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

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...

Externally Inflicted Self Interest!

http://blogs.reuters.com/felix-salmon/2010/06/30/why-banks-are-self-defeating-on-housing/

"But, alas, not. Banks are also bureaucracies; Weber is as relevant as Friedman. Speeding this process would involve massive hiring. Since there aren’t enough qualified people – short-sales used to be comparatively uncommon – that means that there will be a substantial lag as staff is trained. Moreover, banks are both loath to hire staff for what they perceive to be a short-term problem, and reluctant to expand payroll at this moment in time. And it goes beyond hiring. Few banks view restructuring, short-selling, or foreclosure processing as core to their missions. These are unglamorous areas of the bank. The executives in charge rank low on the totem poll, and are poorly positioned to press for the necessary changes. Finally, there’s outright denial. Executives are never interested in recognizing their own failures. That’s painful. They’d rather avert their eyes, even if that proves costly. Every short-sale is an admission of error, and forces the bank to pay the piper. No one is going to make a performance-related bonus for completing transactions faster that cost the bank huge amounts of money – even though that’s precisely the sort of performance that the bank ought to reward, because it results in long-term relative savings.

This is precisely where regulatory pressure is most useful – in compelling businesses to do things that are in everyone’s interest that they might not otherwise be willing to do themselves. But admitting that a free market might not produce such an outcome is simply too painful for leading economic policy makers,"

Remodel. Repainting is More of the Same..

"The Crisis happened because the economic structure could not be sustained. Restoring that structure does not change the fact that it is unsustainable."

"The Financial Crisis, however, invoked a bi-partisan reactionary response, and an effort, not to adapt through structural change, but, rather, to restore the status quo ante. This reactionary effort has brought about the bear market rally of all-time in the Stock Market, and a calm in banking and international finance. But, the determination to push all the losses on to Middle Class home owners and taxpayers, while holding unharmed, the banks and the financial sector, leaves the country weaker and unprepared."

http://comingperfectstorm.blogspot.com/2010/05/storm-cloud-on-horizon.html

"In the Clinton years, the advent of the Internet and the Tech Boom, gave American international economic leadership an Indian Summer revival, but in the Bush years, the costs of hegemony mounted, as the U.S. sold off much of the Middle Class' home equity to buy more electronic junk from China, while American manufacturing was devastated.

When the Financial Crisis arrived, nothing should have been more clear than the need to radically change everything in the structure of the American economy and its relation to the world. Al Gore was quoted in Rolling Stone:

"Right now we are borrowing huge amounts of money from China to buy huge amounts of oil from the most unstable region of the world, and to bring it here and burn it in ways that destroy the habitability of the planet. That is nuts! We have to change every aspect of that."

"

Are Economists Scientists?

'The whole "economics as science" meme should be discredited by now. Using some math does not create science.'

- save_the_rustbelt on Economist's View blog

http://economistsview.typepad.com/economistsview/2010/05/paul-krugman-lost-decade-looming.html