Wall Street Recruiting – Why I’ve grown to hate Harvard

For Rent Sign 

Why Are Harvard Grads Still Flocking to Wall Street? by Amy J. Binder | 
[Via The Washington Monthly

In 2010, Bastian Nichols moved into his freshman dorm at Harvard without much thought of what he would do after graduation. He felt sure that in time he’d find a career that matched his passions (among them, journalism and travel), but while in college he would experiment at becoming “a more interesting person.”* His concentration in psychology and comparative literature matched his general philosophy. So did his choice of summer jobs, which ranged from leading a bike trip through Austria and working in a theater in Croatia to doing post-production work in an Italian film company.

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When I was going to college, a generation ago, Harvard was known for training great scientists and liberal arts majors.  Now its the place for Wall Street players.

Wall Street really creates no new markets and, today, is mainly full of rent seekers. They  try to appropriate wealth rather than create it. So we get things like credit default swaps and derivatives and people who manipulate the political process for their own wealth while doing little to create new markets.

Adam Smith hated those who contributed little to wealth creation. Labor and Capital were needed to make new things. But not the renters (from the Wealth of Nations):

As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come, even to him, to have an additional price fixed upon them. He must then pay for the licence to gather them; and must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land 

I dislike where rent seeking has taken us. We now have some of the brightest people in America not becoming researchers and  business leaders to create new wealth and new companies. We have them going to the financial arena to use money to make more money, to help run a financial casino.

Luckily, academia is being  hugely disrupted and there are other, cheaper avenues appearing for the smart people to get an education.

Could not happen sooner for the rent-seekers and their educational cronies.

Olive Oil and climate change

 Growing Olives

A Mega Drought Is Threatening To Drive Up Olive Oil Prices
[Via ThinkProgress]

Southwest Spain is experiencing its worst drought since record keeping began 150 years ago, and agricultural crops, especially olives, are suffering badly. With climate models and Spanish researchers both predicting that Spain’s droughts will get more intense and more regular than before, this is the second year since 2012 that heat and drought have threatened the country’s trademark olive harvest.

Spain produces around half the world’s olives and is the number one producer of olive oil. The drought has speculators, including forecasting agency Oil World, worried that olive yield could drop up to 40 percent year-over-year in 2014. Olive trees flower and start to bear fruit in the late spring and early summer which was an especially dry time in Spain’s main olive-producing regions this year.

“The drought in Spain and its impact on the olive market is potentially very significant,” Lamine Lahouasnia, head of packaged food at Euromonitor International, told the Wall Street Journal. “If the drought does end up adversely affecting Spanish yields, it is very likely that we’ll see rising consumer prices in 2014.”

European olive oil prices are already up over 30 percent since the beginning of the year, a phenomenon driven by above average temperatures and low precipitation across the Mediterranean olive-growing belt. According to the IPCC, the Mediterranean may be one of the most impacted areas of the world from climate change. Already a hot, semi-arid region, hotter summers and more intense and frequent droughts will threaten water supplies and agricultural production.

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It may sound minor but this will happen more and more.

Climate change will severely disrupt agriculture in many countries. Places that got a lot of water will no longer. Other places will get too much.

We have designed our civilization based on relatively stable climate conditions. With those changing, so too will our civilization. 

Changing the lives of billions.

More Medical disruption: GoPros in surgery, to be watched with Oculus Rift by students

GoPro 

Virtual surgery gets real 
[Via — Medium]

Virtual surgery gets real What the Oculus Rift could mean for the future of medecine Technological innovation takes time : virtual reality has been a thing in the medical field for more than three decades, and despite great promises it isn’t widely available yet. Things could change quickly, and the innovation won’t come from the usual suspects in medecine, but the gaming world.

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The cost for devices continue to drop so far that individuals can now accomplish what used to only be seen in science fiction.

Instead of 10s of thousands of dollars for a virtual operating room and the cameras, a couple of GoPros and some software is all that is needed.

The cameras are small enough that they were mounted on the doctors head during surgery. The Rift allows 3D viewing. The ability to rapidly educate students is tremendous.


Can real capitalism be returning? I think so

 Apple CEO Tim Cook

Shareholder vs. Stakeholder Capitalism
[Via Economist's View]

Quiet day in blogland. Here’s something to kick around for those of you who are so inclined:

Shareholder vs. Stakeholder Capitalism: …We may be witnessing the beginning of a return to a form of capitalism that was taken for granted in America sixty years ago. …

Are we witnessing the reemergence of “Stakeholder Capitalism”? I’m doubtful.

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I’m not. Let’s look at one of the 21st century corporations that recognizes stakeholders, not shareholders – Apple.

At this year’s annual meeting, Tim Cook was visibly angered by the questions from a climate change denier group. They wanted to know if Apple’s investments in controlling the environmental  impacts of its business helped or hurt the bottom line. They wanted him to commit only to things that made money. Period.

Cook does not get angry in public much. But he knows the value of using it when necessary.

He stated that Apple tries to do what is right and just, to not focus purely on the return on investment (ROI) of what they do.

When we work on making our devices accessible by the blind,” he said, “I don’t consider the bloody ROI.

Then  he said something I have never heard a CEO state, one that the sociopathic leaders of shareholder-driven corporations would never even think:

If you want me to do things only for ROI reasons, you should get out of this stock.

A shareholder corporation focusses only on the ROI and screw anything else. A stakeholder corporation cares about that “anything else.”

That “ anything else” used to encompass a lot.There used to be a multitude of stakeholders a corporation needed to serve – shareholders, employees, customers, suppliers, lenders, and the local community.

For much of the last 25 years, the only stakeholder a corporation focussed on is the shareholder.

It is the Costco model vs the Walmart model. One posits that corporations are run by the sort of moral and ethical people that Adam Smith described. People like Tim Cook.

The other envisions a corporation run by sociopaths. One that ignores its necessary impact on employees, suppliers, lenders and the community.

It ignores its social obligations.

Capitalism only works because of its social connections and norms. It cannot work by itself. It cannot exist in isolation. It is a social construct. It needs people who will participate.

And people are learning the power of that participation more and more to control the social behavior of a corporation. 

Apple has always been focussed on much more than its shareholders (one reason Wall Street has never treated Apple well). That is one reason it has such a dynamic community of fans.

Same with Costco.

The sociopaths tried to convince us that their path was the right one because it would raise up everyone. We have seen that this is not the case and people are beginning to use their power to make companies serve the public more.

It will increase and perhaps we will again return to the stakeholder view of capitalism.

Some  corporations and CEOs may not be as wealthy but society as a whole will be.

The chart that shows why the S&P finally noticed wealth inequality

11111Lifeboats

S&P: Wealth gap is slowing US economic growth
[Via The Seattle Times]

Economists have long argued that a rising wealth gap has complicated the U.S. rebound from the Great Recession.

Now, an analysis by the rating agency Standard & Poor’s lends its weight to the argument: The widening gap between the wealthiest Americans and everyone else has made the economy more prone to boom-bust cycles and slowed the 5-year-old recovery from the recession.

Economic disparities appear to be reaching extremes that “need to be watched because they’re damaging to growth,” said Beth Ann Bovino, chief U.S. economist at S&P.

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Shorter post: not surprisingly, the S&P only cares about the income gap when the wealthy are no longer seeing increasing incomes.

The S&P states: “A lifeboat carrying a few, surrounded by many treading water, risks capsizing,

Finally a metaphor from Wall Street to counter the rising tide raises all boats.

The S&P is correct and the increasing disparity between the wealthiest and the rest of us distorts the economy. The small number of wealthy exert different incentives on an economy than the multitudes of a middle class.

From the article:

Adjusted for inflation, the top 0.01 percent’s average earnings have jumped by a factor of seven since 1913. For the bottom 90 percent of Americans, average incomes after inflation have grown by a factor of just three since 1917 and have declined for the past 13 years.

And almost all of the increase for the bottom 90% came between the years of 1947 and 1980, when their income doubled. A three-fold increase in 100 years when it went up two0fold in the post-War boom.

Things get skewed. This has been going on for 100 years, with no notice by Wall Street.

But why hasn’t the S&P said something earlier. I believe this chart shows why.

NewImage

I’ve written about this graph before but this one has it broken out into wealth categories. The wealthy and the middle class saw incomes rise in lockstep from 1947 to the early1970s.

They both went up two-fold. During this period,  the middle class grew at rates never seen in our history.

Something happened in the early 70s. For the top 5%, the growth in income continued. For the rest of us, income growth stopped.

But, look at the top 5% since 2000. Their incomes have been flat for the last 14 years. All those Bush tax cuts had little effect on the incomes of the wealthiest families. We hear about increasing CEO salaries but even that is not enough.

So while the bottom 20% actually saw their incomes drop over the last 14 years, the wealthy have been treading water.

Or to use the S&P metaphor. the wealthy are now treading water like the rest of us, with fewer people remaining in the lifeboats.

No wonder the S&P has finally started to care. Maybe something will be done to get more Americans in the lofeboats.

But I’m not counting on it coming from most of the politicians we currently have. They are mostly minions of the wealthiest to begin with.

The American Revolution was fought between authority and democracy, not tax rates

NewImageBen Franklin at the Lord’s Privy Council

The True Origins of the American Revolution
[Via Contrary Brin]

A few weeks ago, I was one of the headlined speakers at Freedom Fest, the big libertarian convention in Las Vegas. Do I seem an odd choice, given my past thorough and merciless dissections of Ayn Rand?

In fact I’ve done this before, showing up to suggest that a movement claiming to be all about freedom might want to veer away from its recent, mutant obsession — empowering and enabling the kind of owner-oligarchy that oppressed humanity all across the last 6000 years. Instead, I propose going back to a more healthy and well-grounded libertarian rootstock — encouraging the vast creative power of open-flat-fair competition

COMPETITION-1…a word that libertarians scarcely mention, anymore. Because it conflicts fundamentally with their current focus — promoting inherited oligarchy.

With that impudent, contrary attitude, would you believe I had a fine and interesting time? My son and I dined at the VIP table with publishing magnate and former presidential candidate Steve Forbes. Along with humorist P. J. O’Rourke and John Mackey (Whole Foods and an avid SciFi reader.) Also at the table? Grover (I kid you not) Norquist, founder of Americans for Tax Reform and a guiding force beyond the American right’s current-central obsession — that government of/by/for the people must perish from the Earth.

Would you be surprised that I was the most-liberal voice at this gathering? And yes, I managed to poke without being rude. (I’ve been known to poke in other directions, too!) I even learned a few things. See an addendum, below, offering more about the Freedom Fest event.

Foremost, though, I want to focus on one piece of polemic that Grover Norquist thrust upon us over dinner, concerning the origins of the American Revolution.

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History does not repeat itself. But it does rhyme” – Mark Twain.

Brin encapsulates much of what I also feel is true. There were many reasons for the Revolution, but almost all derived from Age of Enlightenment/Reason thought – some of it economic in nature, but not focussed on tax rates per se.

  • Monopolies that cut out American merchants and put the yoke of colonialism on American industry while funneling cash to the richest of the British – a process denounced by Adam Smith.
  • Absolute control of money by the British, making a robust American economy almost impossible. At one point, the colonies wanted to be taxed so as to have some cash of their own.
  • Another thing denounced by Smith – rent-seeking by the British rather than opening up new markets.
  • If they were to be taxed, the colonies wanted an equal and representative say in how this was done. 
  • Control of the frontier, preventing anyone from leaving the rule of the British.
  • A primary and radical idea of the Enlightenment  era – all people were equal. So why should a hereditary lord have more power than a freeborn American?

All of these deal with the power of inherited and hierarchical authority as it combats a distributed democracy.

If one wants a quick synopsis of the effects these sorts of policies had on Americans, the utter failure of landed gentry and hereditary authority to understand the American spirit, read about Franklin’s hour in front of the Lord’s Privy Council in 1774

The attempt to utterly humiliate the smartest and most brilliant mind the world knew at the time is shameful. And all it really accomplished was to take that brilliant mind and turn it away from the hierarchical authority of Britain, to focus it fully on the distributed democracy of America.

Franklin was silent in the face of authority but he quickly made his new point of view clear, helping frame many of our most important political efforts. Then, in a truly distributed approach, Franklin would also make sure Britain paid for the insults he took silently when he negotiated the peace treaty.

He found a great way to route around the damage of inherited wealth and hierarchical authority. Destroy its wealth and  disavow its authority.

This is a solution we have done again and again when this battle has been engaged.

Today we find ourselves again fighting a battle between hierarchical authority and distributed democracy. Like then it cuts across parties. In the same way Adams and Jefferson could come together, so too will we see something similar happen.

Because this is at the heart of being an American, as Brin wrote: (his bold):

The colonies were already home to a new spirit and ethos – part cantankerous, part ebullient and hopeful, and part-scientific, with all those portions combining to demand one core question:

“Why should I have to bow down, or be bullied, by another mere human… just because of who his father was?”

The irony is rich. Those today citing the Founders most often are folks who are most vigorously helping propel us back into a world of inherited status, dominated by clans and cartels of aristocratic families.

I’d add “ or how rich he is?” We created the first modern democracy – of, by and for the people – not to just see the top 1% control our economic and political future.

As Brin states our ‘secret sauce” is an open and mutual accountability to and by others,. It is a social contract, something that every ruling class has attempted to destroy.

Make no mistake. The Charleston tories became Confederate plantation lords, who aimed to re-establish inherited-landed-ownership nobility, the classic human pattern that ruined competition and freedom and social mobility in every society other than ours.

And that torch is now carried by hirelings of a new oligarchy, diverting libertarian passion away from flat-open-fair competition over to worship of absolute property rights, no matter how inherited or how much this re-creates the Olde Order that sparked our Revolution.

One conflict Brin omits because it was not directly an American civil matter is World War II. Here, in many ways, the battle between authoritarian rule by a fascist elite and the distributed approaches of Western democracies was again won by those who have been winning these conflicts since at least 1776.

So, every 80 years or so we Americans have been involved in a tremendous battle over the same things, over hierarchical authority’s need to destroy the benefits of distributed democracy.

I expect they will lose once again. And lose big because we have new tools that support distributed democracy to an extent not seen in perhaps 10,000 years.

Surfers, not plodders

 Academia Surf&Rock 2013

When she finished her pitch, the investor said he didn’t invest in women
[Via Boing Boing]

“I don’t like the way women think. They haven’t mastered linear thinking.

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Idiots. Cutting off half of society simply reduces the possible solutions to a wide variety of solutions.

But the quote about linear thinking is right on. These guys simply do not understand the genius of real innovators and simply follow a linear approach themselves.

We need more non-linear thinkers, those that can adapt to things even as the conditions are changing.

These male investors know how to plod to the top of a mountain. They do not know how to surf a wave of change. But a  mountain does not change as you are hiking to the top. Today’s economies do.

A wave cannot be predicted. It is constantly changing. So we need surfers. But these investors will continue to fund plodders.

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