IdeasConnect

Progressive Unchained Meritocratic Capitalism

Context: Is Meritocracy Good? by James Kwak on The Baseline Scenario

 

Agree to the extent that merit has some of the same element of lottery (talent part of it) as does family background. However, one part of merit is also the work one put in to build on one’s God endowed talent. agree that mere Education (especially when even that Education is unaffordably expensive for many) does not create a normative case for higher earning by itself, unless you can demonstrate it’s utility in an untinkered, un authority-manipulated marketplace:

http://www.nolanchart.com/article6125_RiskSterilization_of_PinStriped_Market_Careers__Its_Consequences.html

Yet It is a societal mistake to scuttle merit and emphasize behavioral suaveness and political navigation through the entrenched power structures - as has occurred under the Corporato Topdown socialism in the last few decades, with its accent on doing well via "Corporate Ettiquetes", "Managing to survive 'Superiors'", while the Government shares the responsibility for Corporate Toplines and Bottomlines. Any ' lottery' - other than straight merit wrt the exact work one does on paper - gives sub optimal results for society. Having a system in which those in power take in new people and promote them as they 'assess' best within the organization 'system' eventually rots, because it does not receive the best from meritorious people - as the mediocres are forever more open to sucking/managing their way up than are meritorious people. Worse, if the latter actually get pushed into the illegal-immoral pathways to get their merit their due, the society is even worser off. So, a system of (individual merit . Progressive taxation) is perhaps the best. With it’s progressive tax haul, the Gov provides for equality for opportunity, not outcomes, and not suppression or "management" of merit and it's achievement- for oneself and for making society better off.

Ohm

Corporate Skew

http://economistsview.typepad.com/economistsview/2011/03/are-ceos-overpaid.html#tpe-action-resize-392

the problem with a self-mandated (as opposed to electorally (re)mandated one like most modern Govs) system [and I see widely held public listed companies as practically self-mandated since I do not believe there is any real thing called Shareholder Democracy in actual operation] is that its feudalism has little scope of correcting, it just gets worse. We get left with little choice but to accept the payouts to the Executive and the facilitator layers, disproprtionate to their value add (another problem is how to even quantify that value add). So a practical view needs to be taken, some legal thumb rules to be imposed (agreed that its easier said than effectively achieved). The thing is, the Wall Street run system has given Capital Appreciation as a substitute for dividends for shareholders, but the salary curve skewing within the Org, beyond a point, helps! kill aggregate demand in the economy, and unless you can legally contain the skew OR have a reckless credit bubble to counter it, the economy, and number of people able to particpate, shrinks.

The "Shareholder Democracy in Public Companies" Fairy Tale!

Felix Salmon: “At risk, then, is the shareholder democracy that America forged, slowly, over the past 50 years. Civilians, rather than plutocrats, controlled corporate America, and that relationship improved standards of living and usually kept the worst of corporate abuses in check…..”
(http://www.nytimes.com/2011/02/14/opinion/14Salmon.html)

Wha..at! In public listed corps, when was the last time shareholders that actually supervised the running of the business, eh!? THAT only happens in closely held companies…exactly the ones whose increase in numbers Salmon’s lamenting! In public listed companies, all stock'holders' are mere pocker players, with their bets, for the most part, outsourced to mutual fund managers at that. "Shareholder Demo" ' s just a nice sounding term. Salmoan's whole piece is heterogenous mumbo jumbo aimed at...dunno what.

Gov policy (of decreasing returns from fixed return instruments) has been squarely to “credit” for the returns people got from the stockmarket casino, NOT the delusionary “shareholder democracy” (whaz-zat!?)

http://economiccircuit.blogspot.com/2011/02/intelligent-design-is-intelligent.html

"If it is reasonable to sAy that one deserves whatever one has stolen, then it is reasonable to say that the banksters deserve their money"!

tiny.cc/cprhn

Isn't this Worse Model than Communism?

“(Cisco) The giant networking company warned that sales will miss forecasts because of a dramatic drop in orders from austerity crazed European governments and U.S. states forced to balance revenue starved budgets. Simply put, when governments order technology products they are creating private sector jobs.”

http://www.escapethenewgreatdepression.com/2010/11/11/early-evidence-public-austerity-killing-private-sector-jobs/

In Communism, Govt creates and maintains all types of jobs, and gets to decide how much each job it sustains will pay. In the above paradigm, Govt maintains jobs in "private" organizations with no control over what it's Executives award themselves. Surely this is nonsense - worse than Communism.

More...

Financial Sector Opulance on Public Policy

“Over the past 30 years, the economics profession – in economics departments, and in business, public policy, and law schools – has become so compromised by conflicts of interest that it now functions almost as a support group for financial services and other industries whose profits depend heavily on government policy.”

www.economicprincipals.com/issues/2010.10.24/1192.html

http://tiny.cc/MarketCareers

Circular Hoodwink!

From, "Wall Street's Global Race to the Bottom"

http://robertreich.org/post/1245725732

"Their main argument is if regulations are too tight, the big banks will be less competitive internationally. Translated: They’ll move more of their business to London and Frankfurt, where regulations will be looser.

Meanwhile, Wall Street is warning Europeans that if their financial regulations are too tight, the big banks will move more of their business to the US, where regulations will be looser.

Two weeks ago, after the Basel Committee on Banking Supervision (a global financial regulatory oversight body) came up with a new set of rules to toughen bank capital and liquidity requirements, European officials threatened to get even tougher. They approved a new system of European regulatory bodies with added powers to ban certain financial products or activities in times of market stress."

"There is something strange with a doctrine that says the rich would work harder if they had more money, and the poor if only they had less."

Demand Pull is the ONLY Good Inflation

Good Stuff:

winterspeak.com/2010/09/real-problem-with-higher-inflation.html

"
In the current environment, yes, I am saying that only large fiscal stimulus will raise inflation rates.

More generally, the non-Govt sector has some endogenously determined desire to net save. This desire can only be funded by Govt deficits (via the fiscal channel). If the desire is underfunded, you get deflation. If it's overfunded, you get (demand pull) inflation. if it's funded just right, you get full employment with no inflation.

This desire also changes over time, so Govt needs to always fund it appropriately."

Financial Resolution Authority

Depositors, and deposit insurance, are the concern of FDIC, and equivalent authorities in their respective countries. So resolving branches from a depositor-protection perspective is well covered even before the latest Fin Reforms in America, the US FDIC does not pay depositors at Foreign branches.

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The concern of the FRA is such liabilities of a falling Bank/Shadow Bank as are not under any kind of insurance say, eg it has issued CDS' to other Financial Insitutions that have made further business/investment decisions based on that 'guarantee'. What liabilities/guarantees the Public Receivership will keep alive and which ones it dissolves (and MOST will fall in this category) is dictated by the ripple-effect of dissolving/defaulting on that liability -- ie if the financial system as a whole can absorb it and stay standing. It does not matter if some of the beneficiaries of the limited, COMPULSIONED, conservation are abroad, the key thing it that clear compulsion wrt save-the-system should exist, all other parties get wiped out (shareholder, bondholder, guarantee holder,....they made a bad business choice in putting their money on a bad bank, so they lose).

If it's possible to capitalize and resell the cleaned up entity, equity in it is resold to public like the current Administration is doing with GM.

The FRA is the Real deal in the Fin Reg Reform, the CPA,the Audit the Fed et al are distractions.

Discussion @
winterspeak.com/2010/06/financial-reform-bill-dud.html#comment-form