Corporatism Redeux

Just like Gary Becker agrees with me on the Efficient Market Hypothesis, now I see that the inimitable Charles Krauthammer agrees with me on Corporatism as an evil to be avoided. Here's a quote from a recent television appearance (emphasis mine).

"Now, what's troubling here is not that the administration is only trying to get companies to . . . hide the fact that [Obamacare] is going to cost, [that] it's not a free lunch as it has been pretending — but it's the attitude of the Democrats in Washington. It [Washington] takes over businesses: Chrysler, G.M. it takes over student loans, it nationalizes it [the student loan business] without a debate at all. And then there is also this attitude that Chairman Waxman will call on the carpet a corporation CEO to explain its actions as if corporations aren't independent entities who produce a product to make a profit but agents or wards of the government who have to answer for every action.

It's the kind of corporatism you see in Europe."

These guys are getting smarter every day.

Nobody's Arguing for Taking It Back

I once heard a preacher say "Some say Christianity has been tried and failed. I believe that Christianity has been found difficult and not tried."

How does that related to Capitalism? Being of a libertarian bent, I believe in truly free markets. The government in a truly free environment exists to provide three things; the physical security of its citizens, the sanctity of the contract between individuals, and the protection of private property rights. Many say that free markets have failed and I say that truly free markets have been found difficult and not tried.

No government has ever lived to this ideal - maybe the closest was Hong Kong before it was absorbed by China a decade ago. Even so, hobbled Capitalism exists in many places and even a partly free market is still a fabulous economic engine for wealth creation.

Here's an interesting interview with Nobel winning economist Gary Becker who apparently agrees with me (what a smart guy!), "Or look at developing countries," he says. "China, India, Brazil. A billion people have been lifted out of poverty since 1990 because their countries moved toward more market-based economies—a billion people. Nobody's arguing for taking that back."

Free Markets are the Best Way to Prosperity

I've heard of this organization before and watched a couple of their presentations. In general, they're mostly politically correct topics. Swedish physician Hans Rosling, though, has a super-spiffy graphics package combined with some killer data.

My take on this is that free markets (or maybe even just free-er markets) are the best way to prosperity.

Squeak, squeak

I bought a new pair of shoes yesterday; very nice shoes but they have a little bit of a squeak. I hope this goes away with wear but I did a quick search on squeaky shoes and ran into this gem.

Time to Short ABC

I try to limit my remarks to Information Technologies and general finance topics. This, however, is too tempting.

If ABC were sold as a separately traded stock, I would be shorting it now. Christiane Amanpour will be leaving CNN and joining ABC. Unfortunately for me, ABC is part of Disney and Disney is much to broad and diverse to be brought down by this. So, shorting Disney is pointless.

But for ABC, let the ratings slide begin!

Do Regulators Believe in Free Markets?

Here's an article at Conglomerate Blog that raises an interesting question. Do financial market regulators believe in free markets? They discuss it as a reflection of the Efficient Market Hypothesis. In short, in an efficient market, no one player will make extraordinary returns over a long period of time. Only through market manipulation of some sort can exceptional returns over a long time be realized.

Why didn't regulators look at organizations with exceptional returns like, oh, Bernie Madoff, AIG, Fannie Mae, and Freddie Mac. Seeing an exceptional return should be a bright light shining on a suspect practice. The article quotes Ray Ball of the University of Chicago with the money quote, "If regulators had been true believers in efficiency, they would have been considerably more skeptical about some of the consistently high returns being reported by various financial institutions."

And What Will We Do In Our Spare Time?

Why the New Normal Could Kill IT. The money quote is "This new world order calls on CIOs to meet its demands in three explicit ways: '"They will have to make the IT function dramatically more productive, use IT more effectively to meet larger corporate goals, and embrace disruptive technologies that will shape the new economic terrain,"'.

The Perfect Movie Trailer

Dude! Check it out.

This Is It! - The Limits of Expertise

Not that you asked but this is one of the most influential things in my life. (http://www.mediafire.com/?2ngtzjtzgwz) It's an article from The American Scholar by Donald McCloskey that was published in 1988. At the risk of overstating things, I think this is one of the clearest thinking pieces ever published. It's fourteen pages long and well, well worth the read.

There are too many pithy quotes for me to have a single favorite but this one is pretty good. McCloskey relates that the financial advice industry grew out of court decisions holding trust accountants liable if they did not take third party advice. And the quality of that advice? "The effect would have been the same had the courts decided that prudent men should consult Ouija boards or the flights of birds."

Oh, and I'm not rich so I guess I ain't smart neither.

The Technocrat Paradox

Just a moment ago, I mildly upset my boss. As I walked into the office in the morning I passed him and two young ladies in a conference room where we waved me in to introduce them. They are from another business unit and I'd long known them but we've never met in person.

During the introduction he told them that we'd recently set up a new server room (not a data center, just a large wiring closet with communications equipment and some servers in it.) He said to the ladies that "Mick is very excited about it."

My look must have baffled him because the glance in response was obviously displeasure. I told them that I was pleased that we had a facility superior to the prior one. That's all.

For me, being excited about a wiring closet is like being excited about a home furnace. I'm glad my furnace works but I don't show it to new guests when I give them the nickle tour of the home.

What this little incident tells me is that even with the MBA, the years of experience in business, the track record of multiple ERP implementations and other large systems that drive the business, and my participation in our senior management councils, the business still sees us as pure technicians.

IT can make or break a business and I was hired specifically for my business skills. Yet still ... still, I'm viewed as a technician.

Check out this excellent post from Martha Heller for a more on-the-point comment about what she calls The CIO Paradox. In particular, read the comments thread.

Blog Name of the Week - The Federalist Paupers

I've just found this blog and, while I don't yet have an informed opinion, the commentary seems worthwhile. Regardless, they clear have won my Blog Name of the Week award.

Clever, but Wrong

Someone is thinking here.

As If I Needed More Evidence

I posted a while ago about the total self-absorption of the Baby Boom generation (my generation). As if we needed more evidence, CNBC is giving Tom Brokaw a special on the topic. No doubt it will get respectable (for CNBC) ratings - minus me.

Spending as a Percent of GDP

I've long felt that those (particularly what I'll call "no-nothing" conservatives) who carp continuously on the federal deficit are missing the main point. In the press, you continuously hear laments that the federal (or state, or local) deficit is the highest ever recorded.

That may be true but it's not the point. What matters is the level of deficit as a percent of Gross Domestic Product (GDP). If the economy grows then the deficit can also grow. It's almost exactly like a business borrowing money to invest in future growth. As long as the business can service the debt, then borrow away.

Having said that, this graphic is still pretty sobering. The federal government historical spends between 15 and 20 percent of GDP. But in the future? Something has to give here.

Oh, Canada

Ever wonder why Canada's banks didn't threaten to crumble as did the American banks in 2008 and 2009? Check out this article. I say there are three dominant factors: full recourse loans (no walkaways from an underwater mortgage), more prevalent mortgage insurance, and no tax deductability for mortgage interest.

In general, I dislike using the tax code to encourage socially acceptable outcomes and mortgage interest deduction is but one example. The temptation for political shenanigans is just too high for politicians to resist. I've read about similar home mortgage environments in places like Holland and Denmark. The Canadians seem to have done this one right.