I started at the bank in the back office doing loan conversions in the late 1980s. $7.65/hour. We wrote up data sheets and sent them to keypunch for the $5.00/hr data entry clerks to enter. I remember how proud one of the girls in the mailroom was when she saved enough money for a downpayment on a yellow Geo Storm.
At the time, branch managers made $18,000/yr.
Times have changed, but I bet the people doing the real work still make the least money.
No kidding. I remember years ago a teller who normally handled the commercial line at my bank branch... we'd see her in the morning at the bank and again after work in the check out line at Wal-Mart. She was the checker. A co-worker asked her about it once and apparently Wal-mart paid better than the bank. That puts so much in perspective. Few ever seem to learn that you get what you pay for.
A group of security guards at a local shopping mall were recently busted for carrying out night time burglaries of stores while on the job. This is what happens when you pay people $8 per hour to guard your property.
ALL bankers at corporate are scum. The people who work in the banks have to deal with their branch managers who have lost all authority years ago. A branch is just a place where the masses shovel their money into trusting it will be safe. What a concept.
Times have changed, but I bet the people doing the real work still make the least money.
It's not only that. The people who once did the real work, or at least have been close enough to the real work for years that they understand fully how it is done--like me--are never paid as well as people who were hired in as "managers" with a business degree and a complete innocence involving how shit actually happens.
There is always that gauche taint of the "middle manager" about those of us who could, in an emergency, sit down at that terminal and actually reverse the transaction, or open the file and interpret the documents, or whatever.
In fact, not too long ago our resident PITA, the great Moralist Jas Jain, launched an attack on yours truly by calling me a "middle manager," as if I were supposed to be insulted by that.
The fact is that one of the reasons my take on the mortgage industry is so very different from that of the quote-bots you read in the paper is often that I simply have a much clearer understanding of who fills out that form and how much they get paid to do so. Remember all the uproar over these banks not having their assignments or notes in a row when they went to file FCs? Grandiose conspiracy-mongering regarding criminal banks trying to FC on loans they never owned ensued by a bunch of armchair moralists.
I'm quite sure that the bank in quesion laid off too many people in the document custody department, the few remaining employees they have are doing the work of two for the same salary, and the remainder of the staff are temps from Manpower who only have the haziest possible idea what an assignment of mortgage is supposed to look like. These "productivity miracles" are causing some havoc when it comes to the point that we have to remember why we have people doing this kind of work in the first place.
But it's "sexier" to talk about management conspiracies to foreclose on the "innocent" than it is to talk about management conspiracies to lay off everyone with a clue until you end up foreclosing on the innocent and guilty alike because you have no reliable records any longer that would allow you to tell the difference.
I also will add that most of my disgust about the famous "Feldman Plan" was not really the outline of the loan relief proposed--although I had enough problems with that.
It was that insouciant belief that loan payment checks would fly to Washington and magically get applied to some account without a "bureaucracy." Atrios calls them "glibertarians." It's this persistent belief that we just don't need workers and "paper pushers" because those people are just "parasites" or "overhead." Then these same people want to get their undies in a bunch about the morality of defaulting mortgage borrowers. Whatever.
Banks have always been expert at assessing the minimum the traffic would bear in entry-level hires and quick to cut staff ruthlessly whenever conditions allowed.
Survivors of that system are not the most loyal or necessary the most honest.
I can only imagine how it must feel to work on wall street and watch well-connected hotshots pulling down amazing bucks while the peons struggle to survive.
I notice that BS locked out employee stock sales (Enron anyone?) while assuring everyone that the sky was sunny. I am guessing that A) that didn't apply to the big guys and B) they already got out anyway.
I've ranted for years about the supposed 'benefits' of downsizing and global wage arbitrage.
How such an enormous percentage of management collectively came to the conclusion that they could increase profits by laying off their own customers is still beyond me.
We've managed to paper over the underlying problem with this thesis for a while with debt. Now we've used that up. It's a long way down to reality from where we are now.
How such an enormous percentage of management collectively came to the conclusion that they could increase profits by laying off their own customers is still beyond me.
That would be because they were trying to stay in business while in competition with other companies who were doing the same thing.
My negativity, or bearishness, on America has everything to do with ethics, or morality. American system -- Legalism, by definition, is a morally bankrupt system. What is legal is NOT what is moral or ethical, right? Mortgage practices over the past few years simply exposed the moral degradation of American businessmen and women. Mozilo is an evildoer and I knew it few years ago. All Debt Pushers are evildoers and that includes Greenspan, Bush and Bernanke.
Whatever morality exists today is a carry over from the past centuries and some due to religious beliefs.
THE ROAD TO SUCCESS IN QUEST OF MONEY AND SEX IN AMERICA IS PAVED WITH DECEPTION, FRAUD, AND MANIPULATION. More so today than at any time in the past and the process is self-reinforcing because deceptors and manipulators got ahead and now have control of the American system.
And yes, the achilles heel of "impersonal" capitalism is that it expects all the little cogs to do their jobs and pay their mortgages no matter how much they've gotten screwed.
It's a testament to the moral fiber of many in this country on how many actually do that.
But I wouldn't count on it forever. If things get bad enough, they'll exercise their moral fiber among the people they actually know, and let the impersonal economic players go hang.
Holy Week starts tomorrow, and that it got me thinking about related topics, like confession. There has been plenty of alliteration over the past 6 months that the big banks have come to the confessional to announce their sub-prime write-downs and then all should have been well. The problem is that all has not been well, mostly because the "confessions" haven't been honest or meaningful. Now, stick with me here for a minute. Regardless of what you think about religion, stories of holy people are fun to listen to in and of their own right. One person who comes to mind is Padre Pio, who died in 1968. He was a priest in rural Italy and spent up to 15 to 18 hours a day hearing confessions. He was extremely popular in hearing confessions and stories began to circulate that he would tell you your sins if you didn't confess them properly yourself. One such story relates a middle age man who stood in lines for hours for the right to have Padre Pio hear his confession. He made what he thought was a good confession, but Padre Pio asked "what else"? The man thought and thought in silence, so Padre Pio said "what about the time in college where you used drugs had sex with a lady named Sarah. The man had long since forgotten the incident, and was filled with shame, but then agreed that he did indeed need to confess this too.
Now, while that makes a nice story, it has direct relevance to the financial world today. What the markets need is for the banks to truly "confess" their sins and give full disclosure of the state of their financial affairs. If they refuse to do that (and I think they are clearly refusing to do that), then we need someone like Ben Bernanke to assume the role of Padre Pio and announce the sins of the bank for them for the world to hear. That would clear the confusion from the marketplace overnight and allow for rational investment. Anything less than this and I think that we will continue to have ongoing "penance" in the markets. In the spirit of Holy Week, let's all push the banks (or Ben) for full disclosure.
My republican colleagues at work have recently dropped most of their liberal bashing ways (in light of the massive fubar of the economy and wars against Asia) and taken up immigrant bashing. I for one am a liberal who does not believe endless immigration is a good thing (I think we should have tried to cap our population at least 100 million ago). But still I think Lou Dobbs' crusade is all about barring the barn door after all of the livestock have escaped. When the big recession or the not so great depression gets here, we may see them going back to Mexico (and wishing we could go with them).
Anyway, they all have this attitude like we just need to get rid of the poor (but god forbid we help them become middle class, so that leaves some pretty ugly alternatives). So their idea of mass deportations of illegals is probably the least offensive of their ideas (mabye the only one they can say out loud in polite society). But somehow it never occurs to them that all those illegal immigrants came here aided and abetted by their rock solid Republican corporate masters.
At least in the Old South I doubt there were many slave owners who considered their slaves and sharecroppers to be a financial burden. Maybe THAT's the difference between the old Southern Democrats and the new Southern Republicans.
Since the start of this mortgage mess I've had this clearly naive thought bouncing through my head. I thought we needed to go back to the "old" way of doing home loans. This is a constant theme on this blog - how the new mortgage business process (brokers and securitization) created imbalances of risk and responsibility.
These articles make sense to me, but I cannot imagine how you dismantle the current mortgage business model. Perhaps it is now happening via this crisis and we just need to step back and let it happen.
Having provided credit to anyone with a pulse, it's hard to pull back without wrecking the entire economy. Who's gonna buy the next hi-def plasma TV?
Very nice post. The money quote from the link, for me, was this:
"If you think Morgan, the arch plutocrat, was just telling a nice sounding, self-serving lie, think again. Think about a world in which there was no SEC, FDIC, or Federal Reserve; in which there was no technology sufficient to prevent a person from simply disappearing, changing his name, starting over somewhere else. Morgan invested vast sums, and though he was a powerful man, he could always be taken. When parting with a dollar, he could not be so lazy as to presume a courtroom would ensure its repayment. Morgan had to trust."
I refuse to argue, that if you accept a job for $X/hr then you should do your job. Rather, it is essentially trust. And that is what is roiling credit markets now, the lack of it.
This credit bubble has removed two essential things. The first is that the lender did not know the borrower. The second is that the borrower did not know the lender. The lender lent on vague numbers and models. The borrower borrowed without fear of being ostracized for being a dead beat.
The current mortgage model is dismantled. The banks did it to themselves. How many mortgage companies are left. COuntrywide and Thornburg. They are dead in the water.
My negativity, or bearishness, on America has everything to do with ethics, or morality. American system -- Legalism, by definition, is a morally bankrupt system. What is legal is NOT what is moral or ethical, right? Mortgage practices over the past few years simply exposed the moral degradation of American businessmen and women. Mozilo is an evildoer and I knew it few years ago. All Debt Pushers are evildoers and that includes Greenspan, Bush and Bernanke.
Whatever morality exists today is a carry over from the past centuries and some due to religious beliefs.
THE ROAD TO SUCCESS IN QUEST OF MONEY AND SEX IN AMERICA IS PAVED WITH DECEPTION, FRAUD, AND MANIPULATION. More so today than at any time in the past and the process is self-reinforcing because deceptors and manipulators got ahead and now have control of the American system.
It Is the Morality, Stupid!
Jas
Jas Jain | 03.15.08 - 10:36 am | #
Interesting.... I have to admit that I agree 100% with Jas. It is basically an issue of morality. And at the moment, it looks like the concept of trust, personal responsibility, honesty, and integrity went out the window a long time ago.
I agree with you on Feldman Plan. All the plans that I have read are immoral because of who they help and who they hurt, indirectly. As far as voluntary changes to the existing contracts are concerned the govt must stay out so that coercion is not a factor. Govt. must simply enforce contracts and stay out of the rest. I am all for people voluntarily be able to renegotiate their contracts due to changed conditions. Can we at least agree on that?
Also, sanctity of contracts was one of the Germanic (later Anglo-Saxon) tradition in keeping law and order and a pretty good one. Most of the proposed plans violate the sanctity of contracts after the fact.
While it is true that Henry Ford raised the salaries of his employees, it is forgotten that he was successfully sued by his stockholders and forced to recind the wage increases. Don't let anyone steal your history!
Henry Ford might have figured out many decades ago that you need to pay your workers enough that they can buy your product, but that lesson was lost on the banks.
We had Unions to make sure people made enough to pay for things we manufactured here. Then we paid them so much we couldnt afford them. Then we had to buy things from China. Delphi Automotive is a good example. $68 an hour to make spark plugs
As we witness the abuse of economic power, as we witness the cruelties of a capitalism that degrades man to the level of merchandise, we have also realized the perils of wealth, and we have gained a new appreciation of what Jesus meant when he warned of riches, of the man-destroying divinity of Mammon, which grips large parts of the world in a cruel stranglehold.
-Pope Benedict XVI,
Topher writes:
Henry Ford might have figured out many decades ago that you need to pay your workers enough that they can buy your product, but that lesson was lost on the banks.
We had Unions to make sure people made enough to pay for things we manufactured here. Then we paid them so much we couldnt afford them. Then we had to buy things from China. Delphi Automotive is a good example. $68 an hour to make spark plugs
Topher | 03.15.08 - 10:48 am
Anyway - so is this our first trust recession? Have all prior recessions ended when the business cycle shifted - inventories and industrial capacity adjusted?
Wages are not the real problem, although I agree management across all industries are over paid and a good part couldn't pour piss out of a boot.. The true problem is the devaluation of the currency threw the banking system leading to the hidden tax of inflation and the result is everyone wants higher wages to compensate for it. When wages increase prices rise accordingly those at the top suffer the least as their compensation is usually over the rate of the inflation, while the lower paid workers see a decline in living standards as the best they can do is run in place or fall behind, they soon become debt slaves to the banks and are forced to keep running on a treadmill going no where.
There is no new model because there are too few mtges being made to constitute a model. Since last August the few closings I've had were all cash, seller financing, etc. Only one regular mtg financed closing since August--7 months--at my office.
And the Mexicans are going back and fewer are coming. I think that it will be interesting to see what happens when the spending these people did dries up.
When your own employees steal from you, or lose the files through misfeasance or malfeasance, that's Operational Risk.
Yeesh, all you people hatin' on living in a legalistic society. I'd much rather live in one than in a moralistic society. Much better some guy interpreting a hundred year old law book than a fifteen hundred year old cut-n-paste storybook whose proponents can't decide whether any given phrase was meant literally or as an allegory.
Sure, the legalistic system allows people who follow the letter but not the spirit of the law to get away with stuff, but you proponents of the moralistic systems might quickly discover, to your dismay, that your moral views don't exactly jive with those of the inquisition/rabbinical court/mullah in charge.
"And the Mexicans are going back and fewer are coming."
At least they are smart enough to know that working for a living and getting compensated in a currency which is falling like a stone is not very bright.
A friend of mine, who is quite rich, tells me he is kinda embarrassed when he goes to his upper-class bank (you sit down and the teller also is always sitting in a chair) to put another $50,000+ of dividends in his account that already has $200,000+ in it and then thinks about what the sweet little lady who is taking his deposit must make per month.
I read the linked post this morning, and I couldn't agree more with Tanta's take on it.
My father was a computer programmer back in the dinosaur days of large main frames and punch cards. He wrote and installed the network on which all the banks in this area run. But back then, the banks still worked with their customers person to person and only delivered their end-of-day receipts to the computer company for processing.
At the same time, my mother was selling real estate and filling out contracts on the trunks of cars in front of houses.
What's the real difference between then and now? As Yves Smith points out, character and trust.
People dealt honestly with each other then, a handshake was a contract and a man's word was his bond. Those days are gone forever.
Today, honesty is a thing of the past, a handshake is the vector for disease transmission and a man's word is nothing but bad breath.
It's all going to get worse before it gets better, if it gets better at all. But anyone who longs for the long gone days of yore is a fool; they're not coming back. And a fool and his money are soon parted, if they were ever lucky enough to get together in the first place.
The story goes that many years ago Henry Ford was showing Walter Reuther, at that time head of whatever union the auto workers belonged to (AFL-CIO ?), around a Ford plant. They paused at a large machine, recently installed that mechanically did what a large number of workers had preciously done.
'You won't get any union dues out of that, Walter' said Henry.
'No', said Walter 'and you won't sell it any cars, either'.
Padre Pio used to wrestle with the Devil in the rectory. The Devil made quite a mess too. Scared the crap out of the housekeeper.
Tanta's post is why I scoff at these huhe bail out plans. You need to have a paper processing machine already in place. The machine is made up of people with experience, a culture or mental template that has grown organically overtime. The template is the melding of rules, procedures, and people experience.
Inside that machine to make it really work you need people who understand it so well they can fix the problems or move the product to where it needs to be.
This comes with years of experience, usually when you have a cadre of "middle managers" who have worked together since the days when they would sneak off together to sit in the parking lot to get high and talk sh@t.
You can not create this overnight but you can destroy it in a day.
Speaking of trust and character and capitalism, I recall Max Weber's seminal study in which he explained why capitalism grew in Protestant Europe (more than in Roman Catholic) as the consequence of the strong moral beliefs, honesty and mutual trust, as well as the virtues of frugality and saving, inculcated among Protestants by their religion.
Concerning taking credit reports on employees: I worked in Vegas at a Thrift for several years. Review of credit reports headed off some real disasters from hiring gambling addicts (irrespective of income). Maybe one or two thirty day delinquencies are OK, when overruled by the Branch Managers experienced judgement.
Concerning senior and middle managers cutting lower level employees pay to increase their bonus payments. Right on!
Why should I read such drivel. It immediately impersonalize's the person doing the hirering as the evil "Market".
Perhaps you have hired people in your line of work? Do you consider the "quality of life" they have under your hire? I do. I don't need some friggin' gov't employee second guessing my decisions.
The more you bureaucraticize an organization, the more you loose the personal.
And wasn't that the theme of Tanta's post? Perhaps I misread.
Hee. I've been watching the (outside) paper pushing right now from the inside of a law firm. A lot of what we end up doing is double-checking and tracking stuff done by some poor $8/hr flunky at some organization that couldn't care less whether the transaction was carried out accurately. As the man says: "more gravy for us legal clerks!"
The old Soviet joke was that the State pretends to pay us and we pretend to work.
My theory is that management lays off anyone with a clue so that they can never be challenged.
Back in the beginning of the outsourcing movement, the facts were not living up to the hype and in many companies the middle management was challenging the upper management( who likely got the idea from an airline magazine) with cold facts. The solution from a outsourcing marketing firm was for upper management to fire anyone who disagreed with them.
At that point in the mid 80s, I know we were sunk as a nation.
In a general sense, the issue really is that compensation doesn't match performance. When all of the profits of a transaction are booked upfront the employees willing to cut corners and push things through are the ones most rewarded. Ethical and prudent actions that may slow down this process are undervalued. The person getting paid the most is the one with a high tolerance for risk not an ability to assess risk.
The more you bureaucraticize an organization, the more you loose the personal.
And wasn't that the theme of Tanta's post? Perhaps I misread.
I certainly wasn't trying to endorse the view that "the more you bureaucratize an organization, the more you lose the personal."
For starters, one man's "bureaucracy" is another woman's "useful and important labor." We just very often hang the term "bureaucracy" on work we either don't understand, or don't glamorize. You mean there are people who spend their careers reviewing mortgage loan assignments? They must be humorless unimaginative worthless "bureaucrats," because who else would do that?
Furthermore, I'd say that there's no obvious connection between "the personal" and unexploitative labor. Item 1, the whorehouse. That's pretty darned "personal" work.
Item 2, the nanny. The loyal secretary who buys your wife's anniversary gifts because you forgot. The nice lady at the bank who handles your $50K dividend check every month, for $35K a year.
I have been in plenty of work environments in which the managers who complained the loudest about "government bureaucrats interfering in his personal hiring decisions" were the kind of exploitative, arbitrary, self-involved shitheads that no sane person would ever work for except as driven by utter economic necessity. Yet they would tell themselves that it wasn't "the market" (the lack of other jobs) that kept their employees coming to work every morning, it was their own wonderful boss skills.
The HR manager I used to work with recognized the essential contradiction in the bank's policy: we paid people so little that they ended up with a lot of debt and cruddy-looking credit reports. But we didn't want to hire anyone with a lot of debt and cruddy-looking credit reports. The idea that you could pay people enough to disincent petty embezzlement was just foreign. And I will have you know that this requirement about pulling CRs on applicants was never a "government rule." We thought that one up all by our ownselves.
I work at a large bank where on our floor there is a mix of mortgage back office, large client investment banking, and legal (collections). The differences are extremely obvious.
There are some differences which become painful just from the casual conversations you hear when getting water or coffee in the lunchroom. The back office people are the ones watching court tv, and who paid out of their own pockets to get cable tv and a flatscreen for the lunchroom.
They do seem to work hard, but I can't be sure because of all the regulatory chinese walls and private data concerns. We can't even walk through most other areas. Yet another reason to start viewing each other as "different", and to not develop personal relationships with people of different backgrounds.
Compensation and ethical behaviour are not directly correlated.
Good grief, who said it was? Certainly if this were true Angelo Mozillo and Robert Toll and Bruce Karatz would be held up as veritable models of moral rectitude.
The point is that people deserve a living wage.
Henry Ford, despite his manifest flaws, knew this better than anyone.
I must say, Topher, this comment is beneath your usual insight.
We had Unions to make sure people made enough to pay for things we manufactured here.
First and foremost, we had Unions to make sure people STAYED ALIVE long enough to collect their paychecks.
One way or another, you're benefiting from OSHA. I guarantee it. Google Triangle Shirtwaist
Enjoying your week-END? Thank Union members for the 40-hour work week. You could be working 7-10s or 7-12s.
Then we paid them so much we couldnt afford them.
Or perhaps we couldn't afford the transition from CEO-pay=40X average employee-pay to CEO-pay=450X average employee-pay.
Then we had to buy things from China. Delphi Automotive is a good example.
We bought things from China to break the Unions - the only control and restraint on corporate greed and shortsightedness.
$68 an hour to make spark plugs
And the $68 went into a black hole?
Take 25%>30% off the top for taxes, Federal, State and Local. Take another 8%>10% to fund the bloated health insurance industry. A couple % goes to keeping the (Union)Local machinery running.
The remainder doesn't fund Swiss villas, nor does it buy Lear jets. It gets spread throughout the community. You know, the butcher, the baker, the candlestick maker.
[aside]
I've spent the last several decades marveling (ruefully) at what point would it occur, if ever, to TPTB that eventually the populace wouldn't be able to afford the products unfettered capitalism offered. The peonization of America is almost complete. [/aside]
Oh, by the way, have you had a spark plug fail lately?
The back office people are the ones watching court tv, and who paid out of their own pockets to get cable tv and a flatscreen for the lunchroom.
Let me just observe, as someone who has done a great deal of it, that most mortgage back-office work is about the most monumentally boring, high-attention-span tediousness the world has ever seen outside of, say, the insurance settlement department and accounting.
It is also necessary, important, and valuable, and the people who do it and are good at it are treasures to any company who hires them.
But if you think it encourages an environment of "professionalism" in all respects, think again.
My biggest problem with most of my fellow managers in the mortgage biz was that they just couldn't deal with their staffs. They saw court TV addicts who wear inappropriate clothes on casual day and sneak out to the loading dock for a smoke and whose emails are rarely a model of literary elegance or even fair-to-middlin' spelling. And having seen that--and it's all often quite true--they can't see through it to the fact that these folks are also skilled hard workers who do incredibly boring shit from which they really need a decent breakroom with a decent TV to escape several times a day or they'll go mad. I'm not a TV watcher, but I've handled document certification on huge securitizations--thousands of documents to be reviewed at high speed in just a few days, with millions of settlement dollars at stake if we don't get done on time and right--and I'd take breaks to go walk around the parking lot talking to myself like some kind of crazy bag lady. So would any moderately rational person doing work like that.
I get terribly offended by insinuations that these people are not valuable because their personal style is not quite our class, as it were.
Tanta, thanks for the great post. Although now 'out of the business' I hired, and fired, a great number of people. The hardest thing for me to remember was what my Dad always told me "Your company IS your poeple, without them, you have nothing." All my great university management courses treated people like they were numbers/ or less! They were just replaceable parts, nameless, faceless pieces who were expected to give absolute trust upward and expect nothing to come down. It took a lot of years for me to realize that my quite expensive graduate educational experiences caused a LOT more harm than good.
What you are experiencing now is simply a lot of managers doing what they were trained to do. They are taught that people below them are stupid, unrelaible, etc. The poeple above the managers treat them the same way and nobody cares about anything but protecting themselves- quite normal given the circumstances under which they work.
Yes, the whole thing IS a moral issue, and no, there is not an easy answer and no, there will probably not be any changes. Which is exactly why we sold out and ran- or voted with our feet, so to say. Well enough of the soap box and good luck.
Bankrupt due to the decline of the automobile industry. How much did those responsible for that, the top executives at the big auto companies and those at their suppliers like Delphi, pay themselves? Check for yourself.
Mezcal - you hit the nail on the head! "We've managed to paper over the underlying problem with this thesis for a while with debt. Now we've used that up."
If you look at the current trade deficit with China of 225 Billion a year and how it has risen exponentially since 2000 it's impossible not to say that all kinds of manufacturing businesses and the businesses that support them have vanished. Real wages have dropped slightly since 1999 - and this is based on the official 'core' inflation.
What has clearly happened is that the middle class has been savaged, but it wasn't quite so noticeable with appreciating homes and MEW and easy credit. Now that easy credit is coming to an end it is obvious there is not the productive economic activity remaining in this country to support current levels of consumption.
This revelation, once fully grasped by the public will likely have a profound impact on trade deals. Funny English quote I heard today, to paraphrase for Americans "You can't get a turkey to vote for Thanksgiving"
I remember the days when it paid to keep money in a bank. These days the banks suck every penny out of people they can. This fee that fee, its all about profits. Nothing wrong with profiting in business but to make it where it cost the customer money to keep his or her money in a bank is why we are where we are today. GREED!
As we witness the abuse of economic power, as we witness the cruelties of a capitalism that degrades man to the level of merchandise, we have also realized the perils of wealth, and we have gained a new appreciation of what Jesus meant when he warned of riches, of the man-destroying divinity of Mammon, which grips large parts of the world in a cruel stranglehold.
-Pope Benedict XVI
You mean that guy with the designer red shoes and the fur cape? This week the Vatican added excess wealth to the sin list. O' kettle, thou art black.
This country values steroid pumpers, common-day slavery masters, and prostitutes, over virtues and honesty.
"And some day-the armies of bitterness will all be going the same way. And they'll all walk together, and there'll be a dead terror from it." - Grapes of Wrath, Chapter 9
I am not taking the unions side or the employees side. I understand the cost to an employer/employee of the $68hr. That is obviously the problem. How did we get there? Thats where the problem lies. I believe it to be an over consuming under saving society.
Back in the early 80's I worked at a grocery store. When I left in 1984 I was making $8.80/hr as a checker. Today at my local Safeway, checkers start at $9/hr! I don't know what they max out at, probably somewhere around $14.
Just checked out the CEO, Steven Burd's salary history. The oldest data I could find was from 1993. His salary and bonus totaled $1.95 million. In 2006, he made just over $7 million.
So, workers pay up less than 50% while CEO's pay goes up 259%!
Back in college my marketing professor taught us that humans are turkeys. Yes, he actually said that.
He told us about an experiment in a check-out at a store where people would ask those standing in line if they could cut. Everyone declined.
However, they then decided to add an additional reason why they needed to cut to the point of asking people, "Could I please cut in line because I need to cut in line?" and people would allow them to cut in line!
Suffice to say, they realized that humans just needed a button to be pushed. Like Pavlov and his doggie, the trigger with this human-turkey experiment was "because."
Anyway, the basically used that experiment to derive how marketing and advertising can get most people to do anything they wanted them to do if you know the right button to push.
So yeah, you can get a turkey to vote for Thanksgiving, just don't tell them about the main course.
Focusing on the cost per employee is misleading or incomplete at best without the productivity per employee - the same myopia that has driven the race to the bottom - what output do you get for that wage?
This is true for an honest evaluation on a microeconomic scale, before you make any consideration on the macroeconomic implications. A biological metaphor might be that if you don't have healthy plankton populations the whales are going to die...
I understand the cost to an employer/employee of the $68hr. That is obviously the problem.
And of course the management salaries and perks had nothing to do with it.
Every year, I go down to NYU to walk by the Triangle Shirtwaist building on March 25. They have a rose for each young woman who died. Toph, will I see you there this year?
And Tanta - I know what you mean about breaks. I often do contract legal work, which is mind numbing. On one interview, they told us there was a Kinko's across the street where we could check our email. I walked out. Another law firm I've worked for did the math and figured out we were more productive with the Internet at our desks. QED
Re. saving society... FWIW, Casa Melater, 20% down, 5yr ballon, is completely paid for long ahead of schedule. Warms the cockles to remember that it was featured in Better Hovels & Outhouses a few years ago. Debt is slow death.
I used to work for a family owned company that was a strong believer in minimum wage for maximum work. They were so tight that buying a single new computer needed the President's signature. The IT Director spent most of his time websurfing because he had no real authority.
A couple of years ago, the company was sold to a foreign corporation. They sent in a review team and interviewed all employees. The result was a sizable pay increase for the folks on the ground. The first one kicked out the door was the President, along with his VP brothers. The company went from 75 million annual to nearly 500 mil in two years.
This is true for an honest evaluation on a microeconomic scale, before you make any consideration on the macroeconomic implications. A biological metaphor might be that if you don't have healthy plankton populations the whales are going to die...
energyecon | Homepage | 03.15.08 - 12:23 pm | #
Its one thing to be healthy and another to live way beyond our means. That was my point.
Quite frankly, I am convinced that one of the reasons that discussions of "morality" and "economics" never get anywhere useful is that mention of the word "morality" functions among the posturers and scolds and hacks like a can of tuna fish functions among the neighborhood cats.
People have been getting up on their hind legs and declaiming about the immorality of the world since long before the Puritans showed up on Plymouth Rock, although it is true that Americans have since the beginning always had a unique talent for moralizing and speaking anathema about each other. I have read both Jas Jain and Cotton Mather, and frankly except for the fact that the latter is a better writer, I can't see any difference. It was all about sin, sex, and religious controversy back then for the professional scolds and self-righteous gasbags, and it still is today.
No moral problem was ever solved by people simply declaring their disapproval of immorality. Can we, like, just skip that part? No one on this blog is going to offer to defend immorality as such, so there's little point to denouncing it. I had rather hoped we might think somewhat more concretely about what the issues are than let this degenerate into a tent revival.
Ralph Cramdown all you people hatin' on living in a legalistic society. I'd much rather live in one than in a moralistic society.
Ah, but all workable ethical systems (morals) are based on what happens as a result of your actions over time, and all good legal systems have the same basis. It's a false distinction. There can be bad legal systems and bad moral/ethical systems, and bad systems of either types are founded on the same errors. They ignore long chains of cause and effect.
"A couple of years ago, the company was sold to a foreign corporation. They sent in a review team and interviewed all employees. The result was a sizable pay increase for the folks on the ground. The first one kicked out the door was the President, along with his VP brothers. The company went from 75 million annual to nearly 500 mil in two years."
Glod! You mean a totally inefficient organization went teats up and...without gov't interference...was bought out in the market...and the employees benefited. For shame!
"Mind numbing is as mind numbing does" to paraphrase one of the great 20th century philosophers.
I'm currently involved with Photoshoping a seemingly endless series of pics for a pending website.
I come here to bask in Tanta's and CR's musings for the blessed relief of not staring at pixels.
(When the edges of the pics begin to waver, I know it's time for a break.)
but really, to compare an 18n year old bagger with the CEO is mindless.
And here all you guys do here is bitch and whine about the CEOs of every bank and investment house! Give me a break! An 18 year old bagger could probably do better at this point.
Do you really believe an 18 year old bagage checker could run the store you're talking about?
What, I'm the only one who has met CEOs who had less of a clue than some baggage checker?
What, exactly, do all the CEOs say every time they get hauled in court to face criminal activity at their companies (Enron, WorldCom, Tyco, Countrywide, you name them)? Why, they say they don't have any effing idea what went on, because they can't be expected to actually, you know, notice shit. They're too busy being Important to actually "run the company." And they can't be expected to know whether the people who do run the company are doing it right, because they don't understand what those people do all day.
We live in a culture in which CEOs can offer the "I don't know anything, I'm just the CEO" defense and that seems reasonable. That being the case, I cannot imagine why we'd be worried about putting the bagger down at Safeway in charge.
I know many, many people who would have offered to run Bear Stearns into the ground for a whole lot less than what Cayne got paid to do it.
So, I was reading Inside Job the other day, and one of the things that stood out in my mind about the Lincoln Savings and Loan scandal (the one that McCain was lobbying for, and obstructing the investigation of) was that in the last year of operation, Lincoln S&L only wrote 11 mortgages, 4 of which were for their own employees.
"Glod! You mean a totally inefficient organization went teats up and...without gov't interference...was bought out in the market...and the employees benefited. For shame!"
Amazing isn't it? I think that's part of America's problem with so many ills including our looming economic disaster.
It's impossible for workers to think outside the box when employers insist they sit in one.
I had rather hoped we might think somewhat more concretely about what the issues are than let this degenerate into a tent revival.
Speaking of tents and class warfare the following link illustrates what our parents or garndparents were up against in dealing with entrenched power. This happened in my Father's youth so is not ancient history. We may be approaching this time again. I personally see no political solution.
Slip slidin' a little? You were just repeatedly banging on the $68/hr drum exclusively, and my point is that is disingenous as an example for living beyond our means without knowing what is produced for that cost...it may well be, it may well not be but you posited it to be the case.
"We live in a culture in which CEOs can offer the "I don't know anything, I'm just the CEO" defense and that seems reasonable. That being the case, I cannot imagine why we'd be worried about putting the bagger down at Safeway in charge."
Gosh what a refute. I've worked for a good number of companies where those running it we're quite savvy. So, because an oligopolized, gov't protected industry CEO gets his ass handed to him, ALL CEO's are like that.
Perhaps you would like to be the CEO of Kroger? He can't get a credit line from the FED. Would you suggest that an 18 year old bagger could do his job? Because you have.
I would think that someone like you who has been in the business world for a while would recognize that your comparison is nonsense.
If I recall you talked about a bear of a man overseeing what you did.
"We live in a culture in which CEOs can offer the "I don't know anything, I'm just the CEO" defense and that seems reasonable. "
Tanta,
This is what you get in this system. People reward those speaking beautifully and inspiringly. Those who make speeches to media and play golf with lawmakers get the biggest pie.
I don't think the defining issue is morality. You could argue greed is the motivator - but the real catalyst, and I think cause is all forms of 'faith based' economics or perhaps just the failure to realize that systems are not necessarily optimized when they become larger and have a higher degree of specialization.
On the macro level, pretty much everyone has been brainwashed into thinking that free trade and unfettered markets will solve all of our problems if we just stick with it, and give it long enough. Even without multi billion dollar government bailouts this is not historically true. Both England and the USA and Japan are ONLY where they are today because during industrialzation they had the HIGHEST import tariffs in the industrialized world. Only when they gained supremacy, did they start spouting off about how free trade with zero tariffs was in everyone's interest. Check out the data in a book called: "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism " if you don't believe me.
On the micro level, as a company gets larger it pays a very steep price to organize itself and communicate internally. These costs can often become exceedingly high, nevermind that quality and customer responsiveness suffer. There are diminishing returns to trying to specialize tasks to the point that 'any idiot making the lowest wage in the industry' can do the job at the company.
Unfortunately, in the world of public companies, no one ever got the CEO job, and no one ever got promoted spouting off about how we may have reached our peak level of corporate operational efficiency. There is always some guy who is willing to try to cut costs by another 10% if it means a big bonus for him, and that's the guy shareholders want in power so they can sell their shares on improved earnings outlook after the next annnual report.
I will tell you how the FDIC thinks. If it does not 'violate' a law, rule or regulation they will do it. If it is a law, rule or regulation they don't like they will ask Congress to change, amend or throw it out. If they want a new law they usually get it one way or another.
This current crisis of confidence in the US financial system is well-founded in the current social acceptability of being untrustworthy; that is, the article bridges the gap between society, social mores, and the financial system, and it speaks to the degradation of those mores, which I have read nowhere else. I have long felt that the decline of the influence of Christian morality since the mid-20th Century in this country is at the root of our social decline (drugs, crime, suicide, pornography, rap music etc.) and that it now relates directly to our financial decline. These phenomena have the same root but the impact on the financial system has been delayed due to the time it took for the degradation in mores to erode the integrity of the Christianity-based legal financial structure. Note J.P. Morgans reference to Christendom, which strikes the modern ear as irrelevant. Well, it is, and that is the problem.
More specifically, Wall Street knowingly sold the rating agencies a bill of goods on CDOs to get that AAA rating, purely for immediate monetary gain and without a thought given to others losses pure greed uninhibited by any concern for honesty. Heres the ethos: Let the buyer beware! The Invisible, Greedy Hand Rules! Whatever you can get away with is acceptable. Ive got mine and to Hell with you!
Slip slidin' a little? You were just repeatedly banging on the $68/hr drum exclusively, and my point is that is disingenous as an example for living beyond our means without knowing what is produced for that cost...it may well be, it may well not be but you posited it to be the case.
energyecon | Homepage | 03.15.08 - 12:54 pm | #
Take it however you like. My point another way is greed on both sides
Liberal ideology insists that a society in which conscious solidarity is the dominating attitude/approach is impossible, because humans are primarily and perpetually motivated by individual material incentives. the Bolivarian Revolution is challenging the core liberal tenet that narrow self-interest is the immutable human condition [that] humans can come to value social solidarity if institutions are designed to facilitate and not to penalize cooperation.
Empirical Study of Venezuelan Cooperatives, Camila Piñeiro Harnecker, Monthly Review, November 2007 An Independent Socialist Magazine - Monthly Review
Misean,
I nearly always agree with you, but in this case I think you are missing Mike's point. He doesn't dispute that the CEO is worth many times more than the bagger. He is asking why the CEO's pay has increased at a rate five times greater than the bagger's during the period in question. I think it's a valid question.
Well, I knew banking was not getting fixed after working for just four months in loss control in Mellon Bank in '96 in Philly.
Management in Pittsburgh were dang near total morons with respect to operations.
To tell you how bad I thought it was, I took a government job to get away from it. The really funny part was how incredibly stupid upper management was. They had bought a fairly well managed local bank, laid off a bunch of the back office people, and were shocked that losses were starting to soar. Um, gee, when loss control for 190 stores goes from 6 people to 2, you are surprised? Gee, we saved $150k per year on head count, but lost an additional $4 million dollars? WTF?
At that point I decided I could not stomach toadying up to total morons, at least the politicians mostly know they are full of sh*t.
Delphi Automotive is a good example. $68 an hour to make spark plugs
GM, and former GM companies, use a word-of-art called "fully burdened overhead" (sometimes called "fully burdened cost") to report salaries. More than just the salary, healthcare and employer deductions, it also includes a share of land, building depreciation, property taxes, utilities and equipment depreciation. It ends up being about 2.5 times the actual salary/wage the worker gets.
I used to work for a division of GM that is now part of Delphi Corp, and the mismanagement (hello, Steve Miller!) that sent Delphi into bankruptcy was highly rewarded by Wall Street and the cast of cronies that Steve Miller took with him from the other companies he drove into bankruptcy, such as Bethlehem Steel. While Miller was wildly repeating a similar "our workers cost $65/hour" story to any newspaper stupid enough to listen to him, he was demanding that his workers take paycuts from $22-25/hour down to $7/hour. Those paycuts were never mentioned in the same stories that were talking about $65/hour.
By the time I left GM, at that division, the lowest seniority of hourly (aka union) staff was 11 years: everyone with lower seniority had been laid off. It wouldn't surprise me that some guy with 20 years seniority was being pulled from the job bank to mow the lawn. What? You don't have any welding work to do? Get out there and mow the grass! And then Miller would turn to any sucker in the media willing to listen and claim "OMG! We have guys making $65/hour mowing the grass!
In my previous life as a software engineer, I had many different jobs and my share of good and bad managers. According to my observation, outside of all the necessary technical skills to be a manager, the separation of good manager and bad manager is how they view the people they work with.
The best example that illustrates this observation occurred when I was talking to a VP of a private company that I used to work for. She wanted me to talk to her secretary, and she literally said "...please speak with my colleague..." That choice of word had a huge impact on me. She didn't say "my secretary", which implies ownership. To me, "my colleague" implies equality. In fact, it wouldn't surprise me that she treated everyone in the company as her colleague. Needless to say, that company had a great culture.
When the people that "works for you" are your colleagues, you wont begrudge them for a little extra TV/smoking break.
I have never taken any MBA classes, but I don't imagine that they know to teach would be managers about this. MBA classes teach would be managers how to win a profit optimization game, and it is hard to model the profit a company would receive by treating everyone as equal. MBA classes might also teach people skill, but to them, people skills are taught in the context that people are tools that you can manipulate. Again, this is my speculation based on the course descriptions that I have read.
I now run my own business, and I have taken this lesson to heart. My vendors and customers are all my "partners" and I treat them as partners. I am picky on whom I do business with, and I don't make a fortune overnight. But we would probably survive an economic downturn a lot better due to the mutual trust in our own little network.
But a public company, under the pressure of quarterly revenue/margin/profit growth, makes this sort of long term thinking/approach difficult.
Ok, misean, you aren't dumb but if you want to play like you are, here goes:
Government has not had a prominent role in U.S. corporate governance to the extent that executive pay has grown in outsized proportion to that of workers.
Simple enough for you? Also, you may wish to scroll up to other comments on this topic that you either skipped over or ignored.
"but in this case I think you are missing Mike's point. He doesn't dispute that the CEO is worth many times more than the bagger. He is asking why the CEO's pay has increased at a rate five times greater than the bagger's during the period in question."
Firstly, I said that gov't interference helped this.
Secondly, you can look every where for it. Just check $/Glod ratios if you like.
I have to come down on the side of the bagger probably performing on par with the CEO. In my experience, in the past as new initiatives get introduced from the top down, every single person in the trenches knows they will not work from day 1, but it takes mamagement a couple of years of PHONY goal achievements to realize that the initiative was a bad idea... and they scramble to reorganize and come up with a new plan. At least the bagger would be likely to do nothing and save tyhe company all the internal costs associated with the turmoil of the latest management restructure.
Misean If the issues aren't looking into the eyes of the borrower and trusting that person...what was the meaning of your post?
Her point was that top-level strategy got divorced from economic fundamentals. Those making policies were not basing them on any realistic economic basis. The failure was systemic. No reality checks!
The same type of thinking produced borrowers earning 50K with 550K mortgages. Needless to say the losses are running high.
Frankly, I DO believe that some baggers from Safeway could have done better than many of these bank executives hitting the news. They at least know what a gallon of milk costs, and whether people are spending freely on groceries or pinching pennies. I know several head tellers who could do much better!
I have to believe that most non-financial businesses are run far better than the worst rung of the financials. Otherwise my clothes would fall apart the first time I washed them, my car batteries would last three months, I'd have to carry two spare tires in my car to be sure of getting to the grocery store, the lights would be off half the time, and the grocery stores would be half empty. I am not exaggerating, either.
My late wife worked for the IRS office in San Jose, Gish Rd, years ago. She told me her boss had 250 people under him and was a GS 11!!!! I was a GS 13 at NASA at the time with no one working for me.
When they went to the SAS system the Division Chief with less than 250 people under him made 120K and got a bonus every other year.
Yes, Henry Ford was on to something important.
I guess Clinton's capping of salaries doesn't qualify as
"Government has not had a prominent role in U.S. corporate governance to the extent that executive pay has grown in outsized proportion to that of workers."
Tanta: I hate to have to think on Saturday but you have forced it on me. Most large burearacracies do not work because the small cogs in the machine are treated like small cogs. Empowerment is a term in textbooks but does not reach in to the work place. We are in a mature economy and are reaping the results of this. The asian economies still work because people are only one generation from hunger and are still scared.
March 15 (Bloomberg) -- President George W. Bush said he won't be stampeded into ``bad policy decisions'' to bail out the home-mortgage industry because they might further harm the U.S. economy.
Yeah, give me a year or so to look into it and I'll come up with an opinion. I don't completely understand it yet.
"Her point was that top-level strategy got divorced from economic fundamentals. Those making policies were not basing them on any realistic economic basis."
How was I saying anything different. I won't loan you the money if I know you can't pay it back.
"Frankly, I DO believe that some baggers from Safeway could have done better than many of these bank executives hitting the news."
OK, but could they run Safeway with it's 1% margin. I never said gov't oligolopilized systems were the same as Safeway.
"I have to believe that most non-financial businesses are run far better than the worst rung of the financials."
Maybe I'm a pint low on coffee this morning, but I'm having trouble figuring out what this thread is about. A few themes that emerge are:
CEO's are paid too much, worker bees are paid too little and no one appreciates them.
Trust is important. So are other morality-type things.
Grocery baggers are paid too little, spark plug makers were (are) paid too much.
I definitely sense some deep unhappiness with the way things are being run in this country, but it's not quite focused and there certainly is no consensus. I guess the economic disparities and value disconnects were not so unsettling when there was lots of credit flowing. After all, that underpaid bank clerk didn't seem so "poor" when they were buying a brand new house, car and wall-sized TV. I guess easy consumer credit was the true opiate of the masses...
A small anecdote (!=data):
My mother (who was a healthcare worker) told me of a "great new plan" to lower nursing costs at her hospital by hiring contract employees for temporary work load issues rather than have the permanent staffing required. She described the plan to me in detail. I, having no experience in the industry or even (at that time) any management experience told her that it was the stupidest plan I'd ever heard of in my life and would cost the hospital more than if they just hired the full-time staff necessary. Two years later the program was discontinued after they had trouble with excess costs and poor performance from the contract hires. The CEO and the entire management was all for this plan, cost the hospital millions, and a bagger could've done better.
It's interesting that a discussion of operating on trust and personal investigation on a mortgage blog has avoided any mention of the elephant in the room: redlining. There is a long history that, when mortgage people work with a policy of individually evaluating their customers in person, rather than using set, impersonal rules, "good character" ends up getting translated as, "people who are a lot like me," or even, "people who look a lot like me."
This isn't to say that the move to impersonal rules based systems is a net loss. Like all things, it's a trade-off.
How was I saying anything different. I won't loan you the money if I know you can't pay it back.
But you don't loan people money. Eye-looking-into or no eye-looking-into.
People with their own mortgages and families to support who get paid $40K a year to loan money to as many as 15 people a day loan people money. On contract.
Your obsession with making all "wage problems" the gubmint's fault is interfering with your ability to read perfectly crisp English sentences.
March 14 (Bloomberg) -- Harvard University economist Martin Feldstein, a member of the group that dates business cycles in the U.S., said the nation has entered a recession that could be the worst since World War II.
I believe the U.S. economy is now in recession,'' Feldstein, president of the National Bureau of Economic Research, told the Futures Industry Association conference in Boca Raton, Florida.Could this become the worst recession we have seen in the postwar period? I think the answer is yes. I would emphasize the word `could.' ''
Feldstein's remarks represent the first time that a member of the NBER's business-cycle dating committee has publicly described the current downturn as a recession. The economy may not respond quickly to Federal Reserve interest-rate cuts, and a package of tax rebates and investment incentives will offer only a temporary boost, he said.
A friend of mine who is a History grad believes the decline in business and political ethics accelerated when Communism collapsed in the 80s. There was no longer a viable alternative to keep the greed of Corporate executives or policians in check.
I think that one of the big problems in our society is that the link between wealth and ability or work has been so strained for so long that the assumption that hard work and talent lead to success is being lost. This leads to bad behavior on everyone's part. On the part of those of us who are in the middle or lower classes, it leads to a belief that we're entitled to more than we can get honestly, so it's OK to cheat or that it's a crapshoot so you might as well swing for the fences. As someone in this group, I find it amazingly frustrating that I can't afford a decent house on a six figure income (fuck you, Bay Area) and I was temped to sign up for some of the "innovative" financial products that many of my friends who are now facing financial disaster used.
The results of the breach between merit and success have been as bad on the wealthy. People like to feel that they're entitled to what they have and if it isn't from skill or work (and people know deep down if it was or not) then they either assume that wealth is their birthright or come to fetishize their skill and supposed work ethic. This leads them to assume that anyone who isn't as successful isn't as special as they are and thus is unworthy of what they have.
The good news is that this isn't the first time that our society has been like this (see, for example, the Great Gatsby), but the end of a guilded age is often painful for many.
Paul said: "...These articles make sense to me, but I cannot imagine how you dismantle the current mortgage business model [without wrecking the economy]."
Well, you can look at an immediately-previous analogy from a different asset-class, the stock-market bubble, as an example of what can happen.
Stocks went to crazy valuations on crazy rationalizations, "it's different this time, the old rules don't apply anymore."
Then when it became obvious that the old rules did still apply, stock valuations came back down to earth, corporations became more circumspect (with the really lousy ones disappearing altogether), the stock market recovered and went on an upward tear for nearly 5 years straight, 2002-2007.
Only this time around, the overall economic conditions are better and the problems are highly concentrated in just one sector, housing.
Jim - yup opiate is an accurate description.... covered all the real pain in the economy by making it seem as if the consumer was not losing purchasing power.
mndean - exactly the kind of examples I was talking about! Someone who knows nothing about the business can spot the flaw immediately but it takes the corporation 2 years and huge losses to admit defeat.
I've been a manager of extremely low paid people, and it was an enlightening experience. For me, it was in the parking industry. Here in Minneapolis, we have a large community of Somali immigrants. For religious reasons, most of them won't work in food service (hard to avoid pork), so parking is one of their preferred entry level positions.
I couldn't help the fact that we paid them too little. I didn't get to make that call. The best I could do was to treat them with respect, and stand up for their interests when I could. This goes a long way to winning the trust of the people you are supervising.
My boss, who I really, really like on the whole, and for whom I would work again in a heartbeat, complained about the amount of time he had to spend filling out paperwork in regards to the cashiers living in Section 8 housing. I refrained from pointing out that there was an easy way to avoid that, namely paying them enough that they could afford to not live in Section 8 housing. At the wages we were paying (which the boss couldn't have really raised to a significant degree due to the owners), dealing with that bureaucracy should be considered a part of doing business.
I left that job when management changed, and the boss I liked left. The new general manager had a habit of going directly to my employees and telling them to do things that were degrading, and, in a couple of cases, flat out illegal. He went around me since he knew damned well that I'd have told him to get lost. When I took up the fact that some of the things were illegal with the owners of the company, and they took the GM's side, I was out the door.
There is a long history that, when mortgage people work with a policy of individually evaluating their customers in person, rather than using set, impersonal rules, "good character" ends up getting translated as, "people who are a lot like me," or even, "people who look a lot like me."
That's absolutely true. I always refer to the "Three Cs" as creditworthiness, capacity, and collateral. Yes, the old-fashioned version of that is "character," but my objection to that is exactly what you describe.
I've seen too many people who really do believe that they can "look into people's eyes" and know something important from having done that. Assuming they aren't actually expecting us to believe some mystical bullshit about their being human polygraphs or psychics, one has to assume that what underlies this is a belief that "character" for these folks is often "people who look like me."
Here we've got some weirdo on this very thread nattering on about how the loss of "Christian values" is at the root of all this. I have to assume that if you stuck this person in the underwriting department and didn't keep a leash on him, he'd be asking the applicants about their church-attendance habits before making them a loan.
Anyone who wants to go back to those "good old days" is going to get a fight out of me. We absolutely have to cut loose this important point about trust-based economies from garden-variety bigotry or WASP self-satisfaction.
Quite honestly, the borrowers often look into our eyes and think "pig." Yet where else are they going to go for money?
I think much of the "problem" is that people finally have realized that the Horatio Alger myth is dead. Hard work and ability don't necessarily lead to success at all in the USA. While high IQ tends to correlate with success, hard work doesn't. And I can't agree that people realize deep down that they may not deserve what they have gotten. If people have gotten "more" than they deserve they can very quickly find "objective" reasons for that. Feeling guilty about success and remaining so is not common.
Tanta said: "I have read both Jas Jain and Cotton Mather, and frankly except for the fact that the latter is a better writer, I can't see any difference."
LOL! You have got to get on the writing staff for "The Daily Show.":) It's a travesty that such a mind and wit don't have a far, far, larger audience with a corresponding bump in pay.
Two years ago I worked a contract at a major NYC bank who had laid off so much of their IT staff that no one knew how their encrypted money transfers worked, so they'd left everything untouched for years.
Needless to say, I was in shock for several days after that revelation.
Disagree - I don't think the economic conditions are really better now for the US than in the past, the economy is in real trouble that will require structural changes.
Agree - one asset class that generally does match inflation over time is real estate. Real Estate has the potential to do well in nominal terms either after the correction has run its course - OR - if inflation really picks up. I wouldn't advise speculating, but if you buy wisely during the height of the crisis you may be happy you did.
just for the record, Ford did not pay his workers well because he was enlightened. he was having such a turnover problem that it was cheaper to pay double the going rate than to deal with the turnover, training and quality problems. the efficiency of the assembly line made it the logical choice. let us not mistake good business sense (with a gun to one's head) for kindness, enlightenment, etc!
Really now, we are just going into a recession, nothing more; the world is not coming to an end. We've had them before and we'll have them again. It's like the flu. You get it and you get over it. Not pleasant but impossible to avoid entirely.
I think the problem that many of us have is your insistence that it is the GOVERNMENT that is causing such wage disparity.
clearly at some times the gov't has exacerbated it through law of unintended consequences, but it can hardly be argued they CAUSED this disparity.
Even the article you cite starts with this:
"Bill Clinton had what he thought was a great idea to curb the soaring paychecks of the nation's executives."
In other words: the salaries were soaring PRIOR to Clinton's law.
the law didn't work. that doesn't mean it caused the raise in salaries.
Another thing I find interesting:
"Companies at the time were allowed to deduct all compensation to top executives."
you think that executive pay would be LOWER today if companies were still allowed to deduct ALL of their executive salaries?
Clinton's law didn't CAUSE increase in executive pay, it simply didn't STOP the rise in executive pay.
The executive pigs will feed at the trough no matter what you try to do.
lastly:
you refuse to answer the question:
WHY do you believe that CEO's are so much more valuable today than they were 20 years ago, in terms of RATIO of executive pay to worker bee pay? It's at the highest in history, and continues to rise exponentially.
While in college in the late 70s, I worked for a while as a bank teller. The pay then, as now, was abysmal. But what is not generally known by the public is how easy it is to steal from banks.
A group of tellers I worked with became experts at a variety of methods of stealing from accounts.
Straight-out bank robbery is fairly easy too, but we never had the heart for that.
I finally left the job after six months and several unapproved "bonuses". The reason I left was because it was so easy to steal, and I needed the money so much that I couldn't resist stealing when it was that easy. I was afraid I would become a professional thief.
That's kind of like our present economic condition. It's like a computer that hasn't had an anti-virus update since installation. Now that the virus has infected the system, we must rely on hacking the registry to clean it out. My only hope is some idiot doesn't decide to reboot the system. The last person that decided to try that was Hitler.
I'm not sure the world is prepared for a Blue Screen of Death.
Conflating individual character with morality or corporate power with government sheds more heat than light but there are some links IMO: Personal character can transcend both morality and reward but if it is chronically punished there will be fewer survivors to practice it and at the risk of recommitting the sin of conflation (and simplistic thinking) we get the governance the powerful want unless there are a sufficient number of people with character who contest corruption (including those with character among the powerful).
Many years ago while traveling in a very poor and chronically misgoverned region of Africa -- yes I know that covers a fair bit of ground -- I made some friends locally and asked one of them why it seemed so hard to make any progress in the region and he simply said, quoting someone else I believe although I do not know who that was, "we have a tradition of permitting the murder of the good, the just, and the beautiful here and now there are too few left to save us."
Tradition is the enactment of a moral system by definition so it seems worthwhile to ask, at what point in the US did the powerful get a bye if they mouthed pieties or slogans while engaging in corruption and betrayal? At what point did we allow them, with minimal contest, to destroy or assassinate the character of those who contested their will?
It occurs to me that it may be related to the reason too many of us still seem to be paying more attention to those who were wrong about our current crises (plural) than those who were right.
Suddenly I feel a pressing need to go to confession myself.
Oddly enough I also feel more sympathy for Spitzer as well.
Not to worry. The PPT is briefing the Monkey-in-Chief!
[President George W. Bush plans to meet on Monday with top U.S. financial policymakers, the White House said, at a time of increased strains in credit markets and fears of a recession....
"The meeting on Monday is for the president to get a status report on the markets," a White House spokeswoman said.]
I have read both Jas Jain and Cotton Mather, and frankly except for the fact that the latter is a better writer, I can't see any difference. It was all about sin, sex, and religious controversy back then for the professional scolds and self-righteous gasbags, and it still is today.
I'm having this one engraved on a plaque for my desk!
"Firstly, I said that gov't interference helped this."
What is with all of the gold bugs coming out of the woodwork lately ? Every thread that I see on this blog and others has some poster mentioning something about how the Fed is responsible for the wage stagnation issue. Yet, none of them seem to want to explain why the wealthy CEOs don't have this same problem. Their pay has kept up with inflation, etc., yet the only salvation for the workers is to revert back to the gold standard ? That doesn't make any sense at all and reeks of trying to provide a justification for rampant inequality in how we reward work and productivity in this country.
I wasn't saying people feel guilty about success. Rather that they often act as though they feel insecure about their position and spend effort buying status symbols that separate them from the huddled masses and by supporting policies that help them to maintain their position (whether not lending to poor people or fighting for lower capital gains taxes or stickers that let people who can afford to buy hybrid cars drive in carpool lanes).
Henry Ford might have figured out many decades ago that you need to pay your workers enough that they can buy your product, but that lesson was lost on the banks.
I think China probably has this problem right now, but it won't become apparent until capital spending slows down.
"No moral problem was ever solved by people simply declaring their disapproval of immorality. Can we, like, just skip that part? No one on this blog is going to offer to defend immorality as such, so there's little point to denouncing it. I had rather hoped we might think somewhat more concretely about what the issues are than let this degenerate into a tent revival.
Tanta"
I would be interested to know if anyone here sincerely believes that reading anyone else's opinion will change their mind? I realized about ten posts in that I was mostly looking for confirmation of my own biases. (Which happen to to be the only right way to think, but that's just lucky for me that I'm on the right side of the question.)
I probably should not post this or even mention it, but re the lack of progress in Africa, you are aware, I presume, that the father of modern genetics, the Nobel laureate, James Watson, attributed Africa's problems to the average IQ there. He got kicked out of the UK for saying that as well as fired from his cushy position in the USA, but he was already about 80 in any case. I haven't heard much about him or from him since.
i posted, yesterday, data you had asked for, to support an argument...3 tables and calculations. did you see it i can re post.
bottom line, clinton was the only administration since carter to decrease annual federal deficit as a percentage of gdp AND clinton was the only president to reduce expenditures below receipts in a year,.. since, i believe, ford. granted the budget and deficit grew under clinton, but he applied the brakes.
yearning to learn...
did you get my thank you for the link to the byrne lecture about broker dealers and the misuse of FTDs IOUs...
M-F said: "Disagree - I don't think the economic conditions are really better now for the US than in the past, the economy is in real trouble that will require structural changes."
A more or less permanent state of affairs, which is why I'm so anal and obnoxious about quantifying those factors in order to get a bottom-line perspective on how significant they really are.
In my lifetime, I've seen real nuclear weapons (not fantasy ones) parked 90 miles off the Florida coast (not 12,000 miles away), I've seen a President assassinated, a far-off war that cost the lives of tens of thousand of our soldiers and nearly tore our society apart, inflation and fixed-rate mortgages in the teens,
another President who was forced to resign for his crimes, a major stock-market crash (1987), 9/11 and too many other equally-serious threats to our country and our economy to mention.
Assigning actual values and not perceived values to our current situation, things don't look so bad.
One of the big reasons Africans have lower IQ's than Westerners is that many Africans face poor nutrition and environments that aren't good for cognitive development. It's not clear to me that the primary cause of low IQ's of Africans (and African Americans) is genetic and not environmental. It would be an interesting question to answer, but it's hard to conduct such research without being accused of racism.
"Times have changed, but I bet the people doing the real work still make the least money."
Not only do they make the least money; they've been downsized and outsourced to automation, and reclassified to part-time employment status... no bennies (vacation, sick pay, healthcare, or 401K) for you.
Probably shouldn't stir this nest up any more, but,..
You know, at one time Bill Gates was an eighteen year old geek, and Warren Buffet delivered newspapers when he was younger, so I would guess the question is not whether an eighteen year old could run a company, but whether we have a system that efficiently picks good CEO's.
"many young couples trying to buy their first home have been priced out of the market because of inflated prices. The market now is in the process of correcting itself, and delaying that correction would only prolong the problem. "
The degeneration has nothing to do with the decline of Xtianity, and a lot to do with its baleful influence. Now the big usurers are the ferventest apostles of christ.
One of the many problems we face today is the lack of union clout. So many workers make so little that they need to beg, borrow and steal. They did the borrowing lately, their bankers did the stealing and are now do the begging. St. Ronnie's true legacy.
hey thanks for several fine posts above.. esp about how debt papered over the inequality between what we consume and what we produce (1:20pm?
also your comment about free trade deserves an addendum. the principal of comparative advantage argues FOR free trade, and i for one am not willing to give up on the idea so easily for this and other reasons. namely that countries that are interdependent via trade and other exchanges are more likely to peacefully co-exist.
but it is true that free trade becomes a bit of a sad and tragic joke when first world workers are asked to compete with corporations that go off shore where basic health and safety laws are un enforced or non existent.
as a young man, working as a deck hand on a tug boat in the oil patch many years ago, i saw waterways on fire and bayous so polluted that when a dog fell in it soon died. now, some of those scenes, almost gone here are to be found in second and third world countries where "our" consumer goods are produced.
I'm only a pretender with a couple of battered Zinn paperbacks, but the corporate model described here (huge salaries for stupid ceos, peanuts for the "real" worker) looks to me like a scale model of American capitalism since day one.
We have seen the capitalist economy grow increasingly efficient at extracting something for nothing, and concentrating wealth into ever smaller circles. It has nothing to do with morality, or legality-- its just the way the machine works. It keeps working because the very people exploited by it believe that they can some day be on top.
I think what this "crisis of confidence" reveals is that while the royals have forgotten that they need peons, the peons are realizing that the machine is not designed to benefit them. The dream of one day "making it" is being exposed as a lie.
The African kleptocrats are playing by the rules set in Washington, London and Paris. The global economy is mobbed up. Halliburton needs local partners for its vampire deals. Corruption appears more blatant in Africa because total economic activity there is too stunted to provide camouflage for the compradors.
I am not trusting him with my precious brain space anymore.
Incidentally, I agree with him that it's good for dollar to go down. But not because it is going to save the economy, but because it is going to finish off whatever imperial we-are-better-than-thou delusions US is harboring.
Then maybe we could have 'kinder, gentler' capitalism.
OT: Barry Ritholtz over at The Big Picture has an excellent discussion of the fraud in official measures of inflation. Measure inflation correctly and use that value to deflate GPD, house prices, wages, and other prices and the myth that fundamentals are positive is exposed as a lie.
In my lifetime, I've seen real nuclear weapons (not fantasy ones) parked 90 miles off the Florida coast (not 12,000 miles away), I've seen a President assassinated, a far-off war that cost the lives of tens of thousand of our soldiers and nearly tore our society apart, inflation and fixed-rate mortgages in the teens,
another President who was forced to resign for his crimes, a major stock-market crash (1987), 9/11 and too many other equally-serious threats to our country and our economy to mention.
Assigning actual values and not perceived values to our current situation, things don't look so bad.
JMO.
Sebastian
Sebastian | 03.15.08 - 2:07 pm | #
You are making a category mistake with this line of argument. The list you provide are "shocks" TO a system and many commenters are arguing about "structural problems" WITH the system. Structural problems are part of how well or not well a system responds to shocks (Taleb's black swans).
You may disagree about these hypothesized structural problems but to argue that we will be fine in a solvency crisis (solvency is a structural problem) because we were fine after the assassination of a leader is not sound logic. If we are economically strong we survive the shock well; if we are broke it can tip us into a general decline. A shock is a different animal than a structural problem.
By the way, you talk about assigning values but you have neither defined what you mean by values nor have you actually assigned values to anything.
"The market now is in the process of correcting itself, and delaying that correction would only prolong the problem. "
Hey Prez, we got a little problem here. How are you going to 'give a little help to responsible homeowners that face foreclosure' if the banks won't refinance at the existing mortgage price? Why would any homeowner refinance a 300k house for 500k?
No clue.
Now where is that envelope and stamp? I gotta mail in my house keys.
Re-reading the Waldman piece makes me wonder if the problem isn't one of complexity because of the increase in the number of people involved. In a small group of people you might be able to trust, but at about one hundred individuals, you run into the 2 percent "Civilizations and Its Discontents" problem. In other words, get used to it, it's only going to get worse.
Sebastian - "Assigning actual values and not perceived values to our current situation, things don't look so bad"
Right. You walked right into the trap, just as planned. Your assets are in equities just where they're most vulnerable so the sharks can rip them apart shred by shred while you're paralyzed by fear and the Wright B.
It's nice to use perspective of past experience to judge the future. That's pretty much always been successful. However, the landscape has changed significantly and we're in quicksand -- The more we squirm the deeper we go. Staggering debt combined with unprecedented leverage everywhere. Treasuries are toast along with the $. This time when the reset button gets pressed there won't be too many asset classes that get away unscathed.
This may be a pretty good time to be broke. At least there's less to lose.
Red Pill said: "By the way, you talk about assigning values but you have neither defined what you mean by values nor have you actually assigned values to anything."
I've already saturated this blog with actual values (GDP growth, unemployment, inflation, etc., etc.), and I'm not going to ruin everyone else's weekend by repeating them again just because you ignored them before.
Phaedrus,
I hear your message but am somewhat comfused as from my reading the USA is the most churched of the western nations. Is our situation speaking to the failure of our churches?
"You know, at one time Bill Gates was an eighteen year old geek, and Warren Buffet delivered newspapers when he was younger, so I would guess the question is not whether an eighteen year old could run a company, but whether we have a system that efficiently picks good CEO's."
sdtfs | 03.15.08 - 2:10 pm | #
Quite apt.
I would add that I believe the good old boy network that controls every major company in the US has neatly arranged things where they don't actually have to answer to the owners (shareholders) of the companies they are paid so handsomely to run into the ground. I believe that some actual accountability and democracy could solve about 90% of the pay disparity problem.
I don't think Berkshire shareholders (who have no such problem) would object at all to a generous pay package for Buffett - but BS shareholders had no actual say in that CEOs pay.
Seb,
Don't go away. We need optimists around here. I read this blog and get very discouraged then I drive around the neighborhood and look at all the optimists tearing down old and building new houses, all the new cars on the road, all the traffic on the highways and city streets, all the craftmen's pickups driving into town and it puts a smile on my face.
I want you to be right!
That said, if the sky really is falling I want to be warned to look up and avoid the big pieces.
Dilbert,
The popular culture/business culture is anything but Christian. I am not, by-the-way, a Born Again or even Christian. I am, however, pro-Christian and acknowledge its role at the base of Western Civ AND modern science.
dilbert dogbert said: "...We need optimists around here..."
This is what kills me. The numbers shape my outlook. I didn't form my opinion first and then go looking for evidence to support it later.
Example: If the SP500 were to drop next week down to the 1225 area (we're a little less than -5% from that as of Friday's close), that would match the valuation at the October, 2002 low from which we had a huge multi-year rally. That would put the SP500 PE valuation (based on peak TTM as-reported earnings) under 15, an excellent long-run value-based buying opportunity.
Is that an optimistic way of looking at things or a realistic way of looking at things? Seems to me that it's only "optimistic" if you have a preconceived notion that the stock market is going to go down a lot further. Based purely on long-run valuation data, the market is already near a good buy-point, so it's not "optimistic" at all, just realistic.
When I was in high school and computers were still large and mysterious, I remember my high school math instructor telling us that "a computer is nothing but a lightning fast idiot with a pencil."
Computers are now smaller, faster and ubiquitious, but they aren't any smarter, and neither are the people that operate them. (The wings gave Icarus new powers but did not make him smarter.)
At the root of our present financial crisis is the computer--its power to do all the record-keeping involved in an ever-more-complex financial system that has grown beyond the power of any one person to understand or control.
We replace as many people as possible with computers, design ever-more-complex financial instruments that supposedly maximize returns and minimize risks--but that system speeds out of control, moves faster and faster until the unanticipated but inevitable event (in this case, the housing bubble bursts) and nobody can stop the chain reaction that results.
"Seb, Don't go away. We need optimists around here"
Wake me up when he turns bearish. Then I'll start to cherry pick as he liquidates what remains, except those that he recommends. You need to keep his timely NEW acquisition as a reminder of how keen his awareness is.
Why do you think there were 400+ people logged on to this blog yesterday?
I'll give you a hint: They had come here looking for an explanation for what they were seeing - not to support their desire to bring pain, calumny, and destruction to a system they depend on.
You're from the "if they aren't with me, they're against me" school, aren't you?
Sebastian - even if the majority agreed with you, the reality would be the same.
A couple of posters here have equated morality with religion. First thing I would like to say about that is that our beloved Prez is a born again Christian.
Second, ethical behavior frequently contradicts religious "morality." Refusal to participate in the Inquisition is a safely distant example.
Christians neither invented ethics, nor do they have an exceptional record of practicing same.
pro-Christian and acknowledge its role at the base of Western Civ AND modern science.
Fundie Christians [like Bush & Huck] running thing these days have as much claim to the foundation of Science as the Taliban does with respect to Algebra.
Western Civ and Science was founded by thoughtful people willing to see nuance and reject the received wisdom.
I've already saturated this blog with actual values (GDP growth, unemployment, inflation, etc., etc.), and I'm not going to ruin everyone else's weekend by repeating them again just because you ignored them before.
S.
Sebastian | 03.15.08 - 2:44 pm | #
Ahhhh, you mean just stating numbers.
Not very enlightening.
You provided a list of events and suggested they were significant (somehow) in comparison to the current economic situation.
Then you wrote something incoherent about values and assigning values.
You seemed to be suggesting a "value" rating system which I presumed assigned a weight to those events and numbers you provided.
Were you then suggesting there were good GDP numbers and the like correlated with the shocks you listed and that this means we will have a good GDP number and the like with the current crisis? Is that it?
You have a writing style that gives the impression of content when there is in fact none.
It is in stark contrast to CR and Tanta. The vacuousness of your counterarguments to CR actually reinforce my opinion something nasty is coming.
I wish you would defend this model you have discussed regularly and others make fun of. Pardon if I am ignorant of past posts where you lucidly discuss this model, but it would be nice if you discussed its strengths, its assumptions, what data it utilizes, the time span of that data series etc. Why is it such a superior model that I should believe it instead of people like Larry Summers?
racerx writes:
In a general sense, the issue really is that compensation doesn't match performance. When all of the profits of a transaction are booked upfront the employees willing to cut corners and push things through are the ones most rewarded. Ethical and prudent actions that may slow down this process are undervalued. The person getting paid the most is the one with a high tolerance for risk not an ability to assess risk.
racerx, you hit the nail on the head in terms of mortgage lending! As Tanta has posted numerous times the Ops - back office people who do the work, and know what is happening are paid the least. Sales and management make the money, and the disparity is Huge! Yet, we're all like lambs and lay down and take it. WHY?
Red Pill said: "You have a writing style that gives the impression of content when there is in fact none."
then said: "I wish you would defend this model you have discussed regularly and others make fun of. Pardon if I am ignorant of past posts where you lucidly discuss this model, but it would be nice if you discussed its strengths, its assumptions, what data it utilizes, the time span of that data series etc...."
So, you're being rude, mean-spirited, and obtuse because you're ignorant of the evidence I've presented, not because you've looked it over carefully and rationally, concluding that it's not valuable?
That's not very nice, is it? Doesn't really motivate me very much to be helpful to you, either, does it?
Marcus Aurelius writes:
It's not postmodernist, its NeoCon.
Marcus Aurelius | 03.15.08 - 3:39 pm | #
Yes, you are correct.
The neocons have adapted some aspects of postmodernist thinking into their new philosophy. I have gotten the impression from the writings of neocons that they are inspired by postmodernist thought, but I don't think they really understand it.
I should be more precise in my statements about philosophy on a board with commenters that go by the name, Marcus Aurelius.
I am only commenting on behavior n America and not comparing it to Asia. Being better than some other countries is good enough or OK? Lot of bigots here indirectly attack my ethnic background. For better or worse, I am American and by choice. This doesnt mean I should shut up and watch America go down.
In general, one of the most disgusting habits most Americans have is attacking other countries and other groups when one talks about problems in America. I could care less about morality between people within Russia, for example.
We know why America is headed down; it is because of people like Anon. And these disgusting people hide behind the dark curtain.
Marcus Aurelius writes:
John Stark | 03.15.08 - 3:21 pm
At the heart of our system is theft by chicanery - not computers.
To borrow a slogan from the NRA: Computers don't kill economies, shiftless bastards kill economies.
I don't disagree, and the NRA/gun comparison is a good one. Guns don't kill people--but bad guys with guns can do a lot more damage. (I oppose gun control so don't start in on me based on some misconception about that)
Amoral financial types with computers can do a lot more damage too. And while there were and are a lot of rogues and rascals in the financial world, I think some of these people were just misguided, following the herd, doing what everyone else was doing, dancing to the music.
I also don't think that even the worst of these people PLANNED to wreck the economy, or their own financial institutions. They just worked their schemes, enriched themselves, lost a sense of limits, and then lost control of their own schemes. (Yes, all the big operators will still be rich after this is over--I realize that.)
My point is really simple--all of these complex financial instruments and systems that are collapsing now, because of their own complexity, would not have been possible when accounting had to be done with ledgers and pencils. Go back to Mason and Rosner's paper from last year and look at the graphics on CDO complexity, for example. (pages 22-23)
So, you're being rude, mean-spirited, and obtuse because you're ignorant of the evidence I've presented, not because you've looked it over carefully and rationally, concluding that it's not valuable?
That's not very nice, is it? Doesn't really motivate me very much to be helpful to you, either, does it?
That's not very nice, is it? Doesn't really motivate me very much to be helpful to you, either, does it?
S.
Sebastian | 03.15.08 - 3:42 pm | #
So I am rude, obtuse, mean-spirited and ignorant? And you assume I am not rationally reading your posts. LOL Well, I guess I can be ignored then! The bad irrational human that I am!
Every time you are challenged you simply adopt a condescending and insulting tone. You never answer the questions.
I like thinking about your posts though. It is my belief that you actually don't believe what you are arguing and that your participation on this blog is just a game.
It is interesting to note that after CR and Tanta post I find things are clearer. Your posts, however, obfuscate and add confusion. It is my experience that that is usually by design.
Sebastian,
The economic numbers for Germany in 1921 looked quite promising too.
Just remember, all the numbers you so offer so comfortingly are a measure of the recent past. Now, to talk about the persistence of numbers and the ability of models to forecast is a wonderful artifact, and I have debated this issue with far more educated and experienced folks than you, including Bob Eggert, founder of Blue Chip Indicator (may he rest in peace), and the conclusion is that the models work until they don't and then you had best just hang on.
Bob Eggert and I discussed this nearly 20 years ago, and I told him that I rather liked investigating when his Blue Chip concensus forecast failed. He said, when we hit those turning points is when you want to be very very careful.
Something in this thread made me think of:
"Kill the Poor"
by the Dead Kennedys
Efficiency and progress is ours once more
Now that we have the Neutron bomb
It's nice and quick and clean and gets things done
Away with excess enemy
But no less value to property
No sense in war but perfect sense at home:
The sun beams down on a brand new day
No more welfare tax to pay
Unsightly slums gone up in flashing light
Jobless millions whisked away
At last we have more room to play
All systems go to kill the poor tonight
Gonna
Kill kill kill kill Kill the poor:Tonight
Behold the sparkle of champagne
The crime rate's gone
Feel free again
O' life's a dream with you, Miss Lily White
Jane Fonda on the screen today
Convinced the liberals it's okay
So let's get dressed and dance away the night
While they:
Kill kill kill kill Kill the poor:Tonight
I can't read all the comments right now, so I don't know if this has been brought up, but Misean's description of the BusinessWeek article is bullshit, as is the title of the article.
Two quotes: Clinton's brainstorm: Use the tax code to curb excessive pay. Companies at the time were allowed to deduct all compensation to top executives. Clinton wanted to permit companies to write off amounts over $1 million only if executives hit specified performance goals. He called Crystal for his thoughts. "Utterly stupid," the consultant says he told the future President.
...
Members of compensation committees of the boards of four of the nation's largest corporations told BusinessWeek that 162(m) is merely a nuisance that hasn't stopped them from paying executives whatever they consider fair. All of these directors requested anonymity for fear of losing their positions. Companies are under no legal obligation to disclose how they comply with 162(m), and as a result, a shroud of secrecy surrounds the topic.
No where in the article does it say that the rule changed in any way made CEO compensation go up. The worst that could be said is that Clinton failed to eliminate a tax break already there. No one forced the companies to make up performance bonuses.
Basically, Misean complains about government regulations, and then points at a lack of meaningful regulation as the problem. Oh Glod! No matter what, the govnerment is wrong!
NC Jim, thanks for the correction. We have had massacres in Utah and I am sure the miners here have been just as badly treated as the ones in Colorado.
Tanta
I have worked for six companies/agencies in my career, none in finance. Only at two have I been treated with respect, the other three I was just a body expected to perform set tasks.
My current company calls us line workers "partners", the shift crew leader is a "team adviser" and mostly stays out of the way, the department manager is called the "team leader" and mostly stays out of the way. Guess which company is making money in this recession, even expanding product lines while the other five companies/agencies are struggling to stay afloat? Except for the steel mill that closed in 1979 when we could not compete on price or quality with Japan.
Oh, by the way, we are paid the national average for manufacturing, not the Utah average. And yes, the company is making money.
Sebastian
I want to see some links to the data you claim backs up all your assertions.
--
In connection with the most topical subject of the Credit Crisis (or Debt Crisis) it is a result of pre-mediated fraud in mortgage lending, in general -- NOT HAVING PROPER SECURITY, OR FACTOR OF SAFETY, FOR A SECURED LOAN.
My guidelines for a secure home loan are very simple the lower of the minimum price of a similar property within the past five years (because prices have gone back to their five year lows several times in the past in most areas). or 80% of the current price. This will also keep the bubbles from forming as it would require higher down payments as prices rise rapidly.
Risky loans were made purposefully in order to make quick money without regard to the future repayments. Also, new rules are dangerous because they have nor been stress-tested. Home mortgages didnt need new rules in terms of how much can be loaned on a home and what documentations should be required. The rules were meant to allow fraud in the name of innovation and flexibility. The idea that lax rules helped minorities is a disgusting claim by the perpetrators of this evil like Mozilo. The weak were targeted and victimized by the likes of Mozilo, e.g., the most common victims seem to be:
Young people
Single women
Blacks
Hispanics
Burdening the less able, financially, with more debt (as % of income) is evil. If you want to be charitable, Mr. Mozilo, charge them lower interests rates and less points and fees!
Sebastian: The logic isn't logical, its fallacious. The numbers are incorrect (or incorrectly applied).
Telling people to believe your numbers and logic, and to ignore reality (what drove them here in the first place), isn't helping.
Here are some other pseudo-logical arguments that should be put to rest:
Cutting taxes on the wealthy makes the economy grow.
Regulation of business is bad for the economy.
The market is more efficient and/or capable than the government.
Deficits don't matter.
Money is ethereal - it exists in concept only and can be created at will.
Any set of numbers is as good and as useful as any other set of numbers.
Life takes Visa (strangely enough, Mastercard's slogan is twistedly honest: There are some thing's money can't buy, for everything else, there's Mastercard." Money can't buy debt, but MC can.)
Affordable healthcare for the population is a bad thing.
A war will pay for itself.
To prosper in a producer/consumer economy, it's okay to consume but not produce.
These are different things, folks. I think the failing this post is citing is a lack of integrity. If I openly espouse that killing people with dark skin is the way to salvation, that may be immoral. If I then don't kill said brown skinned people when the opportunity presents itself, then I lack integrity. One can say that lack of integrity is itself immoral, but it is then definitely a subset of immorality. Not following through on ones commitments, that is what is at issue here, and has nothing to do with sex, sin, etc.
The way Yves Smith uses the word Character seems more or less synonymous with my definition of integrity, but perhaps is much broader. Or then again, maybe he chose that word because it alleterates quite nicely with Capitalism!
Complexity could easily be a front for deception, or hiding the risk, and that is exactly what did happen in securitization of mortgages. The complexity was deliberate and not because it was necessary.
It is lot easier to full less knowledgeable, or mostly lazy, people with complexity, no?
Complexity in finance is the enemy of trustworthiness.
"``The president seems to be on a different economic planet than most Americans,'' Senator Charles Schumer, a New York Democrat, said yesterday after Bush's speech to the Economic Club of New York. "
Actually, that whole "gotta pay the workers enough money to buy the product" is a classic economic fallacy.
For one thing, if you actually paid workers 100% of your revenue, well, you can see what would go wrong there. By definition, all costs have to be less than your revenue, in order to make any money at all.
In fact, the whole genius of the profit system is that it incentivizes you to combine different resources that cost less in ways th produce higher value than costs.
In fact, Herbert Hoover believed in that fallacy of paying workers more to buy the product, and pushed firms to keep wages high...the result, of course, was just more unemployment.
Keynes himself wrote that the problem of business cycles was caused by "sticky wages," which means that wages don't fall, and unemployment rises.
While that was actually true during the Great Depression, most postWW2 business cycles have actually had procyclical wage movements.
Now, the real problem with the stupid "gotta pay workers enough to buy the product" argument, is that it gets in the way of actual good arguments for high wages.
One argument: In positions of trust, you want to provide extra incentive for the worker to be good in the form of higher wages. They don;t want to risk losing the sweet gig so they don't rob from the till. This then allows you to save on monitoring costs a bit.
But Tanta, don't make ignorant arguments. They get in the way of your good ones.
My wife is one of those "middle managers" that the GOBs (good ol boys) frequently sneer at. Now, I happen to be kinda lazy myself, but she is extremely competent and insists on working nonstop. Even at home, she is constantly busy. Back when she used to have slack periods at work, she actually complained about it! (something I had a bit of trouble understanding)
This is the least of her worries now.
One extra duty after another has been piled on her. No raise though. No promotion either. she has trained several of her "superiors" and still has to fix their mistakes. When another person on her level quit, management tried to get her to assume the entire workload of that individual. She said sure - if it means a raise and promotion. Instead, they hired someone else.
One "forward thinking" idea after another comes down the pike. Employees are sometimes asked for "feedback" after a program has been decided on. In no case does this feedback actually affect policy. Does serve to identify malcontents though.
The irony is that the "big boss" is extremely competent himself - but he will promote a barely competent man over a woman any day - and when they fail, he finds something out of the line of fire for them. If a woman screws up, they are shown the door.
Tanta, actually, you drew exactly the oppositely wrong conclusion from your story.
It's not that you should pay workers enough to buy the product, it's that you should try to develop products that might meets the needs of less fortunate people, because after all, they have some money too.
"Only this time around, the overall economic conditions are better and the problems are highly concentrated in just one sector, housing. Tomorrow always comes.:)" Sebastian | 03.15.08 - 1:40 pm
Seb- Either you are a hypocrit, or you have the blinders on you claim CR wears, since you are apparently saying that the collapsing Financial sector either no longer exists, or it was not a sector in the market.
unfortunately, life calls, so no more debating for me!
One last thing:
someone above asked whether or not anybody will actually change their mind due to the arguments held within this thread.
I for one do often change my mindset depending on how well an argument is crafted.
There are certain core beliefs that I have that are highly unlikely to be changed, but there are countless more things that I haven't thought about much... and these discussions help me to make a decision on many topics.
For example: I once strongly felt that billing errors were the nefarious workings of "the man" as example...
Tanta gave an eloquent argument that shows that it could be simple INCOMPETENCE due to over-downsizing.
after her argument, I have changed my mind somewhat.
I am less firm on the 'nefarious' nature of the errors... that said, I still do find it odd that these errors often end up in Big Corp's favor, but I"m willing to change that part of my mind too...
Also:
I once was a more fervent believer in government. That has changed with time. I am not so far as Misean (nor will I ever be) where I fault government for EVERYTHING, but I also am not as trusting as I once was.
anyway:
these debates have merit. Only the foolish stick only to their point of view IMO.
Sebastian, I will credit you with an ability to maintain civility and your desire for whatever reason to present what you perceive to be valid arguments, as ridiculous as they are.
It's like having someone trying to explain to you how bright it is outside in the middle of the night, non stop, trying to get you to put sunglasses on.
" I am, however, pro-Christian and acknowledge its role at the base of ... modern science."
Agh that should be:
I guess you mean Copernicus, Galileo and Darwin. Without Christians telling us these scientists were wrong, how could we have known they were right?
You seem to ignore the high wages of the CEO class. What's the cut-off point for your wingnuttery? You write of pilfering at the till, while wholesale embezzlement, looting, and robbery by "those in positions of trust" runs riot around you.
I think Marie Antoinette stated your argument more succinctly.
(1) The HR manager I used to work with recognized the essential contradiction in the bank's policy: we paid people so little that they ended up with a lot of debt and cruddy-looking credit reports. But we didn't want to hire anyone with a lot of debt and cruddy-looking credit reports. The idea that you could pay people enough to disincent petty embezzlement was just foreign. And I will have you know that this requirement about pulling CRs on applicants was never a "government rule." We thought that one up all by our ownselves.
Tanta |
Thanks Tanta for pointing out this whole we only want people with 750+ credit scores so we can pay them $8 an hour in our area where rents start at $800 a month nonsense.
Republican Fiorello La Guardia had the right of it when as mayor of NYC he said that he didnt care if a business which didnt pay their people enough to live couldnt survive in his city.
How on earth can a business who pays its people poorly expect that those who are willing to accept such jobs can afford to pay their bills?
My grandparents started a business in 1930 and it survived until my parents retired from running it. My grandfathers position was that if you paid you employees so little that they couldnt live then you were publicly admitting that your business was a failure and you should be embarrassed.
As a labor lawyer I routinely argued this point with my corporate clients when they whined about the caliber of their employees I just looked at them and said you get what you pay for and if you want better, pay more. Now shut up.
In 1980, the top CEOs were paid about 40 times what the median worker in their business was paid. Now they are paid around 320 times what their median employee makes. Something is definitely way way out of whack.
(2) Topher writes:
. morg writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
How many sparkplugs do you think that over paid union worker cranks out in an hour?
.morg | 03.15.08 - 11:35 am | #
You missed my point.
number2son writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
Apocryphal bull shit.
number2son | 03.15.08 - 11:40 am | #
Check for yourself. Delphi is now bankrupt.
Topher
_________________-
Delphi is bankrupt and STILL paying millions a year to the twits who ran the business not bankruptcy and gave themselves prospective pay increases effective after clearing bankrutpcy.
And number2son is RIGHT! That is a bogus garbage number bandied around by fools. I read the Delphi-UAW contract. Did you? (And the chances of you having read it are between slim and none, and slim just left town.) You are just repeating some inflated myth circulated by the free-market crazies. Top labor cost per hour was around $24 an hour for the highly skilled tradespeople. Only time it would be remotely possible to hit around $68 was when the employer had to pay double or triple time for wanting people to work the graveyard shift on Christmas Day.
peter is 100% correct when he writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
GM, and former GM companies, use a word-of-art called "fully burdened overhead" (sometimes called "fully burdened cost") to report salaries. More than just the salary, healthcare and employer deductions, it also includes a share of land, building depreciation, property taxes, utilities and equipment depreciation. It ends up being about 2.5 times the actual salary/wage the worker gets.
I used to work for a division of GM that is now part of Delphi Corp, and the mismanagement (hello, Steve Miller!) that sent Delphi into bankruptcy was highly rewarded by Wall Street and the cast of cronies that Steve Miller took with him from the other companies he drove into bankruptcy, such as Bethlehem Steel. While Miller was wildly repeating a similar "our workers cost $65/hour" story to any newspaper stupid enough to listen to him, he was demanding that his workers take paycuts from $22-25/hour down to $7/hour. Those paycuts were never mentioned in the same stories that were talking about $65/hour.
By the time I left GM, at that division, the lowest seniority of hourly (aka union) staff was 11 years: everyone with lower seniority had been laid off. It wouldn't surprise me that some guy with 20 years seniority was being pulled from the job bank to mow the lawn. What? You don't have any welding work to do? Get out there and mow the grass! And then Miller would turn to any sucker in the media willing to listen and claim "OMG! We have guys making $65/hour mowing the grass!
Peter |
Yep dont ever believe what one side to an argument says. You end up making an ass of yourself. Humans have this habit of exaggerating to the point of lying.\t
(Sorry about nay typos, my hands are not co-operating on the keyboard today.)
Complexity could easily be a front for deception, or hiding the risk, and that is exactly what did happen in securitization of mortgages. The complexity was deliberate and not because it was necessary.
It is lot easier to full less knowledgeable, or mostly lazy, people with complexity, no?
Complexity in finance is the enemy of trustworthiness.
Jas
No one could argue that the people involved were NOT making misleading statements, especially near the end. And you are right--complexity provides more opportunities for deception, which is part of my point too. But self-deception is the other part.
IN many cases I suspect these financial geniuses were trying to mislead themselves. I guess the point for discussion would be, are the people responsible for all this 1) fiendishly clever arch-villains, criminal masterminds who planned every bit of this or 2) greedy, scheming ambitious people who eventually got in over their own heads and are now in the process of dragging everyone down with them? To me, (2) makes more sense.
I'm not denying acts of criminality--I'm just saying that these people were not in control of their own schemes. They didn't plan for it to turn out this way. They thought the music would never stop, because they were typically foolish, all too human individuals who tuned out any information that seemed to imply they were on course for disaster. Some would argue that our whole civilization is based on that kind of behavior. Seems to me you yourself have made that argument a number of times, Jas.
--
"In fact, not too long ago our resident PITA, the great Moralist Jas Jain, launched an attack on yours truly by calling me a "middle manager," as if I were supposed to be insulted by that."
Tanta,
I don't recall that but if you post the whole paragraph I would appreciate. I did comment on your legalism. In America, whatever is not specifically and clearly forbidden is legal and this leaves room wide open for new fraudulent practices and that is exactly what we have witnessed in your area or mortgages.
You are a typical American who insists that someone who points out problems must also provide solutions, or vision as someone asked for. My current view is that as long as banking and finance Crooks have firm control of the whole economic system, including the govt, no real solutions can be implemented only some patchwork to calm the people for a while until the hubbub dies off.
The best we can achieve on this blog is how each can position oneself under the increasingly immoral system or whatever views expressed here make sense to one.
Want an example of greed and wage disparity inside the gov't ? Postmaster General 39% raise retroactive
to 2006. Craft worker raises average 1.9 % The Postmaster General makes more than the VP of the US. They compared his pay to the private sector
but refuse to compare letter carrier pay to UPS.
(average letter carrier makes 750 stops per day and walks 7 miles )
Management to craft worker ratio 1 to 8. Lost
billions, but have to pay bonus' for management.
As far as I can tell from what he has said, the problem with Sebastian's data arguments is that he relies upon simple correlations between individual data series and economic growth. He doesn't bother to dig into the guts, and start asking questions about causation, rather than just correlation.
This is a serious problem, because, in finance and economics, you have a dynamic system in which the rules change based upon the perceptions of the participants. Take his Wright Model B, which I gather is just looking at the correlation between the yield curve and GDP. You have to step back and ask why the yield curve has looked the way it does, and whether it means the same thing now that it did in 2001, or 1991, or whatever other year you want to compare it to.
The arguments that a lot of people, including the proprietors, make is that the yield curve is very steep right now for different reasons than it has been very steep at other times. Sebastian doesn't seem to engage with these arguments at all, and just points to past correlations. That isn't a very persuasive way to deal with the hypotheses that are being put forth.
Tanta - I can't scroll thru 234 comments, tho it would be interesting, but enough gets to be enough. But 2 comments I did want to make about your post: 1) are you shortening your posts? They were great long but the short ones are great too. Just wondering how much peer pressure was affecting you. 2) I'm so happy you're taking a stand for the poorer and more oppressed. You did last weekend and you are again. I come from the social services professions and I'm not a card carrying investment/economics whiz, although I find this blog addictingly interesting, but anyway, thank you.
MaxedOutMama writes:
I have to believe that most non-financial businesses are run far better than the worst rung of the financials. Otherwise my clothes would fall apart the first time I washed them, my car batteries would last three months, I'd have to carry two spare tires in my car to be sure of getting to the grocery store, the lights would be off half the time, and the grocery stores would be half empty. I am not exaggerating, either.
Mama, so true so true.
I am an industrial engineer by training (hows that for an obsolete career choice in 21st cent Murika!) who did internships at Ford and GM in the early 90s. For the last 10 years (remember, manufacturing is dead), Ive worked in the financial services industry, first as a peon beholden to one of those firms whose behavior is yet again being glowingly described in your favorite newspaper and blog. A year ago I extricated myself from said Wall St firm, and now offer fee-only financial planning thru Fidelity.
While GM and Ford's problems were prosaic, obvious, and demoralizing, I can tell you unequivically (as I have told clients for 10 years), that if Ford or GM operated like the back office of my former employer, CARS WOULD NOT RUN.
Characterizing someone as a "Fundie" does not make them a good Christian, which is to say that dishonesty is not a Christian moral good, nor is hubris (not to mention that I am anything but a Bush fan) ... trying to stay with the basics, here. Moral people do not lie for gain. Lies used to be frowned upon. No longer.
Anyone who wants to go back to those "good old days" is going to get a fight out of me. We absolutely have to cut loose this important point about trust-based economies from garden-variety bigotry<
Agreed.
Most nostalgia for the 'good old days' is from people that didn't live through them.
The idea that a business cycle is strongly associated with morality doesn't make much sense.
Greed is more or less constant, so it doesn't go far in explaining changes. Anyone have strong evidence that IB's are more greedy today then in the late 80's - think Drexel?
This is simply theoretical, but I think the problem is that FICO and ratings agencies became a problem, not because the didn't work but because they worked too well. Most excesses occur when something works well and is then pushed beyond its limits.
lol, well 2 outa 3 ain't bad. Darwin was a sophist. Most accomplished scientists do (quietly) believe in God, I understand. Whether or not they're Christian, I don't know. The point is, as I'm sure you know, that modern science took root the the context of culturally dominant Western European Christianity.
Just wondering how much peer pressure was affecting you.
There's always at least one comment on any given thread on this blog that sends whatever I'm drinking straight outta my nose.
True story: I had a technician from Verizon actually in my apartment a week or so ago to check the phone line (it was actually the modem). He gave me a new modem and, being very nice and helpful, was actually going to initialize it for me, but when he sat down at my desk and realized that half the keys on my keyboard don't have letters on them anymore--they've been scrubbed off--he couldn't manage. Frankly, if I weren't a touch-typist, you guys would have cost me more in replacement keyboards over the last couple of years than you pay me in tips. (And tips are very generous around here.)
I seem to recall having once responded to peer pressure back in 1979. I don't remember what I did, exactly. But I didn't get arrested and the statute of limitations has expired, so I'm big enough to admit it.
I haven't been feeling great for the last couple of weeks. I have spells of that. I was chuckling to myself last week when I came back to a comment thread and found someone--Rob?--theorizing that I had probably spent the last two hours writing some jillion-word analysis of some highly technical thing or other.
Actually, I had been napping.
Once I shake off my current malaise I'll be back to the kind of rambling nerdy legalistic technocratic middle-managerial detail-wallowing that drives Jas nuts. Driving Jas nuts isn't actually what motivates me to do anything that I do, but it's like a cool bonus.
The Chinese, Persians and the rest of the world had been playing science catch-up for some time. Doing well now, though. Do you think it arguable that modern science rose out of Western Europe? I didn't think that assertion would be all that controversial.
The point is, as I'm sure you know, that modern science took root the the context of culturally dominant Western European Christianity.
Well, kudzu took root in the same context, too.
I think you got a little logical problem there.
I'm not into religion-bashing. People who like to start religious arguments are usually their own worst enemies and they don't need me to help any.
But really. You brought up rap music. What could possibly make you think we'd take you seriously? In all the many explanations of the causes of the current economic and financial mess we're in, I have yet to hear anyone link it to the current generation's piss-poor taste in music.
I have impeccably poor taste in music myself sometimes--heck, I like ABBA--and no one has yet suggested I started this credit bubble nonsense.
The seeds of The Enlightment (Renaissance) were planted by the Moorish libraries plundered when the Spaniards finally retook the Iberian peninsula...if one credits that as the start of modern science.
The link between 'morality' or 'civic virtue' and development has been kicked around more or less forever. You can quote Weber or just move back to Edward Banfield.
I am totally at a loss to explain Africa. Perhaps if Europeans had AK-47's 300 years ago, it would look like Africa today.
"Four(college football)Oklahoma's Bob Stoops, Alabama's Nick Saban, Florida's Urban Meyer and Iowa's Kirk Ferentz coaches already have cracked the $3 million mark, leading a spiral that shows no sign of slowing. This year, for the first time, the average earnings of the 120 major-college football coaches hit $1 million, a USA TODAY analysis finds. That's not counting the benefits, perks and myriad bonuses in their contracts....
Median total compensation for 182 presidents and chancellors of public research universities and university systems was a little more than $397,000 annually."
Jocks over Nerds. In a nutshell the American value system. Aggression over intellect. It starts in our schools where the teacher has students compete for the correct answer instead of sometimes working with one child to reach that answer.
Aggression has its uses when used with other things. But I fear it has become more more naked in our culture. I can only hope that Iraq turns out to be the Picketts charge of this outlook.
I certainly believe that the emphasis on individual aggressive behavior is not optimal for a modern economy
BTW notice that the $3mil coaches all come from Bush states.
I'm probably one of the ones that could be accused of being more moralistic.
My thrust from reading through this is that morality does not equal religion. For the quant folks:
M /= R
Yeah, our morals have deteriorated significantly and it's showing right about now. All good points re mgmt vs labor, treatment of employees, fiduciary responsibility, etc.
While Christian, I don't blame all of this on "gee, we just aren't believers anymore." I think that it's that this country started as a nation with a basis of commons values/beliefs rooted in a common system of beliefs (judeo-christian).
While most still believe in God (60 - 70%), many in the past 40 years have left the church background, a place in which these common beliefs could be reinforced on a regular basis. It was also a place in which you had to pretty much live by the same mores as if you screwed Mr. X, word got around and it came home to roost. As many have left this background and moved on, the structure has suffered as there is no reinforcement. You can joke about this at some level, but there was a purpose served.
And it's been replaced by what? A society ruled by short-attention span devices/media. TV, media, etc. The majority of the programming has not been terribly strong in its message of how we are to treat one another (read Apprentice, etc.).
If you consider a bell curve on an X axis defining the realm of acceptable behavior, for a looooong time, the bell curve was probably a fairly consistent shape. With the loss of the structure and the rise of these other messages, the bell curve has arguably shifted left to the lower end of the spectrum. Hell, I don't even have a problem with other faiths (read Hindu, Islam, etc.) stepping in; but their growth takes time and we'll have some decades (?) until we see the bell curve shift rightwards again. There's a reason that the muslim faith is growing rapidly in this nation.
Well, I'll try to tone it down a little then (that bad habit I have of exaggerating to make a point).
It ain't about kudzu and rap is cultural detritis that wouldn't have been tolerated not so many decades ago, but the essential point is that character, morality and religion are entwined. Can there be character/morality without religion? Some would say "yes". I'm doubtful. Without God? Also very doubtful, I think. I'm not pushing religion or Christianity, just acknowledging the history of Christian morality and its diminishing impact on the good ol' US of A. I guess I would also say that I'm a little irritated that Christianity is not an acceptable topic in intellectual or polite society these days, even though it may be quite relevant.
But I've said enough and will stop.
I love this blog and your stuff, Tanta, so please don't get the wrong idea, and I'm not here to mess up your threads. I actually thought I had a point to make ...
Since highly paid auto workers and the Delphi bankruptcy were under discussion earlier, I'd like to point out a couple of things about the domestic auto industry.
First, the US auto companies insisted that we drive gas guzzlers - forever. When VW started selling cars like hotcakes,the "Big 3" responded with "muscle cars." When quality became an issue, they responded with bigger advertising budgets. When environmentalists demanded fuel efficiency, they built SUVs. When forced by law to build electric cars, they refused to sell em - only lease - and worked assiduously to change the law. When that succeeded, they rounded up the electrics and ground em up.
So I drive a 12 year old Toyota that gets good mileage and runs like a top.
I read a book about the Rockefellers once. It detailed how the Standard oil companies had large ownership stakes in all the "Big 3" and interlocking boards of directors. In case you have wondered why the US auto industry made so many suicidally bad decisions, that's it.
Ziggurat said, "This is simply theoretical, but I think the problem is that FICO and ratings agencies became a problem, not because the didn't work but because they worked too well. Most excesses occur when something works well and is then pushed beyond its limits."
"Delphi Automotive is a good example. $68 an hour to make spark plugs."
A "worker" made $140K/yr. to man a spark plug assembly line? Was that an average or median example? How many spark plugs per hour? How many employees? What would it cost you to produce an equivalent product in your basement?
If you don't know your costs, you don't know anything.
You do have a point to make and clearly did as you had other posters address it - now we may have divergent perspectives - if you had nothing to contribute then your post would just disappear in the stream of additional postings without a response (as many if not most of my posts seem to do lol).
I am totally at a loss to explain Africa. Perhaps if Europeans had AK-47's 300 years ago, it would look like Africa today.
Ziggurat | 03.15.08 - 5:59 pm
can't cite sources, but I heard an explanation of Africa's problems that went like this (there was quite a bit of study behind it, but I hate typing).
Due to the lack of domesticable animals in Africa (think of why a zebra cannot be domesticated, but a horse can), Sub-Saharan Africa was never able to make the leap beyond the simple village society (tribalism is inherent in this condition).
The problems in Africa can be attributed to colonialism (to extract resources the Africans never used), and the subsequent imposition of cultural conditions unsustainable in the African environment.
The difference being between evolution and imposition.
I'm probably one of the ones that could be accused of being more moralistic.
You can claim the word "moralistic" if you want. I personally think there's a difference between "moral" and "moralistic." Moral people just try to behave themselves. Moralists make a career out of carping about other people's shortcomings and generally proclaiming that backsliding is going on from some putative golden age. They are the panty-sniffers and conformity-enforcers. I'll have nothing to do with them.
I'm a little irritated that Christianity is not an acceptable topic in intellectual or polite society these days
You have GOT to be kidding.
It is not the case that people do not consider Christianity an acceptable topic. It is that people consider your claims about Christianity to be wrong, and also not particularly relevant to the conversation you interrupted to bring them up. There's, you know, a difference.
I am familiar with a lot of religious people who try to change the subject to religion, get rebuffed like any rude person who barges into a conversation and tries to dominate it, and then claim that religion is "not welcome."
People who want to talk about Macs versus Windows aren't welcome here. Ditto for long discussions of football games. Those who keep trying to turn this board into non-stop stock tips or political spouting off get short shrift, too. Don't tell me they're being persecuted.
Phaedrus says: "Can there be character/morality without religion? Some would say "yes". I'm doubtful. Without God? Also very doubtful, I think."
That statement is breathtaking in it's ignorance. In other words, by definition, atheists and agnostics are at best amoral and lacking in character. Amazing!
I don't want to trash religion here, but I would bet anything I had that the vast majority of the crooks we are railing about here profess Christianity - as does our "Born Again" president and almost all of his administration. Some character!
I could even make an argument that "morality" of religion is entirely based on fear of punishment; when that fear is absent, it's anything goes - and THAT is the cause of our problem.
Ethics and ethical behavior existed long before Christianity and in some cases even managed to survive - in spite of it.
Please show actual evidence that any religion has produced more ethical behavior in it's adherents than any of the philosophies. Oops, I forgot. You have faith - evidence is a no-no.
beasts of burden (domesticated animals) allowed man to build cities (population growth/expansion) and develop technologies.
Sub-Saharan Africa: no beasts of burden/no cities/no technologies/plenty o' resources/stable cultures and populations.
North Africa/Europe/Asia: beasts of burden/cities/technologies/growing populations/growing demand for resources.
So, the city people go to Africa to get their resources, and they take their cities with them. They introduce and impose a system that is destined to fail in the context of place. "Proper" cotton clothing, weapons, roads, cars, tractors, mining equipment, economics, money, railroads, and systems to government were imposed to replace a naturally occurring , naturally evolved system.
RE: Tanta's post about the back office peon's is enough to bring tears to your eyes (if you've been a peon for some time as I have.)
There is a fantastic book called the "Peon Handbook" that should be the bible of every manager.
I work for the gov't and every time the administration changes we have a bunch of political appointees who ask for our organizational chart and then set about to ferret out all the waste and inefficiency in gov't.
The take a little information about what we do, slam it into whatever schema they are familiar with and fill in the grey areas with solution focused ignorance.
It seems to escape them our ways of executing what has to be done have evolved out of years of having to deliver. (And trust me, if you have an agency that is unable to help you it's because they have some idiot at the helm who won't let his people help you.)
HC - I didn't have any specific riots in mind - but when you asked your question - the first that came to mind was the Miami riots of 1980 (because I lived through them - I didn't simply read about them in the newspaper or see them on TV). They were allegedly a response to a criminal jury verdict the black commmunity didn't like. Regardless of the merits of that trial (I worked on the civil case on the plaintiff's side - and am not at liberty to discuss the merits of the lawsuit - which settled) - it kind of proved my major point. Which is that absolutely nothing was accomplished except perhaps some of the last good businesses in that area left - and nothing ever came back to replace them. The area is still - not to put too fine a point on it - a slum. Maybe Publix or another major chain has opened a grocery store there as of today - but - as of the time I left Miami (1995) - it hadn't.
Your comment about my holding a bake sale is kind of interesting. I threw out my comment about civic duty/responsibility to see how people would react. And your attitude is I'd be an idiot to do anything except look after number 1 (and maybe some immediate family and friends). So be it. If more people here are interested in finding scapegoats than trying to figure out solutions - then I will simply follow your suggestion. I am somewhat of a believer in the phrase "no good deed goes unrewarded" - and I guess when I read what people like you write - my beliefs are confirmed.
Marcus Aurelius - If you look carefully at high school graduation rates - not only in "red states" in the south - but "blue states" too - you will see that in southern states - the graduation rates are a lot different if you factor in race and ethnicity. Here are the most recent Florida stats:
As you can see - there are big differences between graduation rates for (mostly Republican) whites - and (mostly Democrat) blacks. Hispanics are in the middle - but they are kind of a mixed lot in Florida these days (I suspect there are big differences between 3rd generation Cuban Americans and first generation Mexicans).
I don't know whether the states with the highest graduation rates - and overall education achievement levels - are red or black. The one thing they have in common is they are almost 100% white. Think Iowa - North Dakota - Wisconsin and Nebraska.
BTW - Having lived in the south for about 35 years - I wouldn't argue with anyone who says that there are rascist people here. OTOH - I have lived in Boston and Philadelphia too - and the Southie's in Boston and Philadelphia have nothing to brag about when it comes to racial tolerance.
FWIW - when I was in college - I worked part-time to make money helping a professor who was writing a book which analyzed the US from a statistical basis (computers were kind of new then - as was collecting data). His basic findings were that a lot of bad things (like drop-out rates - illegitimate children - poverty - etc.) were most closely correlated with race. Every other factor was a distant second. Being a good old-fashioned liberal who was afraid to speak as openly as the late Senator Moynihan - all the research that was done was never published. Roby
Marcus
In the old Nature/Nurture debate you take the latter. The pendulum has swung toward nature.
Organisms adapt to meet the needs of the environment. The environmental system of sub-Sahara Africa over the last 20,000 years or so is quite different then that of the EuroAsia land mass. It is quite unlikely that a starting population split for say 700 generations under different environmental conditions would would end up with these two groups still being identical.
Note I am not saying either is better or worse, but yes different
Interfaces are a function of complex systems. The nature of interfaces is that they deliberately hide details, not to conduct fraud but to minimize overall transaction costs of a system.
Id say that the current underdevelopment of Africa was proximately caused by colonialism, which was made possible by the maritime prowess which resulted from science/technology that traveled along the Silk Road and the Nile and arrived in Western Europe via the Mediterranean Basin.
The correlation is not simply between skin color and bad things. It is between skin color-based discrimination and poverty/subordination, and between poverty/subordination and bad things.
I am totally at a loss to explain Africa. Perhaps if Europeans had AK-47's 300 years ago, it would look like Africa today.
Ziggurat | 03.15.08 - 5:59 pm
A few hundred years ago (a small span, in the grand scheme of things) Europe WAS a lot like Africa today--roving mercenary bands, famine, pestilence, superstition, etc. etc. So it's hard to argue that Europe is the way it is TODAY because Europeans are smarter. If that's so, they must have figured out a way to get a lot smarter in just a few hundred years. (But then, if they really did get so smart, why didn't they figure out a way to avoid the unpleasantness of World Wars I and II?)
Marcus A: the ideas you're quoting about the differing resource base of Africa (domestic animals etc.) probably come from Jared Diamond's "Guns, Germs and Steel," an excellent read.
I've seen all kinds of statistics that show dramatic differences between racial groups in terms of poverty, crime, intelligence, athletic ability and you name it. Maybe it all means something. What it DOESN'T do is give me any clue about the intelligence and character of the guy sharing my seat on the bus--based on his race.
My take is that the correlation to athletic prowess is not with Africans per se, it is with the African experience in the Americas.
No African has ever won an Olympic sprint. South Africas Daphne Hasenjager (silver 1952) and Frankie Fredericks of Namibia (silver 1992 & 1996) are the only African sprinters to medal. Shes Euro, and he had been cherry-picked to train in the US and represent a US university (BYU, where he got a degree in computer science and an MBA. Physical and mental prowess arent incompatible).
Slavers preferred the most physically robust Africans, and the captives were further culled by the horrific middle passage. Once here, many were bred for physical strength, size and vigor. Until relatively recently, most African-Americans were legally restricted to menial physical pursuits, and racist tradition keeps all but a few out of the upper reaches of business, politics, and the intellectual professions.
Sport is one of the few potentially lucrative areas where black kids can find ready acceptance. Little wonder that they gravitate there and excel.
Tanta - You're right about the difference between "moral" and "moralistic". I don't know much about other religions - but - in Judaism (at least for those of us who aren't ultra-orthodox) - the bottom line is "a life of good deeds" - as opposed to a life of piety or preaching to others. You are judged by what you do - not a few words you utter on your death bed. Seems like a good way to approach life. The picture of Dorian Gray can't change 10 minutes before death. Note that I am certainly not a Biblical or religious scholar. And that even if my religious understanding is mistaken - I think it's a good way to live.
BTW - I think most of the messages here about management must be true. Otherwise - Dilbert wouldn't be the enormous success that it is!
Marcus Aurelius - A lot of contemporary thinking indicates that countries rich in resources have historically been crippled in terms of political and other forms of development because of the tendency of elites (internal and external) to take absolute (and frequently corrupt) control of the resources and just about everything else. Think of contemporary Africa and the middle east. When a country has nothing in terms of natural resources - it has to use the collective brain power of its citizens to accomplish anything. This is of a course a gross oversimplification of articles that may run into hundreds of pages . Roby
Watson:
I am intrigued by the colonialism argument. If say like a plague colonialism had a purely negative effect, then as time goes by we should see a decrease of its effects and a rise of the underlying natural state. I wonder which African states you feel are in any way better off today then they were under colonialism.
Also we might posit that the longer colonialism was imposed on the state the worse the effects. Do you find this to be true? How then do you explain South Africa??
"His basic findings were that a lot of bad things (like drop-out rates - illegitimate children - poverty - etc.) were most closely correlated with race."
No, they were about socio-economic status (SES), and that is what all such studies show now that there are a sufficient number of non-European ethnic groups represented in high SES quintiles to make the distinction clear even to those who lack the sense to look for them: The correlation of outcomes such as drop outs, illegitimacy, 'poverty' (actually relative poverty), etc are now all identified with low SES and in regions where poor whites predominate those negative social outcomes also predominately appear in that group.
The correlation of such outcomes to race was always spurious but did at least have a modicum of face validity even through the 1960s because racism is not simply a set of bigoted attitudes -- many Southern whites were probably not lying when they said they 'liked' blacks -- it is systemic and systematic oppression and can be as invisible as the air one breaths even as it denies the best of education, medicine, jobs, places to live, virtually everything to those held less worthy within the value structure(s) of the dominant social group(s).
Didn't have to be an old fashioned liberal to figure any of this out a half century ago, just a good scientist; or just a good person if it comes to that.
And yes, absolutely right, systematics won't tell you much about that fellow sitting next to you on the bus much less explain why he should be sitting in the back rather than where he pleases.
I checked your doc. I didn't see any mention of Democrat vs. Republican graduation rates. Nor county break-downs by political party.
So, are you saying that Republicans are white people, and Democrats are black people? or is it that white people are smart, so they're Republicans, and black people are dumb, so they're Democrats. Is there a correlation between the hispanics being half-brown and half-smart?
Watson - I refuse to bear "the white man's burden" in the US. When you Mayflower guys (whoever you are) were beating up on blacks in the US - the Czar was beating up on my ancestors. All of my grandparents - and many of their siblings (none of whom ever graduated from high school) came here at the start of the 20th century. When they were teenagers. I assume you've seen Fiddler on the Roof - that's my family. Good thing many of them came here. Those who stayed behind were either killed in WWI - or WWII. Both of my grandfathers became citizens (relatively) quickly because they volunteered to fight in WWI.
As for discrimination - when I first moved to Miami - all the "colored only" signs were gone (although not all of the racist sentiment) - but "Jews not welcome" was still a prominent part of the landscape (contrary to what most of you may think - Miami was a very anti-Semitic city). One reason we left Miami in 1995 is most places where one could play tennis or golf didn't welcome Jewish members. I could never join a decent eating club in Miami where I could take clients to lunch when I was practicing law because I was both Jewish - and a woman. We're not talking ancient history here - we're talking about the 70's to the 90's.
Note that all of this was kind of par for the course everywhere then. When I clerked at one of the most famous liberal law firms in Phladelphia in 1969 - I was not allowed to join the other clerks for weekly clerk/partner lunches because the club at which they ate did not allow women to eat there.
Anyway - I don't think that the only response to stuff like this is dropping out of school and having illegitimate kids - or spending the rest of your life hating the jerks who acted like this. You make the best of things - and move on. Roby
Watson - In Florida - blacks are almost 100% Democrat. Whites who aren't Jewish are - for the most part - Republicans - with the exception of the I-4 corridor (Orlando) swing voters. Whites who are Jewish (mostly older people from up north) are almost 100% Democrat. And Hispanics are hard to "pigeon-hole" because there are all different kinds of Hispanics. E.g., Senator Martinez (Cuban-American) is very Republican. Funny - I always thought he would make a great VP candidate with McCain (not because I like him - it would just be a great match IMO) - and then I realized he couldn't run because he wasn't born in the US. Time for dinner. Take care, Roby
The seeds of The Enlightment (Renaissance) were planted by the Moorish libraries plundered when the Spaniards finally retook the Iberian peninsula...if one credits that as the start of modern science.
Really I'd wager the enlightenment owes more to the rediscovery of ancient Greek culture. Which in turn was set up by humanists in the middle ages becoming interested in languages* . It's all the rage these days in pop History to to ascribe blame/credit for big trends/events to obscure little ones, "How __________ saved/created Western Civilization/America/Science" but I really think that's a bit dubious. Most big trends and movements have diffuse and complex origins.
*A thread picked up in the Reformation, with believers turning from the Jerome's Latin translation to the original Hebrew and Greek texts
Apologies, Missed Information, for this digression. CR has a new post upstairs on the Trade Deficit and Mortgage Equity Withdrawal.
Plschwartz, my understanding is that independence for African countries (only 40 years ago) was primarily a political formality/illusion, that those countries remain economically subordinate, and that by and large they are not better off.
If you are referring to South Africas relative affluence, I think its due to its gold and diamonds, and to the ethnic affinity between its white settlers and the powers-that-be in the major economies. The transition in South Africa was mainly political, not economic. And most Blacks there continue to have a low standard of living.
(I am not suggesting that Africa is without its share of scoundrels and backward practices.)
Robyn, I guess we would agree that European civilization wasn't so hot, otherwise Europeans would have stayed there.
I dont mean to make light of your ancestors suffering; the entire planet is drenched with blood. Its wrong for light-skinned immigrants to grab a perch in the US skin-color hierarchy, and then slander their darker brethren for being unable to succeed on the level playing field.
Jefferson Davis et al are dead. We need to be honest about their deeds and the consequences. None of us should suffer or benefit from their sins. No unjust deprivation; no unjust enrichment.
OK, Tanta. Ill be quiet. Although I would add that economic theory is generally justified as being good in some moral or utilitarian way. I think that our digression has been relevant to whats good and just.
It is that people consider your claims about Christianity to be wrong, and also not particularly relevant to the conversation you interrupted to bring them up. There's, you know, a difference.
Oh, give me a break, Tanta. Jas gets it.
Whatever morality exists today is a carry over from the past centuries and some due to religious beliefs.
I am not a moralist who preaches how people should behave. I just comment on what I observe. And moral corruption, far greater than in the past, is what I do observe in America. The mortgage industry resorted to extreme levels of immorality in pushing debt. We can see the chickens coming home to roost.
One of the wise ones I sometimes listen to once said something to the effect, get all the training you can in your chosen profession because the world, by and large, will pay you what you are worth, not what you think you are worth.
While I complain about bosses who pay as little as they can and still meet production quotas. I tend to think, especially in this age when we can easily discover what various professions pay, it is silly to prepare for a career in factory floor drudge work (i.e. sluff through high school and no further) then expect to be paid more than minimum wage.
Generally speaking, those who work harder at preparation for a given career tend to earn greater rewards.
Of course, if I had reached this stage of wisdom about 40 years earlier, it would have been much more useful to me...
Odd how so many seem to confuse character with God-bothering. Using one to substitute for the other leads to the conclusion that Torquemada and Ted Haggard were real stand-up guys.
When I was in college (late 1980s-early 1990s) I applied to work in a bank (that has been mentioned before in this blog) for the summer. My qualification was, apparently, being a student at a college with a good football team--that's all the HR person talked to me about, anyway. I had no credit history at all. I got $6.50 an hour and got to cancel and issue credit cards and make reports to credit bureaus.
I was honest enough to do my job correctly but I got caught eating in the cafeteria as a freeloader (because they'd screwed up my membership). That was apparently the only thing they ever did check.
There is a fantastic book called the "Peon Handbook" that should be the bible of every manager.
Honestly, managing people just isn't that hard. I'm very, very fond of William Slim, the British commander in Burma during World War II. His management style was very simple, very effective, and easily transportable.
1) It is an officer's duty to take care of his men before he takes care of himself.
2) Top management (i.e. Slim) actually fires those officers that don't follow rule #1.
3) When discussing your business, give credit to those around you for the things that go right, and take the responsibility for the things that go wrong.
Those three rules really cover most of it. I highly recommend reading Slim's memoirs Defeat into Victory, though it helps to also read some other material on the subject. Slim practiced rule #3 to a truly astonishing degree, and his memoirs alone don't do him justice. In a way, he's just as dishonest as the German generals were in their memoirs, but in a much more refreshing way.
and europe had in their dark history the "oil" of past, coal. and still there is a lot of coal in the european continent especially in germany and uk.
so yes the problem in africa have to do with mentality. in what the japanesse and german differ from iraqis and africans?
well in europe if you dont work you freeze to death, in africa you find some bananas.
why is fidel the last commie standing? ok was
well because its warm in Cuba nad they have bananas xD
i had two schoolfriends on electrotechnic comprehensive school (senior high) they were both gypsies. one of those two had the top score in the acceptance exam, the other was average. the one with the top score dropped out in the 3rd year, the other one finished school and went to college.
its the being lazy and being allowed to be lazy without consequences,. why should i learn, why should i work if i dont have to?
To help Tanta get the blog back, the subject of trust is not by any means limited to religious considerations. The fact is, it is at the point where trust becomes involved that economics gets back to it's roots in political economy (and always remember that Smith's 'other' book was his Theory of Moral Sentiments).
See also Fukuyama's book called simply "Trust" from the mid-90's; not my favorite of his, but thought-provoking nonetheless.
Even marginally rational actors (see a great review in today's NYT Review of Books) at some point wake up to being deceived in economic transactions. They then have to make a choice: accept the loss and learn to be more careful or seek to redress it by taking economic, emotional, or physical
revenge.
Hobbes' view of nature suggests that most people will take physical revenge (French Revolution, anyone?). However, Gandhi was very right when he said that the rule of "an eye for an eye" would simply ensure that the whole world will become blind.
The faith that modern economists have in human "rationality" is likely very naive - in fact, we are only sporadically rational, and are just as likely to act against our own interest as for it.
What religion can do (until taken over by dogmatists) is to encourage taking a more nuanced perspective about out own ability to reason. To paraphrase Robertson Davies, "When human reason refuses to admit sovereignty to anything other than itself, life becomes tragedy."
Hysterian writes:
While it is true that Henry Ford raised the salaries of his employees, it is forgotten that he was successfully sued by his stockholders and forced to rescind the wage increases. Don't let anyone steal your history!
Let's also not forget that Henry Ford was a notorious anti-unionist who viciously went after organizers. His internal security force was a private army used to intimidate and abuse workers. You know how the UAW tends towards very confrontational, take-no-prisoners rhetoric? That's because in the early days of the union organizing was a literal matter of life-or-death due to the viciousness of auto co. management.
Good one Tanta.
I still hear CFOs bitching about high labor costs impacting their bottom line.
Simple answer. Fire all employees and let profits soar! To infinity!
There's a Twilight Zone episode about this.
I started at the bank in the back office doing loan conversions in the late 1980s. $7.65/hour. We wrote up data sheets and sent them to keypunch for the $5.00/hr data entry clerks to enter. I remember how proud one of the girls in the mailroom was when she saved enough money for a downpayment on a yellow Geo Storm.
At the time, branch managers made $18,000/yr.
Times have changed, but I bet the people doing the real work still make the least money.
No kidding. I remember years ago a teller who normally handled the commercial line at my bank branch... we'd see her in the morning at the bank and again after work in the check out line at Wal-Mart. She was the checker. A co-worker asked her about it once and apparently Wal-mart paid better than the bank. That puts so much in perspective. Few ever seem to learn that you get what you pay for.
My old bank teller currently works at the grocery store as a checker/assistant manager. The move from finance to food was probably a good move.
A group of security guards at a local shopping mall were recently busted for carrying out night time burglaries of stores while on the job. This is what happens when you pay people $8 per hour to guard your property.
ALL bankers at corporate are scum. The people who work in the banks have to deal with their branch managers who have lost all authority years ago. A branch is just a place where the masses shovel their money into trusting it will be safe. What a concept.
Times have changed, but I bet the people doing the real work still make the least money.
It's not only that. The people who once did the real work, or at least have been close enough to the real work for years that they understand fully how it is done--like me--are never paid as well as people who were hired in as "managers" with a business degree and a complete innocence involving how shit actually happens.
There is always that gauche taint of the "middle manager" about those of us who could, in an emergency, sit down at that terminal and actually reverse the transaction, or open the file and interpret the documents, or whatever.
In fact, not too long ago our resident PITA, the great Moralist Jas Jain, launched an attack on yours truly by calling me a "middle manager," as if I were supposed to be insulted by that.
The fact is that one of the reasons my take on the mortgage industry is so very different from that of the quote-bots you read in the paper is often that I simply have a much clearer understanding of who fills out that form and how much they get paid to do so. Remember all the uproar over these banks not having their assignments or notes in a row when they went to file FCs? Grandiose conspiracy-mongering regarding criminal banks trying to FC on loans they never owned ensued by a bunch of armchair moralists.
I'm quite sure that the bank in quesion laid off too many people in the document custody department, the few remaining employees they have are doing the work of two for the same salary, and the remainder of the staff are temps from Manpower who only have the haziest possible idea what an assignment of mortgage is supposed to look like. These "productivity miracles" are causing some havoc when it comes to the point that we have to remember why we have people doing this kind of work in the first place.
But it's "sexier" to talk about management conspiracies to foreclose on the "innocent" than it is to talk about management conspiracies to lay off everyone with a clue until you end up foreclosing on the innocent and guilty alike because you have no reliable records any longer that would allow you to tell the difference.
I also will add that most of my disgust about the famous "Feldman Plan" was not really the outline of the loan relief proposed--although I had enough problems with that.
It was that insouciant belief that loan payment checks would fly to Washington and magically get applied to some account without a "bureaucracy." Atrios calls them "glibertarians." It's this persistent belief that we just don't need workers and "paper pushers" because those people are just "parasites" or "overhead." Then these same people want to get their undies in a bunch about the morality of defaulting mortgage borrowers. Whatever.
Banks have always been expert at assessing the minimum the traffic would bear in entry-level hires and quick to cut staff ruthlessly whenever conditions allowed.
Survivors of that system are not the most loyal or necessary the most honest.
I can only imagine how it must feel to work on wall street and watch well-connected hotshots pulling down amazing bucks while the peons struggle to survive.
I notice that BS locked out employee stock sales (Enron anyone?) while assuring everyone that the sky was sunny. I am guessing that A) that didn't apply to the big guys and B) they already got out anyway.
Wow Tanta, in your comments above, what you describe is not only occurring in the banking sector.
I've ranted for years about the supposed 'benefits' of downsizing and global wage arbitrage.
How such an enormous percentage of management collectively came to the conclusion that they could increase profits by laying off their own customers is still beyond me.
We've managed to paper over the underlying problem with this thesis for a while with debt. Now we've used that up. It's a long way down to reality from where we are now.
How such an enormous percentage of management collectively came to the conclusion that they could increase profits by laying off their own customers is still beyond me.
That would be because they were trying to stay in business while in competition with other companies who were doing the same thing.
--
My favorite subject, Tanta. Thanks.
My negativity, or bearishness, on America has everything to do with ethics, or morality. American system -- Legalism, by definition, is a morally bankrupt system. What is legal is NOT what is moral or ethical, right? Mortgage practices over the past few years simply exposed the moral degradation of American businessmen and women. Mozilo is an evildoer and I knew it few years ago. All Debt Pushers are evildoers and that includes Greenspan, Bush and Bernanke.
Whatever morality exists today is a carry over from the past centuries and some due to religious beliefs.
THE ROAD TO SUCCESS IN QUEST OF MONEY AND SEX IN AMERICA IS PAVED WITH DECEPTION, FRAUD, AND MANIPULATION. More so today than at any time in the past and the process is self-reinforcing because deceptors and manipulators got ahead and now have control of the American system.
It Is the Morality, Stupid!
Jas
That was a great article.
And yes, the achilles heel of "impersonal" capitalism is that it expects all the little cogs to do their jobs and pay their mortgages no matter how much they've gotten screwed.
It's a testament to the moral fiber of many in this country on how many actually do that.
But I wouldn't count on it forever. If things get bad enough, they'll exercise their moral fiber among the people they actually know, and let the impersonal economic players go hang.
Excellent oft-neglected subject, Tanta. TY.
There must somewhere be an equation that proves that productivity reaches 100% when # of employees reaches 0.
As others have remarked above, there seems to have been a disconnect that didn't allow for the Henry Ford rule.
Offshore. Outsource. Downsize. Then it's all gravy. How's that working out?
Holy Week starts tomorrow, and that it got me thinking about related topics, like confession. There has been plenty of alliteration over the past 6 months that the big banks have come to the confessional to announce their sub-prime write-downs and then all should have been well. The problem is that all has not been well, mostly because the "confessions" haven't been honest or meaningful. Now, stick with me here for a minute. Regardless of what you think about religion, stories of holy people are fun to listen to in and of their own right. One person who comes to mind is Padre Pio, who died in 1968. He was a priest in rural Italy and spent up to 15 to 18 hours a day hearing confessions. He was extremely popular in hearing confessions and stories began to circulate that he would tell you your sins if you didn't confess them properly yourself. One such story relates a middle age man who stood in lines for hours for the right to have Padre Pio hear his confession. He made what he thought was a good confession, but Padre Pio asked "what else"? The man thought and thought in silence, so Padre Pio said "what about the time in college where you used drugs had sex with a lady named Sarah. The man had long since forgotten the incident, and was filled with shame, but then agreed that he did indeed need to confess this too.
Now, while that makes a nice story, it has direct relevance to the financial world today. What the markets need is for the banks to truly "confess" their sins and give full disclosure of the state of their financial affairs. If they refuse to do that (and I think they are clearly refusing to do that), then we need someone like Ben Bernanke to assume the role of Padre Pio and announce the sins of the bank for them for the world to hear. That would clear the confusion from the marketplace overnight and allow for rational investment. Anything less than this and I think that we will continue to have ongoing "penance" in the markets. In the spirit of Holy Week, let's all push the banks (or Ben) for full disclosure.
My republican colleagues at work have recently dropped most of their liberal bashing ways (in light of the massive fubar of the economy and wars against Asia) and taken up immigrant bashing. I for one am a liberal who does not believe endless immigration is a good thing (I think we should have tried to cap our population at least 100 million ago). But still I think Lou Dobbs' crusade is all about barring the barn door after all of the livestock have escaped. When the big recession or the not so great depression gets here, we may see them going back to Mexico (and wishing we could go with them).
Anyway, they all have this attitude like we just need to get rid of the poor (but god forbid we help them become middle class, so that leaves some pretty ugly alternatives). So their idea of mass deportations of illegals is probably the least offensive of their ideas (mabye the only one they can say out loud in polite society). But somehow it never occurs to them that all those illegal immigrants came here aided and abetted by their rock solid Republican corporate masters.
At least in the Old South I doubt there were many slave owners who considered their slaves and sharecroppers to be a financial burden. Maybe THAT's the difference between the old Southern Democrats and the new Southern Republicans.
Since the start of this mortgage mess I've had this clearly naive thought bouncing through my head. I thought we needed to go back to the "old" way of doing home loans. This is a constant theme on this blog - how the new mortgage business process (brokers and securitization) created imbalances of risk and responsibility.
These articles make sense to me, but I cannot imagine how you dismantle the current mortgage business model. Perhaps it is now happening via this crisis and we just need to step back and let it happen.
Having provided credit to anyone with a pulse, it's hard to pull back without wrecking the entire economy. Who's gonna buy the next hi-def plasma TV?
Tanta,
Very nice post. The money quote from the link, for me, was this:
"If you think Morgan, the arch plutocrat, was just telling a nice sounding, self-serving lie, think again. Think about a world in which there was no SEC, FDIC, or Federal Reserve; in which there was no technology sufficient to prevent a person from simply disappearing, changing his name, starting over somewhere else. Morgan invested vast sums, and though he was a powerful man, he could always be taken. When parting with a dollar, he could not be so lazy as to presume a courtroom would ensure its repayment. Morgan had to trust."
I refuse to argue, that if you accept a job for $X/hr then you should do your job. Rather, it is essentially trust. And that is what is roiling credit markets now, the lack of it.
This credit bubble has removed two essential things. The first is that the lender did not know the borrower. The second is that the borrower did not know the lender. The lender lent on vague numbers and models. The borrower borrowed without fear of being ostracized for being a dead beat.
JMHO.
But thanks for the link. I enjoyed the article.
Cheers,
Paul
The current mortgage model is dismantled. The banks did it to themselves. How many mortgage companies are left. COuntrywide and Thornburg. They are dead in the water.
m
The current mortgage model is dismantled.
Fair enough. Is there a new model yet?
Jas Jain writes:
My favorite subject, Tanta. Thanks.
My negativity, or bearishness, on America has everything to do with ethics, or morality. American system -- Legalism, by definition, is a morally bankrupt system. What is legal is NOT what is moral or ethical, right? Mortgage practices over the past few years simply exposed the moral degradation of American businessmen and women. Mozilo is an evildoer and I knew it few years ago. All Debt Pushers are evildoers and that includes Greenspan, Bush and Bernanke.
Whatever morality exists today is a carry over from the past centuries and some due to religious beliefs.
THE ROAD TO SUCCESS IN QUEST OF MONEY AND SEX IN AMERICA IS PAVED WITH DECEPTION, FRAUD, AND MANIPULATION. More so today than at any time in the past and the process is self-reinforcing because deceptors and manipulators got ahead and now have control of the American system.
It Is the Morality, Stupid!
Jas
Jas Jain | 03.15.08 - 10:36 am | #
Interesting.... I have to admit that I agree 100% with Jas. It is basically an issue of morality. And at the moment, it looks like the concept of trust, personal responsibility, honesty, and integrity went out the window a long time ago.
--
Tanta,
I agree with you on Feldman Plan. All the plans that I have read are immoral because of who they help and who they hurt, indirectly. As far as voluntary changes to the existing contracts are concerned the govt must stay out so that coercion is not a factor. Govt. must simply enforce contracts and stay out of the rest. I am all for people voluntarily be able to renegotiate their contracts due to changed conditions. Can we at least agree on that?
Also, sanctity of contracts was one of the Germanic (later Anglo-Saxon) tradition in keeping law and order and a pretty good one. Most of the proposed plans violate the sanctity of contracts after the fact.
Jas
While it is true that Henry Ford raised the salaries of his employees, it is forgotten that he was successfully sued by his stockholders and forced to recind the wage increases. Don't let anyone steal your history!
Henry Ford might have figured out many decades ago that you need to pay your workers enough that they can buy your product, but that lesson was lost on the banks.
We had Unions to make sure people made enough to pay for things we manufactured here. Then we paid them so much we couldnt afford them. Then we had to buy things from China. Delphi Automotive is a good example. $68 an hour to make spark plugs
Jas will like this comment from last year:
As we witness the abuse of economic power, as we witness the cruelties of a capitalism that degrades man to the level of merchandise, we have also realized the perils of wealth, and we have gained a new appreciation of what Jesus meant when he warned of riches, of the man-destroying divinity of Mammon, which grips large parts of the world in a cruel stranglehold.
-Pope Benedict XVI,
Topher writes:
Henry Ford might have figured out many decades ago that you need to pay your workers enough that they can buy your product, but that lesson was lost on the banks.
We had Unions to make sure people made enough to pay for things we manufactured here. Then we paid them so much we couldnt afford them. Then we had to buy things from China. Delphi Automotive is a good example. $68 an hour to make spark plugs
Topher | 03.15.08 - 10:48 am
Yeah, and $10,000/hr to be the CEO
Anyway - so is this our first trust recession? Have all prior recessions ended when the business cycle shifted - inventories and industrial capacity adjusted?
How do you recover from a lack of trust?
Paul,
Collapse.
Cheers,
Wages are not the real problem, although I agree management across all industries are over paid and a good part couldn't pour piss out of a boot.. The true problem is the devaluation of the currency threw the banking system leading to the hidden tax of inflation and the result is everyone wants higher wages to compensate for it. When wages increase prices rise accordingly those at the top suffer the least as their compensation is usually over the rate of the inflation, while the lower paid workers see a decline in living standards as the best they can do is run in place or fall behind, they soon become debt slaves to the banks and are forced to keep running on a treadmill going no where.
There is no new model because there are too few mtges being made to constitute a model. Since last August the few closings I've had were all cash, seller financing, etc. Only one regular mtg financed closing since August--7 months--at my office.
And the Mexicans are going back and fewer are coming. I think that it will be interesting to see what happens when the spending these people did dries up.
When your own employees steal from you, or lose the files through misfeasance or malfeasance, that's Operational Risk.
Yeesh, all you people hatin' on living in a legalistic society. I'd much rather live in one than in a moralistic society. Much better some guy interpreting a hundred year old law book than a fifteen hundred year old cut-n-paste storybook whose proponents can't decide whether any given phrase was meant literally or as an allegory.
Sure, the legalistic system allows people who follow the letter but not the spirit of the law to get away with stuff, but you proponents of the moralistic systems might quickly discover, to your dismay, that your moral views don't exactly jive with those of the inquisition/rabbinical court/mullah in charge.
"And the Mexicans are going back and fewer are coming."
At least they are smart enough to know that working for a living and getting compensated in a currency which is falling like a stone is not very bright.
some people here may find this book on the subject interesting (warning: contains equations and graphs!):
M.E. Sharpe, Inc. - Book Information
A friend of mine, who is quite rich, tells me he is kinda embarrassed when he goes to his upper-class bank (you sit down and the teller also is always sitting in a chair) to put another $50,000+ of dividends in his account that already has $200,000+ in it and then thinks about what the sweet little lady who is taking his deposit must make per month.
I read the linked post this morning, and I couldn't agree more with Tanta's take on it.
My father was a computer programmer back in the dinosaur days of large main frames and punch cards. He wrote and installed the network on which all the banks in this area run. But back then, the banks still worked with their customers person to person and only delivered their end-of-day receipts to the computer company for processing.
At the same time, my mother was selling real estate and filling out contracts on the trunks of cars in front of houses.
What's the real difference between then and now? As Yves Smith points out, character and trust.
People dealt honestly with each other then, a handshake was a contract and a man's word was his bond. Those days are gone forever.
Today, honesty is a thing of the past, a handshake is the vector for disease transmission and a man's word is nothing but bad breath.
It's all going to get worse before it gets better, if it gets better at all. But anyone who longs for the long gone days of yore is a fool; they're not coming back. And a fool and his money are soon parted, if they were ever lucky enough to get together in the first place.
Re: Henry Ford
The story goes that many years ago Henry Ford was showing Walter Reuther, at that time head of whatever union the auto workers belonged to (AFL-CIO ?), around a Ford plant. They paused at a large machine, recently installed that mechanically did what a large number of workers had preciously done.
'You won't get any union dues out of that, Walter' said Henry.
'No', said Walter 'and you won't sell it any cars, either'.
Padre Pio used to wrestle with the Devil in the rectory. The Devil made quite a mess too. Scared the crap out of the housekeeper.
Tanta's post is why I scoff at these huhe bail out plans. You need to have a paper processing machine already in place. The machine is made up of people with experience, a culture or mental template that has grown organically overtime. The template is the melding of rules, procedures, and people experience.
Inside that machine to make it really work you need people who understand it so well they can fix the problems or move the product to where it needs to be.
This comes with years of experience, usually when you have a cadre of "middle managers" who have worked together since the days when they would sneak off together to sit in the parking lot to get high and talk sh@t.
You can not create this overnight but you can destroy it in a day.
Speaking of trust and character and capitalism, I recall Max Weber's seminal study in which he explained why capitalism grew in Protestant Europe (more than in Roman Catholic) as the consequence of the strong moral beliefs, honesty and mutual trust, as well as the virtues of frugality and saving, inculcated among Protestants by their religion.
Tanta,
Thanks for the thought provoking post.
Concerning taking credit reports on employees: I worked in Vegas at a Thrift for several years. Review of credit reports headed off some real disasters from hiring gambling addicts (irrespective of income). Maybe one or two thirty day delinquencies are OK, when overruled by the Branch Managers experienced judgement.
Concerning senior and middle managers cutting lower level employees pay to increase their bonus payments. Right on!
bacon,
Why should I read such drivel. It immediately impersonalize's the person doing the hirering as the evil "Market".
Perhaps you have hired people in your line of work? Do you consider the "quality of life" they have under your hire? I do. I don't need some friggin' gov't employee second guessing my decisions.
The more you bureaucraticize an organization, the more you loose the personal.
And wasn't that the theme of Tanta's post? Perhaps I misread.
Cheers,
Hee. I've been watching the (outside) paper pushing right now from the inside of a law firm. A lot of what we end up doing is double-checking and tracking stuff done by some poor $8/hr flunky at some organization that couldn't care less whether the transaction was carried out accurately. As the man says: "more gravy for us legal clerks!"
We should give the entire country a pay raise so that NOBODY has to earn less than the median salary.
Also, did you know that half the population has an IQ of less than 100? That's crazy! So many dumb people out there...
Anyway. Back to my lazy Saturday morning...
The old Soviet joke was that the State pretends to pay us and we pretend to work.
My theory is that management lays off anyone with a clue so that they can never be challenged.
Back in the beginning of the outsourcing movement, the facts were not living up to the hype and in many companies the middle management was challenging the upper management( who likely got the idea from an airline magazine) with cold facts. The solution from a outsourcing marketing firm was for upper management to fire anyone who disagreed with them.
At that point in the mid 80s, I know we were sunk as a nation.
Delphi Automotive is a good example. $68 an hour to make spark plugs
How many sparkplugs do you think that over paid union worker cranks out in an hour?
Perhaps I misread.
you clearly misread something.
Delphi Automotive is a good example. $68 an hour to make spark plugs
Apocryphal bull shit.
In a general sense, the issue really is that compensation doesn't match performance. When all of the profits of a transaction are booked upfront the employees willing to cut corners and push things through are the ones most rewarded. Ethical and prudent actions that may slow down this process are undervalued. The person getting paid the most is the one with a high tolerance for risk not an ability to assess risk.
In my experience, the folks that said yes to whatever crap upper management was saying, got ahead.
The more you bureaucraticize an organization, the more you loose the personal.
And wasn't that the theme of Tanta's post? Perhaps I misread.
I certainly wasn't trying to endorse the view that "the more you bureaucratize an organization, the more you lose the personal."
For starters, one man's "bureaucracy" is another woman's "useful and important labor." We just very often hang the term "bureaucracy" on work we either don't understand, or don't glamorize. You mean there are people who spend their careers reviewing mortgage loan assignments? They must be humorless unimaginative worthless "bureaucrats," because who else would do that?
Furthermore, I'd say that there's no obvious connection between "the personal" and unexploitative labor. Item 1, the whorehouse. That's pretty darned "personal" work.
Item 2, the nanny. The loyal secretary who buys your wife's anniversary gifts because you forgot. The nice lady at the bank who handles your $50K dividend check every month, for $35K a year.
I have been in plenty of work environments in which the managers who complained the loudest about "government bureaucrats interfering in his personal hiring decisions" were the kind of exploitative, arbitrary, self-involved shitheads that no sane person would ever work for except as driven by utter economic necessity. Yet they would tell themselves that it wasn't "the market" (the lack of other jobs) that kept their employees coming to work every morning, it was their own wonderful boss skills.
The HR manager I used to work with recognized the essential contradiction in the bank's policy: we paid people so little that they ended up with a lot of debt and cruddy-looking credit reports. But we didn't want to hire anyone with a lot of debt and cruddy-looking credit reports. The idea that you could pay people enough to disincent petty embezzlement was just foreign. And I will have you know that this requirement about pulling CRs on applicants was never a "government rule." We thought that one up all by our ownselves.
"THE ROAD TO SUCCESS IN QUEST OF MONEY AND SEX IN AMERICA IS PAVED WITH DECEPTION, FRAUD, AND MANIPULATION. --Jas Jain"
Yeah, no prostitution in Asia, that's for sure, and all value tranactions are honorable everywhere else on the globe.
Jas Jain, you are the biggest hypocrite moron on the internet.
I work at a large bank where on our floor there is a mix of mortgage back office, large client investment banking, and legal (collections). The differences are extremely obvious.
There are some differences which become painful just from the casual conversations you hear when getting water or coffee in the lunchroom. The back office people are the ones watching court tv, and who paid out of their own pockets to get cable tv and a flatscreen for the lunchroom.
They do seem to work hard, but I can't be sure because of all the regulatory chinese walls and private data concerns. We can't even walk through most other areas. Yet another reason to start viewing each other as "different", and to not develop personal relationships with people of different backgrounds.
Don't you love regulations?
...The idea that you could pay people enough to disincent petty embezzlement was just foreign
Compensation and ethical behaviour are not directly correlated.
Compensation and ethical behaviour are not directly correlated.
Good grief, who said it was? Certainly if this were true Angelo Mozillo and Robert Toll and Bruce Karatz would be held up as veritable models of moral rectitude.
The point is that people deserve a living wage.
Henry Ford, despite his manifest flaws, knew this better than anyone.
. morg writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
How many sparkplugs do you think that over paid union worker cranks out in an hour?
.morg | 03.15.08 - 11:35 am | #
You missed my point.
number2son writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
Apocryphal bull shit.
number2son | 03.15.08 - 11:40 am | #
Check for yourself. Delphi is now bankrupt.
I must say, Topher, this comment is beneath your usual insight.
We had Unions to make sure people made enough to pay for things we manufactured here.
First and foremost, we had Unions to make sure people STAYED ALIVE long enough to collect their paychecks.
One way or another, you're benefiting from OSHA. I guarantee it. Google Triangle Shirtwaist
Enjoying your week-END? Thank Union members for the 40-hour work week. You could be working 7-10s or 7-12s.
Then we paid them so much we couldnt afford them.
Or perhaps we couldn't afford the transition from CEO-pay=40X average employee-pay to CEO-pay=450X average employee-pay.
Then we had to buy things from China. Delphi Automotive is a good example.
We bought things from China to break the Unions - the only control and restraint on corporate greed and shortsightedness.
$68 an hour to make spark plugs
And the $68 went into a black hole?
Take 25%>30% off the top for taxes, Federal, State and Local. Take another 8%>10% to fund the bloated health insurance industry. A couple % goes to keeping the (Union)Local machinery running.
The remainder doesn't fund Swiss villas, nor does it buy Lear jets. It gets spread throughout the community. You know, the butcher, the baker, the candlestick maker.
[aside]
I've spent the last several decades marveling (ruefully) at what point would it occur, if ever, to TPTB that eventually the populace wouldn't be able to afford the products unfettered capitalism offered. The peonization of America is almost complete. [/aside]
Oh, by the way, have you had a spark plug fail lately?
The back office people are the ones watching court tv, and who paid out of their own pockets to get cable tv and a flatscreen for the lunchroom.
Let me just observe, as someone who has done a great deal of it, that most mortgage back-office work is about the most monumentally boring, high-attention-span tediousness the world has ever seen outside of, say, the insurance settlement department and accounting.
It is also necessary, important, and valuable, and the people who do it and are good at it are treasures to any company who hires them.
But if you think it encourages an environment of "professionalism" in all respects, think again.
My biggest problem with most of my fellow managers in the mortgage biz was that they just couldn't deal with their staffs. They saw court TV addicts who wear inappropriate clothes on casual day and sneak out to the loading dock for a smoke and whose emails are rarely a model of literary elegance or even fair-to-middlin' spelling. And having seen that--and it's all often quite true--they can't see through it to the fact that these folks are also skilled hard workers who do incredibly boring shit from which they really need a decent breakroom with a decent TV to escape several times a day or they'll go mad. I'm not a TV watcher, but I've handled document certification on huge securitizations--thousands of documents to be reviewed at high speed in just a few days, with millions of settlement dollars at stake if we don't get done on time and right--and I'd take breaks to go walk around the parking lot talking to myself like some kind of crazy bag lady. So would any moderately rational person doing work like that.
I get terribly offended by insinuations that these people are not valuable because their personal style is not quite our class, as it were.
Tanta, thanks for the great post. Although now 'out of the business' I hired, and fired, a great number of people. The hardest thing for me to remember was what my Dad always told me "Your company IS your poeple, without them, you have nothing." All my great university management courses treated people like they were numbers/ or less! They were just replaceable parts, nameless, faceless pieces who were expected to give absolute trust upward and expect nothing to come down. It took a lot of years for me to realize that my quite expensive graduate educational experiences caused a LOT more harm than good.
What you are experiencing now is simply a lot of managers doing what they were trained to do. They are taught that people below them are stupid, unrelaible, etc. The poeple above the managers treat them the same way and nobody cares about anything but protecting themselves- quite normal given the circumstances under which they work.
Yes, the whole thing IS a moral issue, and no, there is not an easy answer and no, there will probably not be any changes. Which is exactly why we sold out and ran- or voted with our feet, so to say. Well enough of the soap box and good luck.
Check for yourself. Delphi is now bankrupt.
Bankrupt due to the decline of the automobile industry. How much did those responsible for that, the top executives at the big auto companies and those at their suppliers like Delphi, pay themselves? Check for yourself.
Mezcal - you hit the nail on the head! "We've managed to paper over the underlying problem with this thesis for a while with debt. Now we've used that up."
If you look at the current trade deficit with China of 225 Billion a year and how it has risen exponentially since 2000 it's impossible not to say that all kinds of manufacturing businesses and the businesses that support them have vanished. Real wages have dropped slightly since 1999 - and this is based on the official 'core' inflation.
What has clearly happened is that the middle class has been savaged, but it wasn't quite so noticeable with appreciating homes and MEW and easy credit. Now that easy credit is coming to an end it is obvious there is not the productive economic activity remaining in this country to support current levels of consumption.
This revelation, once fully grasped by the public will likely have a profound impact on trade deals. Funny English quote I heard today, to paraphrase for Americans "You can't get a turkey to vote for Thanksgiving"
I remember the days when it paid to keep money in a bank. These days the banks suck every penny out of people they can. This fee that fee, its all about profits. Nothing wrong with profiting in business but to make it where it cost the customer money to keep his or her money in a bank is why we are where we are today. GREED!
As we witness the abuse of economic power, as we witness the cruelties of a capitalism that degrades man to the level of merchandise, we have also realized the perils of wealth, and we have gained a new appreciation of what Jesus meant when he warned of riches, of the man-destroying divinity of Mammon, which grips large parts of the world in a cruel stranglehold.
-Pope Benedict XVI
You mean that guy with the designer red shoes and the fur cape? This week the Vatican added excess wealth to the sin list. O' kettle, thou art black.
[Anonymous writes:
"THE ROAD TO SUCCESS IN QUEST OF MONEY AND SEX IN AMERICA IS PAVED WITH DECEPTION, FRAUD, AND MANIPULATION. --Jas Jain"
Yeah, no prostitution in Asia, that's for sure, and all value tranactions are honorable everywhere else on the globe.
Jas Jain, you are the biggest hypocrite moron on the internet.
...Anonymous | 03.15.08 - 11:45 am]
NY Governor uses campaign funds for meetings with prostitutes?
Prostitute In Spitzer Scandal Scores Million Dollar Offer To Bare All
Prostitute In Spitzer Scandal Scores Million Dollar Offer To Bare All | Access Hollywood - Celebrity News, Photos & Videos
Jas knows what he is talking about.
This country values steroid pumpers, common-day slavery masters, and prostitutes, over virtues and honesty.
"And some day-the armies of bitterness will all be going the same way. And they'll all walk together, and there'll be a dead terror from it." - Grapes of Wrath, Chapter 9
I am not taking the unions side or the employees side. I understand the cost to an employer/employee of the $68hr. That is obviously the problem. How did we get there? Thats where the problem lies. I believe it to be an over consuming under saving society.
Back in the early 80's I worked at a grocery store. When I left in 1984 I was making $8.80/hr as a checker. Today at my local Safeway, checkers start at $9/hr! I don't know what they max out at, probably somewhere around $14.
Just checked out the CEO, Steven Burd's salary history. The oldest data I could find was from 1993. His salary and bonus totaled $1.95 million. In 2006, he made just over $7 million.
So, workers pay up less than 50% while CEO's pay goes up 259%!
"You can't get a turkey to vote for Thanksgiving"
M-F | Homepage | 03.15.08 - 12:04 pm
Haha, interesting though I'd disagree!
Back in college my marketing professor taught us that humans are turkeys. Yes, he actually said that.
He told us about an experiment in a check-out at a store where people would ask those standing in line if they could cut. Everyone declined.
However, they then decided to add an additional reason why they needed to cut to the point of asking people, "Could I please cut in line because I need to cut in line?" and people would allow them to cut in line!
Suffice to say, they realized that humans just needed a button to be pushed. Like Pavlov and his doggie, the trigger with this human-turkey experiment was "because."
Anyway, the basically used that experiment to derive how marketing and advertising can get most people to do anything they wanted them to do if you know the right button to push.
So yeah, you can get a turkey to vote for Thanksgiving, just don't tell them about the main course.
Topher,
Focusing on the cost per employee is misleading or incomplete at best without the productivity per employee - the same myopia that has driven the race to the bottom - what output do you get for that wage?
This is true for an honest evaluation on a microeconomic scale, before you make any consideration on the macroeconomic implications. A biological metaphor might be that if you don't have healthy plankton populations the whales are going to die...
I understand the cost to an employer/employee of the $68hr. That is obviously the problem.
And of course the management salaries and perks had nothing to do with it.
Every year, I go down to NYU to walk by the Triangle Shirtwaist building on March 25. They have a rose for each young woman who died. Toph, will I see you there this year?
And Tanta - I know what you mean about breaks. I often do contract legal work, which is mind numbing. On one interview, they told us there was a Kinko's across the street where we could check our email. I walked out. Another law firm I've worked for did the math and figured out we were more productive with the Internet at our desks. QED
I'm in complete agreement on this, Topher.
Re. saving society... FWIW, Casa Melater, 20% down, 5yr ballon, is completely paid for long ahead of schedule. Warms the cockles to remember that it was featured in Better Hovels & Outhouses a few years ago. Debt is slow death.
Maybe the US is having it's "Let them eat cake" moment in history.
How did that work out in France?
Have a great weekend!
Jim
You can't get a turkey to vote for Thanksgiving
I guess you missed the 2004 election.
I used to work for a family owned company that was a strong believer in minimum wage for maximum work. They were so tight that buying a single new computer needed the President's signature. The IT Director spent most of his time websurfing because he had no real authority.
A couple of years ago, the company was sold to a foreign corporation. They sent in a review team and interviewed all employees. The result was a sizable pay increase for the folks on the ground. The first one kicked out the door was the President, along with his VP brothers. The company went from 75 million annual to nearly 500 mil in two years.
Mike in AZ,
Do you really believe an 18 year old bagage checker could run the store you're talking about?
Let alone the entire company?
The gov't has caused wage disparity, but really, to compare an 18n year old bagger with the CEO is mindless.
Cheers,
This is true for an honest evaluation on a microeconomic scale, before you make any consideration on the macroeconomic implications. A biological metaphor might be that if you don't have healthy plankton populations the whales are going to die...
energyecon | Homepage | 03.15.08 - 12:23 pm | #
Its one thing to be healthy and another to live way beyond our means. That was my point.
Quite frankly, I am convinced that one of the reasons that discussions of "morality" and "economics" never get anywhere useful is that mention of the word "morality" functions among the posturers and scolds and hacks like a can of tuna fish functions among the neighborhood cats.
People have been getting up on their hind legs and declaiming about the immorality of the world since long before the Puritans showed up on Plymouth Rock, although it is true that Americans have since the beginning always had a unique talent for moralizing and speaking anathema about each other. I have read both Jas Jain and Cotton Mather, and frankly except for the fact that the latter is a better writer, I can't see any difference. It was all about sin, sex, and religious controversy back then for the professional scolds and self-righteous gasbags, and it still is today.
No moral problem was ever solved by people simply declaring their disapproval of immorality. Can we, like, just skip that part? No one on this blog is going to offer to defend immorality as such, so there's little point to denouncing it. I had rather hoped we might think somewhat more concretely about what the issues are than let this degenerate into a tent revival.
Ralph Cramdown all you people hatin' on living in a legalistic society. I'd much rather live in one than in a moralistic society.
Ah, but all workable ethical systems (morals) are based on what happens as a result of your actions over time, and all good legal systems have the same basis. It's a false distinction. There can be bad legal systems and bad moral/ethical systems, and bad systems of either types are founded on the same errors. They ignore long chains of cause and effect.
Joe Six Pack,
"A couple of years ago, the company was sold to a foreign corporation. They sent in a review team and interviewed all employees. The result was a sizable pay increase for the folks on the ground. The first one kicked out the door was the President, along with his VP brothers. The company went from 75 million annual to nearly 500 mil in two years."
Glod! You mean a totally inefficient organization went teats up and...without gov't interference...was bought out in the market...and the employees benefited. For shame!
By Glod!
Cheers,
"Mind numbing is as mind numbing does" to paraphrase one of the great 20th century philosophers.
I'm currently involved with Photoshoping a seemingly endless series of pics for a pending website.
I come here to bask in Tanta's and CR's musings for the blessed relief of not staring at pixels.
(When the edges of the pics begin to waver, I know it's time for a break.)
Thanks a million (pesos US) Tanta.
but really, to compare an 18n year old bagger with the CEO is mindless.
And here all you guys do here is bitch and whine about the CEOs of every bank and investment house! Give me a break! An 18 year old bagger could probably do better at this point.
A little OT, but here's an article about Spitzer and the bailout. Robert Scheer said pretty much the same thing yesterday on NPR. " + title + "
Tanta,
"I had rather hoped we might think somewhat more concretely about what the issues are than let this degenerate into a tent revival"
If the issues aren't looking into the eyes of the borrower and trusting that person...what was the meaning of your post?
MoM,
Check!!!
Cheers,
mal,
Not my point.
Cheers,
Do you really believe an 18 year old bagage checker could run the store you're talking about?
What, I'm the only one who has met CEOs who had less of a clue than some baggage checker?
What, exactly, do all the CEOs say every time they get hauled in court to face criminal activity at their companies (Enron, WorldCom, Tyco, Countrywide, you name them)? Why, they say they don't have any effing idea what went on, because they can't be expected to actually, you know, notice shit. They're too busy being Important to actually "run the company." And they can't be expected to know whether the people who do run the company are doing it right, because they don't understand what those people do all day.
We live in a culture in which CEOs can offer the "I don't know anything, I'm just the CEO" defense and that seems reasonable. That being the case, I cannot imagine why we'd be worried about putting the bagger down at Safeway in charge.
I know many, many people who would have offered to run Bear Stearns into the ground for a whole lot less than what Cayne got paid to do it.
So, I was reading Inside Job the other day, and one of the things that stood out in my mind about the Lincoln Savings and Loan scandal (the one that McCain was lobbying for, and obstructing the investigation of) was that in the last year of operation, Lincoln S&L only wrote 11 mortgages, 4 of which were for their own employees.
Amazon link to Inside Job:
Amazon.com: Inside Job: The Looting of America's Savings and Loans (9780060986001): Stephen Pizzo, Mary Fricker, Paul Muolo: Books
"Glod! You mean a totally inefficient organization went teats up and...without gov't interference...was bought out in the market...and the employees benefited. For shame!"
Amazing isn't it? I think that's part of America's problem with so many ills including our looming economic disaster.
It's impossible for workers to think outside the box when employers insist they sit in one.
Amen sister.
I had rather hoped we might think somewhat more concretely about what the issues are than let this degenerate into a tent revival.
Speaking of tents and class warfare the following link illustrates what our parents or garndparents were up against in dealing with entrenched power. This happened in my Father's youth so is not ancient history. We may be approaching this time again. I personally see no political solution.
I hope I am wrong.
Massacre in Utah.
MonthlyFeature
Jim
Topher,
Slip slidin' a little? You were just repeatedly banging on the $68/hr drum exclusively, and my point is that is disingenous as an example for living beyond our means without knowing what is produced for that cost...it may well be, it may well not be but you posited it to be the case.
Misean,
I was comparing the increase in pay for checkers vs the CEO, not the difference in pay: less than 50% vs. 259%.
Tanta,
"We live in a culture in which CEOs can offer the "I don't know anything, I'm just the CEO" defense and that seems reasonable. That being the case, I cannot imagine why we'd be worried about putting the bagger down at Safeway in charge."
Gosh what a refute. I've worked for a good number of companies where those running it we're quite savvy. So, because an oligopolized, gov't protected industry CEO gets his ass handed to him, ALL CEO's are like that.
Perhaps you would like to be the CEO of Kroger? He can't get a credit line from the FED. Would you suggest that an 18 year old bagger could do his job? Because you have.
I would think that someone like you who has been in the business world for a while would recognize that your comparison is nonsense.
If I recall you talked about a bear of a man overseeing what you did.
Cheers,
"We live in a culture in which CEOs can offer the "I don't know anything, I'm just the CEO" defense and that seems reasonable. "
Tanta,
This is what you get in this system. People reward those speaking beautifully and inspiringly. Those who make speeches to media and play golf with lawmakers get the biggest pie.
Excuse me: Colorado.
Jim
I don't think the defining issue is morality. You could argue greed is the motivator - but the real catalyst, and I think cause is all forms of 'faith based' economics or perhaps just the failure to realize that systems are not necessarily optimized when they become larger and have a higher degree of specialization.
On the macro level, pretty much everyone has been brainwashed into thinking that free trade and unfettered markets will solve all of our problems if we just stick with it, and give it long enough. Even without multi billion dollar government bailouts this is not historically true. Both England and the USA and Japan are ONLY where they are today because during industrialzation they had the HIGHEST import tariffs in the industrialized world. Only when they gained supremacy, did they start spouting off about how free trade with zero tariffs was in everyone's interest. Check out the data in a book called: "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism " if you don't believe me.
On the micro level, as a company gets larger it pays a very steep price to organize itself and communicate internally. These costs can often become exceedingly high, nevermind that quality and customer responsiveness suffer. There are diminishing returns to trying to specialize tasks to the point that 'any idiot making the lowest wage in the industry' can do the job at the company.
Unfortunately, in the world of public companies, no one ever got the CEO job, and no one ever got promoted spouting off about how we may have reached our peak level of corporate operational efficiency. There is always some guy who is willing to try to cut costs by another 10% if it means a big bonus for him, and that's the guy shareholders want in power so they can sell their shares on improved earnings outlook after the next annnual report.
I will tell you how the FDIC thinks. If it does not 'violate' a law, rule or regulation they will do it. If it is a law, rule or regulation they don't like they will ask Congress to change, amend or throw it out. If they want a new law they usually get it one way or another.
This current crisis of confidence in the US financial system is well-founded in the current social acceptability of being untrustworthy; that is, the article bridges the gap between society, social mores, and the financial system, and it speaks to the degradation of those mores, which I have read nowhere else. I have long felt that the decline of the influence of Christian morality since the mid-20th Century in this country is at the root of our social decline (drugs, crime, suicide, pornography, rap music etc.) and that it now relates directly to our financial decline. These phenomena have the same root but the impact on the financial system has been delayed due to the time it took for the degradation in mores to erode the integrity of the Christianity-based legal financial structure. Note J.P. Morgans reference to Christendom, which strikes the modern ear as irrelevant. Well, it is, and that is the problem.
More specifically, Wall Street knowingly sold the rating agencies a bill of goods on CDOs to get that AAA rating, purely for immediate monetary gain and without a thought given to others losses pure greed uninhibited by any concern for honesty. Heres the ethos: Let the buyer beware! The Invisible, Greedy Hand Rules! Whatever you can get away with is acceptable. Ive got mine and to Hell with you!
But what goes around does come around.
My 2 cents
energyecon writes:
Topher,
Slip slidin' a little? You were just repeatedly banging on the $68/hr drum exclusively, and my point is that is disingenous as an example for living beyond our means without knowing what is produced for that cost...it may well be, it may well not be but you posited it to be the case.
energyecon | Homepage | 03.15.08 - 12:54 pm | #
Take it however you like. My point another way is greed on both sides
The gov't has caused wage disparity, but really, to compare an 18n year old bagger with the CEO is mindless.
Misean, speaking of mindless, that takes the prize.
Liberal ideology insists that a society in which conscious solidarity is the dominating attitude/approach is impossible, because humans are primarily and perpetually motivated by individual material incentives. the Bolivarian Revolution is challenging the core liberal tenet that narrow self-interest is the immutable human condition [that] humans can come to value social solidarity if institutions are designed to facilitate and not to penalize cooperation.
Empirical Study of Venezuelan Cooperatives, Camila Piñeiro Harnecker, Monthly Review, November 2007 An Independent Socialist Magazine - Monthly Review
Misean,
I nearly always agree with you, but in this case I think you are missing Mike's point. He doesn't dispute that the CEO is worth many times more than the bagger. He is asking why the CEO's pay has increased at a rate five times greater than the bagger's during the period in question. I think it's a valid question.
Chickens have all come home to roost.
Well, I knew banking was not getting fixed after working for just four months in loss control in Mellon Bank in '96 in Philly.
Management in Pittsburgh were dang near total morons with respect to operations.
To tell you how bad I thought it was, I took a government job to get away from it. The really funny part was how incredibly stupid upper management was. They had bought a fairly well managed local bank, laid off a bunch of the back office people, and were shocked that losses were starting to soar. Um, gee, when loss control for 190 stores goes from 6 people to 2, you are surprised? Gee, we saved $150k per year on head count, but lost an additional $4 million dollars? WTF?
At that point I decided I could not stomach toadying up to total morons, at least the politicians mostly know they are full of sh*t.
Someday this war's gonna end...
umber2son,
"he gov't has caused wage disparity, but really, to compare an 18n year old bagger with the CEO is mindless.
Misean, speaking of mindless, that takes the prize."
In what way? Do you have anything to say about it? Your statement has no meaning, because you don't qualify your position.
Cheers,
GM, and former GM companies, use a word-of-art called "fully burdened overhead" (sometimes called "fully burdened cost") to report salaries. More than just the salary, healthcare and employer deductions, it also includes a share of land, building depreciation, property taxes, utilities and equipment depreciation. It ends up being about 2.5 times the actual salary/wage the worker gets.
I used to work for a division of GM that is now part of Delphi Corp, and the mismanagement (hello, Steve Miller!) that sent Delphi into bankruptcy was highly rewarded by Wall Street and the cast of cronies that Steve Miller took with him from the other companies he drove into bankruptcy, such as Bethlehem Steel. While Miller was wildly repeating a similar "our workers cost $65/hour" story to any newspaper stupid enough to listen to him, he was demanding that his workers take paycuts from $22-25/hour down to $7/hour. Those paycuts were never mentioned in the same stories that were talking about $65/hour.
By the time I left GM, at that division, the lowest seniority of hourly (aka union) staff was 11 years: everyone with lower seniority had been laid off. It wouldn't surprise me that some guy with 20 years seniority was being pulled from the job bank to mow the lawn. What? You don't have any welding work to do? Get out there and mow the grass! And then Miller would turn to any sucker in the media willing to listen and claim "OMG! We have guys making $65/hour mowing the grass!
Tanta and Investment Banker,
Re: Managers
In my previous life as a software engineer, I had many different jobs and my share of good and bad managers. According to my observation, outside of all the necessary technical skills to be a manager, the separation of good manager and bad manager is how they view the people they work with.
The best example that illustrates this observation occurred when I was talking to a VP of a private company that I used to work for. She wanted me to talk to her secretary, and she literally said "...please speak with my colleague..." That choice of word had a huge impact on me. She didn't say "my secretary", which implies ownership. To me, "my colleague" implies equality. In fact, it wouldn't surprise me that she treated everyone in the company as her colleague. Needless to say, that company had a great culture.
When the people that "works for you" are your colleagues, you wont begrudge them for a little extra TV/smoking break.
I have never taken any MBA classes, but I don't imagine that they know to teach would be managers about this. MBA classes teach would be managers how to win a profit optimization game, and it is hard to model the profit a company would receive by treating everyone as equal. MBA classes might also teach people skill, but to them, people skills are taught in the context that people are tools that you can manipulate. Again, this is my speculation based on the course descriptions that I have read.
I now run my own business, and I have taken this lesson to heart. My vendors and customers are all my "partners" and I treat them as partners. I am picky on whom I do business with, and I don't make a fortune overnight. But we would probably survive an economic downturn a lot better due to the mutual trust in our own little network.
But a public company, under the pressure of quarterly revenue/margin/profit growth, makes this sort of long term thinking/approach difficult.
Ok, misean, you aren't dumb but if you want to play like you are, here goes:
Government has not had a prominent role in U.S. corporate governance to the extent that executive pay has grown in outsized proportion to that of workers.
Simple enough for you? Also, you may wish to scroll up to other comments on this topic that you either skipped over or ignored.
ot sebastian,
"but in this case I think you are missing Mike's point. He doesn't dispute that the CEO is worth many times more than the bagger. He is asking why the CEO's pay has increased at a rate five times greater than the bagger's during the period in question."
Firstly, I said that gov't interference helped this.
Secondly, you can look every where for it. Just check $/Glod ratios if you like.
Cheers,
I have to come down on the side of the bagger probably performing on par with the CEO. In my experience, in the past as new initiatives get introduced from the top down, every single person in the trenches knows they will not work from day 1, but it takes mamagement a couple of years of PHONY goal achievements to realize that the initiative was a bad idea... and they scramble to reorganize and come up with a new plan. At least the bagger would be likely to do nothing and save tyhe company all the internal costs associated with the turmoil of the latest management restructure.
Misean If the issues aren't looking into the eyes of the borrower and trusting that person...what was the meaning of your post?
Her point was that top-level strategy got divorced from economic fundamentals. Those making policies were not basing them on any realistic economic basis. The failure was systemic. No reality checks!
The same type of thinking produced borrowers earning 50K with 550K mortgages. Needless to say the losses are running high.
Frankly, I DO believe that some baggers from Safeway could have done better than many of these bank executives hitting the news. They at least know what a gallon of milk costs, and whether people are spending freely on groceries or pinching pennies. I know several head tellers who could do much better!
I have to believe that most non-financial businesses are run far better than the worst rung of the financials. Otherwise my clothes would fall apart the first time I washed them, my car batteries would last three months, I'd have to carry two spare tires in my car to be sure of getting to the grocery store, the lights would be off half the time, and the grocery stores would be half empty. I am not exaggerating, either.
My late wife worked for the IRS office in San Jose, Gish Rd, years ago. She told me her boss had 250 people under him and was a GS 11!!!! I was a GS 13 at NASA at the time with no one working for me.
When they went to the SAS system the Division Chief with less than 250 people under him made 120K and got a bonus every other year.
Yes, Henry Ford was on to something important.
umber2son,
I guess Clinton's capping of salaries doesn't qualify as
"Government has not had a prominent role in U.S. corporate governance to the extent that executive pay has grown in outsized proportion to that of workers."
How Bill Clinton Helped Boost CEO Pay
Clear enough for YOU???
Cheers,
Tanta: I hate to have to think on Saturday but you have forced it on me. Most large burearacracies do not work because the small cogs in the machine are treated like small cogs. Empowerment is a term in textbooks but does not reach in to the work place. We are in a mature economy and are reaping the results of this. The asian economies still work because people are only one generation from hunger and are still scared.
I get it loud and clear, Misean. To borrow for another comment, you would that the Turkey be blamed for being a favored dish at Thanksgiving.
A funny:
March 15 (Bloomberg) -- President George W. Bush said he won't be stampeded into ``bad policy decisions'' to bail out the home-mortgage industry because they might further harm the U.S. economy.
Yeah, give me a year or so to look into it and I'll come up with an opinion. I don't completely understand it yet.
MoM,
"Her point was that top-level strategy got divorced from economic fundamentals. Those making policies were not basing them on any realistic economic basis."
How was I saying anything different. I won't loan you the money if I know you can't pay it back.
"Frankly, I DO believe that some baggers from Safeway could have done better than many of these bank executives hitting the news."
OK, but could they run Safeway with it's 1% margin. I never said gov't oligolopilized systems were the same as Safeway.
"I have to believe that most non-financial businesses are run far better than the worst rung of the financials."
We're in total agreement.
Cheers,
umber2son,
Could you give me a reason to debate with you further?
Cheers,
Maybe I'm a pint low on coffee this morning, but I'm having trouble figuring out what this thread is about. A few themes that emerge are:
I definitely sense some deep unhappiness with the way things are being run in this country, but it's not quite focused and there certainly is no consensus. I guess the economic disparities and value disconnects were not so unsettling when there was lots of credit flowing. After all, that underpaid bank clerk didn't seem so "poor" when they were buying a brand new house, car and wall-sized TV. I guess easy consumer credit was the true opiate of the masses...
A small anecdote (!=data):
My mother (who was a healthcare worker) told me of a "great new plan" to lower nursing costs at her hospital by hiring contract employees for temporary work load issues rather than have the permanent staffing required. She described the plan to me in detail. I, having no experience in the industry or even (at that time) any management experience told her that it was the stupidest plan I'd ever heard of in my life and would cost the hospital more than if they just hired the full-time staff necessary. Two years later the program was discontinued after they had trouble with excess costs and poor performance from the contract hires. The CEO and the entire management was all for this plan, cost the hospital millions, and a bagger could've done better.
It's interesting that a discussion of operating on trust and personal investigation on a mortgage blog has avoided any mention of the elephant in the room: redlining. There is a long history that, when mortgage people work with a policy of individually evaluating their customers in person, rather than using set, impersonal rules, "good character" ends up getting translated as, "people who are a lot like me," or even, "people who look a lot like me."
This isn't to say that the move to impersonal rules based systems is a net loss. Like all things, it's a trade-off.
How was I saying anything different. I won't loan you the money if I know you can't pay it back.
But you don't loan people money. Eye-looking-into or no eye-looking-into.
People with their own mortgages and families to support who get paid $40K a year to loan money to as many as 15 people a day loan people money. On contract.
Your obsession with making all "wage problems" the gubmint's fault is interfering with your ability to read perfectly crisp English sentences.
From the mouth of a horse:
March 14 (Bloomberg) -- Harvard University economist Martin Feldstein, a member of the group that dates business cycles in the U.S., said the nation has entered a recession that could be the worst since World War II.
I believe the U.S. economy is now in recession,'' Feldstein, president of the National Bureau of Economic Research, told the Futures Industry Association conference in Boca Raton, Florida.Could this become the worst recession we have seen in the postwar period? I think the answer is yes. I would emphasize the word `could.' ''
Feldstein's remarks represent the first time that a member of the NBER's business-cycle dating committee has publicly described the current downturn as a recession. The economy may not respond quickly to Federal Reserve interest-rate cuts, and a package of tax rebates and investment incentives will offer only a temporary boost, he said.
Almost official. And quite pessimistic.
A friend of mine who is a History grad believes the decline in business and political ethics accelerated when Communism collapsed in the 80s. There was no longer a viable alternative to keep the greed of Corporate executives or policians in check.
Could you give me a reason to debate with you further?
That up to you, Misean. You provided good reason this morning. Will you do so again?
I think that one of the big problems in our society is that the link between wealth and ability or work has been so strained for so long that the assumption that hard work and talent lead to success is being lost. This leads to bad behavior on everyone's part. On the part of those of us who are in the middle or lower classes, it leads to a belief that we're entitled to more than we can get honestly, so it's OK to cheat or that it's a crapshoot so you might as well swing for the fences. As someone in this group, I find it amazingly frustrating that I can't afford a decent house on a six figure income (fuck you, Bay Area) and I was temped to sign up for some of the "innovative" financial products that many of my friends who are now facing financial disaster used.
The results of the breach between merit and success have been as bad on the wealthy. People like to feel that they're entitled to what they have and if it isn't from skill or work (and people know deep down if it was or not) then they either assume that wealth is their birthright or come to fetishize their skill and supposed work ethic. This leads them to assume that anyone who isn't as successful isn't as special as they are and thus is unworthy of what they have.
The good news is that this isn't the first time that our society has been like this (see, for example, the Great Gatsby), but the end of a guilded age is often painful for many.
I guess easy consumer credit was the true opiate of the masses...
uncle festus | 03.15.08 - 1:32 pm |
That and the old time religion. Lots of the "poor" in the USA are fundamentalists. Rewards come in the afterlife, etc., etc.
Paul said: "...These articles make sense to me, but I cannot imagine how you dismantle the current mortgage business model [without wrecking the economy]."
Well, you can look at an immediately-previous analogy from a different asset-class, the stock-market bubble, as an example of what can happen.
Stocks went to crazy valuations on crazy rationalizations, "it's different this time, the old rules don't apply anymore."
Then when it became obvious that the old rules did still apply, stock valuations came back down to earth, corporations became more circumspect (with the really lousy ones disappearing altogether), the stock market recovered and went on an upward tear for nearly 5 years straight, 2002-2007.
Only this time around, the overall economic conditions are better and the problems are highly concentrated in just one sector, housing.
Tomorrow always comes.
Sebastia
Jim - yup opiate is an accurate description.... covered all the real pain in the economy by making it seem as if the consumer was not losing purchasing power.
mndean - exactly the kind of examples I was talking about! Someone who knows nothing about the business can spot the flaw immediately but it takes the corporation 2 years and huge losses to admit defeat.
I've been a manager of extremely low paid people, and it was an enlightening experience. For me, it was in the parking industry. Here in Minneapolis, we have a large community of Somali immigrants. For religious reasons, most of them won't work in food service (hard to avoid pork), so parking is one of their preferred entry level positions.
I couldn't help the fact that we paid them too little. I didn't get to make that call. The best I could do was to treat them with respect, and stand up for their interests when I could. This goes a long way to winning the trust of the people you are supervising.
My boss, who I really, really like on the whole, and for whom I would work again in a heartbeat, complained about the amount of time he had to spend filling out paperwork in regards to the cashiers living in Section 8 housing. I refrained from pointing out that there was an easy way to avoid that, namely paying them enough that they could afford to not live in Section 8 housing. At the wages we were paying (which the boss couldn't have really raised to a significant degree due to the owners), dealing with that bureaucracy should be considered a part of doing business.
I left that job when management changed, and the boss I liked left. The new general manager had a habit of going directly to my employees and telling them to do things that were degrading, and, in a couple of cases, flat out illegal. He went around me since he knew damned well that I'd have told him to get lost. When I took up the fact that some of the things were illegal with the owners of the company, and they took the GM's side, I was out the door.
There is a long history that, when mortgage people work with a policy of individually evaluating their customers in person, rather than using set, impersonal rules, "good character" ends up getting translated as, "people who are a lot like me," or even, "people who look a lot like me."
That's absolutely true. I always refer to the "Three Cs" as creditworthiness, capacity, and collateral. Yes, the old-fashioned version of that is "character," but my objection to that is exactly what you describe.
I've seen too many people who really do believe that they can "look into people's eyes" and know something important from having done that. Assuming they aren't actually expecting us to believe some mystical bullshit about their being human polygraphs or psychics, one has to assume that what underlies this is a belief that "character" for these folks is often "people who look like me."
Here we've got some weirdo on this very thread nattering on about how the loss of "Christian values" is at the root of all this. I have to assume that if you stuck this person in the underwriting department and didn't keep a leash on him, he'd be asking the applicants about their church-attendance habits before making them a loan.
Anyone who wants to go back to those "good old days" is going to get a fight out of me. We absolutely have to cut loose this important point about trust-based economies from garden-variety bigotry or WASP self-satisfaction.
Quite honestly, the borrowers often look into our eyes and think "pig." Yet where else are they going to go for money?
Winston:
I think much of the "problem" is that people finally have realized that the Horatio Alger myth is dead. Hard work and ability don't necessarily lead to success at all in the USA. While high IQ tends to correlate with success, hard work doesn't. And I can't agree that people realize deep down that they may not deserve what they have gotten. If people have gotten "more" than they deserve they can very quickly find "objective" reasons for that. Feeling guilty about success and remaining so is not common.
Tanta said: "I have read both Jas Jain and Cotton Mather, and frankly except for the fact that the latter is a better writer, I can't see any difference."
LOL! You have got to get on the writing staff for "The Daily Show.":) It's a travesty that such a mind and wit don't have a far, far, larger audience with a corresponding bump in pay.
[Sincerely,]
S.
Globalism=Failure
Supply side economics=Failure
Peak Oil Lie=Failure
Gold Bug Lie=Failure
War on middle class=Failure
Had enough?
the bank in quesion laid off too many people
Two years ago I worked a contract at a major NYC bank who had laid off so much of their IT staff that no one knew how their encrypted money transfers worked, so they'd left everything untouched for years.
Needless to say, I was in shock for several days after that revelation.
Sebastian, I agree and disagree.
Disagree - I don't think the economic conditions are really better now for the US than in the past, the economy is in real trouble that will require structural changes.
Agree - one asset class that generally does match inflation over time is real estate. Real Estate has the potential to do well in nominal terms either after the correction has run its course - OR - if inflation really picks up. I wouldn't advise speculating, but if you buy wisely during the height of the crisis you may be happy you did.
just for the record, Ford did not pay his workers well because he was enlightened. he was having such a turnover problem that it was cheaper to pay double the going rate than to deal with the turnover, training and quality problems. the efficiency of the assembly line made it the logical choice. let us not mistake good business sense (with a gun to one's head) for kindness, enlightenment, etc!
Bill:
Really now, we are just going into a recession, nothing more; the world is not coming to an end. We've had them before and we'll have them again. It's like the flu. You get it and you get over it. Not pleasant but impossible to avoid entirely.
"Clear enough for YOU???"
Misean:
I read your article.
I think the problem that many of us have is your insistence that it is the GOVERNMENT that is causing such wage disparity.
clearly at some times the gov't has exacerbated it through law of unintended consequences, but it can hardly be argued they CAUSED this disparity.
Even the article you cite starts with this:
"Bill Clinton had what he thought was a great idea to curb the soaring paychecks of the nation's executives."
In other words: the salaries were soaring PRIOR to Clinton's law.
the law didn't work. that doesn't mean it caused the raise in salaries.
Another thing I find interesting:
"Companies at the time were allowed to deduct all compensation to top executives."
you think that executive pay would be LOWER today if companies were still allowed to deduct ALL of their executive salaries?
Clinton's law didn't CAUSE increase in executive pay, it simply didn't STOP the rise in executive pay.
The executive pigs will feed at the trough no matter what you try to do.
lastly:
you refuse to answer the question:
WHY do you believe that CEO's are so much more valuable today than they were 20 years ago, in terms of RATIO of executive pay to worker bee pay? It's at the highest in history, and continues to rise exponentially.
While in college in the late 70s, I worked for a while as a bank teller. The pay then, as now, was abysmal. But what is not generally known by the public is how easy it is to steal from banks.
A group of tellers I worked with became experts at a variety of methods of stealing from accounts.
Straight-out bank robbery is fairly easy too, but we never had the heart for that.
I finally left the job after six months and several unapproved "bonuses". The reason I left was because it was so easy to steal, and I needed the money so much that I couldn't resist stealing when it was that easy. I was afraid I would become a professional thief.
"they'd left everything untouched for years."
That's kind of like our present economic condition. It's like a computer that hasn't had an anti-virus update since installation. Now that the virus has infected the system, we must rely on hacking the registry to clean it out. My only hope is some idiot doesn't decide to reboot the system. The last person that decided to try that was Hitler.
I'm not sure the world is prepared for a Blue Screen of Death.
Conflating individual character with morality or corporate power with government sheds more heat than light but there are some links IMO: Personal character can transcend both morality and reward but if it is chronically punished there will be fewer survivors to practice it and at the risk of recommitting the sin of conflation (and simplistic thinking) we get the governance the powerful want unless there are a sufficient number of people with character who contest corruption (including those with character among the powerful).
Many years ago while traveling in a very poor and chronically misgoverned region of Africa -- yes I know that covers a fair bit of ground -- I made some friends locally and asked one of them why it seemed so hard to make any progress in the region and he simply said, quoting someone else I believe although I do not know who that was, "we have a tradition of permitting the murder of the good, the just, and the beautiful here and now there are too few left to save us."
Tradition is the enactment of a moral system by definition so it seems worthwhile to ask, at what point in the US did the powerful get a bye if they mouthed pieties or slogans while engaging in corruption and betrayal? At what point did we allow them, with minimal contest, to destroy or assassinate the character of those who contested their will?
It occurs to me that it may be related to the reason too many of us still seem to be paying more attention to those who were wrong about our current crises (plural) than those who were right.
Suddenly I feel a pressing need to go to confession myself.
Oddly enough I also feel more sympathy for Spitzer as well.
Interesting.
Good analogy Joe Six Pack. We seem incapable of noticing the most glaring problems of the past few years.
"Only this time around, the overall economic conditions are better and the problems are highly concentrated in just one sector, housing."
There is smart money; there is dumb money; and there's money so moronic it practically cries out for extermination.
Not to worry. The PPT is briefing the Monkey-in-Chief!
[President George W. Bush plans to meet on Monday with top U.S. financial policymakers, the White House said, at a time of increased strains in credit markets and fears of a recession....
"The meeting on Monday is for the president to get a status report on the markets," a White House spokeswoman said.]
I have read both Jas Jain and Cotton Mather, and frankly except for the fact that the latter is a better writer, I can't see any difference. It was all about sin, sex, and religious controversy back then for the professional scolds and self-righteous gasbags, and it still is today.
I'm having this one engraved on a plaque for my desk!
Many thanks for a great post.
"Firstly, I said that gov't interference helped this."
What is with all of the gold bugs coming out of the woodwork lately ? Every thread that I see on this blog and others has some poster mentioning something about how the Fed is responsible for the wage stagnation issue. Yet, none of them seem to want to explain why the wealthy CEOs don't have this same problem. Their pay has kept up with inflation, etc., yet the only salvation for the workers is to revert back to the gold standard ? That doesn't make any sense at all and reeks of trying to provide a justification for rampant inequality in how we reward work and productivity in this country.
Jim:
I wasn't saying people feel guilty about success. Rather that they often act as though they feel insecure about their position and spend effort buying status symbols that separate them from the huddled masses and by supporting policies that help them to maintain their position (whether not lending to poor people or fighting for lower capital gains taxes or stickers that let people who can afford to buy hybrid cars drive in carpool lanes).
Henry Ford might have figured out many decades ago that you need to pay your workers enough that they can buy your product, but that lesson was lost on the banks.
I think China probably has this problem right now, but it won't become apparent until capital spending slows down.
"No moral problem was ever solved by people simply declaring their disapproval of immorality. Can we, like, just skip that part? No one on this blog is going to offer to defend immorality as such, so there's little point to denouncing it. I had rather hoped we might think somewhat more concretely about what the issues are than let this degenerate into a tent revival.
Tanta"
Amen, sister!!
Ooops....sorry
I would be interested to know if anyone here sincerely believes that reading anyone else's opinion will change their mind? I realized about ten posts in that I was mostly looking for confirmation of my own biases. (Which happen to to be the only right way to think, but that's just lucky for me that I'm on the right side of the question.)
sdtfs:
We must have the same biases since mine are the only right way to think too!
I probably should not post this or even mention it, but re the lack of progress in Africa, you are aware, I presume, that the father of modern genetics, the Nobel laureate, James Watson, attributed Africa's problems to the average IQ there. He got kicked out of the UK for saying that as well as fired from his cushy position in the USA, but he was already about 80 in any case. I haven't heard much about him or from him since.
misean
hi
i posted, yesterday, data you had asked for, to support an argument...3 tables and calculations. did you see it i can re post.
bottom line, clinton was the only administration since carter to decrease annual federal deficit as a percentage of gdp AND clinton was the only president to reduce expenditures below receipts in a year,.. since, i believe, ford. granted the budget and deficit grew under clinton, but he applied the brakes.
yearning to learn...
did you get my thank you for the link to the byrne lecture about broker dealers and the misuse of FTDs IOUs...
thanks, very sobering and scary
mt
M-F said: "Disagree - I don't think the economic conditions are really better now for the US than in the past, the economy is in real trouble that will require structural changes."
A more or less permanent state of affairs, which is why I'm so anal and obnoxious about quantifying those factors in order to get a bottom-line perspective on how significant they really are.
In my lifetime, I've seen real nuclear weapons (not fantasy ones) parked 90 miles off the Florida coast (not 12,000 miles away), I've seen a President assassinated, a far-off war that cost the lives of tens of thousand of our soldiers and nearly tore our society apart, inflation and fixed-rate mortgages in the teens,
another President who was forced to resign for his crimes, a major stock-market crash (1987), 9/11 and too many other equally-serious threats to our country and our economy to mention.
Assigning actual values and not perceived values to our current situation, things don't look so bad.
JMO.
Sebastia
Jim:
One of the big reasons Africans have lower IQ's than Westerners is that many Africans face poor nutrition and environments that aren't good for cognitive development. It's not clear to me that the primary cause of low IQ's of Africans (and African Americans) is genetic and not environmental. It would be an interesting question to answer, but it's hard to conduct such research without being accused of racism.
"Times have changed, but I bet the people doing the real work still make the least money."
Not only do they make the least money; they've been downsized and outsourced to automation, and reclassified to part-time employment status... no bennies (vacation, sick pay, healthcare, or 401K) for you.
Probably shouldn't stir this nest up any more, but,..
You know, at one time Bill Gates was an eighteen year old geek, and Warren Buffet delivered newspapers when he was younger, so I would guess the question is not whether an eighteen year old could run a company, but whether we have a system that efficiently picks good CEO's.
Guess who said this ...
"many young couples trying to buy their first home have been priced out of the market because of inflated prices. The market now is in the process of correcting itself, and delaying that correction would only prolong the problem. "
404 Page Not Found | The White House
REBear:
I find myself in a rare moment of agreement with GWB.
The degeneration has nothing to do with the decline of Xtianity, and a lot to do with its baleful influence. Now the big usurers are the ferventest apostles of christ.
One of the many problems we face today is the lack of union clout. So many workers make so little that they need to beg, borrow and steal. They did the borrowing lately, their bankers did the stealing and are now do the begging. St. Ronnie's true legacy.
M-F
hey thanks for several fine posts above.. esp about how debt papered over the inequality between what we consume and what we produce (1:20pm?
also your comment about free trade deserves an addendum. the principal of comparative advantage argues FOR free trade, and i for one am not willing to give up on the idea so easily for this and other reasons. namely that countries that are interdependent via trade and other exchanges are more likely to peacefully co-exist.
but it is true that free trade becomes a bit of a sad and tragic joke when first world workers are asked to compete with corporations that go off shore where basic health and safety laws are un enforced or non existent.
as a young man, working as a deck hand on a tug boat in the oil patch many years ago, i saw waterways on fire and bayous so polluted that when a dog fell in it soon died. now, some of those scenes, almost gone here are to be found in second and third world countries where "our" consumer goods are produced.
how should we compete?
I'm only a pretender with a couple of battered Zinn paperbacks, but the corporate model described here (huge salaries for stupid ceos, peanuts for the "real" worker) looks to me like a scale model of American capitalism since day one.
We have seen the capitalist economy grow increasingly efficient at extracting something for nothing, and concentrating wealth into ever smaller circles. It has nothing to do with morality, or legality-- its just the way the machine works. It keeps working because the very people exploited by it believe that they can some day be on top.
I think what this "crisis of confidence" reveals is that while the royals have forgotten that they need peons, the peons are realizing that the machine is not designed to benefit them. The dream of one day "making it" is being exposed as a lie.
Nobel laureate, James Watson, attributed Africa's problems to the average IQ there.
Thus demonstrating that a high IQ doesn't necessarily mean you'll come to a correct conclusion.
"Assigning actual values and not perceived values to our current situation, things don't look so bad."
Garbage in, garbage out.
Re: the lack of progress in Africa.
The African kleptocrats are playing by the rules set in Washington, London and Paris. The global economy is mobbed up. Halliburton needs local partners for its vampire deals. Corruption appears more blatant in Africa because total economic activity there is too stunted to provide camouflage for the compradors.
I think this very on-topic:
Krugman says that US is doing a wonderful job of destroying the dollar and he thinks that's great!
I am not trusting him with my precious brain space anymore.
Incidentally, I agree with him that it's good for dollar to go down. But not because it is going to save the economy, but because it is going to finish off whatever imperial we-are-better-than-thou delusions US is harboring.
Then maybe we could have 'kinder, gentler' capitalism.
OT: Barry Ritholtz over at The Big Picture has an excellent discussion of the fraud in official measures of inflation. Measure inflation correctly and use that value to deflate GPD, house prices, wages, and other prices and the myth that fundamentals are positive is exposed as a lie.
Growth in the US is mostly just higher prices.
The Big Picture
Jim
In my lifetime, I've seen real nuclear weapons (not fantasy ones) parked 90 miles off the Florida coast (not 12,000 miles away), I've seen a President assassinated, a far-off war that cost the lives of tens of thousand of our soldiers and nearly tore our society apart, inflation and fixed-rate mortgages in the teens,
another President who was forced to resign for his crimes, a major stock-market crash (1987), 9/11 and too many other equally-serious threats to our country and our economy to mention.
Assigning actual values and not perceived values to our current situation, things don't look so bad.
JMO.
Sebastian
Sebastian | 03.15.08 - 2:07 pm | #
You are making a category mistake with this line of argument. The list you provide are "shocks" TO a system and many commenters are arguing about "structural problems" WITH the system. Structural problems are part of how well or not well a system responds to shocks (Taleb's black swans).
You may disagree about these hypothesized structural problems but to argue that we will be fine in a solvency crisis (solvency is a structural problem) because we were fine after the assassination of a leader is not sound logic. If we are economically strong we survive the shock well; if we are broke it can tip us into a general decline. A shock is a different animal than a structural problem.
By the way, you talk about assigning values but you have neither defined what you mean by values nor have you actually assigned values to anything.
ot sebastian writes:
"Assigning actual values and not perceived values to our current situation, things don't look so bad."
Garbage in, garbage out.
not sebastian | 03.15.08 - 2:23 pm | #
LOL, not sebastian is much more succinct than me obviously.
Assigning actual values and not perceived values to our current situation, things don't look so bad.
JMO.
Sebastian
Sebastian | 03.15.08 - 2:07 pm | #
Stick around and you will. Its only a matter of time
Assigning actual values and not perceived values to our current situation
that's the advice government refuses to take...
"The market now is in the process of correcting itself, and delaying that correction would only prolong the problem. "
Hey Prez, we got a little problem here. How are you going to 'give a little help to responsible homeowners that face foreclosure' if the banks won't refinance at the existing mortgage price? Why would any homeowner refinance a 300k house for 500k?
No clue.
Now where is that envelope and stamp? I gotta mail in my house keys.
Re-reading the Waldman piece makes me wonder if the problem isn't one of complexity because of the increase in the number of people involved. In a small group of people you might be able to trust, but at about one hundred individuals, you run into the 2 percent "Civilizations and Its Discontents" problem. In other words, get used to it, it's only going to get worse.
Sebastian - "Assigning actual values and not perceived values to our current situation, things don't look so bad"
Right. You walked right into the trap, just as planned. Your assets are in equities just where they're most vulnerable so the sharks can rip them apart shred by shred while you're paralyzed by fear and the Wright B.
It's nice to use perspective of past experience to judge the future. That's pretty much always been successful. However, the landscape has changed significantly and we're in quicksand -- The more we squirm the deeper we go. Staggering debt combined with unprecedented leverage everywhere. Treasuries are toast along with the $. This time when the reset button gets pressed there won't be too many asset classes that get away unscathed.
This may be a pretty good time to be broke. At least there's less to lose.
paralyzed by the Wright B.
so you mean, someone actually flew in it? No wonder they are paralyzed.
This may be a pretty good time to be broke.
I would rather be not broke now and then broke in a year,
than be broke now and be even more broke in a year.
Red Pill said: "By the way, you talk about assigning values but you have neither defined what you mean by values nor have you actually assigned values to anything."
I've already saturated this blog with actual values (GDP growth, unemployment, inflation, etc., etc.), and I'm not going to ruin everyone else's weekend by repeating them again just because you ignored them before.
S.
Phaedrus,
I hear your message but am somewhat comfused as from my reading the USA is the most churched of the western nations. Is our situation speaking to the failure of our churches?
Yes!!! I am comfused. Oh! My Glod!!
Fat Fingers
Sebastian,
You knocked that one right out of the park!
The Tanta comment - let me get downthread and see what else!
"You know, at one time Bill Gates was an eighteen year old geek, and Warren Buffet delivered newspapers when he was younger, so I would guess the question is not whether an eighteen year old could run a company, but whether we have a system that efficiently picks good CEO's."
sdtfs | 03.15.08 - 2:10 pm | #
Quite apt.
I would add that I believe the good old boy network that controls every major company in the US has neatly arranged things where they don't actually have to answer to the owners (shareholders) of the companies they are paid so handsomely to run into the ground. I believe that some actual accountability and democracy could solve about 90% of the pay disparity problem.
I don't think Berkshire shareholders (who have no such problem) would object at all to a generous pay package for Buffett - but BS shareholders had no actual say in that CEOs pay.
Seb,
Don't go away. We need optimists around here. I read this blog and get very discouraged then I drive around the neighborhood and look at all the optimists tearing down old and building new houses, all the new cars on the road, all the traffic on the highways and city streets, all the craftmen's pickups driving into town and it puts a smile on my face.
I want you to be right!
That said, if the sky really is falling I want to be warned to look up and avoid the big pieces.
Dilbert,
The popular culture/business culture is anything but Christian. I am not, by-the-way, a Born Again or even Christian. I am, however, pro-Christian and acknowledge its role at the base of Western Civ AND modern science.
dilbert dogbert said: "...We need optimists around here..."
This is what kills me.
The numbers shape my outlook. I didn't form my opinion first and then go looking for evidence to support it later.
Example: If the SP500 were to drop next week down to the 1225 area (we're a little less than -5% from that as of Friday's close), that would match the valuation at the October, 2002 low from which we had a huge multi-year rally. That would put the SP500 PE valuation (based on peak TTM as-reported earnings) under 15, an excellent long-run value-based buying opportunity.
Is that an optimistic way of looking at things or a realistic way of looking at things? Seems to me that it's only "optimistic" if you have a preconceived notion that the stock market is going to go down a lot further. Based purely on long-run valuation data, the market is already near a good buy-point, so it's not "optimistic" at all, just realistic.
JMO.
S.
When I was in high school and computers were still large and mysterious, I remember my high school math instructor telling us that "a computer is nothing but a lightning fast idiot with a pencil."
Computers are now smaller, faster and ubiquitious, but they aren't any smarter, and neither are the people that operate them. (The wings gave Icarus new powers but did not make him smarter.)
At the root of our present financial crisis is the computer--its power to do all the record-keeping involved in an ever-more-complex financial system that has grown beyond the power of any one person to understand or control.
We replace as many people as possible with computers, design ever-more-complex financial instruments that supposedly maximize returns and minimize risks--but that system speeds out of control, moves faster and faster until the unanticipated but inevitable event (in this case, the housing bubble bursts) and nobody can stop the chain reaction that results.
"Seb, Don't go away. We need optimists around here"
Wake me up when he turns bearish. Then I'll start to cherry pick as he liquidates what remains, except those that he recommends. You need to keep his timely NEW acquisition as a reminder of how keen his awareness is.
Sebastian... More like "as-reported FAUX earnings".
Better watch that BSC earnings release Monday to get a fix on their earnings, ya know, for a LT buy-&-hold LOL!
Sebastian:
Why do you think there were 400+ people logged on to this blog yesterday?
I'll give you a hint: They had come here looking for an explanation for what they were seeing - not to support their desire to bring pain, calumny, and destruction to a system they depend on.
You're from the "if they aren't with me, they're against me" school, aren't you?
Sebastian - even if the majority agreed with you, the reality would be the same.
"Is that an optimistic way of looking at things or a realistic way of looking at things?"
No
A couple of posters here have equated morality with religion. First thing I would like to say about that is that our beloved Prez is a born again Christian.
Second, ethical behavior frequently contradicts religious "morality." Refusal to participate in the Inquisition is a safely distant example.
Christians neither invented ethics, nor do they have an exceptional record of practicing same.
John Stark | 03.15.08 - 3:21 pm
At the heart of our system is theft by chicanery - not computers.
To borrow a slogan from the NRA: Computers don't kill economies, shiftless bastards kill economies.
pro-Christian and acknowledge its role at the base of Western Civ AND modern science.
Fundie Christians [like Bush & Huck] running thing these days have as much claim to the foundation of Science as the Taliban does with respect to Algebra.
Western Civ and Science was founded by thoughtful people willing to see nuance and reject the received wisdom.
Marcus Aurelius said: "I'll give you a hint: They had come here looking for an explanation for what they were seeing -..."
And which one of us would you say is making a serious, logic-and-numbers-based attempt to help them?
S.
I've already saturated this blog with actual values (GDP growth, unemployment, inflation, etc., etc.), and I'm not going to ruin everyone else's weekend by repeating them again just because you ignored them before.
S.
Sebastian | 03.15.08 - 2:44 pm | #
Ahhhh, you mean just stating numbers.
Not very enlightening.
You provided a list of events and suggested they were significant (somehow) in comparison to the current economic situation.
Then you wrote something incoherent about values and assigning values.
You seemed to be suggesting a "value" rating system which I presumed assigned a weight to those events and numbers you provided.
Were you then suggesting there were good GDP numbers and the like correlated with the shocks you listed and that this means we will have a good GDP number and the like with the current crisis? Is that it?
You have a writing style that gives the impression of content when there is in fact none.
It is in stark contrast to CR and Tanta. The vacuousness of your counterarguments to CR actually reinforce my opinion something nasty is coming.
I wish you would defend this model you have discussed regularly and others make fun of. Pardon if I am ignorant of past posts where you lucidly discuss this model, but it would be nice if you discussed its strengths, its assumptions, what data it utilizes, the time span of that data series etc. Why is it such a superior model that I should believe it instead of people like Larry Summers?
racerx writes:
In a general sense, the issue really is that compensation doesn't match performance. When all of the profits of a transaction are booked upfront the employees willing to cut corners and push things through are the ones most rewarded. Ethical and prudent actions that may slow down this process are undervalued. The person getting paid the most is the one with a high tolerance for risk not an ability to assess risk.
racerx, you hit the nail on the head in terms of mortgage lending! As Tanta has posted numerous times the Ops - back office people who do the work, and know what is happening are paid the least. Sales and management make the money, and the disparity is Huge! Yet, we're all like lambs and lay down and take it. WHY?
And which one of us would you say is making a serious, logic-and-numbers-based attempt to help them?
S.
Sebastian | 03.15.08 - 3:35 pm | #
Another example of suggesting content when there is none. Nor was there any.
It seems to be this postmodernist thinking that seems to be going around these days. It is the appearance that matters. The reality will follow.
so I would guess the question is not whether an eighteen year old could run a company, but whether we have a system that efficiently picks good CEO's
the only good CEOs IME are the ones who bring their company up from nothing.
It's not postmodernist, its NeoCon.
Red Pill said: "You have a writing style that gives the impression of content when there is in fact none."
then said: "I wish you would defend this model you have discussed regularly and others make fun of. Pardon if I am ignorant of past posts where you lucidly discuss this model, but it would be nice if you discussed its strengths, its assumptions, what data it utilizes, the time span of that data series etc...."
So, you're being rude, mean-spirited, and obtuse because you're ignorant of the evidence I've presented, not because you've looked it over carefully and rationally, concluding that it's not valuable?
That's not very nice, is it? Doesn't really motivate me very much to be helpful to you, either, does it?
S.
Marcus Aurelius writes:
It's not postmodernist, its NeoCon.
Marcus Aurelius | 03.15.08 - 3:39 pm | #
Yes, you are correct.
The neocons have adapted some aspects of postmodernist thinking into their new philosophy. I have gotten the impression from the writings of neocons that they are inspired by postmodernist thought, but I don't think they really understand it.
I should be more precise in my statements about philosophy on a board with commenters that go by the name, Marcus Aurelius.
--
Anon,
I am only commenting on behavior n America and not comparing it to Asia. Being better than some other countries is good enough or OK? Lot of bigots here indirectly attack my ethnic background. For better or worse, I am American and by choice. This doesnt mean I should shut up and watch America go down.
In general, one of the most disgusting habits most Americans have is attacking other countries and other groups when one talks about problems in America. I could care less about morality between people within Russia, for example.
We know why America is headed down; it is because of people like Anon. And these disgusting people hide behind the dark curtain.
Jas
--
Paul,
Thanks for the quote and, yes, I liked it.
Jas
Marcus Aurelius writes:
John Stark | 03.15.08 - 3:21 pm
At the heart of our system is theft by chicanery - not computers.
To borrow a slogan from the NRA: Computers don't kill economies, shiftless bastards kill economies.
I don't disagree, and the NRA/gun comparison is a good one. Guns don't kill people--but bad guys with guns can do a lot more damage. (I oppose gun control so don't start in on me based on some misconception about that)
Amoral financial types with computers can do a lot more damage too. And while there were and are a lot of rogues and rascals in the financial world, I think some of these people were just misguided, following the herd, doing what everyone else was doing, dancing to the music.
I also don't think that even the worst of these people PLANNED to wreck the economy, or their own financial institutions. They just worked their schemes, enriched themselves, lost a sense of limits, and then lost control of their own schemes. (Yes, all the big operators will still be rich after this is over--I realize that.)
My point is really simple--all of these complex financial instruments and systems that are collapsing now, because of their own complexity, would not have been possible when accounting had to be done with ledgers and pencils. Go back to Mason and Rosner's paper from last year and look at the graphics on CDO complexity, for example. (pages 22-23)
Link
So, you're being rude, mean-spirited, and obtuse because you're ignorant of the evidence I've presented, not because you've looked it over carefully and rationally, concluding that it's not valuable?
That's not very nice, is it? Doesn't really motivate me very much to be helpful to you, either, does it?
That's not very nice, is it? Doesn't really motivate me very much to be helpful to you, either, does it?
S.
Sebastian | 03.15.08 - 3:42 pm | #
So I am rude, obtuse, mean-spirited and ignorant? And you assume I am not rationally reading your posts. LOL Well, I guess I can be ignored then! The bad irrational human that I am!
Every time you are challenged you simply adopt a condescending and insulting tone. You never answer the questions.
I like thinking about your posts though. It is my belief that you actually don't believe what you are arguing and that your participation on this blog is just a game.
It is interesting to note that after CR and Tanta post I find things are clearer. Your posts, however, obfuscate and add confusion. It is my experience that that is usually by design.
What the hell is the Wright Model B Seb?
Sebastian,
The economic numbers for Germany in 1921 looked quite promising too.
Just remember, all the numbers you so offer so comfortingly are a measure of the recent past. Now, to talk about the persistence of numbers and the ability of models to forecast is a wonderful artifact, and I have debated this issue with far more educated and experienced folks than you, including Bob Eggert, founder of Blue Chip Indicator (may he rest in peace), and the conclusion is that the models work until they don't and then you had best just hang on.
Bob Eggert and I discussed this nearly 20 years ago, and I told him that I rather liked investigating when his Blue Chip concensus forecast failed. He said, when we hit those turning points is when you want to be very very careful.
Someday this war's gonna end...
Something in this thread made me think of:
"Kill the Poor"
by the Dead Kennedys
Efficiency and progress is ours once more
Now that we have the Neutron bomb
It's nice and quick and clean and gets things done
Away with excess enemy
But no less value to property
No sense in war but perfect sense at home:
The sun beams down on a brand new day
No more welfare tax to pay
Unsightly slums gone up in flashing light
Jobless millions whisked away
At last we have more room to play
All systems go to kill the poor tonight
Gonna
Kill kill kill kill Kill the poor:Tonight
Behold the sparkle of champagne
The crime rate's gone
Feel free again
O' life's a dream with you, Miss Lily White
Jane Fonda on the screen today
Convinced the liberals it's okay
So let's get dressed and dance away the night
While they:
Kill kill kill kill Kill the poor:Tonight
I'll say it clean out: Sebastian is a douchebag best ignored.
Heed him at your peril. Beware the Ides of the Wright Model "B".
I can't read all the comments right now, so I don't know if this has been brought up, but Misean's description of the BusinessWeek article is bullshit, as is the title of the article.
Two quotes:
Clinton's brainstorm: Use the tax code to curb excessive pay. Companies at the time were allowed to deduct all compensation to top executives. Clinton wanted to permit companies to write off amounts over $1 million only if executives hit specified performance goals. He called Crystal for his thoughts. "Utterly stupid," the consultant says he told the future President.
...
Members of compensation committees of the boards of four of the nation's largest corporations told BusinessWeek that 162(m) is merely a nuisance that hasn't stopped them from paying executives whatever they consider fair. All of these directors requested anonymity for fear of losing their positions. Companies are under no legal obligation to disclose how they comply with 162(m), and as a result, a shroud of secrecy surrounds the topic.
No where in the article does it say that the rule changed in any way made CEO compensation go up. The worst that could be said is that Clinton failed to eliminate a tax break already there. No one forced the companies to make up performance bonuses.
Basically, Misean complains about government regulations, and then points at a lack of meaningful regulation as the problem. Oh Glod! No matter what, the govnerment is wrong!
NC Jim, thanks for the correction. We have had massacres in Utah and I am sure the miners here have been just as badly treated as the ones in Colorado.
Tanta
I have worked for six companies/agencies in my career, none in finance. Only at two have I been treated with respect, the other three I was just a body expected to perform set tasks.
My current company calls us line workers "partners", the shift crew leader is a "team adviser" and mostly stays out of the way, the department manager is called the "team leader" and mostly stays out of the way. Guess which company is making money in this recession, even expanding product lines while the other five companies/agencies are struggling to stay afloat? Except for the steel mill that closed in 1979 when we could not compete on price or quality with Japan.
Oh, by the way, we are paid the national average for manufacturing, not the Utah average. And yes, the company is making money.
Sebastian
I want to see some links to the data you claim backs up all your assertions.
Gawl dar dang Tanta! You done dar hit da neal on da heed!
--
In connection with the most topical subject of the Credit Crisis (or Debt Crisis) it is a result of pre-mediated fraud in mortgage lending, in general -- NOT HAVING PROPER SECURITY, OR FACTOR OF SAFETY, FOR A SECURED LOAN.
My guidelines for a secure home loan are very simple the lower of the minimum price of a similar property within the past five years (because prices have gone back to their five year lows several times in the past in most areas). or 80% of the current price. This will also keep the bubbles from forming as it would require higher down payments as prices rise rapidly.
Risky loans were made purposefully in order to make quick money without regard to the future repayments. Also, new rules are dangerous because they have nor been stress-tested. Home mortgages didnt need new rules in terms of how much can be loaned on a home and what documentations should be required. The rules were meant to allow fraud in the name of innovation and flexibility. The idea that lax rules helped minorities is a disgusting claim by the perpetrators of this evil like Mozilo. The weak were targeted and victimized by the likes of Mozilo, e.g., the most common victims seem to be:
Burdening the less able, financially, with more debt (as % of income) is evil. If you want to be charitable, Mr. Mozilo, charge them lower interests rates and less points and fees!
Jas
S.
Sebastian | 03.15.08 - 3:35 pm
Sebastian: The logic isn't logical, its fallacious. The numbers are incorrect (or incorrectly applied).
Telling people to believe your numbers and logic, and to ignore reality (what drove them here in the first place), isn't helping.
Here are some other pseudo-logical arguments that should be put to rest:
Cutting taxes on the wealthy makes the economy grow.
Regulation of business is bad for the economy.
The market is more efficient and/or capable than the government.
Deficits don't matter.
Money is ethereal - it exists in concept only and can be created at will.
Any set of numbers is as good and as useful as any other set of numbers.
Life takes Visa (strangely enough, Mastercard's slogan is twistedly honest: There are some thing's money can't buy, for everything else, there's Mastercard." Money can't buy debt, but MC can.)
Affordable healthcare for the population is a bad thing.
A war will pay for itself.
To prosper in a producer/consumer economy, it's okay to consume but not produce.
Oy.
Morality vs integrity vs character.
These are different things, folks. I think the failing this post is citing is a lack of integrity. If I openly espouse that killing people with dark skin is the way to salvation, that may be immoral. If I then don't kill said brown skinned people when the opportunity presents itself, then I lack integrity. One can say that lack of integrity is itself immoral, but it is then definitely a subset of immorality. Not following through on ones commitments, that is what is at issue here, and has nothing to do with sex, sin, etc.
The way Yves Smith uses the word Character seems more or less synonymous with my definition of integrity, but perhaps is much broader. Or then again, maybe he chose that word because it alleterates quite nicely with Capitalism!
Cheers,
Skyguy
--
John Stark,
Complexity could easily be a front for deception, or hiding the risk, and that is exactly what did happen in securitization of mortgages. The complexity was deliberate and not because it was necessary.
It is lot easier to full less knowledgeable, or mostly lazy, people with complexity, no?
Complexity in finance is the enemy of trustworthiness.
Jas
--
Correction: It is lot easier to FOOL less knowledgeable, or mostly lazy, people with complexity, no?
"``The president seems to be on a different economic planet than most Americans,'' Senator Charles Schumer, a New York Democrat, said yesterday after Bush's speech to the Economic Club of New York. "
Bush Won't Be Forced Into `Bad Decisions' on Economy (Update1) - Bloomberg.com
Actually, that whole "gotta pay the workers enough money to buy the product" is a classic economic fallacy.
For one thing, if you actually paid workers 100% of your revenue, well, you can see what would go wrong there. By definition, all costs have to be less than your revenue, in order to make any money at all.
In fact, the whole genius of the profit system is that it incentivizes you to combine different resources that cost less in ways th produce higher value than costs.
In fact, Herbert Hoover believed in that fallacy of paying workers more to buy the product, and pushed firms to keep wages high...the result, of course, was just more unemployment.
Keynes himself wrote that the problem of business cycles was caused by "sticky wages," which means that wages don't fall, and unemployment rises.
While that was actually true during the Great Depression, most postWW2 business cycles have actually had procyclical wage movements.
Now, the real problem with the stupid "gotta pay workers enough to buy the product" argument, is that it gets in the way of actual good arguments for high wages.
One argument: In positions of trust, you want to provide extra incentive for the worker to be good in the form of higher wages. They don;t want to risk losing the sweet gig so they don't rob from the till. This then allows you to save on monitoring costs a bit.
But Tanta, don't make ignorant arguments. They get in the way of your good ones.
AMERICA may have won the cold war BUT:
RUSSIA is already the world's biggest exporter of natural gas
and second in oil behind Saudi Arabia.
WHO IS HAVING THE LAST LAUGH!!!
okee dokee-
"But county Treasurer Chriss Street said, "I still think the county will get all its money back."
Did the county treasurer bet on a nag? | whistlejacket, county, assets - News - The Orange County Register
My wife is one of those "middle managers" that the GOBs (good ol boys) frequently sneer at. Now, I happen to be kinda lazy myself, but she is extremely competent and insists on working nonstop. Even at home, she is constantly busy. Back when she used to have slack periods at work, she actually complained about it! (something I had a bit of trouble understanding)
This is the least of her worries now.
One extra duty after another has been piled on her. No raise though. No promotion either. she has trained several of her "superiors" and still has to fix their mistakes. When another person on her level quit, management tried to get her to assume the entire workload of that individual. She said sure - if it means a raise and promotion. Instead, they hired someone else.
One "forward thinking" idea after another comes down the pike. Employees are sometimes asked for "feedback" after a program has been decided on. In no case does this feedback actually affect policy. Does serve to identify malcontents though.
The irony is that the "big boss" is extremely competent himself - but he will promote a barely competent man over a woman any day - and when they fail, he finds something out of the line of fire for them. If a woman screws up, they are shown the door.
Tanta, actually, you drew exactly the oppositely wrong conclusion from your story.
It's not that you should pay workers enough to buy the product, it's that you should try to develop products that might meets the needs of less fortunate people, because after all, they have some money too.
"Only this time around, the overall economic conditions are better and the problems are highly concentrated in just one sector, housing. Tomorrow always comes.:)" Sebastian | 03.15.08 - 1:40 pm
Seb- Either you are a hypocrit, or you have the blinders on you claim CR wears, since you are apparently saying that the collapsing Financial sector either no longer exists, or it was not a sector in the market.
"No raise though. No promotion either. she has trained several of her "superiors" and still has to fix their mistakes."
Solution: Hubby, you buy massive puts on the company. The your wife stops fixing the mistakes of her moron bosses.
mock turtle:
you're very welcome.
unfortunately, life calls, so no more debating for me!
One last thing:
someone above asked whether or not anybody will actually change their mind due to the arguments held within this thread.
I for one do often change my mindset depending on how well an argument is crafted.
There are certain core beliefs that I have that are highly unlikely to be changed, but there are countless more things that I haven't thought about much... and these discussions help me to make a decision on many topics.
For example: I once strongly felt that billing errors were the nefarious workings of "the man" as example...
Tanta gave an eloquent argument that shows that it could be simple INCOMPETENCE due to over-downsizing.
after her argument, I have changed my mind somewhat.
I am less firm on the 'nefarious' nature of the errors... that said, I still do find it odd that these errors often end up in Big Corp's favor, but I"m willing to change that part of my mind too...
Also:
I once was a more fervent believer in government. That has changed with time. I am not so far as Misean (nor will I ever be) where I fault government for EVERYTHING, but I also am not as trusting as I once was.
anyway:
these debates have merit. Only the foolish stick only to their point of view IMO.
Sebastian, I will credit you with an ability to maintain civility and your desire for whatever reason to present what you perceive to be valid arguments, as ridiculous as they are.
It's like having someone trying to explain to you how bright it is outside in the middle of the night, non stop, trying to get you to put sunglasses on.
You are in DEEP DENIAL. Seek help.
" I am, however, pro-Christian and acknowledge its role at the base of ... modern science."
I guess you mean Copernicus, Galileo and Darwin. Without Christians telling us these scientists were wrong, how we we have known they were right?
" I am, however, pro-Christian and acknowledge its role at the base of ... modern science."
Agh that should be:
I guess you mean Copernicus, Galileo and Darwin. Without Christians telling us these scientists were wrong, how could we have known they were right?
Keith | 03.15.08 - 4:25 pm
You seem to ignore the high wages of the CEO class. What's the cut-off point for your wingnuttery? You write of pilfering at the till, while wholesale embezzlement, looting, and robbery by "those in positions of trust" runs riot around you.
I think Marie Antoinette stated your argument more succinctly.
" I am, however, pro-Christian and acknowledge its role at the base of ... modern science."
How very Occidental of you.
Don't be so quick to discount the Chinese and the Persians.
(1) The HR manager I used to work with recognized the essential contradiction in the bank's policy: we paid people so little that they ended up with a lot of debt and cruddy-looking credit reports. But we didn't want to hire anyone with a lot of debt and cruddy-looking credit reports. The idea that you could pay people enough to disincent petty embezzlement was just foreign. And I will have you know that this requirement about pulling CRs on applicants was never a "government rule." We thought that one up all by our ownselves.
Tanta |
Thanks Tanta for pointing out this whole we only want people with 750+ credit scores so we can pay them $8 an hour in our area where rents start at $800 a month nonsense.
Republican Fiorello La Guardia had the right of it when as mayor of NYC he said that he didnt care if a business which didnt pay their people enough to live couldnt survive in his city.
How on earth can a business who pays its people poorly expect that those who are willing to accept such jobs can afford to pay their bills?
My grandparents started a business in 1930 and it survived until my parents retired from running it. My grandfathers position was that if you paid you employees so little that they couldnt live then you were publicly admitting that your business was a failure and you should be embarrassed.
As a labor lawyer I routinely argued this point with my corporate clients when they whined about the caliber of their employees I just looked at them and said you get what you pay for and if you want better, pay more. Now shut up.
In 1980, the top CEOs were paid about 40 times what the median worker in their business was paid. Now they are paid around 320 times what their median employee makes. Something is definitely way way out of whack.
(2) Topher writes:
. morg writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
How many sparkplugs do you think that over paid union worker cranks out in an hour?
.morg | 03.15.08 - 11:35 am | #
You missed my point.
number2son writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
Apocryphal bull shit.
number2son | 03.15.08 - 11:40 am | #
Check for yourself. Delphi is now bankrupt.
Topher
_________________-
Delphi is bankrupt and STILL paying millions a year to the twits who ran the business not bankruptcy and gave themselves prospective pay increases effective after clearing bankrutpcy.
And number2son is RIGHT! That is a bogus garbage number bandied around by fools. I read the Delphi-UAW contract. Did you? (And the chances of you having read it are between slim and none, and slim just left town.) You are just repeating some inflated myth circulated by the free-market crazies. Top labor cost per hour was around $24 an hour for the highly skilled tradespeople. Only time it would be remotely possible to hit around $68 was when the employer had to pay double or triple time for wanting people to work the graveyard shift on Christmas Day.
peter is 100% correct when he writes:
Delphi Automotive is a good example. $68 an hour to make spark plugs
GM, and former GM companies, use a word-of-art called "fully burdened overhead" (sometimes called "fully burdened cost") to report salaries. More than just the salary, healthcare and employer deductions, it also includes a share of land, building depreciation, property taxes, utilities and equipment depreciation. It ends up being about 2.5 times the actual salary/wage the worker gets.
I used to work for a division of GM that is now part of Delphi Corp, and the mismanagement (hello, Steve Miller!) that sent Delphi into bankruptcy was highly rewarded by Wall Street and the cast of cronies that Steve Miller took with him from the other companies he drove into bankruptcy, such as Bethlehem Steel. While Miller was wildly repeating a similar "our workers cost $65/hour" story to any newspaper stupid enough to listen to him, he was demanding that his workers take paycuts from $22-25/hour down to $7/hour. Those paycuts were never mentioned in the same stories that were talking about $65/hour.
By the time I left GM, at that division, the lowest seniority of hourly (aka union) staff was 11 years: everyone with lower seniority had been laid off. It wouldn't surprise me that some guy with 20 years seniority was being pulled from the job bank to mow the lawn. What? You don't have any welding work to do? Get out there and mow the grass! And then Miller would turn to any sucker in the media willing to listen and claim "OMG! We have guys making $65/hour mowing the grass!
Peter |
Yep dont ever believe what one side to an argument says. You end up making an ass of yourself. Humans have this habit of exaggerating to the point of lying.\t
(Sorry about nay typos, my hands are not co-operating on the keyboard today.)
Complexity could easily be a front for deception, or hiding the risk, and that is exactly what did happen in securitization of mortgages. The complexity was deliberate and not because it was necessary.
It is lot easier to full less knowledgeable, or mostly lazy, people with complexity, no?
Complexity in finance is the enemy of trustworthiness.
Jas
No one could argue that the people involved were NOT making misleading statements, especially near the end. And you are right--complexity provides more opportunities for deception, which is part of my point too. But self-deception is the other part.
IN many cases I suspect these financial geniuses were trying to mislead themselves. I guess the point for discussion would be, are the people responsible for all this 1) fiendishly clever arch-villains, criminal masterminds who planned every bit of this or 2) greedy, scheming ambitious people who eventually got in over their own heads and are now in the process of dragging everyone down with them? To me, (2) makes more sense.
I'm not denying acts of criminality--I'm just saying that these people were not in control of their own schemes. They didn't plan for it to turn out this way. They thought the music would never stop, because they were typically foolish, all too human individuals who tuned out any information that seemed to imply they were on course for disaster. Some would argue that our whole civilization is based on that kind of behavior. Seems to me you yourself have made that argument a number of times, Jas.
Marcus Aurelius writes:
" I am, however, pro-Christian and acknowledge its role at the base of ... modern science."
How very Occidental of you.
Don't be so quick to discount the Chinese and the Persians.
Marcus Aurelius | 03.15.08 - 4:40 pm | #
Marcus Aurelius,
Please don't stop commenting on this blog.
What is your educational background if you don't mind me asking?
--
"In fact, not too long ago our resident PITA, the great Moralist Jas Jain, launched an attack on yours truly by calling me a "middle manager," as if I were supposed to be insulted by that."
Tanta,
I don't recall that but if you post the whole paragraph I would appreciate. I did comment on your legalism. In America, whatever is not specifically and clearly forbidden is legal and this leaves room wide open for new fraudulent practices and that is exactly what we have witnessed in your area or mortgages.
You are a typical American who insists that someone who points out problems must also provide solutions, or vision as someone asked for. My current view is that as long as banking and finance Crooks have firm control of the whole economic system, including the govt, no real solutions can be implemented only some patchwork to calm the people for a while until the hubbub dies off.
The best we can achieve on this blog is how each can position oneself under the increasingly immoral system or whatever views expressed here make sense to one.
Jas
Want an example of greed and wage disparity inside the gov't ? Postmaster General 39% raise retroactive
to 2006. Craft worker raises average 1.9 % The Postmaster General makes more than the VP of the US. They compared his pay to the private sector
but refuse to compare letter carrier pay to UPS.
(average letter carrier makes 750 stops per day and walks 7 miles )
Management to craft worker ratio 1 to 8. Lost
billions, but have to pay bonus' for management.
As far as I can tell from what he has said, the problem with Sebastian's data arguments is that he relies upon simple correlations between individual data series and economic growth. He doesn't bother to dig into the guts, and start asking questions about causation, rather than just correlation.
This is a serious problem, because, in finance and economics, you have a dynamic system in which the rules change based upon the perceptions of the participants. Take his Wright Model B, which I gather is just looking at the correlation between the yield curve and GDP. You have to step back and ask why the yield curve has looked the way it does, and whether it means the same thing now that it did in 2001, or 1991, or whatever other year you want to compare it to.
The arguments that a lot of people, including the proprietors, make is that the yield curve is very steep right now for different reasons than it has been very steep at other times. Sebastian doesn't seem to engage with these arguments at all, and just points to past correlations. That isn't a very persuasive way to deal with the hypotheses that are being put forth.
--
"But self-deception is the other part."
John,
Bravo! Succinct expression of human follies related to the topic.
Jas
LMAO!
Uh, Keith, the "company" is the Federal Government.
Tanta - I can't scroll thru 234 comments, tho it would be interesting, but enough gets to be enough. But 2 comments I did want to make about your post: 1) are you shortening your posts? They were great long but the short ones are great too. Just wondering how much peer pressure was affecting you.
2) I'm so happy you're taking a stand for the poorer and more oppressed. You did last weekend and you are again. I come from the social services professions and I'm not a card carrying investment/economics whiz, although I find this blog addictingly interesting, but anyway, thank you.
A way back,
MaxedOutMama writes:
I have to believe that most non-financial businesses are run far better than the worst rung of the financials. Otherwise my clothes would fall apart the first time I washed them, my car batteries would last three months, I'd have to carry two spare tires in my car to be sure of getting to the grocery store, the lights would be off half the time, and the grocery stores would be half empty. I am not exaggerating, either.
Mama, so true so true.
I am an industrial engineer by training (hows that for an obsolete career choice in 21st cent Murika!) who did internships at Ford and GM in the early 90s. For the last 10 years (remember, manufacturing is dead), Ive worked in the financial services industry, first as a peon beholden to one of those firms whose behavior is yet again being glowingly described in your favorite newspaper and blog. A year ago I extricated myself from said Wall St firm, and now offer fee-only financial planning thru Fidelity.
While GM and Ford's problems were prosaic, obvious, and demoralizing, I can tell you unequivically (as I have told clients for 10 years), that if Ford or GM operated like the back office of my former employer, CARS WOULD NOT RUN.
Characterizing someone as a "Fundie" does not make them a good Christian, which is to say that dishonesty is not a Christian moral good, nor is hubris (not to mention that I am anything but a Bush fan) ... trying to stay with the basics, here. Moral people do not lie for gain. Lies used to be frowned upon. No longer.
I am of the Stoic school. My most valuable tuition came from my mentor, Fronto, and through my readings of the the Diatribai of Epictetus.
Red Pill:
I have no academic credentials.
Does it show? (That's a serious question, BTW).
Agreed.
Most nostalgia for the 'good old days' is from people that didn't live through them.
The idea that a business cycle is strongly associated with morality doesn't make much sense.
Greed is more or less constant, so it doesn't go far in explaining changes. Anyone have strong evidence that IB's are more greedy today then in the late 80's - think Drexel?
This is simply theoretical, but I think the problem is that FICO and ratings agencies became a problem, not because the didn't work but because they worked too well. Most excesses occur when something works well and is then pushed beyond its limits.
lol, well 2 outa 3 ain't bad. Darwin was a sophist. Most accomplished scientists do (quietly) believe in God, I understand. Whether or not they're Christian, I don't know. The point is, as I'm sure you know, that modern science took root the the context of culturally dominant Western European Christianity.
Just wondering how much peer pressure was affecting you.
There's always at least one comment on any given thread on this blog that sends whatever I'm drinking straight outta my nose.
True story: I had a technician from Verizon actually in my apartment a week or so ago to check the phone line (it was actually the modem). He gave me a new modem and, being very nice and helpful, was actually going to initialize it for me, but when he sat down at my desk and realized that half the keys on my keyboard don't have letters on them anymore--they've been scrubbed off--he couldn't manage. Frankly, if I weren't a touch-typist, you guys would have cost me more in replacement keyboards over the last couple of years than you pay me in tips. (And tips are very generous around here.)
I seem to recall having once responded to peer pressure back in 1979. I don't remember what I did, exactly. But I didn't get arrested and the statute of limitations has expired, so I'm big enough to admit it.
I haven't been feeling great for the last couple of weeks. I have spells of that. I was chuckling to myself last week when I came back to a comment thread and found someone--Rob?--theorizing that I had probably spent the last two hours writing some jillion-word analysis of some highly technical thing or other.
Actually, I had been napping.
Once I shake off my current malaise I'll be back to the kind of rambling nerdy legalistic technocratic middle-managerial detail-wallowing that drives Jas nuts. Driving Jas nuts isn't actually what motivates me to do anything that I do, but it's like a cool bonus.
The Chinese, Persians and the rest of the world had been playing science catch-up for some time. Doing well now, though. Do you think it arguable that modern science rose out of Western Europe? I didn't think that assertion would be all that controversial.
The point is, as I'm sure you know, that modern science took root the the context of culturally dominant Western European Christianity.
Well, kudzu took root in the same context, too.
I think you got a little logical problem there.
I'm not into religion-bashing. People who like to start religious arguments are usually their own worst enemies and they don't need me to help any.
But really. You brought up rap music. What could possibly make you think we'd take you seriously? In all the many explanations of the causes of the current economic and financial mess we're in, I have yet to hear anyone link it to the current generation's piss-poor taste in music.
I have impeccably poor taste in music myself sometimes--heck, I like ABBA--and no one has yet suggested I started this credit bubble nonsense.
Marcus,
Just ran into a great link on Maxed Out Mama's blog - Epictetus - no doubt old ground for you but others here may appreciate it, I certainly did.
Phaedrus,
The seeds of The Enlightment (Renaissance) were planted by the Moorish libraries plundered when the Spaniards finally retook the Iberian peninsula...if one credits that as the start of modern science.
Kicking in Groups
The link between 'morality' or 'civic virtue' and development has been kicked around more or less forever. You can quote Weber or just move back to Edward Banfield.
I am totally at a loss to explain Africa. Perhaps if Europeans had AK-47's 300 years ago, it would look like Africa today.
"Delphi Automotive is a good example. $68 an hour to make spark plugs."
A good example? Example of what exactly? That's a one-sided argument on the accounting ledger that doesn't tell us ANYTHING at all.
Lemme tell you a story that illustrates how stupid an argument about costs of labor can get.
My old man was a pharmacist for 39 years. He had 42 employees; his turnover rate was
"Four(college football)Oklahoma's Bob Stoops, Alabama's Nick Saban, Florida's Urban Meyer and Iowa's Kirk Ferentz coaches already have cracked the $3 million mark, leading a spiral that shows no sign of slowing. This year, for the first time, the average earnings of the 120 major-college football coaches hit $1 million, a USA TODAY analysis finds. That's not counting the benefits, perks and myriad bonuses in their contracts....
Median total compensation for 182 presidents and chancellors of public research universities and university systems was a little more than $397,000 annually."
Jocks over Nerds. In a nutshell the American value system. Aggression over intellect. It starts in our schools where the teacher has students compete for the correct answer instead of sometimes working with one child to reach that answer.
Aggression has its uses when used with other things. But I fear it has become more more naked in our culture. I can only hope that Iraq turns out to be the Picketts charge of this outlook.
I certainly believe that the emphasis on individual aggressive behavior is not optimal for a modern economy
BTW notice that the $3mil coaches all come from Bush states.
Tanta:
I'm probably one of the ones that could be accused of being more moralistic.
My thrust from reading through this is that morality does not equal religion. For the quant folks:
M /= R
Yeah, our morals have deteriorated significantly and it's showing right about now. All good points re mgmt vs labor, treatment of employees, fiduciary responsibility, etc.
While Christian, I don't blame all of this on "gee, we just aren't believers anymore." I think that it's that this country started as a nation with a basis of commons values/beliefs rooted in a common system of beliefs (judeo-christian).
While most still believe in God (60 - 70%), many in the past 40 years have left the church background, a place in which these common beliefs could be reinforced on a regular basis. It was also a place in which you had to pretty much live by the same mores as if you screwed Mr. X, word got around and it came home to roost. As many have left this background and moved on, the structure has suffered as there is no reinforcement. You can joke about this at some level, but there was a purpose served.
And it's been replaced by what? A society ruled by short-attention span devices/media. TV, media, etc. The majority of the programming has not been terribly strong in its message of how we are to treat one another (read Apprentice, etc.).
If you consider a bell curve on an X axis defining the realm of acceptable behavior, for a looooong time, the bell curve was probably a fairly consistent shape. With the loss of the structure and the rise of these other messages, the bell curve has arguably shifted left to the lower end of the spectrum. Hell, I don't even have a problem with other faiths (read Hindu, Islam, etc.) stepping in; but their growth takes time and we'll have some decades (?) until we see the bell curve shift rightwards again. There's a reason that the muslim faith is growing rapidly in this nation.
Thanks and good night. The soapbox is yours.
Well, I'll try to tone it down a little then (that bad habit I have of exaggerating to make a point).
It ain't about kudzu and rap is cultural detritis that wouldn't have been tolerated not so many decades ago, but the essential point is that character, morality and religion are entwined. Can there be character/morality without religion? Some would say "yes". I'm doubtful. Without God? Also very doubtful, I think. I'm not pushing religion or Christianity, just acknowledging the history of Christian morality and its diminishing impact on the good ol' US of A. I guess I would also say that I'm a little irritated that Christianity is not an acceptable topic in intellectual or polite society these days, even though it may be quite relevant.
But I've said enough and will stop.
I love this blog and your stuff, Tanta, so please don't get the wrong idea, and I'm not here to mess up your threads. I actually thought I had a point to make ...
Since highly paid auto workers and the Delphi bankruptcy were under discussion earlier, I'd like to point out a couple of things about the domestic auto industry.
First, the US auto companies insisted that we drive gas guzzlers - forever. When VW started selling cars like hotcakes,the "Big 3" responded with "muscle cars." When quality became an issue, they responded with bigger advertising budgets. When environmentalists demanded fuel efficiency, they built SUVs. When forced by law to build electric cars, they refused to sell em - only lease - and worked assiduously to change the law. When that succeeded, they rounded up the electrics and ground em up.
So I drive a 12 year old Toyota that gets good mileage and runs like a top.
I read a book about the Rockefellers once. It detailed how the Standard oil companies had large ownership stakes in all the "Big 3" and interlocking boards of directors. In case you have wondered why the US auto industry made so many suicidally bad decisions, that's it.
Ziggurat said, "This is simply theoretical, but I think the problem is that FICO and ratings agencies became a problem, not because the didn't work but because they worked too well. Most excesses occur when something works well and is then pushed beyond its limits."
Yes, YES, YESSSS!!!!!
"Delphi Automotive is a good example. $68 an hour to make spark plugs."
A "worker" made $140K/yr. to man a spark plug assembly line? Was that an average or median example? How many spark plugs per hour? How many employees? What would it cost you to produce an equivalent product in your basement?
If you don't know your costs, you don't know anything.
Phaedrus,
You do have a point to make and clearly did as you had other posters address it - now we may have divergent perspectives - if you had nothing to contribute then your post would just disappear in the stream of additional postings without a response (as many if not most of my posts seem to do lol).
I am totally at a loss to explain Africa. Perhaps if Europeans had AK-47's 300 years ago, it would look like Africa today.
Ziggurat | 03.15.08 - 5:59 pm
can't cite sources, but I heard an explanation of Africa's problems that went like this (there was quite a bit of study behind it, but I hate typing).
Due to the lack of domesticable animals in Africa (think of why a zebra cannot be domesticated, but a horse can), Sub-Saharan Africa was never able to make the leap beyond the simple village society (tribalism is inherent in this condition).
The problems in Africa can be attributed to colonialism (to extract resources the Africans never used), and the subsequent imposition of cultural conditions unsustainable in the African environment.
The difference being between evolution and imposition.
I'm probably one of the ones that could be accused of being more moralistic.
You can claim the word "moralistic" if you want. I personally think there's a difference between "moral" and "moralistic." Moral people just try to behave themselves. Moralists make a career out of carping about other people's shortcomings and generally proclaiming that backsliding is going on from some putative golden age. They are the panty-sniffers and conformity-enforcers. I'll have nothing to do with them.
I'm a little irritated that Christianity is not an acceptable topic in intellectual or polite society these days
You have GOT to be kidding.
It is not the case that people do not consider Christianity an acceptable topic. It is that people consider your claims about Christianity to be wrong, and also not particularly relevant to the conversation you interrupted to bring them up. There's, you know, a difference.
I am familiar with a lot of religious people who try to change the subject to religion, get rebuffed like any rude person who barges into a conversation and tries to dominate it, and then claim that religion is "not welcome."
People who want to talk about Macs versus Windows aren't welcome here. Ditto for long discussions of football games. Those who keep trying to turn this board into non-stop stock tips or political spouting off get short shrift, too. Don't tell me they're being persecuted.
Phaedrus says: "Can there be character/morality without religion? Some would say "yes". I'm doubtful. Without God? Also very doubtful, I think."
That statement is breathtaking in it's ignorance. In other words, by definition, atheists and agnostics are at best amoral and lacking in character. Amazing!
I don't want to trash religion here, but I would bet anything I had that the vast majority of the crooks we are railing about here profess Christianity - as does our "Born Again" president and almost all of his administration. Some character!
I could even make an argument that "morality" of religion is entirely based on fear of punishment; when that fear is absent, it's anything goes - and THAT is the cause of our problem.
Ethics and ethical behavior existed long before Christianity and in some cases even managed to survive - in spite of it.
Please show actual evidence that any religion has produced more ethical behavior in it's adherents than any of the philosophies. Oops, I forgot. You have faith - evidence is a no-no.
That was not clear at all.
here:
beasts of burden (domesticated animals) allowed man to build cities (population growth/expansion) and develop technologies.
Sub-Saharan Africa: no beasts of burden/no cities/no technologies/plenty o' resources/stable cultures and populations.
North Africa/Europe/Asia: beasts of burden/cities/technologies/growing populations/growing demand for resources.
So, the city people go to Africa to get their resources, and they take their cities with them. They introduce and impose a system that is destined to fail in the context of place. "Proper" cotton clothing, weapons, roads, cars, tractors, mining equipment, economics, money, railroads, and systems to government were imposed to replace a naturally occurring , naturally evolved system.
Our way is not the only way.
RE: Tanta's post about the back office peon's is enough to bring tears to your eyes (if you've been a peon for some time as I have.)
There is a fantastic book called the "Peon Handbook" that should be the bible of every manager.
I work for the gov't and every time the administration changes we have a bunch of political appointees who ask for our organizational chart and then set about to ferret out all the waste and inefficiency in gov't.
The take a little information about what we do, slam it into whatever schema they are familiar with and fill in the grey areas with solution focused ignorance.
It seems to escape them our ways of executing what has to be done have evolved out of years of having to deliver. (And trust me, if you have an agency that is unable to help you it's because they have some idiot at the helm who won't let his people help you.)
HC - I didn't have any specific riots in mind - but when you asked your question - the first that came to mind was the Miami riots of 1980 (because I lived through them - I didn't simply read about them in the newspaper or see them on TV). They were allegedly a response to a criminal jury verdict the black commmunity didn't like. Regardless of the merits of that trial (I worked on the civil case on the plaintiff's side - and am not at liberty to discuss the merits of the lawsuit - which settled) - it kind of proved my major point. Which is that absolutely nothing was accomplished except perhaps some of the last good businesses in that area left - and nothing ever came back to replace them. The area is still - not to put too fine a point on it - a slum. Maybe Publix or another major chain has opened a grocery store there as of today - but - as of the time I left Miami (1995) - it hadn't.
Your comment about my holding a bake sale is kind of interesting. I threw out my comment about civic duty/responsibility to see how people would react. And your attitude is I'd be an idiot to do anything except look after number 1 (and maybe some immediate family and friends). So be it. If more people here are interested in finding scapegoats than trying to figure out solutions - then I will simply follow your suggestion. I am somewhat of a believer in the phrase "no good deed goes unrewarded" - and I guess when I read what people like you write - my beliefs are confirmed.
Marcus Aurelius - If you look carefully at high school graduation rates - not only in "red states" in the south - but "blue states" too - you will see that in southern states - the graduation rates are a lot different if you factor in race and ethnicity. Here are the most recent Florida stats:
http://www.fldoe.org/eias/eiaspubs/pdf/gradrate.pdf
As you can see - there are big differences between graduation rates for (mostly Republican) whites - and (mostly Democrat) blacks. Hispanics are in the middle - but they are kind of a mixed lot in Florida these days (I suspect there are big differences between 3rd generation Cuban Americans and first generation Mexicans).
I don't know whether the states with the highest graduation rates - and overall education achievement levels - are red or black. The one thing they have in common is they are almost 100% white. Think Iowa - North Dakota - Wisconsin and Nebraska.
BTW - Having lived in the south for about 35 years - I wouldn't argue with anyone who says that there are rascist people here. OTOH - I have lived in Boston and Philadelphia too - and the Southie's in Boston and Philadelphia have nothing to brag about when it comes to racial tolerance.
FWIW - when I was in college - I worked part-time to make money helping a professor who was writing a book which analyzed the US from a statistical basis (computers were kind of new then - as was collecting data). His basic findings were that a lot of bad things (like drop-out rates - illegitimate children - poverty - etc.) were most closely correlated with race. Every other factor was a distant second. Being a good old-fashioned liberal who was afraid to speak as openly as the late Senator Moynihan - all the research that was done was never published. Roby
Marcus
In the old Nature/Nurture debate you take the latter. The pendulum has swung toward nature.
Organisms adapt to meet the needs of the environment. The environmental system of sub-Sahara Africa over the last 20,000 years or so is quite different then that of the EuroAsia land mass. It is quite unlikely that a starting population split for say 700 generations under different environmental conditions would would end up with these two groups still being identical.
Note I am not saying either is better or worse, but yes different
Most accomplished scientists do (quietly) believe in God, I understand.
Sigh...
Complexity could easily be a front for deception, or hiding the risk
Interfaces
Interfaces are a function of complex systems. The nature of interfaces is that they deliberately hide details, not to conduct fraud but to minimize overall transaction costs of a system.
Id say that the current underdevelopment of Africa was proximately caused by colonialism, which was made possible by the maritime prowess which resulted from science/technology that traveled along the Silk Road and the Nile and arrived in Western Europe via the Mediterranean Basin.
Squeezed:
Are you suggesting that one can believe in both God and Evolution. I'd say that is close to treason. (smile)
The correlation is not simply between skin color and bad things. It is between skin color-based discrimination and poverty/subordination, and between poverty/subordination and bad things.
I am totally at a loss to explain Africa. Perhaps if Europeans had AK-47's 300 years ago, it would look like Africa today.
Ziggurat | 03.15.08 - 5:59 pm
A few hundred years ago (a small span, in the grand scheme of things) Europe WAS a lot like Africa today--roving mercenary bands, famine, pestilence, superstition, etc. etc. So it's hard to argue that Europe is the way it is TODAY because Europeans are smarter. If that's so, they must have figured out a way to get a lot smarter in just a few hundred years. (But then, if they really did get so smart, why didn't they figure out a way to avoid the unpleasantness of World Wars I and II?)
Marcus A: the ideas you're quoting about the differing resource base of Africa (domestic animals etc.) probably come from Jared Diamond's "Guns, Germs and Steel," an excellent read.
I've seen all kinds of statistics that show dramatic differences between racial groups in terms of poverty, crime, intelligence, athletic ability and you name it. Maybe it all means something. What it DOESN'T do is give me any clue about the intelligence and character of the guy sharing my seat on the bus--based on his race.
My take is that the correlation to athletic prowess is not with Africans per se, it is with the African experience in the Americas.
No African has ever won an Olympic sprint. South Africas Daphne Hasenjager (silver 1952) and Frankie Fredericks of Namibia (silver 1992 & 1996) are the only African sprinters to medal. Shes Euro, and he had been cherry-picked to train in the US and represent a US university (BYU, where he got a degree in computer science and an MBA. Physical and mental prowess arent incompatible).
Slavers preferred the most physically robust Africans, and the captives were further culled by the horrific middle passage. Once here, many were bred for physical strength, size and vigor. Until relatively recently, most African-Americans were legally restricted to menial physical pursuits, and racist tradition keeps all but a few out of the upper reaches of business, politics, and the intellectual professions.
Sport is one of the few potentially lucrative areas where black kids can find ready acceptance. Little wonder that they gravitate there and excel.
Tanta - You're right about the difference between "moral" and "moralistic". I don't know much about other religions - but - in Judaism (at least for those of us who aren't ultra-orthodox) - the bottom line is "a life of good deeds" - as opposed to a life of piety or preaching to others. You are judged by what you do - not a few words you utter on your death bed. Seems like a good way to approach life. The picture of Dorian Gray can't change 10 minutes before death. Note that I am certainly not a Biblical or religious scholar. And that even if my religious understanding is mistaken - I think it's a good way to live.
BTW - I think most of the messages here about management must be true. Otherwise - Dilbert wouldn't be the enormous success that it is!
Marcus Aurelius - A lot of contemporary thinking indicates that countries rich in resources have historically been crippled in terms of political and other forms of development because of the tendency of elites (internal and external) to take absolute (and frequently corrupt) control of the resources and just about everything else. Think of contemporary Africa and the middle east. When a country has nothing in terms of natural resources - it has to use the collective brain power of its citizens to accomplish anything. This is of a course a gross oversimplification of articles that may run into hundreds of pages
. Roby
Make that "no good deed goes unpunished". Roby
Watson:
I am intrigued by the colonialism argument. If say like a plague colonialism had a purely negative effect, then as time goes by we should see a decrease of its effects and a rise of the underlying natural state. I wonder which African states you feel are in any way better off today then they were under colonialism.
Also we might posit that the longer colonialism was imposed on the state the worse the effects. Do you find this to be true? How then do you explain South Africa??
where am I?
I want my blog back!
Median: for a set of observation the number above which one half of the observations are greater and one half of which the observations are lesser.
Put 100 people in the room each of whom makes $50,000 per year and the median is $50,000. Replace one with Bill Gates and the median is still $50,000.
Median is one useful measure of central tendency, but it tells you very little by itself.
"His basic findings were that a lot of bad things (like drop-out rates - illegitimate children - poverty - etc.) were most closely correlated with race."
No, they were about socio-economic status (SES), and that is what all such studies show now that there are a sufficient number of non-European ethnic groups represented in high SES quintiles to make the distinction clear even to those who lack the sense to look for them: The correlation of outcomes such as drop outs, illegitimacy, 'poverty' (actually relative poverty), etc are now all identified with low SES and in regions where poor whites predominate those negative social outcomes also predominately appear in that group.
The correlation of such outcomes to race was always spurious but did at least have a modicum of face validity even through the 1960s because racism is not simply a set of bigoted attitudes -- many Southern whites were probably not lying when they said they 'liked' blacks -- it is systemic and systematic oppression and can be as invisible as the air one breaths even as it denies the best of education, medicine, jobs, places to live, virtually everything to those held less worthy within the value structure(s) of the dominant social group(s).
Didn't have to be an old fashioned liberal to figure any of this out a half century ago, just a good scientist; or just a good person if it comes to that.
And yes, absolutely right, systematics won't tell you much about that fellow sitting next to you on the bus much less explain why he should be sitting in the back rather than where he pleases.
Robyn:
I checked your doc. I didn't see any mention of Democrat vs. Republican graduation rates. Nor county break-downs by political party.
So, are you saying that Republicans are white people, and Democrats are black people? or is it that white people are smart, so they're Republicans, and black people are dumb, so they're Democrats. Is there a correlation between the hispanics being half-brown and half-smart?
If not any of these things, what are you saying?
Watson - I refuse to bear "the white man's burden" in the US. When you Mayflower guys (whoever you are) were beating up on blacks in the US - the Czar was beating up on my ancestors. All of my grandparents - and many of their siblings (none of whom ever graduated from high school) came here at the start of the 20th century. When they were teenagers. I assume you've seen Fiddler on the Roof - that's my family. Good thing many of them came here. Those who stayed behind were either killed in WWI - or WWII. Both of my grandfathers became citizens (relatively) quickly because they volunteered to fight in WWI.
As for discrimination - when I first moved to Miami - all the "colored only" signs were gone (although not all of the racist sentiment) - but "Jews not welcome" was still a prominent part of the landscape (contrary to what most of you may think - Miami was a very anti-Semitic city). One reason we left Miami in 1995 is most places where one could play tennis or golf didn't welcome Jewish members. I could never join a decent eating club in Miami where I could take clients to lunch when I was practicing law because I was both Jewish - and a woman. We're not talking ancient history here - we're talking about the 70's to the 90's.
Note that all of this was kind of par for the course everywhere then. When I clerked at one of the most famous liberal law firms in Phladelphia in 1969 - I was not allowed to join the other clerks for weekly clerk/partner lunches because the club at which they ate did not allow women to eat there.
Anyway - I don't think that the only response to stuff like this is dropping out of school and having illegitimate kids - or spending the rest of your life hating the jerks who acted like this. You make the best of things - and move on. Roby
Watson - In Florida - blacks are almost 100% Democrat. Whites who aren't Jewish are - for the most part - Republicans - with the exception of the I-4 corridor (Orlando) swing voters. Whites who are Jewish (mostly older people from up north) are almost 100% Democrat. And Hispanics are hard to "pigeon-hole" because there are all different kinds of Hispanics. E.g., Senator Martinez (Cuban-American) is very Republican. Funny - I always thought he would make a great VP candidate with McCain (not because I like him - it would just be a great match IMO) - and then I realized he couldn't run because he wasn't born in the US. Time for dinner. Take care, Roby
energyecon writes:
Phaedrus,
The seeds of The Enlightment (Renaissance) were planted by the Moorish libraries plundered when the Spaniards finally retook the Iberian peninsula...if one credits that as the start of modern science.
Really I'd wager the enlightenment owes more to the rediscovery of ancient Greek culture. Which in turn was set up by humanists in the middle ages becoming interested in languages* . It's all the rage these days in pop History to to ascribe blame/credit for big trends/events to obscure little ones, "How __________ saved/created Western Civilization/America/Science" but I really think that's a bit dubious. Most big trends and movements have diffuse and complex origins.
*A thread picked up in the Reformation, with believers turning from the Jerome's Latin translation to the original Hebrew and Greek texts
Apologies, Missed Information, for this digression. CR has a new post upstairs on the Trade Deficit and Mortgage Equity Withdrawal.
Plschwartz, my understanding is that independence for African countries (only 40 years ago) was primarily a political formality/illusion, that those countries remain economically subordinate, and that by and large they are not better off.
If you are referring to South Africas relative affluence, I think its due to its gold and diamonds, and to the ethnic affinity between its white settlers and the powers-that-be in the major economies. The transition in South Africa was mainly political, not economic. And most Blacks there continue to have a low standard of living.
(I am not suggesting that Africa is without its share of scoundrels and backward practices.)
where am I?
I want my blog back!
Believe me. I hear you.
Robyn, I guess we would agree that European civilization wasn't so hot, otherwise Europeans would have stayed there.
I dont mean to make light of your ancestors suffering; the entire planet is drenched with blood. Its wrong for light-skinned immigrants to grab a perch in the US skin-color hierarchy, and then slander their darker brethren for being unable to succeed on the level playing field.
Jefferson Davis et al are dead. We need to be honest about their deeds and the consequences. None of us should suffer or benefit from their sins. No unjust deprivation; no unjust enrichment.
OK, Tanta. Ill be quiet. Although I would add that economic theory is generally justified as being good in some moral or utilitarian way. I think that our digression has been relevant to whats good and just.
Booooooorrrriinnnngggg! take it to a room for heaven's sake.
Francois | 03.15.08 - 6:03 pm | #
Francois, perhaps if you were to extend your study week longer than your workweek you might understand.
Can we have a tip jar to pay Robyn for not posting?
It is that people consider your claims about Christianity to be wrong, and also not particularly relevant to the conversation you interrupted to bring them up. There's, you know, a difference.
Oh, give me a break, Tanta. Jas gets it.
Whatever morality exists today is a carry over from the past centuries and some due to religious beliefs.
--
Boy, is Tanta clueless or what.
I am not a moralist who preaches how people should behave. I just comment on what I observe. And moral corruption, far greater than in the past, is what I do observe in America. The mortgage industry resorted to extreme levels of immorality in pushing debt. We can see the chickens coming home to roost.
Jas
One of the wise ones I sometimes listen to once said something to the effect, get all the training you can in your chosen profession because the world, by and large, will pay you what you are worth, not what you think you are worth.
While I complain about bosses who pay as little as they can and still meet production quotas. I tend to think, especially in this age when we can easily discover what various professions pay, it is silly to prepare for a career in factory floor drudge work (i.e. sluff through high school and no further) then expect to be paid more than minimum wage.
Generally speaking, those who work harder at preparation for a given career tend to earn greater rewards.
Of course, if I had reached this stage of wisdom about 40 years earlier, it would have been much more useful to me...
Odd how so many seem to confuse character with God-bothering. Using one to substitute for the other leads to the conclusion that Torquemada and Ted Haggard were real stand-up guys.
When I was in college (late 1980s-early 1990s) I applied to work in a bank (that has been mentioned before in this blog) for the summer. My qualification was, apparently, being a student at a college with a good football team--that's all the HR person talked to me about, anyway. I had no credit history at all. I got $6.50 an hour and got to cancel and issue credit cards and make reports to credit bureaus.
I was honest enough to do my job correctly but I got caught eating in the cafeteria as a freeloader (because they'd screwed up my membership). That was apparently the only thing they ever did check.
There is a fantastic book called the "Peon Handbook" that should be the bible of every manager.
Honestly, managing people just isn't that hard. I'm very, very fond of William Slim, the British commander in Burma during World War II. His management style was very simple, very effective, and easily transportable.
1) It is an officer's duty to take care of his men before he takes care of himself.
2) Top management (i.e. Slim) actually fires those officers that don't follow rule #1.
3) When discussing your business, give credit to those around you for the things that go right, and take the responsibility for the things that go wrong.
Those three rules really cover most of it. I highly recommend reading Slim's memoirs Defeat into Victory, though it helps to also read some other material on the subject. Slim practiced rule #3 to a truly astonishing degree, and his memoirs alone don't do him justice. In a way, he's just as dishonest as the German generals were in their memoirs, but in a much more refreshing way.
and europe had in their dark history the "oil" of past, coal. and still there is a lot of coal in the european continent especially in germany and uk.
so yes the problem in africa have to do with mentality. in what the japanesse and german differ from iraqis and africans?
well in europe if you dont work you freeze to death, in africa you find some bananas.
why is fidel the last commie standing? ok was
well because its warm in Cuba nad they have bananas xD
i had two schoolfriends on electrotechnic comprehensive school (senior high) they were both gypsies. one of those two had the top score in the acceptance exam, the other was average. the one with the top score dropped out in the 3rd year, the other one finished school and went to college.
its the being lazy and being allowed to be lazy without consequences,. why should i learn, why should i work if i dont have to?
To help Tanta get the blog back, the subject of trust is not by any means limited to religious considerations. The fact is, it is at the point where trust becomes involved that economics gets back to it's roots in political economy (and always remember that Smith's 'other' book was his Theory of Moral Sentiments).
See also Fukuyama's book called simply "Trust" from the mid-90's; not my favorite of his, but thought-provoking nonetheless.
Even marginally rational actors (see a great review in today's NYT Review of Books) at some point wake up to being deceived in economic transactions. They then have to make a choice: accept the loss and learn to be more careful or seek to redress it by taking economic, emotional, or physical
revenge.
Hobbes' view of nature suggests that most people will take physical revenge (French Revolution, anyone?). However, Gandhi was very right when he said that the rule of "an eye for an eye" would simply ensure that the whole world will become blind.
The faith that modern economists have in human "rationality" is likely very naive - in fact, we are only sporadically rational, and are just as likely to act against our own interest as for it.
What religion can do (until taken over by dogmatists) is to encourage taking a more nuanced perspective about out own ability to reason. To paraphrase Robertson Davies, "When human reason refuses to admit sovereignty to anything other than itself, life becomes tragedy."
Hysterian writes:
While it is true that Henry Ford raised the salaries of his employees, it is forgotten that he was successfully sued by his stockholders and forced to rescind the wage increases. Don't let anyone steal your history!
Let's also not forget that Henry Ford was a notorious anti-unionist who viciously went after organizers. His internal security force was a private army used to intimidate and abuse workers. You know how the UAW tends towards very confrontational, take-no-prisoners rhetoric? That's because in the early days of the union organizing was a literal matter of life-or-death due to the viciousness of auto co. management.