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Thursday, December 8, 2016

The Golden Age of Innovation Refuted

“By all appearances, we’re in a golden age of innovation. Every month sees new advances in artificial intelligence, gene therapy, robotics, and software apps. Research and development as a share of gross domestic product [of the U.S.] is near an all-time high. There are more scientists and engineers in the U.S. than ever before. None of this has translated into meaningful advances in Americans’ standard of living.”[1] The question I address here is why.
The essay is at "Golden Age of Innovation."

1. Greg Ip, “Economic Drag: Few Big Ideas,” The Wall Street Journal, December 7, 2016.

Wednesday, December 7, 2016

A Business Surtax on Income Inequality: Target the Proceeds

The medium compensation in 2015 for the 200 highest-paid executives at publicly-held companies in the U.S. was $19.3 million; five years earlier, the figure was $9.6 million.[1] CEO pay compared with the earnings of average workers surged from a multiple of 20 in 1965 to almost 300 in 2013.[2] “Income inequality is real, it is a national problem and the federal government isn’t doing anything about it,” said Charlie Hales, the mayor of Portland, Oregon in 2016 when that city passed a surtax on companies whose CEO’s earn more than 100 times the medium pay of their rank-and-file workers.[3] According to the law, set to take effect in 2017, companies whose ratios are between 100 and 249 would pay an additional 10 percent in taxes; companies with higher ratios would face a 25 percent surtax on the city’s business-license tax. Whether the new law would make a dent in reversing the increasing income-inequality was less than clear.

1. Gretchen Morgenson, “Portland Adopts Surcharge on C.E.O. Pay in Move vs. Income Inequality,” The New York Times, December 7, 2016.
2. Ibid.
3. Ibid.

Monday, December 5, 2016

Analysis of Italy’s 2016 Referendum: Beyond the Euro and the E.U.

The predominate axis of analysis in the wake of the Italian referendum in early December, 2016 centered on the euro, the federal currency of the European Union. For example, an article in The Wall Street Journal begins with the following: “Sunday’s referendum vote in Italy reinforced a widening split between the economics needed to sustain Europe’s common currency and the continent’s rising tide of populism.”[1] At the time, however, the populism in the E.U.’s states had more to do with immigration than the federal currency. Even so, analysts predicted that Italian parties antagonistic to the currency could be expected to benefit. Stephen Gallo at BMO Financial Group went so far as to claim, “Eurozone breakup risks are rising,” given “the political currents at work in the Eurozone.”[2] Although he makes a good observation in noting the lack of a political will in the States “to finish building the missing architecture of the single currency area”—implying that the underpinnings of the euro were inherently unstable—he overlooked the matter of the distribution of wealth, and in particular the element of fairness, which I submit is salient in the Italians’ ‘No’ vote as well as in the rising anti-establishment, or shall we say, anti-elite, populism of the day.
The full essay is at "Italy's Referendum."

1. Stephen Fidler, “Italy’s ‘No’ Opens Harrowing Year for EU,” The Wall Street Journal, December 5, 2016.
2. Jon Sindreu, “Euro Falls as Italian Reject Renzi’s Changes,” The Wall Street Journal, December 5, 2016.

Young Japanese: An Early Verdict on Climate Change

Is the verdict in, and have we, mankind, lost our own self-inflicted climate battle? Is this what Japanese millennials were saying in 2016 when, according to a government survey, only 75 percent expressed interest in climate change, whereas close to 90 percent of the same age group (18-29) had expressed interest just a few years earlier?[1] Their intuition may have been the proverbial canary in the coal mine.
The full essay is at "An Early Verdict on Climate Change."

1. Tatiana Schlossberg, “Japan Is Obsessed with Climate Change. Young People Don’t Get It,” The New York Times, December 5, 2016.

Friday, December 2, 2016

Business CEO’s Overstating Political Uncertainty in the United States

The impact on business of political uncertainty in countries that are seized by revolution can be substantial—so much so in fact that CEO’s and board directors are motivated to avoid the uncertainty itself. I submit that business analysts of political risk tend unwittingly to routinely overstate the uncertainty arising from incoming U.S. presidential administrations. If I am correct in this claim, CEO’s and board directors pay too much heed to political uncertainty itself in the making of major strategic decisions involving operations in the American context.

Modern Day Mercantilism: Donald Trump Intervenes at Carrier

The tension between the free-market philosophy and mercantilism (e.g., an industrial policy) has been longstanding. I contend that the philosophy of international business (or international economics) is flawed terms of how far comparative advantage is applied, even at the expense of full employment at the city or country level. The case of Carrier in Indiana points to the legitimacy of government intervention even at the expense of comparative advantage.

The full essay is at "Modern Day Mercantilism."

Wednesday, November 30, 2016

Springtime for China's Coal Industry: Is China Too Big to Swerve Enough to Avoid the Climatic Iceberg Ahead?

Even as Chinese government officials “called on the United States to recognize established science and to work with other countries to reduce dependence on dirty fuels like coal and oil,” China was “scrambling to mine and burn more coal.”[1] Notably, short-terms concerns were dominant. “A lack of stockpiles and worries about electricity blackouts” were “spurring Chinese officials to reverse curbs that [had] once helped reduce coal production.”[2] By December, 2016, coal mines were reopening, and with them coal miners were returning to work. The renewed activity would of course make it more difficult for China and the world to meet CO2 emissions targets, “as Chinese coal is the world’s largest single source of carbon emissions from human activities.”[3] In fact, China’s use of coal results in more emissions “than all the oil, coal, and gas consumed in the United States.”[4] The implications for being able to contain the global rise in temperature within 2 degrees C are not bright from this real-life scenario. It is important, therefore, to grasp the underlying dynamics behind China’s plight.
The full essay is at "Springtime for China's Coal".

1. Keith Bradsher, “Despite Climate Vow, China Scrambles for Coal,” The New York Times, November 30, 2016.
2. Ibid.
3. Ibid.
4. Ibid.

Wednesday, November 23, 2016

A Law School Dean Offers Grief Counseling to "Hysterical" Students after Trump Wins: Legal Reasoning Suffers

Michael Schwartz, dean of the law school at the University of Arkansas at Little Rock announced in November, 2016 that he would resign the following summer. His accomplishments included a lawyer-student mentoring program, live-client learning sessions, and a low-income clinic in the Arkansas Delta.[1] The trigger for his resignation was a school-wide email he had sent to students just days earlier in which he announced that he was making counseling available to any student who was upset by the election of Donald Trump as U.S. President. Besides effectively normalizing over-reactions and failing to recognize normal venting, the dean’s email interjected partisan politics, albeit tacitly, into higher education. Rather than turn the popularized context into a teachable moment for assumption-analysis, the dean modeled what happens when unsupported assumptions run unchecked. In the end, the legal reasoning of students could suffer.

The full essay is at "Grief Counseling to Hysterical Students."

1. Emily Walkenhorst, “UALR Law School Dean to Exit Post,” Arkansas Democrat-Gazette, November 19, 2016.

Tuesday, November 22, 2016

The Courts Go After Gerrymandering: Deconstructing a Conflict-of-Interest

In the U.S., the boundaries of both federal (e.g., U.S. House of Representatives) and state legislative districts are redrawn every ten years after the census to “ensure that each district contains roughly the same number of people.”[1] Both major political parties in state legislatures “often remap districts to favor themselves, either by cramming opposition voters into a single district or by dividing them so they are the majority in fewer districts.”[2] I contend that a simple majority vote is problematic, given the irresistible temptation to redraw the districts for partisan advantage rather than merely to take account of changes in population.

The full essay is at "Gerrymandering."

1. Michael Wines, “Judges Find Wisconsin Redistricting Unfairly Favored Republicans,” The New York Times, November 21, 2016.
2. Ibid.

Sunday, November 20, 2016

The Electoral College: Beyond the Conventional Wisdom

The matter of how the U.S. President is to be selected was a tough nut for the delegates in the Constitutional Convention in 1787 to crack. Mason observed the following in convention, “In every Stage of the Question relative to the Executive, the difficulty of the subject and the diversity of the opinions concerning it have appeared.”[1] The alternative proposals centered around the Congress, State legislatures, the governors, the people, and electors designated for the specific purpose as the possible determiners. Although the delegates were men of considerable experience, their best judgments about how the alternatives would play out were subject to error as well as the confines of their times. In re-assessing the Electoral College, we could do worse than adjust those judgments and rid them of circumstances pertaining to them that no longer apply. For example, the Southern States no longer have slaves, so the question of whether those States would be disadvantaged by going with a popular vote no longer applies; the alternative of going with the popular vote nationwide no longer suffers from that once-intractable pickle. Yet lest we rush headlong into a popular vote without respect to the States, we are well advised not to dismiss the points made by the convention delegates, for we too are constrained by our times, and we may thus not be fully able to take into account points that have been forgotten.

The full essay is at "The Electoral College."

1. James Madison, Notes of Debates in the Federal Convention of 1787 Reported by James Madison (New York: W. W. Norton, 1966): 370.

Tuesday, November 15, 2016

The Trump Organization and a President Trump: Minimizing the Exploitation of Conflicts of Interest

In a matter of days after his being elected as President of the United States, Donald Trump decided to put his business empire in the hands of his adult children. Roughly a month later, in recognition of the intractable conflicts-of-interest problem even were his three eldest children to run his roughly 500 companies, he announced that he would sever his ties with his empire; after all, he would have his hands full as the federal president of another sort of empire: The United States of America. Even so, he did not mean to divest, suggesting that conflicts of interest involving his brand could be salient through his tenure as U.S. President. It is important to remember that nothing in federal law prohibits the President from continuing to run his own business; the conflict-of-interest rules that apply to other federal officials do not apply to the office of the president. Even so, enormous external pressure was being brought to bear on the president-elect to divest completely from his businesses.

The full essay is at "Donald Trump: Conflicts of Interest."

Saturday, November 12, 2016

Transforming Transformational Leadership: Foundations over Ideology

James Burn’s concept of transformational leadership is in essence a process in which “one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality.”[1] This includes a moral commitment to develop followers, especially morally. To Burns, transformational leadership is therefore “an ethical, moral enterprise.”[2] I contend that the term transformation is not inherently ethical, and so it can apply to leadership in an amoral sense. Freed up from the limitations of being viewed primarily or even exclusively as moral, transformation can be seen to apply to leadership in at least two, much more direct—or central—ways than morally: as referring to a leader’s own transformation and to a leader’s vision being transformational.

The full essay is at "Transformational Leadership."

1. James M. Burns, J. Leadership (New York: Harper & Row, 1978): 20.
2. Ken W. Parry and Sarah B. Proctor-Thomson, “Perceived Integrity of Transformational Leaders in Organizational Settings,” Journal of Business Ethics 35, no. 2 (January, 2002): 75.

Friday, November 11, 2016

Getting an Election So Wrong: The American Media and Pollsters in 2016

“After projecting a relatively easy victory for Hillary Clinton with all the certainty of a calculus solution, news outlets like The New York Times, The Huffington Post and the major networks scrambled to provide candid answers.”[1] The dynamics likely went beyond even candid answers from the media, with major implications for how much reliance Americans should place on their media-establishment for political information.

The full essay is at "Getting an Election So Wrong."

1. Jim Rutenberg, “News Outlets Wonder Where the Predictions Went Wrong,” The New York Times, November 9, 2016.

Thursday, November 10, 2016

California and Britain: “Calexit” and “Brexit”?

Nearly six months after a majority of British voters voted to secede from the E.U., interest was building among Californians on the possibility of a “Calexit” from the U.S.[1] In fact, supporters were proposing a referendum to take place in 2019. Although the two exits would be comparable—two large states of empire-scale unions (California’s economy being larger than that of France, and California’s population being larger than that of Poland)—the reasons for a Brexit are more fundamental than those for a Calexit. As a result, the secession of Britain from the E.U. would have a firmer foundation in terms of political theory.

The full essay is at "Calexit and Brexit." 

1. Eugene Scott, “Interest in #Calexit Growing after Donald Trump Victory,” CNN, November 10, 2016.

Wednesday, November 9, 2016

Societal Norms Understating Unethical Corporate Cultures: The Case of Wells Fargo

The case of Wells Fargo suggests that even when a massive scandal is revealed to the general public, the moral depravity of a company’s culture is skirted rather than fully perceived. Wells Fargo was fined a total of $185 million by regulatory agencies including the Consumer Financial Protection Bureau, which had accused the bank of creating as many as 1.5 million deposit accounts and 565,000 credit-card accounts that for which consumers never asked. The bank fired 5,300 employees over the course of about five years after it was revealed those employees had opened the accounts and credit cards.[1] Wells Fargo's CEO at the time, John Stumpf, "opted" for a cushy early retirement after an abysmal performance before a U.S. Senate committee; he walked away from the bank with around $130 million[2], and none of the other members of senior management were fired, or "retired," obliterating any hope societally that any of the senior managers would be held accountable. This result is particularly troubling, given the true extent to which that management had turned the bank into an ethically compromised organization.