The Conflucian policy advice to Hillary Clinton on economics

It’s a bit much for one dragon.

She didn’t ask for my opinion but she’s getting 200 advisors to tell her theirs. The problem she is facing is how to rebalance the country in terms of income inequality without, you know, pissing off the ultra wealthy. I’m not sure it can be done. A little bit of a snit is to be expected in all likelihood. Although, maybe she could have someone from Vox put together one of those cool and groovy graphics that demonstrate that no matter how hard the vanishing middle class works, we will never be able to afford our own yachts. That might bring a tear to the eyes of the 1%. The graphics should show how big a boat you can buy on a lifetime of $32000/year (if you’re lucky enough to get that these days) compared to what Steve Ballmer can buy.

Ok, so what would I recommend? Well, the rich are not going to like this but I’m not really interested in how the rich feel about these things. I’m only interested in bringing back prosperity, income security and innovation to the American middle class. It’s not all about them, except they are behaving like greedy dragons sitting on a giant pile of gold. If they’d just get off the stash we wouldn’t have any problems with the rich. I don’t envy their wealth and don’t want to be like them. I just want to be fairly compensated without feeling like I just got a handout that i didn’t deserve.

What I see as the biggest obstacle to income equality is what I call “exploitative profit mining”. That is the idea that Americans  can be harvested for various wealth through rents, fees and deregulation. I don’t want to feel like a crop anymore. The number one biggest policy initiative that I would propose is to eliminate the incentives to take advantage of everyday Americans simply because there is no one making sure it doesn’t happen. Than means reregulation. I can already hear the screams and howls from the flaming swamp monsters of the ridiculously rich. We can start at Wall Street. Let’s stop rewarding excessive financialization and risk taking. Maybe this would mean that Wall Street bonuses have to be capped at no more than 15% of income. That’s right, give those guys a straight salary. Maybe this would mean you can’t work an analyst to death at 100 hours a week. Go through every industry and increase the compensation to all stakeholders, not just the shareholders. Hire good managers and stop making CEOs co-owners who have an incentive to increase the values of their options at everyone else’s expense. That’s not socialism. That’s fairness.

Speaking of shareholders, I would like to see an alternative to the 401K. Americans should not be forced to gamble their retirement savings at a global casino. It’s immoral to require non-wealthy Americans to do this. Sorry, I’m not into it. I don’t like risk, especially when I’m going to have to live on that money. Plus, the 401K system undermines industries and innovations that create jobs. We have all seen investments gain in value when jobs are eliminated. The work still has to be done but it’s sent overseas or heaped onto the backs of people who are left after the lay off bloodbath. It’s inefficient and it destroys wealth of the middle class. Again, shareholders are not the only people who count. Bring back defined benefit pensions.

Medicare for all. There I said it. It’s ridiculous that anyone in this country has to be at risk of losing everything they’ve worked for all of their lives because cruelty is the flavor of the day on TV and radio. Let’s stop beating people when they’re down. If there are going to be sacrifices, everyone should have to make them, including the people getting rich on hip joint replacements and hospital beds. If you can’t get Medicare for all, at least impost cost controls and uniform fee schedules. Insurance companies shouldn’t have to negotiate different payments for each course of treatment based on how much profit providers think they can reap. Obamacare is not the wonderful panacea it’s been made out to be and it was never supposed to control costs. Let’s stop lying about it.

For god’s sakes, do something about long term unemployment. We’ve been hanging out here for too long. The jobs numbers are not telling the whole story. There are too many part time positions, too many temp positions and salaries are too low. Plus, ageism is rampant. Those of us who have decades to go before we can retire need to live on something. In the meantime, our lives are on hold. We can’t spend money because we don’t have it. That’s a drag on the economy and it depresses the wages of everyone else. People in the sciences especially need help. There’s a blighted generation that needs to be working. Set up some  private-public research labs, pay us a living wage and let’s get on with it already. We’re being wasted out here.

Those are some of my suggestions. I can think of a zillion more. We need to work on infrastructure, especially broadband. We need to gradually free ourselves from fossil fuel. The lefties will make climate change the reason but I’m just as interested in loosening the control of the super rich oil barons on the rest of our lives. Their price manipulations affect everything from mass transit initiatives to food prices. We should be allowed to choose whether we want to be owned by oil. I choose not to.

By the way, I don’t want profit sharing. I want a nice, steady income with a living wage. I’ve seen profit sharing schemes and they’re not serious. They are no substitute for stability. Our corporate overlords have a different value system than average Americans. Some of us do not want to be our own bosses, aren’t particularly turned on by playing capitalist games and just want the sweet relief of a regular paycheck. Recognize this. It’s important. Let’s stop measuring success in terms of how many yachts we can buy. Success can mean many things from discovering a new drug to being the best baker around. It’s not all about money.

I invite other Confucians to chime in here. What would your advice be to Hillary?

Finally, here is a video from one of my favorite straight talking Australians, Jane Caro. Caro has a background in advertising but she has been a popular speaker on education and feminism as well. In this video, Caro speaks about Dangerous Ideas. Her bit on quotas for women on boards and other institutions is brilliant. Not to be missed. So, I would add as a final suggestion to Hillary to institute a Gender Glasses program like they have in Finland. That is a government office that actually gathers cold, hard statistics from workplaces that demonstrate whether there is discrimination that prevents women from succeeding. No more “he said/she said”. If statistics are good enough in sports, they’re good enough to prove sexism in the workplace. Let’s measure everything. This country is way too deferential to men’s needs and ignores the economic impact on women’s lives.

Fast forward to about the 3 minute mark to Jane’s introduction.

This week in STEM: Annnnd a NEW round of job cuts!

This morning, Microsoft announced a new round of job cuts.  It recently acquired Nokia and that seems to be where the bulk of the 18,000 hits are going to come from.  Let’s try to parse why they’re doing this, shall we?  Here’s an explanation from new CEO Satya Nadella:

The larger-than-expected cuts are the deepest in the company’s 39-year history and come five months into the tenure of Chief Executive Satya Nadella, who outlined plans for a “leaner” business in a public memo to employees last week.

“We will simplify the way we work to drive greater accountability, become more agile and move faster,” Nadella wrote to employees in a memo made public early Thursday. “We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making.”

The size of the cuts were welcomed by Wall Street, which viewed Microsoft as bloated under previous CEO Steve Ballmer, topping 127,000 in headcount after absorbing Nokia earlier this year.

“This is about double what the Street was expecting,” said Daniel Ives, an analyst at FBR Capital Markets. “Nadella is clearing the decks for the new fiscal year. He is cleaning up part of the mess that Ballmer left.”

The goal is to simplify the work process.  That sounds good.  Everyone likes simplicity.  It makes work easier to deal with if the path forward is cleared of unnecessary complexity and clutter.  But that’s not really why they’re simplifying, is it?  The goal of the simplification is actually to “drive greater accountability”.  On the surface, this also seems reasonable until we stop to consider, accountable to whom?  If you’ve been paying attention in the last decade, this usually refers to shareholders.  Shareholders want greater accountability.  Does that mean they want a bunch of reports and retrospective analyses to peruse at their leisure to make sure everything is being done with an eye towards simplicity, agility and speed?  Probably not.  Accountability is generally a code word for shareholders wanting to see that they’re not spending a penny more on people than they absolutely have to so that they can increase the amount of money they can hoard get for their shares.  It will be up to these 18,000 people to account for their existence.

It sounds like they’re going to get rid of management- everywhere.  Good luck with that! </snark>

Finally, we see that Steve Ballmer left a mess.  Not sure what that’s all about since I’m not in the software side of tech and I only use Microsoft products under duress.  But just because the company now has 127,000 people doesn’t mean that some of them necessarily have to go.  Unless they need to be accountable, of course.  I’m sure this comes as no surprise to the workers at Nokia but no one forced Microsoft to buy them.

So, to recap, Microsoft buys struggling cell phone manufacturer Nokia, drinks its smooth and tasty patent milkshake and discards the worker bees because they are no longer sufficiently accountable.

If anyone is still wondering why the US doesn’t make anything worth exporting, look no further than this layoff announcement and the rest of the carnage happening at IBM, Cisco, Intel and Hewlett-Packard.  It looks like a bloody hemorrhage this month.  There will be a lot of tech workers hitting the virtual pavement.  Contrast this with the way Germany handles its STEM workers.  When times get tough, they reduce their hours to part time and keep their wages high.  That way, when the economy recovers, they can rev their engines up again and work productively with a work force that has not lost its critical skills.

German shareholders and the government work together in a smart way to ensure they have the skills to compete in the market later.  American shareholders and government?  ehhhhhh, not so much.  Finland (the home of Nokia) must be thrilled with Microsoft’s announcement, even though they must have been expecting it since the acquisition.

Someone should tell the Microsoft people to stop referring to its workforce as a “mess” that needs to be cleaned up.

In the meantime, Derek Lowe wrote another post about the prospects of new Chemistry PhDs.  It looks like the number of post docs has gone down in recent years and the number of unemployed PhDs has gone up.  So, to recap, you spend 4 years as an undergrad and about 5-7 years getting your PhD in a very difficult subject that demands sharp, innovative thinking and many thousands of hours of lab work and what do you get for your hard work?  Not much.

Paraphrasing what a former colleague told me in 2009, when it comes right down to it, the reason why employers say they can’t find good help anymore is because what they want, what they really, really want, is a new graduate with 25 years of experience.  I would add, and someone who they can make accountable whenever they please.

Hey, did you hear about the CDC losing track of influenza and smallpox vials?  Funny what persistent underfunding and a round of sequestering will do to your disease control mechanisms.  I’m not surprised after what I heard during my trip to Cambridge, MA in May.  A recent visitor to the CDC said that the place is demoralized and disorganized with co-workers not even knowing who was in their groups.  I don’t blame this on government since the CDC didn’t used to be this FUBARed.  No, I blame it on the authoritarian nut cases in the Republican party whose intractable, unyielding, “take-no-prisoners”, never compromise, never surrender attitude and actions are putting the rest of us at risk.

We need to hold them accountable.

Oh, by the way, congresspersons who vote for more H1B visas in the immigration bill before the excess glut of American STEM workers are re-employed should be vigorously primaried.

 

Hmmm, the financiers seem to be undermining business

It takes the Brits to put the pieces together and spell-it-out for the terminally slow Americans.  This piece on Business Secretary Vince Cable’s revelation is from the Guardian this morning:

Britain’s banks are “throttling” the economic recovery because of an anti-business culture which focuses on short-term profits, the business secretary, Vince Cable, has said.

As Ed Balls warned of widespread outrage if the ousted Barclays chief executive, Bob Diamond, receives a £16m pay-off, Cable accused banks of undermining multibillion-pound measures to help businesses.

Speaking on The Andrew Marr Show on BBC1 on Sunday, the business secretary said: “The real problem at the moment is that the banks – because of their existing culture, which is frankly anti-business, obsession with short-term trading profits, not focusing on the long term – are throttling the recovery of British industry.”

Tell me more:

He said: “There has been a breakdown in the mechanism, in the transmission. It just doesn’t get through to companies. We are going to ensure that the new money that the chancellor and the governor of the Bank of England talked about at the Mansion House does actually directly reach the companies.

“Given that our leading banks are, frankly, throttling recovery by not making business lending available, particularly to small-scale companies, we now have to focus single mindedly on that task. How to make sure that the additional money gets through to business.”

The business secretary indicated impatience with some of his Conservative colleagues, who were wary of state intervention, as he praised the scheme by his predecessor, Lord Mandelson, to revive the car industry.

Aaaand?:

Highlighting the importance of working in collaboration with business, he said: “Laissez-faire just doesn’t work. When you are making big long-term investments you have to have the government and the private sector working together. It has been a great success story in the car industry, similarly in aerospace and life sciences and others.”

Well, it *used* to be a great success in the life sciences business but no longer.  Mr. Cable might want to check in with the people who live and work around Sandwich, if there are any left.  A lot more government intervention will be required if Britain and the US ever expect to be on top in that area again.

In conclusion:

The shadow chancellor had earlier warned Diamond against accepting a £16m pay-off from Barclays. Balls said: “People will look at that and think that is totally outrageous. It is outrageous that somebody should stand aside because the board decides there is a problem and then get a payout which is off the scale for anything normal people will receive in their life times.

“The shareholders are going to think really hard about this. The government will need to look at this and talk to the shareholders. They clearly talked to the shareholders about Mr Diamond.”

Indeed, the shareholders should think long and hard about a lot of things.  For instance, do we need so many people to be trading their defined benefit pensions for 401Ks that will be used by the banks as a constant, monthly replenishing source of money with which they can gamble?  Do the hard working people of America need to also be the same shareholders who cheer at a bump in their portfolios at the same time they fear for their jobs (so other 401K shareholders can get a bump in their portfolios)?  By the financiers’ logic, the 401K will achieve its maximum value as the number of workers approach zero.  How did we get talked into this scam in the first place anyway? It sounds so stupid and self-defeating that we should all have our heads examined.  Oh, sure, there’s nothing wrong with investing if you have the money to do it but to use Wall Street as your primary source of retirement income?  Let’s face it, we are morons.

The politician that proposes a mechanism that allows us to convert our 401Ks to pensions gets my vote.

Anyway, it’s good that someone in government, well, someone else’s government, has finally made the connection between incentives for short term profits and an anti-business atmosphere.  Perhaps the Brits are finally waking up to the idea that all of the deficit reducing austerity measures are meant to do only one thing: increase the wealth of the wealthy at the expense of everyone else, including Main Street businesses.  I don’t expect Republicans will acknowledge that this is what is leading to so many layoffs and dragging the economy down.  For that matter, I don’t expect Democrats to acknowledge it either.  And from what I can see on the frontpage of the NYTimes, this is something that the city elites don’t want to talk about.

By the way, why do I have to go all the way to London to get any new information on the LIBOR scandal?  Why exactly is there so little coverage of the LIBOR scandal in American newspapers? Who are they trying to protect with this “nothing to see here, move along” attitude?  Anyone want to take a guess at this?  And did you know that the CFTC started investigating the LIBOR manipulations back in March of 2011?  That means they must have been aware of it before that time.  THAT means that when Occupy Wall Street was righteously indignant at Zuccotti Park and was getting beaten up by the DHS and smeared by our elected officials, the Obama administration was well aware that there had been fraudulent interest rate manipulation on an enormous scale.  Those same students who can’t pay their huge student loans with their high interest rates are the same people who were potentially harmed by these manipulators.  Why was it so necessary to kick people when they were already down on Wall Street’s behalf?  And knowing this, do we have any reasonable expectation that Barack Obama will hold Wall Street accountable for what it has done to our economy and our futures?

Why so much silence from our elected officials?  And what did Tim Geithner know and when did he know it? Inquiring minds want to know.

Oh, and I ran across this bloke on twitter.  Is he representative of the British public?  Because he is asking a very good question about why the scandal is being handled like an internal governmental investigation instead of a judicial inquiry.  It’s similar to what we are doing here.  That indicates that they are trying to prevent too much public outrage and real reform.  But if the general public gets the gist of the scandal as well as this guy does, then how long will this stay contained?  And what effect will it have on an election year?