Would be to do some empirical work as to how much executives actually add to their corporations, and whether increasing an executive's paycheck from $3 million to $5 million actually improves their performance.
I agree that the current pay legislation isn't the end-all of people's hopes, but I think it's redirecting energy and attention to what, in the end, is a sideshow.
1. Re: "Disposable worker." Part of what could be done is to generally replace at law the concept of "at-will" employment with some kind of general floor of "just cause."
2. Pensions I have talked about; check out "Social Security 2.0" at The Realignment Project.
3. Ditto with education, see "The Balance Wheel of Society" at same.
4. The problem with reshaping society with incentives is that, in the end, you still have the issue that 10% of the people have 50% of the income. In the end we're going to have to get part of that income to the other 90% of the population, so why shilly-shally about it?
5. Regarding cause, I'm much more of the opinion that it's more about the strategic position to take yourself out of the market - executive pay is decided by committees of other executives, and the link between short-term management strategies and management ownership of stock is far too dodgy. Back in the day, we called this "rent-seeking."
if you want to research it out, complete w/ graphs, go ahead.
we were writing about oil speculators vs. hidden, stashed supply somewhere a lot during the height....
but since that time I can tell you that whole debate seemingly has been ignored plus China has been buying up oil supplies right and left (which I wrote about).
Also note that global supply chain analysts FINALLY went past cheap labor focus exclusively and realized energy costs in shipping cheap crap from China adds costs (duh) and are looking to modify global supply chains...which would reduce oil demand. Of course they still are obsessed with cheap labor, looking at Mexico instead.
But in terms of commodities futures, oil speculation, hedge funds I have't written anything on it and neither has NDD is quite some time...so where this is at I don't have any answers at the moment.
But folks, if you want to research out a topic from first principles and write a post, that's one of the biggest features of EP....we can answer our own questions...of course it's a lot of work to do that but ya know, how many writers for the MSM do that level of homework? (not too many!)
I wonder about oil prices. Before we invaded Iraq, world oil production was about 69 million barrels per day. Since 2004, it's stayed around 73 million barrels/ day. Except for spikes around 1979-82 and the Persian Gulf war of 1990-91, crude prices stayed pretty tame, even during periods of inflation. During most of the Clinton years, prices tended toward the low to mid 20s. Prices were in the low 20s for a couple of years until 2003, when they started a climb to $37 in 2004, $50 in 2005, and an average of $91 in 2008. Now it's hovering aroung $70. What should the price of oil be now, and why?
Frank T.
Have you looked at the latest amendments credit card issuers are sending out announcing hikes in rates and fees?
They blame it on the economy and rising costs.
Here is the challenge. Reagan Administration did an incredible job w/transforming the entire country - economic and political structure. He convinced many middle class people about the virtues of 'trickle down' economics. And we are seeing remnants of this today with these 'tea baggers'. He demonized labor costs and unionization. He was able to did because he had a huge machine/apparatus behind him. He had an entire administration - cabinet members, media, academia (certain segments) and business groups that believed in this neo-liberal theology.
It was a huge social experiment.
Side note: I just heard one of the dumbest statements that came from one the 'tea baggers' who said they were against a surtax on rich to pay for HCR. Asked why, they said because I be rich some day. WTF? Maybe if you the lottery! Class mobility is practically non-existent in this country but people have been brain washed into thinking that working for slightly above min. wage with very few benefits will get them a better life someday - not with the status quo.
We need to get rid of of this myth that mega- million dollar pay packages are necessary to keep the CEO and key staff from walking out the door. How much was Ken Lay's pay package, anyway?
Frank T.
I overviewed some of it, in Have a say on pay, with links to more in depth research work & testimony.
Ralph Gomory has written a few things on this topic as well, but the problem is fundamentally multinational corporations no longer align or act in the national interest. It goes along with income inequality in that not only is executive compensation into the stratosphere in profit percentages, but the incentives themselves do not even align the corporate strategy correctly and especially anything long term.
This kind of kills two birds with one stone, firstly to stop this feudal kingdom creation but to also realign what is the definition of a corporation in the United States to what is in the best interests of the United States....
which is going to increase profits, increase jobs, increase worker compensation as well.
I mean right now we have a very, very weak bill, Say on Pay, which passed the house and even that is supposedly going to be blocked in the Senate.
With the public outrage over AIG, and TARP bonuses, I don't believe for a second the public doesn't want legislation to stop these beyond belief executive compensation packages, esp. the ones which compensate for failure and incompetence.
Firstly I think this disposable worker motif from corporations has to be stopped through a host of tax disincentives, improvements on employment law and vigorous action on cases, strong legal action on age discrimination cases as well as stop, ban and curtail global labor arbitrage through a host of policy changes.
That just kills any income equalization because people are constantly being considered as temporary and not only lose their income, but also benefits.
Then, I think they need to revitalize the pension system in the United States. Pensions have been robbed blind and most people next to retire do not have anything to retire on. This is not true in comparison of the people currently in retirement.
Then, educational costs need to be nearly free for U.S. citizens.
But how to pay for all of this? Much of the ideas are investments in the U.S. citizen and workforce and it can really pay for itself in increased tax revenues as well as business revenues generated from a supported workforce.
If one notices globalization is really putting a damper on U.S. restructuring the economy.
I also think we need major reforms in corporate governance and executive compensation.
In other words, I think incentives are better than way to reshape society than just "lump sums".
Take poverty as an example, how many single women are poor because they cannot take care of children and go to school or obtain the skills? How about child care and support that really works for the circumstances which created the poverty in the first place?
How many cannot get to college because they cannot afford it?
I don't believe it's college and advanced degrees. I think if one drills down into that data, it's also going to be certain occupations and certain categories of jobs within those occupations....where the income inequality really pops out.
Prof Saez further said Income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression. The paper points to a unprecedented disparity in American incomes. It's high time we focus our efforts on radicla policy changes
of the gaussian copula per the correlation coefficient, that coefficient has to be 1:1, linear and the CDSes by their nature are not, they are not a 1:1 relationship at all to market values of current defaults. i.e. it's a violation of the properties which would make the Copula valid.
Atoms in a vacuum or things like dust motes, liquid molecules, etc? The latter is Brownian Motion (the equation the Langevin equation) and used as a classic example of statistical motion for all sorts of things. Might have relevance to the market in limited cases, but Brownian Motion is Markovian, and the market is not.
Will likely have more to say after reading the paper. But I don't have a problem with simplifications or even with using a CDS based correlation coefficient. The latter may be useful for model studies of sensitivity to that coefficient. I do have a problem with assuming it is useful in the real world, or as a method of pricing.
Economics is also a strange field in that there is no good way to test the models. Would another have done better? Would one predicting something quite different have been any worse? Is it just the presence of a plausible one that creates a boom?
Re: Black Swan. I agree that was hard to read. 150 pp of real material, 200 pp of I'm So Smart. Desperately in need of a strong editor, there.
The GI Bill was a great innovation -- you had millions of men getting out of service, many at age where they would form families, and inflationary demand. The GI bill took many out of the labor force for a few years and enabled expansion of universities, at the same time as a baby boom got under way (We used to refer to the married student housing as "conception village," a phenomenon which was replicated many times over). GI Bill also provided vocational education, and a stipend for farming. The outputs included a well-trained labor force and an educational infrastructure for the 1960s achievements. Other innovations that complemented this were the National Defense Education Act and the Interstate Highway System.
Today's GI bill does not have the same potential because the numbers are not as large, but we need the same kind of innovative thinking to deal with current problems. All the innovations I cited were paid for by the American taxpayer -- with great return on investment. That was a much better use of public funds than bailing out imprudent mega-banks and non-bank speculators.
To me, this can only be good but I think it worthy to pull out oil/gas from the CPI to not only show you are right, but to also show what a bubble last summer's gas prices were.
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.2 percent in July before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Over the last 12 months the index has fallen 2.1 percent, as a 28.1 percent decline in the energy index since its July 2008 peak has more than offset increases of 0.9 percent in the food index and 1.5 percent in the index for all items less food and energy.
On a seasonally adjusted basis, the CPI-U was unchanged in July following a 0.7 percent increase in June. Small declines in the food and energy indexes offset a small increase in the index for all items less food and energy. The food index declined 0.3 percent in July with all six major grocery store food groups posting declines. The energy index, which rose 7.4 percent in June, fell 0.4 percent in July. Decreases in the indexes for gasoline, fuel oil, and electricity more than offset an increase in the index for natural gas.
He clearly was using the class to get free help or input from us (like we had any idea). The equation took up three lengths of the chalk board. It was amazing piece of work. After he did that there were very few people left in the class.
I think he was bucking for that Wall Street gig probably w/AIG. Who knows he maybe one of the quants that created this mess.
Would be to do some empirical work as to how much executives actually add to their corporations, and whether increasing an executive's paycheck from $3 million to $5 million actually improves their performance.
I agree that the current pay legislation isn't the end-all of people's hopes, but I think it's redirecting energy and attention to what, in the end, is a sideshow.
1. Re: "Disposable worker." Part of what could be done is to generally replace at law the concept of "at-will" employment with some kind of general floor of "just cause."
2. Pensions I have talked about; check out "Social Security 2.0" at The Realignment Project.
3. Ditto with education, see "The Balance Wheel of Society" at same.
4. The problem with reshaping society with incentives is that, in the end, you still have the issue that 10% of the people have 50% of the income. In the end we're going to have to get part of that income to the other 90% of the population, so why shilly-shally about it?
5. Regarding cause, I'm much more of the opinion that it's more about the strategic position to take yourself out of the market - executive pay is decided by committees of other executives, and the link between short-term management strategies and management ownership of stock is far too dodgy. Back in the day, we called this "rent-seeking."
if you want to research it out, complete w/ graphs, go ahead.
we were writing about oil speculators vs. hidden, stashed supply somewhere a lot during the height....
but since that time I can tell you that whole debate seemingly has been ignored plus China has been buying up oil supplies right and left (which I wrote about).
Also note that global supply chain analysts FINALLY went past cheap labor focus exclusively and realized energy costs in shipping cheap crap from China adds costs (duh) and are looking to modify global supply chains...which would reduce oil demand. Of course they still are obsessed with cheap labor, looking at Mexico instead.
But in terms of commodities futures, oil speculation, hedge funds I have't written anything on it and neither has NDD is quite some time...so where this is at I don't have any answers at the moment.
But folks, if you want to research out a topic from first principles and write a post, that's one of the biggest features of EP....we can answer our own questions...of course it's a lot of work to do that but ya know, how many writers for the MSM do that level of homework? (not too many!)
I wonder about oil prices. Before we invaded Iraq, world oil production was about 69 million barrels per day. Since 2004, it's stayed around 73 million barrels/ day. Except for spikes around 1979-82 and the Persian Gulf war of 1990-91, crude prices stayed pretty tame, even during periods of inflation. During most of the Clinton years, prices tended toward the low to mid 20s. Prices were in the low 20s for a couple of years until 2003, when they started a climb to $37 in 2004, $50 in 2005, and an average of $91 in 2008. Now it's hovering aroung $70. What should the price of oil be now, and why?
Frank T.
Have you looked at the latest amendments credit card issuers are sending out announcing hikes in rates and fees?
They blame it on the economy and rising costs.
Frank T.
Here is the challenge. Reagan Administration did an incredible job w/transforming the entire country - economic and political structure. He convinced many middle class people about the virtues of 'trickle down' economics. And we are seeing remnants of this today with these 'tea baggers'. He demonized labor costs and unionization. He was able to did because he had a huge machine/apparatus behind him. He had an entire administration - cabinet members, media, academia (certain segments) and business groups that believed in this neo-liberal theology.
It was a huge social experiment.
Side note: I just heard one of the dumbest statements that came from one the 'tea baggers' who said they were against a surtax on rich to pay for HCR. Asked why, they said because I be rich some day. WTF? Maybe if you the lottery! Class mobility is practically non-existent in this country but people have been brain washed into thinking that working for slightly above min. wage with very few benefits will get them a better life someday - not with the status quo.
Until we recognize this nothing will change.
RebelCapitalist.com - Financial Information for the Rest of Us.
We need to get rid of of this myth that mega- million dollar pay packages are necessary to keep the CEO and key staff from walking out the door. How much was Ken Lay's pay package, anyway?
Frank T.
I overviewed some of it, in Have a say on pay, with links to more in depth research work & testimony.
Ralph Gomory has written a few things on this topic as well, but the problem is fundamentally multinational corporations no longer align or act in the national interest. It goes along with income inequality in that not only is executive compensation into the stratosphere in profit percentages, but the incentives themselves do not even align the corporate strategy correctly and especially anything long term.
This kind of kills two birds with one stone, firstly to stop this feudal kingdom creation but to also realign what is the definition of a corporation in the United States to what is in the best interests of the United States....
which is going to increase profits, increase jobs, increase worker compensation as well.
I mean right now we have a very, very weak bill, Say on Pay, which passed the house and even that is supposedly going to be blocked in the Senate.
With the public outrage over AIG, and TARP bonuses, I don't believe for a second the public doesn't want legislation to stop these beyond belief executive compensation packages, esp. the ones which compensate for failure and incompetence.
Firstly I think this disposable worker motif from corporations has to be stopped through a host of tax disincentives, improvements on employment law and vigorous action on cases, strong legal action on age discrimination cases as well as stop, ban and curtail global labor arbitrage through a host of policy changes.
That just kills any income equalization because people are constantly being considered as temporary and not only lose their income, but also benefits.
Then, I think they need to revitalize the pension system in the United States. Pensions have been robbed blind and most people next to retire do not have anything to retire on. This is not true in comparison of the people currently in retirement.
Then, educational costs need to be nearly free for U.S. citizens.
But how to pay for all of this? Much of the ideas are investments in the U.S. citizen and workforce and it can really pay for itself in increased tax revenues as well as business revenues generated from a supported workforce.
If one notices globalization is really putting a damper on U.S. restructuring the economy.
I also think we need major reforms in corporate governance and executive compensation.
In other words, I think incentives are better than way to reshape society than just "lump sums".
Take poverty as an example, how many single women are poor because they cannot take care of children and go to school or obtain the skills? How about child care and support that really works for the circumstances which created the poverty in the first place?
How many cannot get to college because they cannot afford it?
I don't believe it's college and advanced degrees. I think if one drills down into that data, it's also going to be certain occupations and certain categories of jobs within those occupations....where the income inequality really pops out.
Prof Saez further said Income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression. The paper points to a unprecedented disparity in American incomes. It's high time we focus our efforts on radicla policy changes
of the gaussian copula per the correlation coefficient, that coefficient has to be 1:1, linear and the CDSes by their nature are not, they are not a 1:1 relationship at all to market values of current defaults. i.e. it's a violation of the properties which would make the Copula valid.
Dr. Thomas Palley: America's Exhausted Paradigm
RebelCapitalist.com - Financial Information for the Rest of Us.
That is it. That is the equation that I tried to mentally block out for that past 16 years. What a flashback?
And look what I found:
Modelling of Short Term Interest Rate Based on Fractional Relaxation Equation (PDF File)
RebelCapitalist.com - Financial Information for the Rest of Us.
Household debt ... marginal tax rates ... interest rates ... asset bubbles ... income inequality ... crash and burn.
Atoms in a vacuum or things like dust motes, liquid molecules, etc? The latter is Brownian Motion (the equation the Langevin equation) and used as a classic example of statistical motion for all sorts of things. Might have relevance to the market in limited cases, but Brownian Motion is Markovian, and the market is not.
Will likely have more to say after reading the paper. But I don't have a problem with simplifications or even with using a CDS based correlation coefficient. The latter may be useful for model studies of sensitivity to that coefficient. I do have a problem with assuming it is useful in the real world, or as a method of pricing.
Economics is also a strange field in that there is no good way to test the models. Would another have done better? Would one predicting something quite different have been any worse? Is it just the presence of a plausible one that creates a boom?
Re: Black Swan. I agree that was hard to read. 150 pp of real material, 200 pp of I'm So Smart. Desperately in need of a strong editor, there.
The GI Bill was a great innovation -- you had millions of men getting out of service, many at age where they would form families, and inflationary demand. The GI bill took many out of the labor force for a few years and enabled expansion of universities, at the same time as a baby boom got under way (We used to refer to the married student housing as "conception village," a phenomenon which was replicated many times over). GI Bill also provided vocational education, and a stipend for farming. The outputs included a well-trained labor force and an educational infrastructure for the 1960s achievements. Other innovations that complemented this were the National Defense Education Act and the Interstate Highway System.
Today's GI bill does not have the same potential because the numbers are not as large, but we need the same kind of innovative thinking to deal with current problems. All the innovations I cited were paid for by the American taxpayer -- with great return on investment. That was a much better use of public funds than bailing out imprudent mega-banks and non-bank speculators.
Frank T.
To me, this can only be good but I think it worthy to pull out oil/gas from the CPI to not only show you are right, but to also show what a bubble last summer's gas prices were.
He clearly was using the class to get free help or input from us (like we had any idea). The equation took up three lengths of the chalk board. It was amazing piece of work. After he did that there were very few people left in the class.
I think he was bucking for that Wall Street gig probably w/AIG. Who knows he maybe one of the quants that created this mess.
RebelCapitalist.com - Financial Information for the Rest of Us.
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