firm had the vision to see the benefits of flexible scheduling — and it’s never said no. We’ve had an official flex policy since 1999,” she said in an article for The Glass Hammer . Changes now, in attitudes, awareness and culture could end the stagnation of small women-led businesses and make them into the economic drivers we need. For more articles about high-growth women entrepreneurs, visit Guiding the Way for Women Entrepreneurs , Ventureneer’s curated source for information women entrepreneurs can use to power-up their businesses.

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Rory O’Connor: Facebook Is Not Your Friend

April 15, 2012

“Imagine… that you knew which sites — or what news stories — people you trust found useful and which they disliked,” David Kirkpatrick wrote in the June 11, 2007 issue of Fortune magazine. “This isn’t fantasy. Facebook might make it possible, and soon. Yes, the social-networking site college kids spend so much time on — the one you thought was just about hooking up — could turn out to be more important than any of us thought.” Kirkpatrick, who was then Fortune ‘s Senior Editor for Internet and Technology, went on to write the best-selling The Facebook Effect: The Inside Story of the Company That is Connecting the World , the definitive book on the company. He was prescient. In a startlingly short period of time, Facebook did make it possible for you to find those trusted and useful news sites and stories — along with much, much more. Now, with Facebook facing growing scrutiny in advance of its IPO next month, which is expected to value the Internet giant at $100 billion, the question of trust looms even larger. True, the social networking giant has made it easier than ever before to find trusted friends and followers, who can now create, curate, aggregate and distribute news and information with an unprecedented ease, as I detail in my new book Friends, Followers and The Future : How Social Media are Changing Politics, Threatening Big Brands and Killing Traditional Media . But is Facebook itself, the billion dollar baby whose rapid growth has yet to be slowed by continuing controversy over the privacy of its more than 800 million users, itself worthy of our trust? Can we rely on its wunderkind CEO Mark Zuckerberg, who has repeatedly pronounced privacy to be outmoded and argued that we are living in a new era beyond it, to safeguard our interests? Despite our differing — some would say competing — concerns, should we regard Facebook and Zuckerberg as our friends? After all, the online social network, which offers its tools, technologies, and services at no cost, makes profit primarily by using heretofore private information it has collected about you to target advertising. And Zuckerberg has repeatedly made sudden, sometimes ill conceived and often poorly communicated policy changes that resulted in once-private personal information becoming instantly and publicly accessible. As a result, once-latent concerns over privacy, power and profit have bubbled up and led both domestic and international regulatory agencies to scrutinize the company more closely. In one case, consumer protection groups, including the Electronic Privacy Information Center (EPIC) and fourteen others, filed a 2009 unfair-trade complaint with the Federal Trade Commission (FTC) accusing Facebook of unfair and deceptive trade practices that “violate user expectations, diminish user privacy, and contradict Facebook’s own representations.” It said that Facebook’s decisions to disclose previously restricted “personal information to the public” had violated users’ expectations, diminished their privacy, and contradicted its own representations. It asked the FTC to order the company to “restore privacy settings that were previously available… and give users meaningful control over personal information,” to investigate Facebook’s trade practices, require the company to restore privacy settings that were previously available and force it to “give users meaningful control over personal information.” Facebook settled in November 2011 by agreeing to refrain from making any further deceptive privacy claims, to obtain consumers’ approval before changing the way it shares their data, and to undergo independent third-party auditing for 20 years. Shortly after the uproar subsided, however, renewed concerns over privacy and trust began to shake the brand again. This privacy blunder centered on Facebook’s belated admission that it was still tracking the web pages its members visited, even after they have logged out of the Facebook site. As Daniel Bates reported for the Daily Mail , The social networking giant says the huge privacy breach was simply a mistake — that software automatically downloaded to users’ computers when they logged in to Facebook ‘inadvertently’ sent information to the company, whether or not they were logged in at the time. Most would assume that Facebook stops monitoring them after they leave its site, but technology bloggers discovered this was not the case. Instead, the tracking information — worth billions of dollars to advertisers — was being sent back to the Facebook servers. Even after you were logged out, Facebook still tracked every page you visited. As Bates noted, “The admission is the latest in a series of privacy blunders from Facebook, which has a record of only correcting such matters when they are brought to light by other people.” As its executives struggled to explain the “inadvertent” privacy row over its “creepy” web-tracking practices, that trust was shaken once again “by criticism and speculation regarding how it uses browser cookies to get data about users,” as Josh Constine posted on Insidefacebook.com . A lack of thorough documentation explaining what each of its cookies does has led some observers to assume that the company is tracking offsite browsing behavior in order to target ads. Facebook needs to provide explanations for both the average user and privacy researchers about how exactly its cookies work in order to prevent these press flare-ups from giving users a negative impression and bringing on regulatory scrutiny from governments. The company’s growing stature and importance only magnifies such concerns. As Facebook profile pages morph more and more into overall online identities, the inherent tension between our individual desire to protect personal information and the company’s need for that information comes into ever-sharper focus. Last week, for example, Facebook sought once again to address the persistent criticism of its privacy practices by instituting a new policy providing greater transparency on the types of data it stores about you. Yet critics like Max Schrems, a German law student who filed a complaint leading to the agreement, still criticize the company’s response. “We welcome that Facebook users are now getting more access to their data, but Facebook is still not in line with the European Data Protection Law,” Schrems told Kevin J. O’Brien of the New York Times . “With the changes, Facebook will only offer access to 39 data categories, while it is holding at least 84 such data categories about every user.” In 2011, when Schrems requested his own data from Facebook, he learned that the company was keeping information he had previously deleted from the website, and was storing information on his location. None of that sounds too friendly to me, so I really can’t recommend that you trust Zuckerberg, or Facebook, or indeed any corporation that makes its money by selling you — down the river or anywhere else. And as Nielsen’s Latest Global Trust in Advertising Survey proves, we trust “word-of-mouth recommendation from friends and family” above all other forms of communication. (At least that’s what 92 percent of respondents in 56 different countries said .) At the same time, our trust in paid traditional media (including television, magazine and newspaper ads) has steadily declined since 2009. (Trust in television is down 24 percent; magazines, down 20 percent; and newspapers down 25 percent, according to the survey.) “Consumers around the world continue to see recommendations from friends… as by far the most credible,” said Randall Beard, global head, Advertiser Solutions at Nielsen. Trust is essential for the success of any brand. Mark Zuckerberg may think that Facebook’s recurrent privacy flaps haven’t much affected the sometimes anti-social social network, but they represent a huge potential threat to what he has built. The high-handed manner in which members’ personal information has been treated, the lack of consultation or even communication with them beforehand, Facebook’s growing domination of the entire social networking sphere, Zuckerberg’s constant and very public declarations of the death of privacy and his seeming imposition of new social norms all feed growing fears that he and Facebook itself simply can not be trusted. As Zuckerberg’s fellow CEOs from the legacy media should have already learned, losing the trust of your audience is the first step in losing your audience itself — and eventually the power of your brand.

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Mohamed A. El-Erian: What the Return of Market Volatility Tells Us

April 15, 2012

Four of last week’s five daily trading sessions saw the Dow move by more than a hundred points. The wide fluctuations of the index reminded investors of the unsettling market volatility of last year. In the process, and after a wonderfully strong first quarter, questions multiplied as to whether stocks would again be subject to a mid-year correction. By looking at the factors behind the recent volatility, including how it played out in different segments of the global markets, you will see that a big part of the answer depends on policymaking here and in Europe — a particularly uncomfortable situation for those who rightly believe that valuations and correlations should reflect underlying fundamentals. The renewed volatility in stocks was due to conflicting signs of additional central bank liquidity support, both in Europe and the US. By providing time (and hope) for economic and financial fundamentals to heal properly, such support is seen as critical to sustain the recent rally in risk assets. Yet, in listening to different voices here and across the Atlantic, equity investors come to different conclusions as to whether additional liquidity will indeed be forthcoming. Some officials seem committed to renewed unusual central bank activism. Others feel that this would only postpone the inevitable adjustments required on the part of governments, companies and individuals. And there seems to be no way, as yet, to get both groups on the same wavelength quickly. Market volatility has also been accentuated by competing narratives about the economic outlook. Last week, several companies’ quarterly earnings reports, led by Alcoa, were supportive. The problem is that they conflicted with the more worrisome macro data, including a Chinese growth slowdown (though 8.1 percent would be deemed great anywhere else in the world), the undershooting of a much-followed US sentiment indicator, and mounting signs of recession in Europe . These two narratives are, once more, finely balanced; and the tug of war will continue until one side asserts itself — either through a policy breakthrough or through a policy breakdown. No wonder so many analysts are warning that stock market volatility may be with us for a while. In understanding the implications, it is good to reflect on what other market segments are telling us — particularly global bonds where last week’s differentiation was both noteworthy and insightful. Compared to stocks, US Treasury bonds experienced less volatility (both in absolute and relative terms). This was partly due to a measurement issue: As only the bond market was open when the disappointing March employment number was released, yields reacted on that Friday while stocks had to wait for the following Monday. But even when adjusting for this by extending the comparison to two weeks, the contrast is still there. Investors in the Treasury segment appears less conflicted. This market segment signals a muted growth outlook, and one that may even trigger additional Federal Reserve intervention in the form of a new QE. Signals of a challenging outlook are much, much louder in European bond markets — and rightly so. Last week, yields on peripheral government securities went from flashing orange to again flashing red, with Spanish risk spreads near or at record levels (as measured by credit default swaps). All this speaks to the unsettling situation of markets that remain highly dependent on policymakers who, themselves, are stuck in the muddled middle: unable to deliver sustainable outcomes or to exit from their market interventions. This is the unfortunate reality of an “unusually uncertain” outlook, blunt policy tools, and a rather dysfunctional political context. Mohamed El-Erian is the co-CEO of Pimco, which oversees nearly $1.8 trillion in assets and runs the Pimco Total Return Fund, the largest bond fund in the world. Cross-posted from CNBC.com

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Dave Johnson: The National Manufacturing Strategy Debate

April 14, 2012

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

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Mark Engler: ALEC Annoyed at Losing Sponsors? It Breaks My Heart

April 13, 2012

It is a myth that Gandhi said, “First they ignore you, then they laugh at you, then they fight you, then you win.” But that old saying nevertheless carries a lot of truth when it comes to social movements. And it is always a pleasure to see a worthy target of activism move from disregard or mockery to going on the attack. Therefore, I was happy to see the right-wing American Legislative Exchange Council (ALEC) release a half-defiant, half-pathetic statement bemoaning the “coordinated and well-funded intimidation campaign against corporate members of the organization.” Its statement reads : ALEC is an organization that supports pro-growth, pro-jobs policies and the vigorous exchange of ideas between the public and private sector to develop state based solutions. Today, we find ourselves the focus of a well-funded, expertly coordinated intimidation campaign. Our members join ALEC because we connect state legislators with other state legislators and with job-creators in their states. They join because we support pro-business policies that promote innovation and spur local and national competitiveness. They’re ALEC members because they’re more interested in solutions than rhetoric…. At a time when job creation, real solutions and improved dialogue among political leaders is needed most, ALEC’s mission has never been more important. This is why we are redoubling our commitment to these essential priorities. We are not and will not be defined by ideological special interests who would like to eliminate discourse that leads to economic vitality, jobs and fiscal stability for the states. After about the third reference to “job creators,” it’s hard to miss that this is an operation nestled snugly within the depths of the far-right echo chamber, never passing over a chance to frame tax cuts for the top 1 percent as a moderate, bipartisan path to common bliss. In fact, far from sticking to promoting “improved dialogue,” ALEC has (with troubling effectiveness) advanced a slew of reactionary measures in statehouses throughout the country. Stand Your Ground? Check . Prison privatization? Check . Right to Work? Check . Discriminatory Voter ID laws? Check . The list goes on and on . These legislative outrages have inspired a coalition of progressive groups to fight back. They are going after the companies that are paying $25,000 annual dues to this far-right outfit — exposing these brand-sensitive patrons for aligning themselves with the conservative fringe. The tactic is proving very effective. On Wednesday, fast-food giant Wendy’s joined McDonald’s in ending its ALEC membership. Previously Pepsi, Coke, Kraft, Intuit, and the Bill & Melinda Gates Foundation all announced that they were jumping ship. This exodus is what prompted ALEC’s response. That organization complaining about a “well-funded, expertly coordinated” political operation surely merits placement in the pot-calling-the-kettle-black hall of fame. But these words serve as high praise for the organizations that have endeavored to expose the group’s corporate funders. Prominent among them is ColorOfChange.org , which has quickly established itself as a leader in the field of corporate campaigning. I previously lauded ColorOfChange.org for its successful effort to strip Glenn Beck of advertisers after the demagogue (then at Fox News) said that President Obama harbored a “deep-seated hatred for white people or the white culture,” among other batshit-crazy statements . Few in the mainstream media wanted to give the boycott credit for ousting Beck, preferring to believe that the cable news personality had simply outstayed his welcome on the network. Beck himself was not about to acknowledge activists’ impact, just as Kraft now says that it is leaving ALEC for a “number of reasons” — none, of course, related to the tens of thousands of signatures pouring in from ColorOfChange.org and allies such as the Progressive Change Campaign Committee . This is exactly what you would expect. Wendy’s, for its part, says that it didn’t renew its ALEC membership not because of pressure but because it “didn’t fit our business needs.” That, in the end, is a pretty good definition of the purpose of corporate campaigns — making businesses decide that it doesn’t “fit their needs” to attack workers, reinforce institutional racism, wreck the environment, or undermine the social safety net. In any case, it certainly doesn’t fit the needs of the rest of us. Cross-posted from the “Arguing the World” blog at Dissent magazine.

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Alan Jenkins: Racial Discrimination by Banks Only Worsens the Foreclosure Crisis

April 13, 2012

Is there a house in your neighborhood that everybody hates to walk past? You know, the one with broken and boarded up windows, trash left to gather on the lawn, and grass so overgrown it’s becoming a habitat for rodents? If you have a house like that in your community, you know it’s more than just an eyesore. Neglected, vacant houses depress property values throughout the community, and can threaten health and safety. They erode the sense of community and stability that creates vibrant localities, and they hamper economic resiliency. With a national foreclosure crisis still in full swing, such houses are all too common. You might be surprised to learn, though, that if you have problem properties like that in your neighborhood, there’s a good chance your absentee neighbor is a bank. More shocking still, banks are neglecting houses they own in minority communities even more frequently — much more frequently — than those they hold in white communities. A detailed, undercover investigation unveiled last week by the National Fair Housing Alliance and several regional partners shows not only that banks too frequently fail to maintain foreclosed properties that they own, but that they tend to neglect their properties in communities of color at a much higher rate, with devastating consequences. A large number of the neglected, bank-owned properties have broken or missing doors and windows, inviting vandalism and trespassers. And many have safety hazards that endanger the public. Those and other defects are significantly more prevalent in bank-owned properties located in communities of color. Another finding is that, on average, the banks are not marketing houses located in communities of color as aggressively to individual homebuyers as they do properties in white neighborhoods. The properties in white neighborhoods are, for example, more likely to have clear and professional “for sale” signs. When banks both poorly maintain and poorly market foreclosed houses, the properties tend to stay vacant longer and to eventually be sold to speculators, rather than to people who would make the houses their home. The discriminatory differences are stark. In Dayton, Ohio, for example, 60 percent of bank-owned properties in African American neighborhoods had broken or unsecured doors, compared to only 18 percent in white neighborhoods. In Atlanta, properties in African American neighborhoods were almost five times more likely than homes in white neighborhoods to lack a “for sale” sign. And in Dallas, 73 percent of the bank-owned homes in predominantly non-white neighborhoods had trash on their properties, while only 37 percent in white areas did. Neighbors of all races who live near foreclosed, bank-owned properties, the investigation found, are pulling together to keep them presentable — doing maintenance the banks should be doing, like mowing lawns and removing trash. But in communities of color, neighbors reported seeing home improvement contractors working on those properties at only half the rate seen by neighbors in predominantly white areas. The bank behavior identified by this investigation is unethical, unlawful, and harmful to our economy. It breaches our basic national values of equal opportunity and the common good. It violates the Fair Housing Act of 1968, signed 44 years ago this week in the wake of Dr. Martin Luther King Jr.’s assassination. And it is holding back our economic recovery by, among other things, depressing home prices and hampering sales. It’s hard to know all the reasons why banks are discriminating in this way. Bias and unfounded stereotypes about minority communities and homes, however, are a likely root cause. The investigators controlled for 39 race-neutral factors like building structure, water damage, and curb appeal, so the different treatment is indisputably about race, and not class or other home or neighborhood characteristics. This investigation should be a wake up call for banks, regulators, local governments, and the neighbors of these bank-owned properties. Among the solutions identified by the National Fair Housing Alliance are anti-discrimination investigations by the Consumer Financial Protection Bureau and other enforcement agencies, making information about bank-owned properties more publicly accessible, and prioritizing buyers who will occupy these properties over speculators who may warehouse them. As Americans struggle together toward a lasting economic recovery, good neighbors are more important than ever. It’s time to remind America’s banks that this includes them. Cross-posted from Race-Talk .

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Bianca Bosker: Why A Picture Is Worth $1 Billion: Instagram Has Moments, While Facebook Has Memories

April 13, 2012

Facebook just spent $1 billion to acquire Instagram , the 554 day-old company behind an app that, at least on the surface, offers everything you can already get on Facebook, only with filters that make drab photographs look pretty. You can post photos, “like” the pictures other users have shared, or leave comments on friends’ images — just like you can on Facebook. So why would the Godzilla of social networks bother itself with this gnat of an app? Understanding Facebook’s Instagram affair means starting with the simple fact that the app mastered an activity that makes up the heart and soul of Facebook: sharing photos among friends. There’s a key difference between the two social services, however, and one that has made Instagram’s images worth a thousand words to its users and $1 billion to Facebook . While the images on Facebook are an archive, the images on Instagram are alive. Facebook showcases memories — last week’s wedding, dinner, birthday, vacation — while Instagram frames moments — the tulips you just passed, the sun hitting a building during your morning run, or the bizarre quote you saw on a talk show. Designed from the ground up for our phones, not our laptops, Instagram has, more gracefully than Facebook, leveraged the simple fact that we have a camera in our pockets more often than a pen to create an outlet for images that are intimate and immediate. It taps into our desire to share and be seen, but lets us do so exclusively via images, which require less thought than text to both post and process. There’s no fiddling around with a mini keyboard, no danger of typos, and less risk of offending. The barebones design — five clicks and you’re done — makes it blissfully simple to abide by Instagram’s unspoken manifesto: share now, share often, and share something lovely. And with the knowledge that there’ll be a new delicacy every time we check back, Instagram keeps us coming back regularly for more. Instagram is also a storytelling app, one that speaks to our fast click nation’s growing addiction to visual status updates that are beautiful and of the moment. Facebook understood early on that if you control how people share photos with each other, you control how people share stories with each other — and if you control that, then you control social. By bringing Instagram into the fold, Facebook is better positioned to tap into the photo sharing we do “in the moment” and safeguard its status as the web’s photo album and teller of stories about people. The Financial Times ‘ Duncan Robinson recently marveled that Facebook had spent $1 billion to buy an app “used mainly by hipsters to take photos of their lunch – in sepia.” Robinson’s jab actually helps explain what’s so compelling about the app, and it’s no coincidence that same critique was leveled at Twitter in its early days, when it was dismissed as a forum for chatter about meals and bathroom breaks. Like Twitter, Instagram offers real-time access to the lives of the people who matter to us, and next to their constantly updated feeds, the pace of new posts in Facebook’s News Feed appears positively glacial. Having missed its shot at snapping up Twitter, Facebook may be again trying to nail the insta-update with Instagram . The power of pretty can’t be ignored, either. On the whole, Facebook photos lack the dreaminess of Instagram’s snapshots, as well as the focus on our surroundings, rather than ourselves. Scrolling through my Instagram account reveals images of a lavendar bouquet, a dog lounging at the beach, and a metal subway panel reading “hope.” Instagram belongs to an increasingly popular cohort of sites, including Pinterest, Tumblr and Svpply, that provide a platform for us to share pictures that inspire and amuse — and, quite often, aren’t of us. What I wrote of Pinterest holds true for Instagram: It’s “look at this,” not “look at me.” On Facebook, that’s rarely been the case. Say what you will about filters — they deliver some delicious eye candy. And while perusing photos on Facebook inevitably makes me feel that I was left out of whatever get-together I see, Instagram just feels good. It offers an entry point into a world where everything is lovely and, quite frequently, seen through rose-colored glasses. In an age of information overload, it feels good to get a brain vacation from Facebook and see our friends’ “wish you were here” images. A professor at the University of California Berkeley recently found that even automated text messages reminding his patients to “reflect on positive interactions” could make them feel more cared for, connected and supported . Instagram, which largely showcases “positive interactions,” also stands to soothe the soul. It seems hard to put a price on that.

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

April 12, 2012

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

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Zaid Jilani: As Donors Flee, Corporate Front Group ALEC Whines That Critics Are Trying to "Eliminate Discourse"

April 12, 2012

At least six major corporations and foundations — Coca-Cola, Pepsi, McDonald’s, Kraft, Intuit, and the Bill and Melinda Gates Foundation — have now left or have pledged to leave the American Legislative Exchange Council (ALEC), a secretive corporate front group that works to pass legislation in all 50 states. The corporations are leaving largely thanks to protests by activists and consumers outraged that ALEC has been pushing voter suppression and “Stand Your Ground” laws that harm American communities. Yesterday morning, ALEC sent out a panicked press statement complaining of an “intimidation” campaign that is trying to “eliminate discourse”: ALEC is an organization that supports pro-growth, pro-jobs policies and the vigorous exchange of ideas between the public and private sector to develop state based solutions. Today, we find ourselves the focus of a well-funded, expertly coordinated intimidation campaign. Our members join ALEC because we connect state legislators with other state legislators and with job-creators in their states. They join because we support pro-business policies that promote innovation and spur local and national competitiveness. They’re ALEC members because they’re more interested in solutions than rhetoric.  At a time when job creation, real solutions and improved dialogue among political leaders is needed most, ALEC’s mission has never been more important. This is why we are redoubling our commitment to these essential priorities. We are not and will not be defined by ideological special interests who would like to eliminate discourse that leads to economic vitality, jobs and fiscal stability for the states. A much more accurate re-write of one of those statements would read like this: Our members join ALEC because we connect state legislators with other state legislators and with the biggest campaign donors in their states. They join because we support pro-Big Business policies that promote the bottom lines of special interests and spur local and national donations by Big Business to our organization. They’re ALEC members because they’re more interested in profit than principles. ALEC loves to claim that it is simply advocating for small-government, conservative ideas. But its agenda isn’t that of the free market but rather one of its Big Business donors. It has in the past gotten state legislatures to pass laws stopping local governments from enacting their own municipal broadband systems and banning them from deciding to use their tax dollars to pay living wages to contractors. These laws are not designed to promote the free market or small government. They have only one goal — padding the profits of ALEC’s corporate members, even if small government principles are discarded in the process. ALEC claims that its critics are trying to “eliminate discourse.” That’s nonsense. We here at Republic Report love the discourse about ALEC that is occurring in town squares, Internet forums, social media, and corporate boardrooms all over America. We and our partners have sought to engage in this discussion with corporations sitting on ALEC’s Private Enterprise Board. Everywhere, Americans are asking why corporations are pouring so much money into this secretive organization that has such a harmful impact on their lives. And when groups like Color of Change call on corporate donors to leave ALEC, they are not utilizing Big Government but rather their own right to free speech — and the right to use their own money as they see fit in a free market — to change America. The campaign to hold ALEC responsible represents the best combination of free speech and the free market. ALEC hates that, but that’s because ALEC doesn’t stand for the free market or free speech at all. It stands for an America where Big Business can secretly write our laws. And increasingly, even Big Business is learning that a relationship with ALEC may be unprofitable. This story is adapted from a post originally appearing on Republic Report .

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Brian Tolle: Sales or Marketing?

April 12, 2012

The longer I’m in the business world, the more comical the term sales and marketing seems to me. These two disciplines couldn’t be more different. And since I’ve had to wear both hats as a business owner, what each role demands of me is mind-boggling. When I’m the marketer, I’ve got to get and keep the brand right and blast it as far and wide as possible. When I’m the salesperson, I’ve got to get in the trenches and go face-to-face with the real buyer in the flesh. It’s the difference between zone defense and man-to-man. So in the real world, it’s sales or marketing. At any one moment you’re either one or the other, not both. The same goes for when you are leading others; you’re either a marketer or a salesperson. Why is this important? The very nature of marketing requires some sort of medium… television, magazines, Internet, mail. This means the marketer is one (significant) step removed from the end user, the buyer. The two can only connect when the medium is present. If the medium isn’t available, the marketer will check their Blackberries. And the chief weapon they wield is scale. Millions of TV watchers can see one commercial, read one ad in a publication. No surprise, then, that their techniques take on a certain carpet bombing feel with the marketer as the pilot, high above the fray of the buying moment of truth. Regrettably, a leader with this mindset has a hard time connecting with the troops and spends more time in front of groups instead of individuals. Think of those leaders in your experience who epitomize the marketing mindset. How many of them can you imagine gaining commitment from a reluctant front-line employee through a face-to-face discussion? Not many. Without the bullhorn, the marketer has no voice. The very nature of sales requires personal contact… face to face, asking questions, listening for pain, being up front about each step in the process and bold enough to hold a prospect or customer to their mutual agreement, however small in the grand scheme of things. Salespeople hear “no” whereas marketers hear silence. Salespeople come to know the hard truth about the product or service but still work to make it work, it’s the only way they make a buck. Great salespeople have guts; they go back into the line of fire every day. Think of those leaders in your experience who epitomize the sales mindset. They’re never far removed from you in the trenches. They find you to make sure you’re ready to take on the fight. They look you in the eye. It’s sale or marketing. Your choice. Which one will you be? If I had my druthers, I’d take the sales guy.

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Sara Hanks: Now the Really Hard Work Begins

April 11, 2012

With the ink still drying on the just signed JOBS Act, we are witnessing a new phase in America’s economy that will democratize access to capital and change the landscape for investors. This new period will look like “the wild, wild West” now that the law is unleashing the power of the Internet to allow citizens to invest in startup businesses. That’s what’s known as crowdfunding, something previously limited to non-profit groups or businesses promising non-monetary returns. The technology community is positively giddy about this development, which will expand the pool of investors dramatically and reduce entrepreneurs’ dependence on established financial institutions for access to capital. Now, the really hard work begins as the Securities and Exchange Commission begins writing the rules governing crowdfunding. Just as websites that will facilitate crowdfunding (known as “portals”) build out their physical infrastructure to be prepared for when the rules are adopted, we must also work on building a moral infrastructure too. Yes, moral. That’s because this is an entirely new form of capital market, and the tech community and excited entrepreneurs should acknowledge that while we all have new opportunities, there are new responsibilities too. Everyone who worked hard to bring this revolution to life will now have to work even harder to make sure it is not rife with fraud. If that were to happen, it will die an early death. For crowdfunding to succeed, entrepreneurs, investors, and regulators will all have to cooperate. But the SEC has the hardest job of all the players (full disclosure, I worked at the SEC for four years). The SEC rightly has serious reservations about companies at the most risky stage of development pitching securities to the most vulnerable investors on the basis of minimal disclosure that no one has vetted. And if things go terribly wrong, who will be blamed? The SEC. So the crowdfunding industry has an obligation to work with the SEC to ensure that investors understand just what they are getting into. We also need to make a special effort to work with groups like AARP and faith organizations to protect older Americans and those who are most vulnerable to fraud and affinity scams. In return, the SEC should be amenable to Congressional wishes that it adopt crowdfunding rules in a timely manner and not impose additional costs and burdens on crowdfunding intermediaries. In particular, the SEC’s registration process for portals should be timed so that registration could coincide with final adoption of the crowdfunding rules 270 days from the time President Obama signed the legislation into law. The responsibility lies not just with the SEC, however. Funding portals will need some form of due diligence to weed out bad actors whose only business is ripping off investors. The company I founded, CrowdCheck, will employ securities attorneys to perform due diligence on startups to make sure they are who they say they are and help entrepreneurs navigate disclosures and filings. We will be part of the crowdfunding community that seeks to keep a level playing field for both investors and start-ups, and we hope other crowdfunding portals will take that responsibility seriously as well. Start-ups must feel responsible to their investors and to the community that has fought for crowdfunding because we believe it can work. Entrepreneurs need to transparently define what they are offering, and be very clear on those terms and how they will handle relationships with their “crowdholders.” And venture capitalists need to help the crowdfunding industry work out how best to help companies graduate from crowdfunding to venture capital funding. Since the Internet has already democratized media, shopping, and social networking, it was only a matter of time before it disrupted our old model of financial investing. My hope is that angel investors and venture capitalists will be creative and embrace this new marketplace as well. Most of all, citizen investors need to take a lesson from the playbook of professional investors and treat it seriously. Investors have a moral obligation to actually think before they invest. They can’t act as if they are buying lottery tickets. Get informed, watch out for fraud, and fund those who most deserve a shot at the American dream. Crowdfunding does embody some of the most important aspects of what makes America American: entrepreneurialism, passion, risk, and a desire to give everyone a chance to show what they can do, no matter what their background. But it only works if we apply other American virtues: hard-headed realism and intelligent investing.

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Jason Alderman: Put Your Tax Refund to Work

April 11, 2012

If you’re among the millions of Americans expecting an income tax refund this year, you’ve probably already filed your 2011 return and are eagerly awaiting the money. But if you haven’t already mentally spent your refund on a guilty pleasure, here are several great ways you might better put that money to work for you: Pay down debt. Beefing up credit card and loan payments can significantly lower your long-term interest payments. Suppose you currently pay $120 a month toward a $3,000 credit card balance at 18 percent interest. At that pace it’ll take 32 months and $788 in interest to pay off, assuming no new purchases. By doubling your payment to $240 you’ll shave off 18 months and $441 in interest. Use this calculator to try different repayment scenarios. If you carry balances on multiple cards, always make at least the minimum payments to avoid penalties. Paying down the highest-rate card first will save the most money overall, but some people find that paying off smaller-balanced accounts first is a better motivator. Start an emergency fund . To protect your family against the impact of a layoff or other unexpected financial crisis (e.g., medical emergency, major car repair, theft), set aside enough cash to cover at least six months of living expenses — nine months is even better. Seed the account with part of your refund and then set up monthly automatic deductions from your paycheck or checking account. Boost retirement savings. Another great use for your refund is to beef up your 2012 IRA or 401(k) contribution, especially if your employer offers matching contributions; a 50 percent match corresponds to a 50 percent guaranteed rate of return — something you aren’t likely to find in any investment. Spend now to save later. Reap long-term savings on things you’ll eventually pay for anyway: Replace older appliances with energy-efficient models that will pay for themselves through lower utility bills. For example, replacing a 1980s refrigerator with an ENERGY STAR model will save over $100 a year. The government’s ENERGY STAR website can help you find ENERGY STAR products and estimate savings. Sell your older appliances or donate them to a charitable organization for the tax write-off to help offset the cost of new models. Switching from traditional light bulbs to energy-efficient alternatives like CFLs and LEDs, while initially more expensive, can save about $6 per bulb in annual energy costs. Just make sure they are ENERGY STAR-qualified models, which exceed minimum standards. Click HERE to learn more. Schedule routine car maintenance. According to AAA , simply changing your car’s air filter once a year can save over $270, while replacing older spark plugs can save $540 in wasted fuel. Ask whether your utility company offers free or subsidized home energy audits. An audit will tell you which investments — such as increasing home insulation and replacing drafty windows and doors — will lower both winter and summer energy bills. Overcome bad habits . If all that stands between you and quitting an unhealthy (and expensive) habit is the treatment cost, now’s your chance to make a down payment on your health. Also ask whether your health insurance will help cover weight loss and smoke-ender programs or at least lower your premiums afterwards. Finance education. Strengthen your career prospects and earnings potential by adding new skills through college courses or vocational training. Ask if your employer will help pay for job-related education. You can also set money aside for your children’s or grandchildren’s education by contributing to a 529 Qualified State Tuition Plan or Coverdell Education Savings Account. Bonus: Your contributions will grow tax-free until withdrawn. Visit the U.S. Securities and Exchange Commission’s Introduction to 529 Plans and the IRS’s Tax Topic 310 — Coverdell Education Savings Accounts for details. Vacation fund. Start budgeting and saving now for your summer vacation so you’re not caught off guard when the bills start rolling in. See my previous blog, Trim Your Vacation Costs , for travel budgeting tips. Charitable contributions . Many people wait until year’s end to make charitable donations, but nonprofits need help year-round. Prepay bills . If you expect major expenses later this year (e.g., insurance premiums, orthodontia, college tuition), start setting money aside now so you won’t rack up interest charges. Also, use this calculator to see how paying slightly more each month toward your mortgage principal can save you thousands of dollars in interest over the life of the loan. And finally, if you regularly receive large tax refunds, you’re probably having too much tax withheld from your paycheck — you’re essentially giving the government an interest-free loan. Ask your employer for a new W-4 form and recalculate your withholding allowance using the IRS’ Withholding Calculator . This is also a good idea whenever your pay or family situation changes significantly (e.g., pay increase, marriage, divorce, new child, etc.) This article is intended to provide general information and should not be considered legal, tax or financial advice. It’s always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation. To participate in a free, online Financial Literacy and Education Summit on April 23, 2012, go to Practical Money Skills .

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Robert Shiller: 10 Ways Finance Can Be a Force for Good

April 11, 2012

The finance profession gets maligned after every financial crisis. The anger is especially strong now, after the most recent financial crisis, which began in 2007, and the anger that is felt about it goes far beyond the Occupy Wall Street movement. The crisis is often viewed as more than an unfortunate accident, but as a revelation of an underlying moral fault. Of course, some people in finance are evil, but that is true in every walk of life. Maybe the wrongdoings of financiers loom especially large in our imagination, since some in finance make so much money doing it. We naturally want a more equal society where most people feel fulfilled and sense a basic respect from others. But, we have to think about how achieve that kind of equality without disrupting our goals or disturbing our standard of living. Moving forward from here, we need to think about how we can make finance work toward a society that is both comfortable for all of us and stimulating and forward-moving as well. In my view, doing that means tinkering with some of the financial institutional structures so that they work better for everyone, and expanding the scope of finance to cover more of our risks and activities. That means enlisting the help of people with financial expertise. Throwing a lot of financial people in jail or shutting down financial institutions are not on my list. In my new book Finance and the Good Society (Princeton) I advance some ideas how this can be done, in our new information-technology-rich society: 1. Advance the benefit corporation. From the initiative of the nonprofit B Lab, the first law allowing benefit corporations was created in Maryland in 2010, and now eight states have them. A benefit corporation is a for-profit corporation that has some additional social or environmental purpose other than just making profits. Each benefit corporation can define its own purpose and will attract its own kind of idealists as investors. My guess is that this new idea will turn out to be a winner, that will yield some of our most profitable corporations because of the employee and community support they will inspire. The amazing example of Wikipedia, with its unpaid authors, shows how public purpose can motivate people. 2. Create what I am calling, in my new book, participation nonprofits, nonprofits that might run schools or hospitals or the like, but that raise money by selling shares to the public. Such a firm pays dividends from its profits into a special account in the name of the shareholder. The shareholders get a charitable tax deduction for making the investment, but can use the dividends in the account only for further charitable contributions, including purchasing shares in participation nonprofits, or can spend them on themselves in some predefined emergency situations such as a medical crisis. With participation nonprofits, charitable giving will be more fun for the donors, for they could watch their money grow and feel their influence grow with it, if they invest wisely, fulfilling a natural human need for stimulation and appreciation. For example, the Wikipedia Foundation might have been even more successful if it had been set up as a participation nonprofit, and found some revenue opportunity associated with their mission. Instead of operating on a shoestring of the mere 75 employees it has today, I’ll bet it would have received many billions in donations by now, which it probably could use for a much expanded social purpose. 3. Create what I am calling continuous-workout mortgages, mortgages whose contract specifies from the beginning that the loan balance will be reduced in contingencies like a decline in home prices or a severe economic recession. In the current crisis, we are hampered by the fact that few troubled homeowners are getting workouts on their mortgages. This has been a significant factor in the severity of the crisis, since people who are underwater on their mortgages are not likely to spend, or to move to take a new job. Workouts could be not only preplanned but also made continuous, responding day by day to every change in the economic situation of the homeowner. 4. Get risk-management markets for real estate risks going on a high level. In 2006, my colleagues and I worked with the Chicago Mercantile Exchange to launch the world’s first futures exchange for single-family homes. The market is still going, though trade is very weak. But the CME Group has just launched new options on home prices, which may rekindle the market. If this initiative does not work well either, we need to come up with another initiative to make these markets work, which will enable private mortgage issuers to use them as risk management devices so that they can do such things as create continuous workout mortgages without taking on unacceptable risks by doing so. The financial crisis might largely have been prevented if we had such markets. 5. Empower lobbyists on behalf of the 99%, the people who make up all of the population except the very wealthy. There is nothing wrong with lobbyists per se, for they give needed information to lawmakers. Every interest group should have lobbyists, including the working class and the poor. Financial lobbying is especially important since lawmakers cannot be expected to have expertise on difficult financial concepts. The problem has been that the financial lobbyists have grown dramatically in resources in recent decades, while other groups’ lobbyists have not. Supporting a better balance of lobbying efforts needs to be emphasized. 6. Advance the cause of risk management for the very poor. There are billions in the world today whose survival depends on subsistence farming. Farms ought to be able to insure their crops against failure due to bad weather. Traditional crop insurance has not worked because crops are difficult to verify and there is thus a moral hazard problem. Now that weather reporting is more detailed, and now that agronomists better understand the relation between crops and weather, we can base insurance on the weather changes that affect crops. The take-up by farmers of such insurance has been slow, despite demonstration programs sponsored by the World Bank and other donors. We need to experiment more with marketing forms until we get these right. 7. Create more sophisticated forms of public debt. At the present time, national governments tend to rely exclusively on conventional debt to finance their deficits, in contrast to companies who use both debt and equity as well as a plethora of other financial devices. A simple first step would be for governments to sell shares analogous to the shares in corporations that are traded on stock markets. My Canadian colleague Mark Kamstra and I have proposed that governments with deficits, instead of borrowing more now, start selling what we call trills: each trill promises to pay a dividend equal to trillionth of GDP each year to the owner, in perpetuity. Investors who are optimistic about GDP might love these investments, and governments would then find that they are cushioned against financial crises like the present crisis since their required dividend payments decline then. 8. Create tradable social policy bonds. The idea, first articulated by Ronnie Horesh in New Zealand, is for governments to create bonds that pay out if some specified social policy objective, such as an increase in public awareness of some important issue or a decline in some specified crime rate. By creating such bonds, an incentive is created for private sector initiatives to solve them. An entrepreneur can profit by buying the bonds and taking steps to solve the problem. The entrepreneur does not have to wait to profit until the day when the policy objective is finally met, for, if these bonds are traded on public markets, the price of the bonds will tend to increase in anticipation of the fulfillment as soon as the prospect is apparent. 9. Create an inequality indexation scheme in the tax code. We would pass a law now that specifies that taxes will be indexed to inequality: tax rates on higher incomes will be automatically raised at any future date when inequality surpasses a specified threshold level worse than it is today. It should be politically much easier to create such a contingency plan now, to be triggered only at a future date if some specified level of higher inequality is reached, than to raise taxes later after such inequality is a reality and a political constituency for the newly rich is created. Just as, with fire insurance, one must insure a house before it burns down. So to, if we are to view increased inequality as a risk with a financial solution, we should take risk-managing actions while it is still just a risk. 10. Create livelihood insurance, insurance offered to individuals against declines in the average income paid to people in their professional specialty. We already have disability insurance, insurance that protects individuals against loss of income due to illness. In the information age, we ought to be able to expand such insurance, without triggering moral hazard, to protect people against possibly catastrophic drops in lifetime earnings that sometimes occur when people’s occupational income suffers a serious hit because of some technological innovation or change in the economy. If people are able to insure their livelihoods against such events, they will not only rest easier, they will be able to be more adventuresome in their career choices. All of these ideas are expansion of basic financial technology toward the broader social benefits. The first step in making any such things happen is first to appreciate the kinds of financial institutions we already have, as well as their defects. We need then to improve and build up this financial infrastructure so that it works better in our lives. Robert Shiller is professor of economics and finance at Yale University. This month Finance and the Good Society appeared and also a new revised version of his free video online Financial Markets course, part of Open Yale , was launched.

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Kristie Arslan: Mr. President, Focus on the ‘Baffle Rule,’ not the ‘Buffett Rule’

April 11, 2012

President Obama is calling on Congress to raise taxes on the wealthy in a speech today, and he’s using a clever example to describe it. Calling it the “Buffett Rule,” he’s calling for tax law changes to ensure the Warren Buffetts of the world don’t pay a lower tax rate (due to their investment income) than their secretaries. Tax fairness is a top priority for the National Association for the Self-Employed , but we’re much more interested in tax laws that impact the 22 million self-employed Americans who aren’t household names but who create a whole lot more jobs than Mr. Buffett. In honor of the millions of Americans who are struggling this week to figure out the home office deduction and other baffling tax laws, we’re calling on Congress and the president to change all tax laws that are so baffling that taxpayers don’t take advantage of them. Let’s call it the “Baffle Rule.” The tax deduction for the use of a home office is one of the biggest headaches for taxpayers. It is probably the most notoriously complex and confusing broad-based tax credit offered by the federal government. An estimated 9 million Americans work out of their homes, but there are perhaps millions of these entrepreneurs each year who don’t claim this tax credit, simply because they don’t understand it. This is especially true for self-employed taxpayers, who usually prepare their own taxes. Unlike Mr. Buffett, they don’t have a platoon of tax lawyers on speed dial, so in many cases they just give up on the deduction out of frustration or fear of an audit from an incorrectly filed return. The NASE is asking Congress to simplify this deduction, by allowing home-based businesses to take a standard $1,500 deduction for home office expenses. By making the tax rule less confusing, more self-employed taxpayers will take advantage of it, thus providing more resources for these small businesses to grow and create jobs. Tax credits don’t work to encourage behavior if Americans can’t understand them, so let’s get Congress and the president to enact the “Baffle Rule” this year, so that our taxes for next year are friendlier and less baffling to the self-employed and small businesses.

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Preetam Kaushik: Starbucks Finally Coming to India: Will It Knock Out the Indian Coffee Retailers?

April 10, 2012

One of my Indian friends abroad was returning home after a three year stint in Japan and mentioned, “Well, the only thing that I would not find in India and I can’t live without is Starbucks.” “But, there are Café Coffee Day and Barista, the Indian Coffee chains, if all you want is a hang out joint and some good tea or coffee,” I said. “No, they are not the same, they don’t even serve Tazo Chai Tea Latte,” was the curt response. Well, it’s only an individual example, but kind of opens up a window to understand how brands develop and make your life incomplete without them being around. It is also precisely this sentiment that would welcome Starbucks in India. However, Starbucks is looking at a much bigger market than merely those who eagerly await its arrival. Indian coffee consumption has doubled up in the last decade to 100,000 metric tonnes . While the main players in the retail coffee chain in India are Café Coffee Day, Barista and Costa Café, it is really only the Café’ Coffee Day that has the largest market share. With over 1250 cafés across various cities in India, Café Coffee Day is progressing at a growth rate of nearly 30 percent a year. In Contrast, Barista remains slightly an upmarket Café with about 250 cafes across the county and Costa Coffee, still lesser at about 100 Cafes. Who amongst these is really the competitor for Starbucks really depends on how the company positions itself in India. Starbucks is partnering with Tatas with a 50: 50 Joint Venture to launch the first set of the 50 retail coffee chains across India by the end of the year. The first launch is estimated in August. Finally! The question one likes to ask is not what is bringing Starbucks into India, but what has really kept it out for so long. It may be the Foreign Direct Investment Policies for single brand retail companies, where the bar was kept at 51 percent. Apparently, Starbucks has long been interested in coming to India but somehow it didn’t work. However in the last few years, contemplating a Franchisee Model and was in talks with Kishore Biyani of The Future Group, India. It however does not work for many brands who do not want to partner with any Indian brand, such as Apple and IKEA. It is only in January, 2012, that the Indian Government allowed 100 percent FDI for single brand retailer raising from 51 percent. The only condition that comes with 100 percent FDI is that the companies who take the 100 percent route must procure 30 percent from smaller Indian companies . It is interesting that despite the 100 percent FDI allowance now, Starbucks has chosen to go for a joint venture with the leading Indian Conglomerate Tata, that too with a 50:50 partnership stake. The two companies who are signing in MO U’s are working on the finer print for the Indian chains set to launch soon. Starbucks is already in agreement with the company over sourcing its coffee from India. Although the final arrangement between the tie up is still not public, it wouldn’t be a surprise if TATAs, who are also in the hospitality business, run some of the retail stores out of their own properties. Starbucks, which runs over 1900 retail stores in over 58 countries, is planning to launch stores in all leading cities in the first round this year. However, it is estimated that Indian market currently has the capacity to absorb more than double the stores it already has. What brings Starbucks to India, when it is a known fact that Indians are not known for their love for coffee? In a country where the predominant beverage across the country remains ‘tea’ and the coffee drinking South Indians drink milky and sugary filtered coffee, it may not sound like a very naturally inclined market for Starbucks. However it is not the affinity for coffee, but the size of the Indian middle class which is estimated at 300 million that is attractive for brands like Starbucks. It is also true that Starbucks isn’t really all about Coffee, the branding apparently is hooked on to the coffee, but Starbuck offers more than the Coffee anywhere in the World and wouldn’t it be fair to expect that there would be something special for Indian market too. Café Coffee Day is no different, it does sell snacks, tea and so many soda based drinks, not remotely connected with Coffee. That brings the discussion to the buzz that is going around in the internet world. From the Washington post to the Wall Street Journal, blogs are talking about suggestive or anticipated menu for the Indian palate courtesy Starbucks. While the guess is that “Frappuccino” and the “Latte” , should remain there, some suggest Starbucks could benefit from having Alphonso Vivanno Lassi for Indians and may also consider change of name for ‘Tazo Chai Tea Latte’. Some suggestions are around having a ‘real masala tea’ as well as serving ‘coconut water’. One could imagine Indian obsession with mangoes, diary and sweet getting twisted into some interesting new beverages. It’s not a long wait now. Starbucks Corp. is serious on spreading its wings in Asia. One, the middle class in any of the East and South Asian countries is growing and the success in China has been definitely impressive for the company. The China success where cafeterias have become a national pastime of the sorts for the middle class, India must be an inspiration. The China experience shows that it is the young from the middle class that are its typical customers. While all across Asia Pacific the Café market is growing and is estimated at 10 percent to 30 percent, Mr. Wang, head of the Starbucks Asia Pacific finds Korea as one of the most promising market . Mr. Wang believes that their entry into the Indian market will lift up the entire coffee market in the country. Self-assured yet cautious, Mr. Wang seem not too worried about the local or national competition from existing brands. One of the reasons he cites is that theirs is a proven global brand. The other being their attitude that any competition helps you remain focussed, keeps them working hard on standing out. Or as they say, there may be a place for everyone to co exists. Interestingly, Mr. Wang who is a trained lawyer thinks that Starbucks culture is about being either a rule breaker or a rule maker. The company, he insists, relies on innovation and engaging customers and the market. Starbucks, he conveys, stands for its goals on sustainable growth, farmer equity and environmental awareness. The Starbucks would like to work with coffee farmers to better yields without reducing chemical inputs. The joint venture between the Tata and Starbucks will be called Tata Starbucks Ltd. It is Delhi and Mumbai which would host the first of these stores. Well, for those who won’t like to go to a café for their coffee, they can still relish a new product that both groups will together launch ‘Tata Tazo”. For the rest, long chats await in a few months from now at Starbucks.

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Renee Blodgett: Entrepreneurs Should Think Globally Far Beyond Silicon Valley’s Borders

April 10, 2012

While Silicon Valley may be the “hub” for technology startups and where the world thinks the top creativity and talent reside, there is plenty of innovation coming out of other parts of the world. In the states, Denver, Boston, Los Angeles, Washington DC, Portland and Seattle are all making strides. Just this past week, I was informed of a few startups out of Montana which just closed small rounds. Outside the states, many entreprenuers and VCs alike know about the flood of activity coming out of Israel, the UK and mobile apps from developers in Eastern Europe, Asia and South Africa (Memeburn is a growing social media and start-up blog for the developing world and a hot new Cape Town-based start-up conference is unveiling in the fourth quarter). Paris-based LeWeb is one of the hottest start-up and technology conferences around and given its growth and diversity, it’s not just focused on Europe anymore. In the last six months alone, I’ve met 6 French entrepreneurs who are moving from Paris to the Bay Area to increase their likelihood of getting funded and hiring the “right” names. Canada, the Netherlands, Belgium, Singapore too are all sprouting up new initiatives and innovations. I talked to the Singapore folks at SXSW who fed me fabulous chicken wings at their booth. (there was a huge international presence this year). They have a presence in Silicon Valley and are hoping to grow it in the coming months and years, as is Ireland with Enterprise Ireland, who is responsible for the funding, development and international growth of start-up companies in Ireland. The popularity of the Dublin Web Summit and the Founders conference are both strong indicators that the number of entrepreneurs and smart ideas coming out of Dublin and other pockets of the country is on the rise. Ireland also had a strong presence at SXSW with 30 companies on-site under the Enterprise Ireland umbrella. Part of their pitch to the social media and technology world was not just of their own talent, but to encourage others to bring their businesses to Ireland. Ireland has a €10 million fund for international start-ups. While it may not be brand new, many may not be aware of it. Why Ireland, besides the natural reasons of it being a gorgeous country with landscape to die for and a country loaded with smart, witty storytellers? What many may not realize is that Ireland has the most business friendly tax regime of any country in Europe or the Americas, which is pretty attractive when your budgets are small and you’re trying to raise early capital. It is obviously English-speaking as well, which makes it easy for Canadians and Americans to migrate east and Ireland’s geographic position and EU membership provides easy access to money flow on the continent. The World Bank’s ‘Doing Business’ report rates Ireland as the easiest EU location to start a business. And, the Irish Government has an assertive pro-business economic policy, offering a 12.5% corporate tax rate and 25% R&D tax credit. For those solely focused in Silicon Valley, perhaps it’s time to think a little more global. With more expansive thinking will come additional resources, capital and creativity not to mention interesting culture, social benefits and economic development outside of what northern California has to offer.

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

April 10, 2012

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

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Susan Harrow: How Do I Smell? Use Twitter to Survey Customer Wants

April 10, 2012

When she decided to develop a perfume, Kim Kardashian didn’t guess what her almost eight-million Twitter followers wanted; she asked them. Her first scent, named after the “star” herself, was created after Kardashian asked her devoted Twitter followers what they wanted from a fragrance. The response? Hints of honeysuckle and sensual tonka beans. Tonka beans? Who knew? They are purported to be so intoxicating that they may be declared illegal. While I agree that to poll your Twitter followers before you create a new product is a great strategy, I also know that I don’t want to smell like dessert when I go out for the evening. But I may be alone on this. “I wanted something rich and creamy and sexy, but still youthful,” Kardashian said . Good enough to eat perhaps… Sister Kourtney Kardashian called Twitter “the best decision-maker,” disclosing that she Tweets everything from potential perfume bottle designs for the sisters’ signature fragrance, to outfit decisions, and even, absurd as this sounds, asking fans what she should have for dinner. Hey, ya’ll, what should I have for dinner? Weigh in on Twitter , will you? I may create a product from your suggestions. Susan Harrow is the author of “Sell Yourself Without Selling Your Soul.” She runs a Media Consultancy where she helps everyone from Fortune 500 CEOs to celebrity chefs, entrepreneurs to authors grow their business through media coaching and the power of PR. For more information please contact Susan .

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Edward Wytkind: Richard Branson Is Quite Busy Not Owning Virgin America

April 10, 2012

In 2005, British billionaire Richard Branson came to America to launch a new airline for Americans, owned by Americans and controlled by Americans. At least that was the story he was selling. First, you have to understand that under current U.S. law, foreign interests cannot own more than 25 percent of the voting stock or 49 percent of the equity in a U.S. carrier. To further ensure this is crystal clear, the law requires the “actual control” of the airline to be in the hands of U.S. citizens. This is no small matter not only for national security purposes, but also because of its impact on U.S. airlines, safety, jobs and the collective bargaining process. But Sir Richard doesn’t get involved in many things he can’t control, so you can imagine our skepticism at the outset. You think he would have let someone else control the introduction of his self-proclaimed ‘ sexiest spaceship ever ‘–Virgin Galactic? So I have a question: If Virgin America is independent of U.K.-based Virgin Group, why is the group’s founder talking to Virgin America’s flight attendants about the evils of unionizing? Hold that thought, I’ll get back to the video-taped evidence in a moment. Since the end of 2005 when Virgin America first filed an application with the U.S. Department of Transportation to operate as a U.S airline, the Transportation Trades Department, AFL-CIO and others argued that Virgin America is controlled by foreign interests, which is counter to U.S. law. But time and time again founder and Chairman of the Virgin Group Richard Branson, who is no stranger to arguing against U.S. ownership laws and regulations, was able to convince U.S. authorities that he was not controlling the airline and was, therefore, compliant with our laws. Eventually our regulators agreed. Therefore, we find ourselves in a place where — more than four years since it actually began flying in the fall of 2007 — Virgin America is vying for highly sought-after slots at Washington Reagan National Airport. And while it battles it out for these slots with its competitors, its compliance with foreign ownership and control laws must again be scrutinized. This time, it is not about speculation that at some point in the future Mr. Branson might play a role in controlling the operations of the airline. This time, there is a video produced by the Virgin Group and shown to Virgin America employees of the great founder taking the time out of his busy schedule (what, no space launch that day?) to speak to them about what is supposed to be their unfettered right to vote on unionization without employer interference. In the video, he tells flight attendants of the consequences to the company of joining a union after the Transport Workers Union filed to represent these employees. Branson asks the employees of Virgin America, a carrier in which he has sworn no control in, to think about what is at stake for the company if the TWU is elected. He then urges them to protect their “independent spirit” by rejecting the TWU because the union will take their “uniqueness away.” Actually, what is unique about these employees is that they have to sit at the table, on their own, and negotiate with a billionaire over wages and benefits without a union voice. That’s a “uniqueness” I wouldn’t cling to. In telling Virgin America employees to “say no to the old way of flying and say no to the TWU,” Sir Richard couldn’t have been clearer — he is at the helm making sure that his (sorry, I meant Virgin America’s) employees remain non-union. Branson is taking Virgin America down this path, an airline he allegedly doesn’t control. Odd. And now Branson’s airline has applied for two nonstop flights to San Francisco International from Reagan National. These slots are coveted by actual American-owned and controlled airlines because there are a limited number to go around from this popular stop near the nation’s Capital. It would appear that Mr. Branson is fond of making videos these days. In a Kobe Bryant ad for Nike, which features Branson and his business success, the video ends with this message: “Attack Fast. Attack Strong. Learn the System.” It looks as though Mr. Branson and Virgin America, fully in compliance with our foreign control laws I’m sure, have learned our system well, and how to beat it. Regulators take notice: Sir Richard is quite busy not controlling Virgin America.

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Robert Pozen: An Intermediate Approach to the Auditor Rotation Issue

April 10, 2012

In March the Public Company Accounting Oversight Board (PCAOB) held hearings about whether to require public companies to change (or “rotate”) their external auditor periodically. Similarly, the European Union has proposed mandatory auditor rotation every six or 12 years. Mandatory auditor rotation is designed to address a potential conflict of interest between a public company and its auditor. Because an auditor is hired and paid by the public company it audits, the auditor’s desire to maintain a good relationship with its client could conflict with its duty to rigorously question the client’s financial statements. Advocates of mandatory rotation generally object to the historic coziness between auditors and the management of public companies: the auditors of almost 36 percent of all companies in the Russell 1000 have held that position for 21 years or more. These advocates cite two specific benefits of replacing the auditor every five or 10 years: a term limit for an auditor’s engagement with a company would decrease the auditor’s incentive to ingratiate itself with management, and furthermore, mandatory rotation would keep the current auditor on its toes, since it would fear that a new auditor would expose any previous errors or omissions. On the other hand, public companies have vigorously argued that the benefits of mandatory rotation are outweighed by its costs. Because multinational corporations are very complex, an auditor must develop company specific knowledge to fully understand the company’s finances. Mandatory rotation would quickly erode this institutional knowledge, reducing audit quality and increasing costs. In addition, critics point out that mandatory rotation undermines the role of the audit committee in overseeing the audit process, as expanded by the Sarbanes Oxley Act. That Act made the auditor report to the independent audit committee, which now has the power to appoint and terminate the auditor. Given these competing arguments, I favor a compromise proposal requiring the independent audit committee to periodically issue a request for proposal (RFP) for the audit engagement, but allowing the existing auditor to bid on the RFP. This proposal would reap most of the benefits of auditor rotation without imposing many of the costs. Even if the existing auditor usually wins the RFP, the bidding process raises the probability that the audit committee would appoint a new auditor. This would encourage the existing auditor to maintain its professional skepticism more vigilantly. The existing auditor would be worried that any deficiencies in its audits would be discovered if a new auditor were subsequently engaged. Yet an RFP requirement would not impose large costs on a public company from switching its auditor every five or 10 years. The existing auditor would be replaced only if the audit committee decided that this change met a cost/benefit test in the context of that particular company. Most importantly, an RFP process would reinforce the critical role of the independent audit committee in the eyes of the external auditor, especially one with a longstanding relationship to the same company. The RFP process would make it clear that the independent directors on the audit committee, not company management, were in charge of choosing the auditor and supervising its work. Nevertheless, commentators are likely to raise three practical questions about this RFP proposal. 1. How often should the audit committee be required to issue a RFP? In my view, the answer is every 15 years. This period would allow an audit firm enough time to gain the expertise it needed to understand the complexities of a global company. This period would also be long enough to warrant a serious effort by other large audit firms in responding to these RFPs. Audit fees for 15 years might even persuade one or two middle-size audit firms to develop the capability of auditing multinational companies. 2. Will there be enough firms bidding on the RFP other than the existing auditor? Even if only one firm other than the existing auditor responds to the RFP, that should be sufficient to obtain most of the benefits of a competitive bidding process, as shown by the bidding for many large defense contracts . Of course, audit firms cannot perform both audit and non-audit services for the same public company. But the regulators could allow any qualified firm to respond to a RFP as long as the firm stopped the non-audit services if it won the RFP for the audit. 3. Will the RFP process make audit firms more likely to fold on tough accounting issues? With a periodic RFP process, the auditor would make great efforts to serve the needs of the audit committee, not company management. Thus, the RFP process would make the existing auditor to be more responsive to the audit committee — exactly what we want. With the RFP process in mind, the auditor would be more likely to alert the audit committee to close questions on financial reporting and possible areas of debate with company management. In short, mandatory audit rotation as a blanket rule is probably not cost effective. Instead, the PCAOB should require the audit committee to issue a RFP for the auditor engagement every 15 years, but allow the existing auditor to participate in the bidding process. This process would enhance the auditor’s willingness to make tough calls and reinforce its primary allegiance to the audit committee.

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Chris Weigant: Occupy’s Next Crossroads

April 10, 2012

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

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Andrea Learned: Sustainability’s Neglected Frontier: The Young and the Entrepreneurial

April 10, 2012

Where should we be looking for sustainable business change today? Perhaps it should not be toward the usual corporate suspects, many of which are slow to decide on even minor operational and product development shifts. The more compelling view may instead come from looking in the entrepreneurial direction. I’ve been covering corporate sustainability for a while now, but, admittedly, my passion for it has waned. What most big companies can achieve in their attempts to change centuries old operational systems struggles to compare with the game-changing energy, ideas and commitment I’ve recently come across in the young entrepreneur community. The potential sustainability impact of what those in Seattle (my own city) and those of similarly innovative minds on many other college and university campuses across the nation/globe is what strikes me to the core of my ever-hopeful, change-through-business soul. A week ago I spent a day with representatives of the Pacific Northwest’s emerging generation of sustainability and socially-minded entrepreneurs, and it blew me away. To fully disclose, and though the thoughts I share here are my own, I participated in this event in my social media role for the University of Washington’s Center for Innovation and Entrepreneurship, covering their Environmental Innovation Challenge (EIC). After being at this gathering, I realized that corporate sustainability likely has nothing better than the potential for paradigm shift that bubbles inside the men and women now attending our colleges and universities. But, back to the actual event. As the 23 student teams made their two-minute pitches early on, it was all my Twitter-happy fingers could do to capture each of their cool ideas and smart thinking. And, I was not the only one impressed. Even the highly experienced Seattle-area entrepreneurs who judged the challenge seemed to have the same feeling as me, which was that our economy will do just fine — as long as we identify, support and encourage this generation of student sustainability innovators. (Many also said something like “Darn, why wasn’t I this smart when I was that age?”) A quick look at three of the winning innovations from this one event demonstrates why there is great sustainability promise in our next generation of entrepreneurial minds: • An alternative to freeway “jersey barriers” made from something so often found lying shredded near them: old tires. • Sustainable shelter-building materials packaged in an easy to transport barrel as an alternative to post-disaster relief transitional housing. • A radical re-design of non-stick cookware surfaces that eliminates the coating altogether. ( More on those innovations , including some video.) Such incredible ideas might never have made it to prototype or professional business plan format were it not for an approach now starting to get more emphasis on campuses: multi-disciplinary collaboration. The various combinations of students developing these particular innovations, in fact, reflected a mix of undergraduate and graduates, and included engineering and science students working right alongside business majors. Creation at this level comes from true teamwork, and sustainability innovation demands collaboration like nothing else. If I seem enthusiastic, it’s because I’ve been so newly reminded of this and want to spread the word: Students are not some separate entity to be forgotten (until they graduate) in our struggling but sustainability-pursuing economy. Instead, these inspiring men and women are the beginning of a talent pipeline that is already changing our world. Before our very eyes, sustainable innovation is turning the young and restless into the young and entrepreneurial. Here’s hoping your company is paying attention.

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

April 9, 2012

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

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

April 9, 2012

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

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Jed Kolko: Home Prices Are Up. Haven’t You Heard?

April 9, 2012

Find Out Where Asking Prices and Rents Are Heading, Almost In Real-Time, With the New Trulia Price Monitor and Trulia Rent Monitor I rely on the major sales-price indexes — Case-Shiller , Federal Housing Finance Agency (FHFA) and CoreLogic — as much as the next guy (or the next housing economist, anyway). They’re essential for understanding where home prices have been going. But they come out between five and eight weeks after each month ends, and the sales prices they report are rooted in asking prices set two or three months earlier. Doing these sales-price indexes right takes time , but buyers, sellers, investors and policymakers need to know what’s happening in the housing market now . Starting today, we’re closing this gap. The Trulia Price Monitor and the Trulia Rent Monitor show every month what’s happening to asking prices and rents almost in real-time. By focusing on asking prices and releasing each month’s Monitors just days after each month ends, we can detect price movements at least three months before the major sales-price indexes do. What are the Trulia Price Monitor and Trulia Rent Monitor? To create the Trulia Price Monitor and Trulia Rent Monitor, we take all the for-sale homes and rentals ever listed on Trulia.com and calculate how asking prices and rents changed month by month. Rather than simply tracking the average or median, we adjust for the changing composition of homes that are listed each month. Therefore, these Monitors reflect the price and rent trends for similar homes in similar neighborhoods over time. For the Trulia Price Monitor, we also account for the regular seasonal fluctuations in asking prices in order to reveal the underlying trend in prices. The Trulia Price Monitor differs from the major sales-price indexes in important ways. First, we focus on asking prices. Final asking prices lead sales prices by about two or three months, reflecting the time that homes are typically on the market. In 2011, the Trulia Price Monitor’s national month-on-month changes track the seasonally-adjusted month-on-month changes in Case-Shiller and FHFA two months later.  Asking prices, however, are not a perfect predictor of sales prices: the final sales price for a home can be above or below asking, and some listed homes might not sell. Asking prices and sales prices each have their advantages for understanding the housing market: asking prices have the advantage of showing current market conditions and trends, but sales prices are the best guide to historical and long-term trends in the housing market. Second, the Trulia Price Monitor uses a different statistical approach: a “hedonic” rather than “repeat-sales” method. The explanation gets technical pretty quickly, but we’ve provided all the details in our FAQs . Here’s what to expect from us: in the first few days of each month, we will publish price and rent trends for the previous month, for the nation as a whole and for the largest metro areas (for prices, the 100 largest; for rents, most of the 100 largest). We report monthly, quarterly and yearly changes nationally, plus quarterly and yearly changes at the metro-level. Our approach lets us dig deep: in the future, we’ll look at price trends for single-family homes versus condos; homes with one, two and three or more bedrooms; downtown versus suburban trends; and more. Have some other comparison that you’d like us to make? Email us and let us know. Madness! Asking Home Prices Moved Up in March Let’s get to the facts. Nationally, asking prices on for-sale homes were 1.4 percent higher in March than one quarter ago. Prices increased month over month by 0.9 percent in March and 0.6 percent in February. What we found through the Monitor is that asking prices had been declining prior to February and reached a low in January 2012. Throughout 2011, asking prices rose slightly in several months of the year, but never more than 0.2 percent in a month. Asking prices in March were 0.7 percent below their level one year earlier. One thing to keep in mind — because the Trulia Price Monitor is seasonally adjusted, these monthly and quarterly increases are on top of typical springtime price jumps . Without adjusting for seasonality, asking prices rose 2.4 percent quarter over quarter. Asking Home Prices Are Looking Up for the Sunshine State But all housing is local. On the up side, the Trulia Price Monitor revealed that asking prices rose year over year in all large Florida metros, and fastest in Cape Coral-Fort Myers and Miami. Asking prices also rose in Phoenix, Pittsburgh and the Detroit area. Meanwhile, local housing markets in much of the West continue to struggle. Prices fell most in Tacoma and Seattle, followed by Sacramento and Las Vegas. All large California metros saw year-over-year price declines. Just check out this metro-level map and see for yourself. Florida and Michigan are looking mighty green (which means rising prices) whereas California is in the red (which means falling prices). Why do we see price increases in some places and price declines in others? As a general rule, prices are now rising faster in places where prices fell more during the bust and where vacancy rates are higher . In other words, many of the local price increases are bounce-backs: Cape Coral-Fort Myers, Miami and Phoenix all saw huge price drops after the bubble burst and big increases in asking prices this past year. But there are exceptions: Las Vegas prices continue to fall, even after years of steep price declines. Top 10 Metros With Largest Price Increases # U.S. Metro Y-O-Y % Change in Asking Price 1 Cape Coral – Fort Myers , FL 14.8% 2 Miami, FL 14.1% 3 Phoenix, AZ 13.2% 4 Pittsburgh, PA 9.2% 5 Little Rock, AR 6.7% 6 Orlando, FL 6.3% 7 North Port – Bradenton – Sarasota , FL 6.2% 8 Palm Bay – Melbourne – Titusville , FL 6.1% 9 West Palm Beach , FL 5.8% 10 Warren – Troy – Farmington Hills , MI 5.6% Top 10 Metros with Largest Price Decreases # U.S. Metro Y-O-Y % Change in Asking Price 1 Tacoma, WA -11.9% 2 Seattle, WA -9.1% 3 Sacramento, CA -8.3% 4 Las Vegas, NV -7.7% 5 Wilmington , DE-MD-NJ -7.7% 6 Columbia, SC -7.3% 7 Cleveland, OH -6.9% 8 Fresno, CA -6.8% 9 Milwaukee, WI -6.7% 10 Allentown , PA-NJ -6.7% Note: Rankings based on the year-over-year changes in asking price among the 100 largest U.S. metropolitan areas. Want to see the full list of price and rent changes for all 100 metros? You can download it here . No Wonder Your Landlord is Smiling What about rentals? Nationally, rents rose by 5.0 percent year on year: unlike prices, rents have been moving steadily upward. During the recession, some owners lost their homes and became renters instead; also, many younger adults deferred the leap from renting to owning. Strong rental demand, combined with little new rental construction, pushed rents higher. Asking rents rose over the past year in almost all large metro areas included in the Trulia Rent Monitor — regardless of whether asking home prices were going up or down. For example, rents rose strongly in Miami (12.1 percent) and Denver (9.9 percent), where for-sale prices also increased. Meanwhile, rental affordability declined in places where rents rose while prices fell, most notably in San Francisco (rents up 11.1 percent), Seattle (9.7 percent), San Jose (9.4 percent) and Boston (9.2 percent). As for the very largest metros, rents rose 6.2 percent in New York and 6.1 percent in Chicago , but only 0.6 percent in Los Angeles . So what drives rent trends? Employment growth matters most. San Francisco, Denver, Seattle, San Jose and Austin all had high year-on-year employment growth (through February 2012, according to the Bureau of Labor Statistics) and big rent increases. Is This Bounce-back Here To Stay? Will these price and rent increases continue? Continued job growth plus declining inventories equal more buyers chasing fewer homes – and therefore higher prices. The big wildcard for prices is the next wave of foreclosures. The robo-signing settlement will accelerate foreclosures, which will ultimately depress prices in neighborhoods where foreclosures are concentrated. Rents this year depend on both job growth and new construction: last year builders broke ground on many multi-family buildings, which should come to market later this year and dampen rent increases. Want to be the first to know how foreclosures , construction and jobs are affecting prices and rents in April? Come back in early May, when we’ll release the April 2012 Trulia Price Monitor and Trulia Rent Monitor.

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Dr Layla McCay: Wanted: Professional Soulmate

April 9, 2012

I had never heard of the term “professional soulmate.” But it turns out that while I was spending my formative years coming up with brilliant ideas to change the world, I should actually have been screening my fellow students for their potential as my future business partners. That’s what the founders of “farm-to-table” company Sweetgreen did, while they were students at Georgetown University. Recently, they told us at TEDxDupont Circle , a screening party that streamed the TEDxChange conference from Berlin (with “local voices” afterward), that as an entrepreneurial society, we put too much emphasis on the big idea. They argued that you could have all the best ideas in the world, but it takes a synergistic partnership to make it happen. As they said, Ben and Jerry didn’t become big because of Chunky Monkey. (Not that I’m suggesting that flavor is the best idea in the world, though it’s not unpleasant…) The conference wasn’t specifically about partnerships, but it really drove home the message — finding the right partners is critical to success. I liked hearing about designer Jeff Chapin’s partnership with a non-profit organization to design low-cost latrines that people really want, with huge potential impact on sanitation and health in the world’s poorest countries. It was intriguing to think of how aesthetics can play such a central role in the success of public health measures. Then Theo Sowa made a thought provoking presentation about how interventions to empower African women keep making the mistake of conceptualizing these women as “victims” who need to have things done to help them, rather than recognizing their leadership and partnering with them to deliver change. Bill and Melinda Gates are surely each others’ professional soulmates. The TEDxChange chair noted that their Foundation has become the biggest change agent in the world outside of government. This conference launched their ‘ no controversy ‘ campaign to catalyze the leadership needed to increase access to contraception in low and middle income countries. I suspect it will get results. In the meantime, there may be a gap in the market for professionalsoulmate.com …

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David Kiley: New Chevy Impala Is No John Wayne

April 9, 2012

There is a reason why John Wayne and his career advisers thought the name “The Duke” was better than his given name — Marion Morrison. There is something in a name. This week, General Motors is showing off the 2014 Chevy Impala , a car that looks like the greatest single-generation improvement in anything since Rocky III made us forget about the tragedy of Rocky II. But there is that name. Impala. Speaking of Rocky, “The Italian Stallion” was a great name for a boxer. Much better than, say, “The Bayonne Bleeder,” the name given to boxer Chuck Wepner. The Impala long ago became what even car executives at GM would privately call, and please excuse me, “a rental bitch.” That means that only people with little imagination and a mere love of value-priced big sedans could love it. And, of course, rental fleets. The new Impala is built on the same platform as the new Chevy Malibu, another Chevy that has been held back by its 1970s, early 90s name. In fact, professional women in particular really like the car when they are shown it without Chevy Malibu badging. Put the badging on it and interest drops like a stone. The Impala is headed for the same fate. The hardware looks good. The new design borrowed a few visual cues from the Buick LaCrosse and Chevy Camaro. And we can look forward to a new, more fuel-efficient 2.4-liter direct-injection eAssist version, along with a 3.6-liter V6 for the old-school customers. The interior looks a smidge gaudy, but it’s not a deal breaker. It’s a very different car from the existing Impala and a vast improvement. GM executives do not like to dump old names no matter the baggage. They say it costs hundreds of millions of dollars to establish a new name. The company has had experience with this lately with the Buick LaCrosse. But as this is a very new GM, and Chevy, with the best products they’ve had in my lifetime, I’d be the guy arguing for a new name. There are just too many people who would not touch this car no matter how good it looks or drives with the Impala badge. It’s too bad. Impala is actually a cool name. But after what GM has done to it in the last 20 years or so, it has lost its marketability. People on the coasts won’t take this car seriously with the Impala name, nor will many people under 60. Who wants to go see a cowboy movie starring Marion Morrison? For an in-depth take on the new Impala , go to the Autoblog review from the New York Auto Show. Grand Blvd. is a weekly column about cars from David Kiley, editor-in-chief of AOL Autos . He is a former marketing editor at BusinessWeek, and a former ad executive at three ad agencies.

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Sen. Fritz Hollings: Untying the Knot

April 9, 2012

Grover Norquist has the President and Congress tied in a knot. Norquist’s pledge against taxes forbids bipartisanship. Defeating a bipartisan budget last week in the House of Representatives patterned after Bowles-Simpson, Norquist said : “… the need for compromise is ‘nonsense.’” Budget rhetoric in Washington is askew. Instead of discussing taxes we ought to be discussing the merit of programs and how to pay for them. But programs are never debated. It’s always “for taxes” or “against taxes.” It’s the “size of government.” It’s never paying for government by cutting programs or increasing taxes. For eight years under President Bush, Congressmen Boehner, Cantor, and Ryan voted for tax cuts, wars and prescription drugs and never paid for them. Now, Congressmen Boehner, Cantor and Ryan want to pay for tax cuts, war, and prescription drugs with spending cuts. President Obama is running annual deficits of $1 trillion or more. I would like to see their list of $1 trillion in spending cuts. In 1948 we had a rule in the South Carolina House of Representatives that on second reading, any spending bill had to have a certificate from the Controller that the expenditures were within the revenues or the bill was sent back to the Ways and Means Committee. In 1959, as Governor of South Carolina, we raised taxes and in 1960, South Carolina was the first southern state to receive a AAA credit rating. All Governors think of paying for this year’s government. We used to in Congress. In 1993 without a single Republican vote in either the House or Senate, we cut spending and increased taxes — even on Social Security — and the U.S. enjoyed its strongest economy for 8 years. We gave President Bush a balanced budget in 2001. But today in Washington, we never pay for this year’s government. We just debate 10 year plans to cut $4 trillion in spending for later Congresses to do the cutting. It’s a grand charade. To untie the knot in Washington, we have to excise the cancer of money on the body politic. First, we must amend the Constitution: “The Congress is empowered to regulate or control contributions and spending in federal elections.” This doesn’t commit to a particular solution — that’s for later Congresses. But authorizing Congress to limit spending will limit Norquist and the lobbyists, limit fundraising, give time for the Senator to do his or her work, and return control of the government back to the people. This will take time. There is an immediate solution to deficit spending and creating jobs — just replace the 35 percent Corporate Tax with a 6 percent VAT. The 2011 Corporate Tax produced revenues of $181.1 billion. A 2011 6 percent VAT would have produced $728 billion. This will cut taxes, eliminate loopholes, give instant tax reform, promote exports, free up $2 trillion in offshore profits for Corporate America to create jobs in the United States, provide billions to avoid deficits, and create millions of jobs. Everyone in Congress is for these initiatives, but not one of the 535 members will introduce the VAT solution, nor will President Obama. Why not? Because Corporate America doesn’t want to increase the cost of their China exports to the United States. U.S. exports to China are taxed twice: the 35 percent corporate tax and a 17 percent VAT when exports reach China. China’s exports to the United States are tax free. 141 countries compete in globalization with a VAT that is rebated on exports. Wall Street, the big banks, and Corporate America are the biggest contributors to the President and Congress. Contributions for reelection in Washington come before the nation’s economy. Talk shows and the political pundits don’t mention the VAT solution because the press and media are owned or in bed with Corporate America. In 2006, the Princeton economist, Alan Blinder, estimated that for the next decade off-shoring would cost the U.S. Economy an average of 3 to 4 million jobs per year. We are off-shoring jobs faster than we can create them. The recession ended over 2 ½ years ago and we wonder why the recovery is anemic. The economy would come alive by replacing the 35 percent corporate tax with a 6 percent VAT.

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Amalia Negreponti: When Did They Forbid Love?

April 8, 2012

I loved it when on Thursday night I read the phrase, “We have always wanted Google to be a company that is deserving of great love.” in Larry Page’s dispatch that appeared on the company’s website for investors and Page’s personal profile on Google Plus. Of course the over-use of the word “love” (seven times in his 3,459 word ” 2012 Update from the CEO “) brought a wry smile to my face. The exaggeration seemed to me to take the weight out of that hefty word: love. Yet I was strangely moved. In the way we always are, despite the jaded, skeptic, ironic, maybe more practical and realistic side to ourselves scoffing at us for being so naïve. Indeed, Google’s declarations of “doing no evil” and “trying to make the world a better place” may not inherently differ from the official politically-correct spiel of many other major companies. Page’s fervent wish for Google “to be loved” may also have more to do with increasing revenue and profit (therefore, money), or endeavoring to close some enemy fronts and win users hearts back (leading to unhindered development and profit, thus… money) than with the four letter-word. Yet I can think of nothing for which I would risk being duped or disappointed, other than love. The following day, I was shocked to read some of the negative or ironic feedback the use of this evidently subversive word by a company CEO, generated in some circles. “It’s a megalomaniacal goal when a person says they want the world to love them or their creation”, one critic said speaking to the Financial Times . Since when? And more importantly, why? Especially if that person or company want to be deserving of our love! Why does it have to be all about the money? Isn’t it crazy to forbid love from an aspect of life? This prohibition is also in striking contrast with how intimately people feel about the Internet and the companies that dominate its world. How they trust them and become dependent on them — emotionally and practically. Less than half of the public trust financial services and banks to do what is right, making them the least-trusted industries for the second year in a row, according to an annual survey by public relations firm Edelman. Trust in government officials, regulators and chief executive officers as “credible spokespeople” dropped the most in the 12-year history of Edelman’s Trust Barometer survey. However faith in technology and the Internet has remained steady, despite the sector’s incontrollable growth, with a staggering 79 percent of those who participated in the survey, saying they trusted it. Combined with the intimacy and sharing the Internet commands and provides, love is only a stone’s throw away from this leap of faith. I must confess I do love the Internet. At an impressionable age, I gave my heart — and probably an extensive amount of information about me! — to Google because it was free and because through it I researched my way from adolescence to adulthood and from there to maturity. Nowadays I am a Twitter, Skype, iPad, Kindle, and Blackberry devotee. Quite a few years ago when the Internet was something you did alongside your life, instead of your life being something that happened to you while you were online, the place in our hearts that Internet companies now occupy through their products and creations, was held by beloved friends and family. If this infatuation that grew into a permanent relationship (with its fair share of dependency and addiction!) is not also related to love, I don’t know what is. That said, no person, let alone company, can survive on love alone, no matter how much you may try. Even if, for a short period of time you manage to, you may well find the love another holds for you, evaporating or turning to strife as the money well dries up. Cinderella becomes loved by the man she loves but she also gets a kingdom thrown in as well, for good measure! In Sex and the City , Carrie comes to the Big City to find “love”. She finally, exhaustingly, manages to do so in the arms of an implausibly romantic Mr Big who conveniently also happens to be a multi-millionaire (and hunk). Now that is a happy end! Even in perfect lives and fairy tales, you cannot survive without some combination of love and money. That the corporate world does not accept the bald truth of this fact does not really surprise me. One has only to take a look at the financial mess the money-generating world has landed the U.S. and Europe in, to realize the toll their conviction that business is “really, only about the money” is having on all of us. To realize the toll this stubborn misunderstanding is taking on the companies themselves, one has only to look at how public opinion, even their clients are regarding them: with every negative emotion ranging from suspicion, loss of respect and trepidation, to full-blown rage and hostility. This shows up in financial results too and it is not pretty. Sure, a company always has to be about the money — and how to make more of it in order to make shareholders happy. It also has to be about engaging in lawful and ethical behavior that creates respect and — a reasonable amount of — trust. Why, if it does all that, shouldn’t it aspire to be loved by consumers? To be deserving of love. Who forbade love and said it should all be only about the money? Are they that scared they wouldn’t be loved, or is it just because they know they don’t deserve to be loved? In this Larry Page is right, I think, when he writes, “But we recognize this (deserving to be loved) is an ambitious goal because most large companies are not well-loved, or even seemingly set up with that in mind.” Love is inherently scary, like all “major” stuff. It’s right there, in the big league, together with Life and Death. Nothing scares me as much as the fear that I may love someone but they may not love me. It is a risk you can never eliminate. That is where “deserving” comes into the equation. We may not be able to control who we love yet as adults we can all recognize the concrete steps a person or company takes, to become deserving of our love. Therefore, mixing love with business can become less fraught with risk. Yet, to me, it’s scarier to think that a person or group of people (company) who affect and often define me, are a daily presence in my life, know my most intimate secrets and are privy to even my craziest thoughts and searches, may not care about acting in a manner that deserves my love. So in a way I get Google: Kike a few other major online companies, they have touched and daily affect so many peoples’ lives (almost all of us) that a bond is created. This attachment is, of course, based on mutual self-interest, dependency and on expediency. It is more than that however. Like all things that start off as entirely interest-based (work) or gut-based (sexual attraction), our relationship with Google has also become deeply emotional. We are afraid it might betray us, using everything it knows about us, in some dire or merely lucrative way. Google is afraid we might abandon it and choose someone else over it. As for the need to be loved, it precedes, infinitesimally, even the need to love. It is our greatest strength but also what ultimately makes us most vulnerable. It is what makes the Internet human in peoples’ eyes. It is what makes HuffPost a community, a family. It is what, for today’s teenagers, makes life before the mobile Internet, before Instant Messenger, Google, Facebook, Twitter, Pinterest and so many others, inconceivable. The need Google expressed, to be loved, to be found deserving of love is nothing more than putting to words a reality all we tech-geeks have come to realize: that the Web is alive. So, like with every creation, love inevitably has become one of the defining factors of the Web and the Internet companies that play a major part in our lives. Whether we like it or not, we are all susceptible to love.

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

April 8, 2012

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

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Mark Samuel: Being Indispensable: When Keeping Commitments Undermines Your Accountability

April 7, 2012

It is common thought that accountability is about keeping commitments. There is nothing so frustrating as when someone has made a commitment to us — to communicate with us, to complete a task we asked them to complete, to assist us with something we’re having difficulty with — and then fails to follow through. It can be hurtful or frustrating, and our typical response is “You aren’t being accountable.” It can be even more frustrating when we don’t keep our own commitments — to things like our diets, keeping ourselves organized or to staying in touch with our friends. We feel we are letting ourselves down and may label ourselves as “not very accountable.” Regardless of which side of the broken agreement or commitment we may find ourselves, thinking that a broken agreement is necessarily an example of a lack of accountability may be a misdiagnosis. It might surprise you to learn that being accountable does not have to mean keeping all of your commitments. Why? Because accountability is more about being counted on to achieve desired results than accomplishing lots of meaningless activities. How many times have you seen someone looking busy doing lots of things they’ve committed to, but failing to achieve quality results, or satisfaction of their target audience (spouse, boss or customer)? Accountability is not just keeping commitments. Accountability is taking action consistent with your desired outcome. It begins with defining the kind of results you want to achieve in your life at home and at work. What kind of partner do you want to be in your relationships? What is the optimal health that you want to experience? What kind of reputation do you want to have at work with your teammates, your boss and/or your direct reports? Being accountable is taking actions consistent with those desired outcomes. It is not making and keeping commitments that take you away from your purpose. Based on those desired outcomes, it is essential to only make commitments that support your “picture of success” rather than accepting every commitment put before you in order to accommodate others… Sometimes, you may even make a commitment that you have to break or change in order to get back to creating your desired outcomes. For instance, I made a commitment one day to go out with my co-workers after work the following Friday. However, after getting on the scale on Wednesday, I decided it was important for me to get back on my eating plan immediately to lose weight and get my cravings under control. I had to break my commitment with my friends for a higher purpose of getting myself back on track with my health. Now, you might wonder, why didn’t I just go out with my co-workers and eat healthy foods and drink water? Because, at that stage of getting healthy, I was still having difficulty curbing my cravings, and I didn’t want to risk breaking a commitment to my higher purpose. I also wanted to support myself by not putting myself in a risky position in order to accommodate others. The problem with keeping commitments that support others at the expense of supporting ourselves is that we feel like we have undermined our own value by breaking a bigger and more meaningful commitment to our own personal success. Six Steps for Increasing Accountability and Keeping Commitments Identify your “picture of success” and desired outcomes for various aspects of your life — relationships with yourself, family and friends; your performance and communication at work; your contribution to your community or your personal/spiritual growth, hobbies and health. Develop the very few commitments you are willing to make to support yourself in achieving your “picture of success” or desired outcomes. These are your “non-negotiable” commitments. Create “recovery plans,” or your best responses which you will use if you find yourself in jeopardy of breaking one of these commitments or agreements. Recovery plans represent how you will communicate with others and yourself if you can’t keep a commitment as is, so that the commitment can be amended or changed without breaking integrity with yourself. Assess any new commitments that others ask you to make in order to stay consistent with your “picture of success” and have the courage to say “no” to a new commitment that breaks your accountability to your higher purpose or your values. If you can’t make a commitment to support or accommodate another person, assist them in finding a new solution or re-evaluating their request so that they can achieve or make progress on their “picture of success.” Acknowledge yourself for every commitment you keep that reinforces your “picture of success,” and acknowledge yourself for every commitment you break or don’t agree to because it will take you away from acting consistent with your purpose or values. If you would like to learn more about making yourself indispensable, I invite you to visit http://www.MarkSamuel.com to download two FREE chapters of my new book. For more by Mark Samuel, click here . For more on success and motivation, click here .

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

April 6, 2012

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

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Jennifer Hamady: Reevaluating Ownership

April 6, 2012

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

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Adrian Nazari: Credit Card Breach: It Can Happen to Anyone, Do You Know What to Do?

April 6, 2012

Joining the likes of Zappos, Michael’s, Sony, Epsilon and the New York Yankees — Global Payments Inc. is the latest company to make headlines with a data breach originally reported to have compromised more than 10 million card numbers. Global Payments is a large third-party payment processor for Visa and MasterCard, and handles a substantial number of transactions for Discover and American Express as well. Global Payments has since confirmed that the breach was limited to their North American systems and believes that “fewer than 1.5 million card numbers may have been stolen.” An investigation is currently underway but we won’t fully know how many cardholders were impacted, or how extensive the breach, until the dust settles and the investigation is completed — which could take weeks, or even months. Are You Protected Under Federal Law? The good news for cardholders, if you can call it that, is the theft was limited to credit card numbers and did not include names, Social Security numbers, or addresses. This means the information that was stolen is limited to fraudulent credit card charges, which consumers are protected from by federal law. On credit cards, the Fair Credit Billing Act limits the liability for fraudulent charges to $50, and if a card number is stolen — and not the actual card — cardholders are not responsible for any of the fraudulent charges. For debit cards, consumers are covered under the Electronic Funds Transfer Act and are not be liable for unauthorized charges if the card was not physically lost or stolen. The main difference between the two is that with a debit card being directly tied to a checking account, cardholders have the additional frustration and inconvenience of waiting on the bank to investigate and return the fraudulently used funds. How Will You Know if Your Card was Compromised? Chances are, if your data was breached, you have already received — or will soon receive — notification from your bank or card issuer. When a consumer’s personal data is breached there are mandatory security breach notification laws in 46 states that require businesses to notify you if your personal information has been compromised in a breach. In most cases the bank or card issuer will automatically re-issue a new card with a new account number, effectively eliminating the extent of the theft. But, if you have not received an official notification, don’t assume you are in the clear; contact the issuer or check your account online to find out. Thieves are smart and may lay low and wait months, or even years before using the data they’ve stolen, and could hit you when you least expect it. What Steps Can You Take to Protect Yourself? Whether you think your data may have been compromised or not, one thing is clear: No matter how cautious we are as consumers, we are all vulnerable when it comes to the security of our personal information. We may not be able to prevent a data breach from happening, but we can take steps to protect ourselves and limit the damage if it does: Check your credit and debit card accounts regularly for any unauthorized transactions. If you can, don’t wait until your statement arrives to check for unusual activity or unauthorized charges. If you spot any unusual charges, contact the issuer immediately. Avoid sharing too much information online, including social networking sites. It doesn’t take much for a thief to steal your identity — a name, an address, a pin number. They don’t need your Social Security number or specific financial information to succeed. Review your credit reports for any unusual activity. The Fair and Accurate Credit Transactions Act (FACTA) gives you the right to a free copy of your credit report, once every 12 months, from each of the three credit reporting agencies through www.annualcreditreport.com , the federally mandated website. Monitor your credit and credit report information every month to catch any suspicious loan or credit activity, or sudden, unexpected drops in your credit score. Most of these services cost money but there are also free resources like CreditSesame.com, where you can get your free credit score with monthly updates to help pinpoint unauthorized or sudden changes to your score or balances, which are often indicative of credit card fraud or identity theft. What Can You Do to Minimize the Damage? By taking these precautions you’ll be able to identify whether or not your information or identity have been compromised. In the unlikely event that you are a victim of identity theft, it’s crucial to act immediately. Report the theft. Notify the affected account or company to report the theft immediately to stop any further charges or theft. Place a fraud alert on your credit report. A fraud alert lets creditors know that you may be a victim of identity theft and will alert creditors and keep an identity thief from opening new accounts in your name. To place a 90-day fraud alert on your credit reports you only need to contact one of the three credit reporting agencies to have the alert show on all three of your credit reports. File a police report. If the extent of the theft is more severe than fraudulent credit card charges, you’ll want to file a police report to document the crime and keep the damage from escalating even further. There’s no surefire way to prevent identity theft, but if you follow these basic guidelines, you can minimize the damage and save yourself a much larger financial headache in the event it does happen. Adrian Nazari is the Founder and CEO of CreditSesame.com , a free personal finance resource that gives consumers the power of bank-level analytics — providing comprehensive credit and debt analysis, monthly access to your free credit score, and personalized savings advice to help improve your finances, build wealth, and save money.

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

April 5, 2012

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

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Robert Reich: The Fable of the Century

April 5, 2012

Imagine a country in which the very richest people get all the economic gains. They eventually accumulate so much of the nation’s total income and wealth that the middle class no longer has the purchasing power to keep the economy going full speed. Most of the middle class’s wages keep falling and their major asset — their home — keeps shrinking in value. Imagine that the richest people in this country use some of their vast wealth to routinely bribe politicians. They get the politicians to cut their taxes so low there’s no money to finance important public investments that the middle class depends on — such as schools and roads, or safety nets such as health care for the elderly and poor. Imagine further that among the richest of these rich are financiers. These financiers have so much power over the rest of the economy they get average taxpayers to bail them out when their bets in the casino called the stock market go bad. They have so much power they even shred regulations intended to limit their power. These financiers have so much power they force businesses to lay off millions of workers and to reduce the wages and benefits of millions of others, in order to maximize profits and raise share prices — all of which make the financiers even richer, because they own so many of shares of stock and run the casino. Now, imagine that among the richest of these financiers are people called private-equity managers who buy up companies in order to squeeze even more money out of them by loading them up with debt and firing even more of their employees, and then selling the companies for a fat profit. Although these private-equity managers don’t even risk their own money — they round up investors to buy the target companies — they nonetheless pocket 20 percent of those fat profits. And because of a loophole in the tax laws, which they created with their political bribes, these private equity managers are allowed to treat their whopping earnings as capital gains, taxed at only 15 percent — even though they themselves made no investment and didn’t risk a dime. Finally, imagine there is a presidential election. One party, called the Republican Party, nominates as its candidate a private-equity manager who has raked in more than $20 million a year and paid only 13.9 percent in taxes — a lower tax rate than many in the middle class. Yes, I know it sounds far-fetched. But bear with me because the fable gets even wilder. Imagine this candidate and his party come up with a plan to cut the taxes of the rich even more — so millionaires save another $150,000 a year. And their plan cuts everything else the middle class and the poor depend on — Medicare, Medicaid, education, job-training, food stamps, Pell grants, child nutrition, even law enforcement. What happens next? There are two endings to this fable. You have to decide which it’s to be. In one ending the private-equity manager candidate gets all his friends and everyone in the Wall Street casino and everyone in every executive suite of big corporations to contribute the largest wad of campaign money ever assembled — beyond your imagination. The candidate uses the money to run continuous advertisements telling the same big lies over and over, such as “don’t tax the wealthy because they create the jobs” and “don’t tax corporations or they’ll go abroad” and “government is your enemy” and “the other party wants to turn America into a socialist state.” And because big lies told repeatedly start sounding like the truth, the citizens of the country begin to believe them, and they elect the private equity manager president. Then he and his friends turn the country into a plutocracy (which it was starting to become anyway). But there’s another ending. In this one, the candidacy of the private equity manager (and all the money he and his friends use to try to sell their lies) has the opposite effect. It awakens the citizens of the country to what is happening to their economy and their democracy. It ignites a movement among the citizens to take it all back. The citizens repudiate the private equity manager and everything he stands for, and the party that nominated him. And they begin to recreate an economy that works for everyone and a democracy that’s responsive to everyone. Just a fable, of course. But the ending is up to you. Robert Reich is the author of Aftershock: The Next Economy and America’s Future , now in bookstores. This post originally appeared at RobertReich.org .

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Annie McKee: The Evil Boss Reconsidered

April 5, 2012

“I can’t stand my boss.” “My boss is incompetent.” “I hate my boss.” “My boss is clueless.” It’s a sad situation, really, when statements like these are at the center of so many conversations at work. But it’s true: bosses are disliked, despised, disrespected and detested. More people leave jobs because of their bosses than because of pay issues, working conditions or the job itself. In fact, in a Gallup survey, fully one half of all workers would fire their boss if given the opportunity . So, if we want to improve our workplaces and work lives, we better start by looking at why so many leaders are falling short on such a grand scale. I’ve spent the last decade or so on the other side of this question — how to help leaders get better at what they do. It’s more fun to look at the problem with a solution in mind, but I keep coming back to the fundamental fact that too many leaders really do wreak havoc on people and organizations. Why does this issue persist? There are countless reasons, but a few stand out: First: We promote people for the wrong reasons. We revere the mind and we promote people who seem smart — regardless of their ability to deal well with people. We worship money and reward individuals for making it for our companies, no matter the collateral damage to people along the way. By the time a person has significant leadership responsibility, he or she has gotten loads of positive feedback — money, praise, promotions, you name it. Why should they think there is anything wrong? And if we do notice the problems with these dissonant individuals, it’s hard to convince anyone — so we see again and again that the easiest thing to quiet the storm is to promote them again. Second: Even if people want to learn how to lead, it’s difficult, if not impossible, to get this kind of development at work today. Most of our bad bosses have not learned anything at all about how to manage or lead people — that is, other than the basic plug-and-play that is the stuff of most leadership development programs in organizations. Fact: billions of dollars are wasted on leadership development programs every year , partly because they are designed and conducted in ways that ignore the vast proven practices for meaningful learning. The result: a few people learn something, most people learn very little — and even those small gains are lost over time — and we’re talking lost after only a few weeks or months, not years. And even the companies that have good programs have sidelined most of them for the last four years. Four years! That’s a generation in management terms, and accounts for the exceptionally low rate of employee satisfaction these days. Third: These bad bosses are completely, totally stressed out. If they ever had self-awareness, self-management or the capacity to create a resonant environment, these skills have become casualties of the Sacrifice Syndrome . We expect so much of our leaders, work is incredibly demanding, and our home lives aren’t easy either. Try working 24/7 for a few years, and see what happens. With that kind of stress, our brains are designed to shut down, to go myopic — and in that state you can say good-bye to clear thinking, good judgment and positive relationships at work or home. In the end, organizations create their own monsters. These bad bosses aren’t usually evil. Don’t get me wrong, I’ve met a few who are. I even worked for one. They are soul destroying. But so are the well-intended, generally good people who have turned into insecure, credit-seeking, micromanaging nightmares. What can you do? 1. The first thing you need to do is check to see if you are one of them. If you have become the person everyone loves to hate, it’s time for a change. It won’t necessarily be easy, but if you want to get back to the person you really are, you’ll need to take a hard look at what got you to this place. You’ll likely need to make some pretty major changes to your lifestyle so you can deal with the stress that is inherent in your job. You may need to put yourself in a learning mode — get a coach, find a good leadership program, develop daily routines that support you to be at your best more often, maybe even get a therapist. Yes, it might require even that. At the least, you’re sure to need to focus on personal growth. Professional development simply doesn’t happen without it. 2. If you’re not the problem — still a good leader, still creating a resonant environment for your team — you need to find ways to protect yourself from the dissonance around you. You can start by making sure your psychological defenses are strong and in place. Make sure you know that the behavior directed your way that hurts so much is not about you. It’s about your boss. It is his or her stress, not yours. It’s her insecurity, his lack of understanding about how to manage people. Defend yourself by refusing to let your bad boss hurt you. 3. You can also take some solace in looking down and around you. Make sure that you’re not “kicking the dog.” Instead of passing on the bad behavior, do just the opposite. Get yourself to the point where you can share positive emotions, not negative. Create an environment that is full of promise and excitement, not doom and gloom. Engage your natural optimism and focus on hope. Focus on empathy and compassion so you can direct your activities toward supporting others. Hope and compassion are two ways to literally shift your brain into a mode that helps you deal with stress — while you are also protecting and inspiring others. 4. Finally, you can stop the madness by promoting the right people. Don’t focus so much on results, focus on how people get results. Look under the rocks — what are they doing to people? Are they killing people to reach goals? Squeezing the life out of their team to get that last half percent of growth in the business? If so, it’s not worth it when you consider the debris they have left in their wake. No matter how unpleasant it is, you really do need to learn to give people honest feedback about their leadership skills. It’s time we look beyond smarts and focus on emotional intelligence — those are the skills that make good leaders and are the antidote to the bad bosses out there. It may be common sense, but it’s not common practice — so if we want high performing and compassionate organizations, it’s time to turn this around.

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Blythe McGarvie: Wealth, Prosperity and Longevity (Part II)

April 5, 2012

In last month’s newsletter, I provided a Values Framework and stated that in subsequent letters I would dig deeper into the implications of the five dimensions of cultural values. Today, I will explain the first three dimensions. In Part 2 of this two-part series, I will discuss risk-taking and how people from different cultures deal with time. Today’s fast-paced technology is changing the levels of risk-taking in certain cultures. Individual vs. Collective Dimension When I worked in France, I advised my multicultural team to remember that French management holds in great esteem those individuals who make a name for themselves through their investments or accomplishments in great respect. Napoleon Bonaparte is still revered because he dared to be different and succeeded. Many western cultures, like those in the U.S. and the UK, tend to celebrate the strength of the individual and individual achievement. In such cultures, family ties tend to be secondary to individual goals and self-sufficiency is an honored trait. Nations like Japan or Kenya, however, embrace a collective or group-oriented value orientation, in which people tend to identify or define themselves as members of a group rather than as individuals. For example, an American company operating in Japan with Japanese employees must be sensitive to the notion that those workers think less about individual achievement than about how their efforts reflect on the group’s achievement as a whole. Also, unlike the American ideal of self-sufficiency, Japanese workers highly value the interdependence that comes from working within a group. For leaders, that means creating incentives and recognizing achievements for groups rather than individuals. In such a culture, a business should adopt a “high context,” defined as keeping the volatility and variability of a group to a minimum. In many Asian cultures, awareness of the concept of “saving face” should restructure a westerner’s behavior. How another person is perceived within his or her group is important. Accordingly, do not criticize an Asian individual in his own culture in public. Even praise should be done in a manner that does not isolate the individual from his group. Equality vs. Hierarchy Dimension Surprisingly, although Liberté, égalité, and fraternité is the national motto of France, the idea of equality is much different than to which Americans have grown accustomed. Hierarchy is quite important in France and modeling behaviors after King Louis XIV will serve you well when you meet the CEO or key political leaders. Whereas cultures like those found in the U.S., Canada or Sweden tend to share a value that people with different levels of power, prestige, and status, can interact with each other as equals, the cultures of nations like France as well as Asian countries expect recognition of social hierarchies based on a person’s social status. This acceptance of hierarchy leads to higher status differences, formal social relations and greater power concentrations among fewer people. It also means people who reside in lower rungs of the social order may have fewer perceived choices and rarely question authority. As a global leader coming from an egalitarian culture that might reward individuals that speak out or question authority figures, you will need to adjust your leadership approach if you want to create trust. It is crucial for you to define your rank and status at the onset of any relationship so that other individuals will know how to interact with you. You will also be expected to make the decisions affecting your organization with less input from subordinate. Tough vs. Tender Dimension I’ve done business and observed negotiations in Russia and learned that it is a tough culture. A “tough” culture has a preference for high material rewards to a winner and nothing to the loser. Tough societies also tend to enforce gender and racial stereotypes accepting male domination and aggressive behavior and discounting of minority races and cultures. When I was walking in downtown Moscow with our company controller who was of Indian descent, he was stopped by police who demanded to see his passport and questioned him. We found out later that this harassment was common and sent a message that certain foreigners are not welcomed. A book entitled Dilemmas of Diversity After the Cold War: Analyses of “Cultural Difference” by U.S. and Russia-based Scholars by Michele R. Rivkin-Fish and Elena Trubina expands on this theme describing social differences which often lead to symbolic violence and struggles between groups. It’s more difficult to assert which countries have a tender culture because the more aggressive participants stand out in business. When working within a tender culture, leaders need to be sensitive to gender issues. Men may also assume more domestic roles and take an active role in raising the family. Tender cultures also reject the “winner take all” approach championed in tougher cultures. Leaders need to adjust how they conduct their outreach to members of each kind of culture. While individuals from tough cultures will respond to personal challenges, members of tender cultures will respond more positively to efforts that result in “win-win” scenarios for everyone involved. Prepare differently Generalizations are dangerous yet they can give a clue to deep-rooted attitudes. With different nationalities in today’s workplace, just thinking in advance about how someone might think and behave will create better alignment in an organization and make your day more effective. Read Part I of this series here .

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Mohamed A. El-Erian: Markets Wake Up to Central Banks’ Complicated Tradeoffs

April 5, 2012

This week’s market action serves as a vivid reminder of how dependent valuations are on central bank policies, and especially the aggressive provision of liquidity by the Federal Reserve and the European Central Bank. The question for markets thus boils down to whether central banks will do more; and the issues these institutions face are extremely and increasingly complex. The global sell-off started on Tuesday with the release of the minutes of the most recent FOMC meeting. They were read by many as signaling less eagerness on the part of the Fed to embark on yet another round of liquidity injections (“QE3″). Virtually every asset class promptly slumped, including bonds, commodities and equities — a reflection of how liquidity, rather than fundamentals, partly underpins recent market strength. The sell-off in risk assets accelerated on Wednesday as the European Central Bank also cautioned about expectations of yet more unusual policy activism on that side of the Atlantic. The disappointing Spanish government bond auction was also a problem, coming at a time of mounting market concern about the country’s outlook. This time around, however, German and U.S. government bonds decoupled reflecting the “flight to quality” trade — out of risk assets and into what are regarded as safe heavens. Against this background, it is natural that investor conversations center on whether central banks will renew their liquidity injection programs if markets continue to sell off. Some believe that the institutions have no choice but to do so. Others are less sure. This uncertainty is not surprising. The analysis conducted here at PIMCO, including research for next week’s presentation of the Homer Jones Memorial Lecture at the St. Louis Federal Reserve, confirms that central banks face extremely complicated policy challenges: They are dealing with what Chairman Bernanke correctly called an “unusually uncertain outlook.” They are forced to use blunt tools. They receive very little support from other government agencies. And their repeated interventions inevitably distort price signals, alter market functioning, and disrupt liquidity. In sum, the critical trade-off in policymaking — between benefits, costs and risks — is becoming less attractive for central banks. Thus, recent signals of their hesitancy to do more, especially in light of improving economic data. When push comes to shove, however, we suspect that central banks may ultimately resort yet again to their printing presses, especially if meaningful economic and financial weaknesses reappear. Remember, this is not about what central banks SHOULD do; rather, it concerns what they are LIKELY to do. And in being forced to inject liquidity into the global system, central banks would be driven not by positive motivations but, rather, negative ones. In their hearts, central banks know that their policies cannot by themselves deliver the desired economic outcomes; and they are increasingly aware of the collateral damage associated with their unusual policy activism, as well as the unintended consequences. But they also feel that, for many reasons, they cannot be seen to stand on the sideline while politicians bicker, other agencies dither, and the economy stumbles. The markets’ obsession with central bank policies will not go away any time soon. Moreover, it will evolve over time to also include the question that holds the key to sustaining over time the bull market: whether central banks will be able to hand off the policy challenge — either to a robust economy or to other institutions that have better tools yet, for a host of reasons, have preferred to remain on the sidelines until now? Dr. Mohamed El-Erian is CEO and Co-CIO of PIMCO, the global investment manager. This post originally appeared at CNBC.com . © 2012 CNBC.com

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Paul Boden: I Ain’t No Broken Window

April 5, 2012

James Q. Wilson, the person credited with coining the theory of broken-windows policing , died last month and people are starting to ask what “Broken Windows” is all about. Those of us who have been identified as no more than a broken window are sick of it. The broken-windows theory holds that one poor person in a neighborhood (or, using Wilson’s words, “a single drunk or a single vagrant”) is like a first unrepaired broken window. If the window is not immediately fixed, if the vagrant is not immediately removed, it is a signal that no one cares, disorder will flourish, and the community will go to hell in a handbasket. For this theory to make sense, you first have to step far far away from thinking of people, or at least poor people, as human beings. You need to objectify them. You need to see them as dusty broken windows in a vacant building. Wilson himself admits that his reasoning here seems unjust on the individual level, but goes on to argue that not dealing with a single drunk or vagrant who hasn’t even harmed anybody may lead to “a score of drunks or a hundred vagrants” who could destroy an entire community or downtown business district. That is why we now have Business Improvement Districts (BIDs) with police enforcement to keep that neighborhood flourishing and poor unsightly people out of it. There are now over 1500 BIDs worldwide and their number is growing. And we are right back to Jim Crow Laws, Sundown Laws, Ugly Laws and Anti-Okie Laws, local laws that profess to “uphold the locally accepted obligations of civility.” Such laws have always been used by people in power against those on the outside. In other words, today’s Business Improvement Districts and broken-windows policing are, at their core, a reincarnation of various phases of American history none of us is proud of. Central to the argument is the need to adhere to “locally accepted obligations of civility.” But who is setting these “locally accepted obligations of civility?” Where is our “human civility?” We have gone from the days where people could be told “you can’t sit at this lunch counter” to “you can’t sit on this sidewalk,” from “don’t let the sun set on you here” to “this public park closes at dusk” and from “you’re on the wrong side of the tracks” to “it is illegal to hang out” on this street or corner. Of course a tired shopper can sit on the sidewalk to rest between stores and the people that lined up for two days waiting to get the new iPod can loiter and none of them will ever be ticketed, moved on, or arrested. These are the civilized people; they are consumers. They are us. The people these laws are enforced against are not us. They are them. And their mere presence makes us uncomfortable, so therefore they are not civil and need to be replaced with someone more like those of us who set the locally accepted obligations of civility. Jim Crow Laws, Sundown Laws, Ugly Laws, Anti-Okie Laws, and Broken Windows Laws, its all the same old wine — just in a new bottle. I guess history really does repeat itself and that’s sad.

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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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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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Brian Hamilton: It’s a Good Time to Start a Business: Five Things You Need to Know

April 4, 2012

The economy is improving. Private company sales and profit margins are up and steadily increasing, GDP is growing, and there are signs of life in the real estate markets. However, while the unemployment rate is declining, it is still too high. Now is the perfect time to employ yourself by starting a business. Here is advice on the five things you need to know before you get started. 1) Do what you love. Find something that you know and something that interests you. 2) Start a low capital business. You’re not going to get a loan from anyone. Start small and build slowly and steadily. 3) Find something that is really needed in the marketplace. Do something that people don’t want to do or cannot do themselves. 4) Keep your overhead low. Hire slowly and do without. 5) Follow the customer. Value and listen to your customers — your best source of market research and the reason you’re in business.

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