I Decided. Have You? January 27, 2008Posted by Jim Satterfield in 2008 Presidential Campaign.
After thinking about it a great deal I’ve decided who will get my vote on “Super Tuesday”. Barack Obama. I don’t appreciate the direction that the Clinton campaign has taken lately and as much as parts of what John Edwards says appeal to me I don’t consider his campaign to have a realistic chance at this time. But…should the worse happen I still think Senator Clinton is a better choice than any Republican.
Health Care Needs More January 27, 2008Posted by Jim Satterfield in 2008 Presidential Campaign, Government, Health Care, Health Insurance.
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I like the essence of Senator Obama’s health care ideas but I think we just need to go farther. Comparisons to the system in Canada and Great Britain are always made by conservatives but they ignore other countries that have more government involvement than we do, including single payer systems that work much better than those two countries. This of course includes the rest of Europe. But in the real world it is questionable whether even any of those variations would be politically achievable in the United States. So I tried to think of something else. If anyone stumbles across this blog opinions and input are something I’d love to read.
First, nothing beyond current regulations except for consumer protection legislation would be passed limiting private insurance companies. But they’re still going to have to adapt to the existence of a new type of insurance organization. This organization would have a closer relationship to the government than the Post Office, but like it not be an actual agency of the government. It would be a purely non-profit health care organization like no other.
Too Simple To Be True January 25, 2008Posted by Jim Satterfield in Business & Society, Corruption, Economics.
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David Brooks writes of the recent problems in the financial sector of which the subprime mortgage mess is only one part. His column says that there are two narratives and only two narratives used to explain it. The Greed Narrative or the Ecology Narrative. He closes with this (emphasis mine).
The lesson of the Ecology Narrative is that, in most cases, the market corrects itself. Maybe this year banks will change their pay structure so there’s not so much emphasis on short-term results. Maybe companies will change their boards to improve scrutiny over complex new instruments. In short, markets adapt.
People who embrace the Ecology Narrative don’t like the offensive bonuses that get handed out on Wall Street. They just don’t see any way the government can curtail them without rending the fabric of the ecosystem. They don’t like the periodic crises, but don’t see how government can prevent them without clamping down on innovation. The challenge is to give people the means to withstand the perturbations.
The Ecology Narrative is not morally satisfying. I wouldn’t bet on its popularity as a backlash against Wall Street and finance sweeps across a recession-haunted country. But the Ecology Narrative has one thing going for it. It happens to be true.
I just haven’t seen any signs that there is anything in the financial services sector that would correct the problems with the compensation structure. I haven’t read anything anywhere that indicates I’ve missed something that would indicate there’s any demand building for a system less destructive of the long term good. After all, the people who make a mint with the current structure are the ones in charge and there is no motivation for them to change things and the incestuous relationship between company management and boards pretty much guarantees there is no force influencing them from the “outside” to encourage repairs. There is no magic wand, spell or potion that guarantees that “markets adapt”. Not so long as over-compensated executives and traders have people like Brooks shrugging and saying that they and the damage they do to our economy must be tolerated because of unproven claims about the good they do.
But his claim is too simple. His last sentence precludes the possibility that while the Ecology Narrative has a lot going for it, it just doesn’t explain a lot of what is seen in the real world. Frankly, Mr. Brooks, someone got a lot of their Greed Narrative in your Ecology Narrative. And the narrative that includes them both is the one that is true.
Pogo and The Street January 24, 2008Posted by Jim Satterfield in Business & Society, Corruption, Economics.
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Do you think that any of the hotshots on Wall Street are familiar with Pogo? Maybe you remember the famous saying and maybe you don’t but Wall Street seems to be the latest capitalists to have become capitalism’s greatest enemies. I rarely agree with anything Robert J. Samuelson has to say but this column of his actually makes some sense. But of course, since it is critical of the current economic environment he just dips his toe into the water. He rightly points out that the compensation structure not only produces incredulity on the part of many that these people really deserve the huge pay packages they routinely get but also encourage behavior that has larger consequences for the country. The way their bonuses are structured encourage activities that have little to do with what’s good for their customers, the companies whos stocks and bonds they sell and certainly not what’s good for the average person who doesn’t work for them.
Consider this admission from someone who should know:
“People self-select for careers. On Wall Street, they self-select for the money,” says pay consultant Alan Johnson. “Wall Street is a sales business — they sell bonds, securities, transactions, ideas. . . . They’re not paid to be long-term, philosophical, reflective.” The pressure is to do the next merger, sell more stocks and bonds, do more trading — whatever boosts current profits and bonuses, the long-term consequences be damned.
The focus is an unrelenting one purely on personal gain and status in the company that accompanies doing well in the short term measurements that are pretty much all they deal in. The standard excuses are that they are responsible for the strength of our economy by their ability to provide capital to those companies that deserve it. But Samuelson points out the places where they have failed miserably at this task. I think that he could have listed more but after all, there’s only so much room for his column and so much time to research it, isn’t there?
Samuelson closes with this:
But if the subprime failure turns out to be a preamble to a larger financial breakdown, flowing from the creation of new securities that offered short-term trading possibilities but whose long-run risks were underestimated, then the mood could turn uglier. Indeed, many Americans may conclude that capitalism has run amok.
But let’s be honest, this current disaster in the making is related in a very basic way to Enron, Enron and other energy trading companies’ gaming of the California energy market a few years back, Tyco, Global Crossing, Adelphia, Arthur Andersen, Worldcom and the rest. It relates to the demands placed on publicly held companies by Wall Street. There is no restraint, no moderation. There doesn’t seem to be any such thing as enough. There isn’t enough profit to make them happy, there isn’t enough income to give traders and consultants the ego boost, status and material goodies they apparently crave. So eventually it becomes just too easy to step over the lines, whether they are the ones separating honesty from dishonesty or ambition from greed. Just remember that the very definition of greed includes the word excessive. MBA programs now include more discussion of ethics than before the wave of scandals that swept American business a few years ago. But how many of them ever address the simple idea that at some point people in business should say “Enough. That’s going too far.”. Because even if it’s legal that doesn’t mean it’s a good idea.
Plan B is the Better Option Sometimes January 5, 2008Posted by Jim Satterfield in Climate Change, Environment.
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Time Magazine reports on Lester Brown’s Plan B, an ambitious set of actions to be taken to attempt to control global warming. There’s lots to it and it would cost $190 billion a year. That amount is what would be spent globally, not just by the U.S. Sounds like a huge amount of money, doesn’t it? Of course the global annual military budget is $1.2 trillion, just to put some perspective on it. And the $190 billion has the potential to save us a lot more by mitigating effects of global warming that could cost a lot more.