This recent CBC Spark episode demonstrates the damage still being caused by th3e myths being clung to by the mainstream. Investment isn't helping innovation, it is stifling it. He mentions a "stockholder revolution" at the base of this. Guess when it happened. That's right, the 1980s.
Sunday May 21, 2017
Has America become anti-innovation?
"Pointless"... "Might make you hate humanity"... "Needs To Be Squeezed Out Of Existence"... just a few of the headlines for Juicero, a $400 high- tech juicing machine that uses $8 packs that, it turns out, you can squeeze by hand.
It was the punchline of the tech world last month.
Ben Tarnoff writes about technology for The Guardian. He says, "The fall of Juicero isn't just entertaining tech industry stupidity, it's the sign of a country refusing to break new ground."
Ben argues that the Juicero fiasco is not an anomaly, but an example of how profoundly anti-innovation the U.S. seems to have become. "I really see it as a symptom of an economy that's not investing in itself to grow."
He sees the "whole machine breaking down" due to a lack of investment in basic tech research.
A lack of innovation, or even antipathy towards it, has serious consequences, not least because a great deal of government investment goes into the tech sector, he says. When that investment is used wastefully, it fails to produce economic growth and encourages stagnation, and working people suffer.
Ben believes that the root of the problem lies in the so-called "myth of the entrepreneur."
"The Steve Jobs mold of the rule-breaking visionary who disappears into a garage and emerges with this totally world changing invention… it's just not an accurate story of how innovation works. Every major innovation since WW2 has required a massive push from the public sector."
What will it take to nurture actual innovative breakthroughs? "In the long term we need to increase public funding for research. We also need to claw back the resources that have been essentially surrendered to the private sector," Ben says. "So it's going to take a lot of different simultaneous fights, but ultimately we need a long term real industrial policy that has substantial funding behind it."
The following debate is a perfect example of what’s wrong with mainstream thinking right now. They are both right. However, one is talking about the Liberal International Order that was while the second is talking about the Neoliberal Investment Order that is.
Tuesday May 09, 2017
The decline and fall of the liberal international order
Niall Ferguson, Rudyard Griffiths, and Fareed Zakaria. (The Munk Debates)
For decades, global affairs have been moulded by ideas about the mutual benefits of an interdependent world. But the pillars of liberal internationalism are cracking under the rise of nationalist politics and other challenges. Is this the beginning of the end of the liberal international order? In a head-to-head Munk Debate, historian Niall Ferguson says Yes, the old order is collapsing, while commentator Fareed Zakaria argues No, there's life yet in liberal ideals.
Almost a year after Brexit, Fareed Zakaria and Niall Ferguson spar over the accuracy of a legendary story about British suspicion
"All this talk of a liberal international order is just what they do at Davos and Aspen to keep their spirits up as slowly and inexorably, ever smaller shrinks the deck on the Titanic." -- Niall Ferguson
"Poland is three times richer than Ukraine having started in the same place in 1990 … it is those ordinary Ukrainians, ordinary Poles who understand this, and who understand that the European Union provides them with political stability... Those are the people who I look to when I ask myself 'Does the European Union have a future?' I couldn't care less about the bankers at Davos." -- Fareed Zakaria
The United Nations, the European Union, NATO, the International Monetary Fund, NAFTA, the World Health Organization. The list is long, and the ideas behind these and many others have shaped our world since at least the end of the Second World War, and led to a time of general prosperity. But a rising tide hasn't raised all boats equally. Economic disparity, declining industries, and large-scale immigration have all contributed to a growing anxiety about the state of the world.
Niall Ferguson is a senior fellow of the Hoover Institution, Stanford University, and a senior fellow of the Center for European Studies, at Harvard University. He also holds positions at Tsinghua University in Beijing and the Nitze School of Advanced International Studies in Washington, D.C. He is a prolific commentator on contemporary politics and economics, writing a weekly column for London's Sunday Times and the Boston Globe.
Ferguson has published 14 books, including most recently Kissinger: 1923-1968: The Idealist. Many of Ferguson's books have been adapted for television. He was born in Glasgow, Scotland. He holds a master's degree and a doctorate of philosophy from Oxford. He is a father of four and is married to the author and women's rights activist Ayaan Hirsi Ali.
Fareed Zakaria was named one of the top 100 global thinkers by Foreign Policy in 2010. He is the host of CNN's flagship international affairs program, Fareed Zakaria GPS, and is also a Washington Post columnist, a contributing editor at The Atlantic and a New York Times bestselling author. He has written several books, most notably The Post American World, (2008), The Future of Freedom (2003), and most recently In Defense of a Liberal Education (2015).
Zakaria was born in India, received a bachelor of arts from Yale College and a Ph. D. from Harvard University. He lives in New York City with his wife and three children.
Watch the full debate on the Munk Debates website
The Munk Debates
**This episode was produced by Dave Redel.
Economists Debate If Tax Cuts Pay For ThemselvesMay 9, 20175:03 AM ET
Heard on Morning Edition
A decades-old economic theory is making a comeback. The theory: tax cuts can pay for themselves. Trump administration advisers have repeated this mantra to explain their corporate tax rate cut.
STEVE INSKEEP, HOST:
President Trump's administration is pushing a business tax cut. And to promote that tax cut without corresponding cuts in government spending, the administration is pushing an old idea - that tax cuts finance themselves. Ailsa Chang from NPR's Planet Money podcast found where that notion comes from.
AILSA CHANG, BYLINE: The story starts with a napkin. That's where economist Arthur Laffer first sketched the so-called Laffer curve more than 40 years ago.
Can I call you Art?
ARTHUR LAFFER: Oh, yes you may but not poop head. Please don't call me poop head.
Seventy-six years old and 12 grandchildren later, Laffer and his curve are back in the limelight.
LAFFER: I've been to this barbeque many, many times in many, many countries.
CHANG: This time, it's the Trump White House resuscitating his theory. And here's what the Laffer curve says, that cutting taxes may encourage businesses to invest more, hire more people. And all those new workers will pay taxes. That will mean more money for the government, so the original tax cuts end up paying for themselves.
Has there ever been any evidence in history in the United States where a tax cut has actually paid for itself?
LAFFER: Oh, tons of them.
CHANG: Which examples?
LAFFER: Whether you go back to Harding and Coolidge, or whether you look at Kennedy, or whether you look at Reagan.
CHANG: Let's take the first two. It's true, there were deep tax cuts in the 1920s and 1960s followed by economic booms, but no one can definitively prove the tax cuts were what caused those booms. As for Reagan, many economists say that's actually a great example of where Laffer was wrong.
(SOUNDBITE OF ARCHIVED RECORDING)
RONALD REAGAN: Join me in this dramatic but responsible plan to reduce the enormous burden of federal taxation on you and your family.
CHANG: When Ronald Reagan took office, the top tax rate was 70 percent. He got Congress to slash it to 50 in 1981. Laffer was one of Reagan's advisers, and he was in the camp saying the steep tax cuts would pay for themselves. Others in the White House were not buying that.
DAVID STOCKMAN: I never believed that. And there was always a split within the church - the supply-side church, so to speak.
CHANG: That's David Stockman, Reagan's budget director. Just a few days after the cuts were signed into law, Stockman noticed something.
STOCKMAN: There was a horrific hole in the budget. In other words, the deficit had exploded or was projected to explode to levels never seen before in peacetime.
CHANG: Stockman convinced Reagan the tax cuts went too far, so over the next few years, there were some tax hikes. They had to stabilize spending. It was a lesson for future Republican administrations. Doug Holtz-Eakin was the Congressional Budget Office director under President George W. Bush.
DOUG HOLTZ-EAKIN: I'm a very conservative economist. I would love it if tax cuts paid for themselves, but I'm also someone who looks at the numbers. And there's just no evidence that the tax cuts actually pay for themselves.
CHANG: No question Trump's corporate tax cut could boost the economy. Businesses would invest in new plants, create jobs but probably not enough to cover the entire cost of that tax cut.
HOLTZ-EAKIN: It's just unlikely that you can move an economy that is approaching $20 trillion in size so much, so fast with a tax cut, that it will turn around and generate even more revenue.
CHANG: There is one other problem. What is the perfect corporate tax rate? Trump says 15. Laffer? Well, he advised Trump, but his answer's a little different.
How do you know that 15 percent is the magic point?
LAFFER: I don't know that it is, but I do know it's a heck of a lot less than 35 percent.
CHANG: Less is a concept most conservative economists can agree on, but no one seems to be able to prove exactly how less will amount to more. Ailsa Chang, NPR News.
(SOUNDBITE OF CLORINDE'S "PEGASUS")
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
Sunday October 16, 2016
Canada's cowardly CEOs are sitting on billions, rather than investing in the economy - Michael's essayIn 2012, Mark Carney, then the governor of the Bank of Canada, chastised Canadian companies for sitting on "dead money." (Reuters) Listen 3:58
In August 2012, Mark Carney, then governor of the Bank of Canada, made a speech to the Canadian Auto Workers about corporate Canada. Mr. Carney, as you know, is now governor of the Bank of England, hence one of the most important people in the UK.
What he had to say was a kick to the delicate undercarriage of Canada's big businesses.
Governor Carney said that companies were sitting on huge piles of cash, what he called dead money. They weren't investing the money, just sitting on it.
It turns out Carney was being polite when he said the caution by Canadian CEOs might be excessive. It turns out that they are in fact scaredy cats. Chickens. Nervous Nellies. Cowards, even. - Michael Enright
"Their job," he said, "is to put money to work and if they can't think of what to do with it, they should give it back to their shareholders."
Stats Can reported that at the time of the governor's speech, companies were hoarding nearly half a trillion dollars in cash, an increase of 43 per cent since the end of the recession in 2009.
Canadian firms weren't doing enough to drive economic growth and create new jobs because the level of caution of CEOs was, in his words, "excessive."
It turns out Carney was being polite when he said the caution by Canadian CEOs might be excessive. It turns out that they are in fact scaredy cats. Chickens. Nervous Nellies. Cowards, even.
Last month, Deloitte published the results of a survey of big business which showed that fully 90 per cent of business leaders lack courage. As a result, the Canadian economy is suffering mightily, stuck in neutral, as Deloitte says. The report is entitled "The future belongs to the bold."
Now, this allegation isn't coming from some upstart startup run by nerds in linty sweaters and sneakers without socks.
Deloitte is the largest business services network in the world, with revenues this year of $36.8 billion. It works like the internal affairs division of a police department. It looked at 1,200 businesses across the country and discovered that 90 per cent lacked what the report calls courage.
The irony is that Deloitte found that the 10 per cent of so-called courageous companies did better at the bottom line than the chicken-hearted. Nearly 70 per cent of the courageous companies had rising revenues and fully 17 per cent increased their work forces. In other words, having guts pays off in terms of profits and in the doing, actually creates jobs. - Michael Enright
This is from the report: "At a time when Canada needs its businesses to be bolder and more courageous than ever before, almost 90 per cent aren't up to the task."
It found that Canadian executives are far more risk averse than those in other countries, especially the United States.
The bad news gets worse. Canadian firms invest less in machinery and equipment than those in comparable industrialized nations. Moreover, investment in training has dropped 40 per cent in the last 20 years.
The irony is that Deloitte found that the 10 per cent of so-called courageous companies did better at the bottom line than the chicken-hearted.
Nearly 70 per cent of the courageous companies had rising revenues and fully 17 per cent increased their work forces. In other words, having guts pays off in terms of profits and in the doing, actually creates jobs.
The report points out that executives may have some legitimate concerns, as the projected growth for the country next year is only 1.3 per cent — much less than other countries. It does not offer that as an excuse for hyper caution of business leaders.
In the end, Deloitte's findings can serve as a warning for Canadian CEOs to find a little courage somewhere and get the economy moving again.
Incidentally, the compensation for the top CEOs in this country is 159 times that of the average worker.
Wednesday May 10, 2017
Surviving Post-Capitalism: Coping, hoping, doping & shopping
An excerpt from How Will Capitalism End? by Wolfgang Streeck 1:34 Listen to Full Episode 53:59
The signs are troubling: the ever-widening chasm between the ultra-rich and everyone else. Mass protests. Political upheaval and social division. It looks as though the rocky marriage between capitalism and democracy is doomed, at least according to Wolfgang Streeck, who directs the Max Planck Institute for the Study of Societies in Cologne, Germany, where he is also a professor of sociology. In conversation with Paul Kennedy about his book How Will Capitalism End?, he makes the unnerving case that capitalism is now at a point where it cannot survive itself. **This episode originally aired February 9, 2017.
(Verso Books, 2016.)
According to Streeck, capitalist societies are entering an interregnum -- a pause or suspension of normal governance -- as the system of capitalism collapses in on itself. In the absence of countervailing forces to keep it afloat, capitalism has essentially devoured itself. One consequence is a loss of state solidarity citizens in western countries have become used to. Streeck points to Italy, Greece and Spain, countries where young people can't get find jobs; where fewer people can live on their own; and where marriage and birth rates are declining. People everywhere are now trying to protect what little they have left.
Wolfgang Streeck sees day-to-day life in the interregnum in stark terms: coping, hoping, doping, and shopping. He says that when it comes to the harsh realities of the interregnum, those who cope well will wear their stress as a kind of badge of honour. Those who cope poorly will mask their inability with drugs and mindless consumerism.
Democracy vs. Capitalism
"Democracy was always a problem in a capitalist society. There's an enormous inherent tension between the two. Democracy is inherently egalitarian because every citizen has one vote. And the rich also have one vote but the rich are only five percent. Whereas in the market, every dollar has a vote. And the capitalist economy in particular functions according to -- I think it's [the Gospel of] Matthew -- where it says he who has will be given [more]. And he who has [little] will have even what he has taken away...
And where you have capitalism and democracy at the same time, you have a contest between these two principles of distribution: egalitarian versus inegalitarian. This is why democratic politics have always tried to intervene in the markets and tried to contain the "Matthew effect". You can also call it cumulative advantage if you want a more elevated term. So, where you have democracy in the form of trade unions, centre left political parties, sometimes centre right political parties, Catholic parties, and so on -- they look at the market and what comes out of the market and then they become concerned both about their capacity to get re-elected and about principles of justice which, in a democracy, are principles of social justice, not market justice."
Coping to Death
"Coping is an attitude or an activity whereby people who lack traditional support -- either from families or from social services -- work very hard to cope with increasing pressures on their everyday life.
And you can observe this in lots of studies on family life in the United States and Europe, where two people work full-time, they try to raise two children, they live a very sort of regulated, exhausting life in order to meet all the contingencies that hang together with competing in the labour market -- caring for others, caring maybe also for their parents, in a world in which external help is increasingly less available.
Now what I observe in ethnographic studies is that people actually can become proud of their ability to exhaust themselves in this struggle. So that they say we are coping, we're good, and others are less good or bad at coping. So it becomes a matter of pride to subject yourself to this rigid discipline imposed on you by the market."
"[In] The New Yorker, there was an article on survivalism among the American very, very rich. In my book, I envisage a situation in which inequality becomes so big that something happens that has never happened in society before in the history of human societies. That is, that the elites of society lose interest in the society as a whole because they can survive on their own.
Someone, for example, buys the silo of an intercontinental missile which is hardened against nuclear attack, and deep in the ground builds apartments that he sells within a matter of a few weeks to New York financial billionaires, tech billionaires from California, who all buy one of these apartments because they are afraid of the breakdown of social order, and of people taking guns and trying to go after them.
I think these people are not so unrealistic. I don't think they are obsessed. They see better than most others the decaying body of a system that can no longer keep itself together. I take this as a very interesting example of what I thought when I looked at the increase in inequality in our societies that we could be facing the moment when those who absorb and extract all the resources from these societies begin to think that they can dissociate themselves from it and live their own lives."
**The New Yorker article: "Doomsday Prep for the Super-Rich"
The Coming Age of Uncertainty
"As a sociologist, I think we have to think very seriously about transitions in the structure of our societies. I happen to have come to the conclusion that we are facing a fundamental transition in modern societies, modern capitalist societies. And I feel that these societies have exhausted the capacity to build a framework, a social framework, around the hot core of capitalist profit-making -- so that we will see signs of social disintegration all over the place in unexpected, surprising ways, in a period in which we lose control and governance and orientation, and we'll live in an era of great uncertainty."
How Will Capitalism End? by Wolfgang Streeck, published by Verso Books, 2016.
PostCapitalism: A Guide to our Future by Paul Mason, published by Allen Lane, 2015.
The End of Alchemy: Banking, the Global Economy and the Future of Money by Mervyn King, published by W.W. Norton, 2016.
Max Planck Institute for the Study of Societies
**This episode was produced by Naheed Mustafa.
See these related posts where I explore our grievances further, using examples from people far more expert than I. The initial paragraphs are provided for reference.
These three programs from CBC Ideas help weave together the threads that reveal the answer.