Rooting against America...and reason

After 8 years of W., Zombie Republicans are tired of cheering U-S-A

Remember when, under President Dubya, Republicans accused Democrats of rooting against America?  As if our psychic energy made all the difference.

Well, now Republicans are clearly rooting against America. One blogger at the conservative American Spectator wrote, "I'm just too angry at the [BLS jobs] report" to write about it.  That's right.  Angry.  At a report. That ostensibly shows good news.  And he's not alone.  

Pickled old One Percenter and ex-CEO of GE, Jack Welch, immediately tweeted that Obama was fixing the data, Chicago-style, (whatever that means), and he refused to take back his accusation when given the chance.  And of course Tea Party favorite, Rep. Allen "Non-Negotiable" West, wasn't buying the report for a second either. It was also no surprise that Rush Limbaugh accused the "Obama regime" of manipulating the BLS data.

Things got absurd with MSNBC's Joe Scarborough & Co. "scratching their heads" over the report, and debating whether the latest unemployment figure shouldn't actually be 8.1 percent instead of 7.8 percent.  Imagine! Debating on live TV a difference of 0.3 percent in the unemployment figures!  Is this what we've come to, folks?  

Finally, there was conspiracy theory nutjobbery. One writer at the conservative Washington Examiner theorized that thousands of unemployed Democrats who were surveyed by the Census Bureau simply lied about being unemployed.  You know, to help Obama.  And something called The Washington Free Beacon did some amazing investigative journalism and uncovered the smoking gun that "at least two" economists at the BLS have donated money to Democrats over the last three elections, although one of them, uh, left the Bureau in July.

This gamut of paranoia to outright disbelief to mild skepticism among Republicans is kind of funny, considering what happened 12 months ago. Cast your mind back. It's a crisp October morning. And Glenn Thrush at Politico, within 45 minutes of the BLS releasing lower than expected jobless numbers, said he "received no fewer than eight GOP press releases blasting away at President Obama for failing to stem the tide of unemployment."

Labor Secretary Hilda Solis pointed out to CNN on Friday: "This is a methodology that's been used for decades. And it is insulting when you hear people just cavalierly say that somehow we're manipulating numbers."

So Republicans have faithfully believed the jobs data based on the exact same methodology up until now, and they have reminded us constantly how bad things were, and when things got a little bit better, suddenly they stopped trusting the Census Bureau and the Bureau of Labor Statistics.  What rank, self-serving hypocrisy!  That's what they get for fixating on one statistic for three years. Now I predict that they'll start saying the unemployment figure doesn't matter, that the economy is still in the pits, or they're not very high-paying jobs anyway, and so on and so forth.

A few reasonable Republicans and all economists agree that there's nothing fraudulent going on here.  

For a very technical explanation of September's labor participation and unemployment data, see this.

Besides rooting against America, against economic growth and jobs, because it hurts their party's electoral chances, Republicans are once again aligning themselves with kooks, and petulantly setting up camp outside the civilized boundaries of the "reality-based community."  

Corporations ain't people (redux)

Yeah, but Boards of Director are people, right?  Right, but what are their incentives?  Conservatives believe in incentives, so what's the company's officers' incentive to be human beings?  Zilch.  More precisely, those incentives exist, but they are not material or intrinsic to the corporation; they exist only in the ethics that corporate employees bring to their jobs.  Because there isn't any explicit reward in the corporate structure for individual responsibility and concern for the greater good, much less self-sacrifice, which in the corporate world entails a threat to one's job security, one's compensation, and perhaps to the company's bottom line.  

Furthermore, Tapscott is right to mention that corporations are psychopathic by the definition of the American Psychological Association (and psychopathic personalities are more common in corporations).  So what holds them back?  Regulators, first and foremost.  Without government regulators, corporations would be truly scary.  Second, what holds them back is whatever morality (or lack thereof) employees bring to their jobs, as mentioned. Third, we have the courts.

And so, the only meaningful checks on the abuses of corporations come from outside the corporation, and everybody agrees on that.  That's worth remembering.  

To wit, even right-wing ideologue Dr. Milton Friedman realized corporate excesses would have to be checked somehow.  Rather than regulations, he preached that society should rely on the courts to alleviate the externalities and suffering that corporations foist on their customers and non-customers alike.  (Never mind that sick people can't be made well, and the dead can't be resurrected, by courts, no matter what penalties or monetary awards they grant in retrospect.)  Even Milton Friedman acknowledged that corporations would do very bad things if left to their own devices.

Why?  Because corporations are not human.  When it comes to human beings in society, we're very particular about assigning responsibility (or blame) and holding individuals accountable.  Yet the genius, the key innovation of the corporation, is the limits it places on each shareholder, founder's or employee's liability for the bad stuff the corporation does, as well as the financial risks it takes.  

No such limits exist, nay, would be not tolerated, by society when it comes to individuals.  Conservatives are most adamant on that point; liberals, at least stereotypically, are the ones making all sorts of excuses for individuals' behavior: nurture, not nature, and societal forces and all that, they plead.  Such liberal "excuses" drive conservatives nuts.  And yet when it comes to corporations, whose main innovation in the history of mankind is to limit individual responsibility, and thereby make individual risk-taking more palatable, conservatives don't see any contradiction with their professed ethical-moral values.

This diffusion, or rather, dissipation, of moral responsibility has recently reached absurd proportions.  For example, how could one employee of Goldman Sachs, Fabrice Tourre, be held responsible (in a civil, not criminal, suit, mind you) for $3.2 billion fraudulent trades, and yet Goldman's management escape unscathed?  OK, Goldman paid a $550 million fine to the U.S Government while admitting no wrongdoing, but that fine was paid by Goldman's shareholders -- while investors in those fraudulent trades received nothing, and company officers kept their jobs.  Where's the accountability?  

And finally, Tapscott is right to mention the influence of the Internet on corporate transparency.  Is it any wonder that the fig leaf of Corporate Social Responsibility (CSR) coincides with the birth of the Internet?  But yet again, the Internet is external to the corporation; it depends on active citizens to monitor the activities of the corporation.  It is citizen-sponsored regulation, or external regulation by other means, and arguably not the most efficient means.

Tapscott's conclusion is dead on: "The blanket assertion that corporations are people obfuscates the complex issues at play in the changing business world. Corporation are institutions. People are people."

Are Corporations People (Redux)? Why Jack Welch Is Wrong

By Dan Tapscott

September 16, 2012 | Huffington Post

URL: http://huff.to/U1WQKD

What's good for a business is not necessarily good for Business, or for Us

Since the 1980s, business schools have taught future executives that shareholder value maximization (SVM) is the best way to structure the operations of a firm and measure its performance.  Yet a few years ago, precipitated by the financial crisis, something changed.  Even Businessweek, one of the biggest cheerleaders of b-school since its ratings and admissions info is a cottage industry for the publication, acknowledged it in 2010: "How Business Schools Lost Their Way."  

No less than former GE CEO Jack Welch, the hero of many a business school case study, has seen the light and fallen from his high horse, calling SVM "the dumbest idea in the world."  Perhaps that's because GE lost 60 percent of its market value since Welch left in 2001?  Is GE that much worse now, or was it overvalued then?

Explaining what Welch meant, Forbes' Steve Denning argued that in practice, SVM is not so much about executives' maximizing the firm's value, but rather managing (or manipulating) investors' expectations of the firm's value.  Citing the example of GE, he concluded that Welch & Co. were clearly managing the firm's earnings with uncanny precision.  Denning argues for regulatory changes that could thwart the influence of managed earnings and managed expectations, and get business back to the previous dogma of management guru Peter Drucker that, "There is only one valid definition of a business purpose: to create a customer."  

Using other words, celebrated business leader Steve Jobs echoed Drucker's classic sentiment to biographer Walter Isaacson.

Meanwhile, alternative theories like the Triple Bottom Line and Porter's Shared Value have started to gain credence.  More companies are at least paying lip service to it, and the related concept of Corporate Social Responsibility (CSR).  Personally, I believe CSR is bunk.*  Expecting firms to focus on something other than their bottom line is misguided and naive, no matter what they state on their websites and annual reports.  It's not what they're made to do.  What are the internal incentives for firm employees to promote CSR?  Few or none.  Meanwhile, CSR gives irresponsible firms PR cover for their misdeeds.

(*When CSR really works is when consumer watchdogs, labor unions, environmentalists and other organizations shine the light of public scrutiny on the firm's lofty stated aspirations.  Yet this is just public regulation by other means -- and arguably not the most efficient means -- not the result of public altruism by the firm. And crucially, these public critics are often not even the firm's customers, shareholders or employees, but rather "stakeholders" in the most amorphous sense of CSR, meaning they may have no direct economic stake in the firm's performance.)

But I want to talk about the public arena.

Tragically, the theory of SVM has been accepted by many policy-makers and academics as the best model not only for individual firms, but also the model around which to structure our economy.  In effect, these public-sector cheerleaders of SVM gave up their prerogative and obligation to engage in precisely the kind of long-term planning for the common good that firm-level SVM is a incapable of doing.  What is good for the firm is the firm's decision; what is good for society is not.  It's ours, the people's.  

Yet too many have swallowed the Kool-Aid that the "invisible hand," i.e. the mystical, untraceable aggregate of millions of individual business decisions, leads to the best outcomes in all respects for society.  Taken to its logical conclusion, this misguided belief compels policy-makers and regulators not to meddle at all; they should get out of business's way and let the magical accounting of economic debits and credits do its thing.  Because better outcomes for society simply aren't achievable.  Nay, a committed group of human beings with a singular purpose has no purpose, in their view, outside the confines of the firm.  

(The one exception to this rule of human endeavor, conservatives tell us, is private charity, which they believe should replace publicly-funded safety nets.  Yet a simple look at poverty statistics pre- and post-LBJ show us that charity never was, and never can be, nearly adequate to "mop up" the Dickensian poor among us.  Indeed, the key failing of private charity -- with its high overhead, wasteful duplication, lack of scale, and most importantly, non-reporting on performance -- is that it is at its weakest when it's needed most: during economic downturns.)

Certainly, we must strive for a delicate balance between impeding business and giving it free dominion over society.  Unfortunately, today we hear many thinkers and politicians on the Right calling for chainsawing regulations and giving polluting industries and exploitative labor practices free reign over our economy -- all in the name of creating jobs.  Indeed, I have no doubt that gutting regulations would boost those firms' bottom lines in the short and even medium term, and even create jobs.  What worries me is the long term.  When our productivity suffers from lack of skills and capital that have been exported, never to return.  When unaccounted-for pollution creates enormous health costs which nevertheless exist in the real economy yet are absent in polluters' financial statements.  When we have privatized every government service and public asset until we are at the mercy of executives whose primary motivation is this year's bonus, and next year's "golden parachute."  

To whom then do we appeal for amelioration, when there is nobody to appeal to but impersonal market forces?

"The Dumbest Idea in the World": Corporate America's False - and Dangerous - Ideology of Shareholder Value

By Lynn Stout  

August 29, 2012 | AlterNet

URL: http://www.alternet.org/economy/dumbest-idea-world-corporate-americas-false-and-dangerous-ideology-shareholder-value?paging=off