Archive for March, 2008|Monthly archive page
I have been teaching for almost 40 years at a modest, but comfortable salary. I have been thinking that I should figure out a way to lose a few billion dollars so that I can get rewarded with a few million for my efforts.
If anybody wants to contribute to my new career, please send me your checks ASAP. Get in on the ground floor.
Forbes counts 1062 billionaires. The number is increasing exponentially. Soon we will all be billionaires and the trickle down vindicated. Who cares about short run economic setbacks?
I cannot help but feel some satisfaction in watching recent event confirm the diagnosis found in my Confiscation of American Prosperity: From Right Wing
Extremism and Economic Ideology to the Next Great Depression (Palgrave). The toxic combination of speculative excesses, financial deregulation, and unequal incomes, which make demand dependent on credit.
All the while, Panglossian economics insisted that this was the best of all possible worlds, except for some residues of the New Deal.
The book begins with the historical perspective that the earlier massive waves of inequality and free market dogmatism all led to disaster. This one may not become a renewal of the Great Depression. The Fed may succeed in reflating the bubble, but sooner or later the purge will occur.
In the U.S. doctors are cutting the price of medicine by reducing the doses that they offer patients. This tactic is understandable because some medicines cost several hundred thousand dollars per year.
In Thailand, the health ministry is recommending that the government ignore patents.
Michael Mandel, (very) late of Dollars and Sense, may have returned to his roots, questioning the role of the multinationals, although suggesting that they have the potential to contribute to an economic recovery. He notes that the 150 U.S.-based nonfinancial multinationals cut more than 2 million jobs between 2000 and 2005, while they are hoarding more than $500 billion in cash.
A header describes the role of the multinationals as “exporting jobs, not goods.”
Mandel, Michael. 2008. “Multinationals: Are They Good for America?” Business Week (28 February): pp. 41-51.
41: “the top 150 U.S.-based nonfinancial multinationals, which include the likes of Hewlett-Packard, Pfizer, eBay, and Sara Lee, had more than $500 billion in cash and short-term investments at the end of 2007.”
41: “Figures collected by the Bureau of Economic Analysis suggest the multinational sector has in some ways been a drag on the U.S. economy since 2000. From 2000 to 2005, the last year for which full data are available, U.S. multinationals cut more than 2 million jobs at home, even as employment in the rest of the private sector grew — and there’s no sign the trend has significantly reversed.”
The increasing bureaucratization of education has now reached the tipping point where faculty represent less than half the full-time professional staff at Title IV institutions. I have not seen any data to be able to project when more than half of faculty time will be devoted to unproductive administrative duties, but what I noticed here is that that point will not be too far off in the future.
U.S. Department of Education. 2008. Employees in Postsecondary Institutions, Fall 2006, and Salaries of Full-Time Instructional Faculty, 2006-07, NCES 2008-172 (Institute of Education Sciences National Center for Education Statistics).
Only 48.6 percent of full-time professional staff at Title IV institutions are faculty, indicating a surge in administrators. In public institutions, 51.1 percent, while the figure for private institutions is 44%.
Do you remember when we could save Social Security by funding retirement in the stock market. Here is what the Wall Street Journal reports about the U.S. Pension Benefit Guaranty Corp.’s decision to invest in the stock market.
Silva, Lauren and Martin Hutchinson. 2008. “Pension Guarantor’s Bad Bet.” Wall Street Journal (21 February): p. C 14. http://online.wsj.com/article/SB120356297487082117.html?mod=todays_us_money_and_investing
“The U.S. Pension Benefit Guaranty Corp.’s decision to boost its investment in equities and alternative assets looks like poor risk management. The liabilities of this government guarantor of corporate pensions increase sharply in economic downturns, when companies file for bankruptcy and offload their under-funded pension plans onto it. So equities, which tend to fall in downturns, and alternative investments, which can become illiquid, may represent a doubling of risk for the pension agency, rather than a hedge. Pension Benefit Guaranty, established in 1974, has been funded primarily by corporate premiums. It had built up a surplus of $9.7 billion by 2000, but two factors caused it to run a deficit since 2002. First, several large bankruptcies, particularly in the airline sector, burdened it with large, unfunded pension liabilities. Second, bond yields dropped. That lowered the discount rate used to calculate the present value of its future pension obligations, meaning that from an accounting perspective, they increased rapidly.” Continue reading
This article says that a small shoe manufacturer failed because the exit of shoe manufacturers left the industry with too few suppliers for the plant to survive.
Supposedly, the most efficient businesses are supposed to survive, but that works only if there is adequate infrastructure.
Aeppel, Timothy. 2008. “U.S. Shoe Factory Finds Supplies Are Achilles’ Heel.” Wall Street Journal (2 March). http://online.wsj.com/article/SB120450124543206313.html
Howard Shaffer’s factory for making high-end custom shoes, relied on computer imaging to fit customers from around the U.S. and Canada remotely, turning out shoes for $450 or more a pop.
“Having spent the previous decade setting up plants in China to manufacture shoes for big U.S. brands, he thought he knew how to revive the moribund U.S. footwear industry: use heavy automation run by a handful of skilled workers instead of relying on large numbers of low-paid Chinese laborers.”
A trade magazine catering to the factory-automation industry pronounced him “Progressive Manufacturer of the Year” in 2005, picking tiny Otabo for an award that usually goes to a large multinational.
Gamerman, Ellen. 2008. “What Makes Finnish Kids So Smart?” Wall Street Journal (29 February): p. W 1.
The article seems to suggest a type of learning suggestive of the ideology of Mao’s China, where the best had the responsibility of helping the others.
“15-year-old Fanny Salo at Norssi gives a glimpse of the no-frills curriculum. Fanny is a bubbly ninth-grader who loves “Gossip Girl” books, the TV show “Desperate Housewives” and digging through the clothing racks at H&M stores with her friends. Fanny earns straight A’s, and with no gifted classes she sometimes doodles in her journal while waiting for others to catch up. She often helps lagging classmates. “It’s fun to have time to relax a little in the middle of class,” Fanny says. Finnish educators believe they get better overall results by concentrating on weaker students rather than by pushing gifted students ahead of everyone else. The idea is that bright students can help average ones without harming their own progress.” Continue reading