Daily Archives: June 8, 2016

The Trouble Buried in the New Fortune 500

BOOK REVIEW

Makers and Takers: The Rise of Finance and the Fall of American Business, Author: Rana Foroohar.

By Rana Foroohar – Profits at big companies are down—but CEO pay is up.

For the last couple of years, corporate earnings have been flattening out, as Main Street has struggled along in the longest, weakest recovery of the post World War II era.

The key word there is performance. Performance pay is typically awarded in stock options, which have special tax benefits, thanks to changes in how executive pay can be doled out made in the 1990s.

And that gets us to the record number of share buybacks that have been pulled off by corporations in the U.S. over the last couple of years. Buybacks, which essentially involve companies buying up their shares on the open market, jacks up the price of the stock.

The result is a market that goes up, and enriches the 10% of the population that owns 80% of the stock (and particularly lines the pockets of the C-suite), but no real change in the underlying corporate growth story (witness those falling profits). more> http://goo.gl/oTja3c

Bring On the Blockchain Future

Bloomberg – Could the technology behind bitcoin, the alternative currency much loved by anarchists and drug dealers, make the world less vulnerable to financial disasters?

Surprisingly enough, it could.

Finance is all about trust: Essentially, financial institutions evolved to enable transactions with strangers. Centralized intermediaries of various kinds solved that problem, keeping track of who owns what and who owes whom. But centralized intermediaries also create points of systemic vulnerability. Regulators continue to wrestle with this underlying — and hitherto unavoidable — dilemma.

Blockchain establishes trust in a new way. It creates a so-called distributed ledger, which maintains a complete history of all participants’ transactions — a history that’s verified and recorded across a network of computers spread around the world.

There’s no need to trust a single source. The record resides in so many places that it can’t be lost or tampered with.

Technically, this seeming utopia is within reach. The question is how to make it happen. more> http://goo.gl/DjQrR7

5 Mistakes to Avoid in Product Development

By Mitch Maiman – Mistakes are a part of life and certainly part of the learning process.

Here are some of the key mistakes observed in hundreds of product development teams.

In the heat of the project, it is easy to lose sight of the complete nature of the requirements that need to be driven into the product being developed. Often, these oversights are not discovered until late in the development process. The design may be so far along that missing features cannot practically be incorporated.

Best case, correcting for the missing requirements may be quite costly in terms of schedule or development budget. Missing requirements can play havoc with trying to control product cost projections, as well. more> http://goo.gl/xcA5vR

Swiss Rejection Won’t Doom Universal Basic Income

By Leonid Bershidsky – The proposal for a universal basic income (UBI) — a monthly payout of 2,500 francs ($2,560) — was rejected by 77 percent of Swiss voters in Sunday’s referendum, just as their government recommended.

The Swiss initiative wasn’t a good test of the idea to begin with. For the average Swiss — with the highest income in Europe, not counting the tiny principality of Liechtenstein next door — voting against the universal basic income was a no-brainer. The Swiss government had made clear that the scheme would be financially unfeasible.

The basic income campaigners tried to sell their proposal as insurance for those who might be displaced by technology.

Switzerland, however, is one of the worst countries in the world for this kind of argument. Its unemployment rate, at 3.5 percent, is evidence that nobody is being displaced, at least not yet.

Even if it starts happening anytime soon, Switzerland’s hedonic goods — the cheese, the chocolate, the watches — are likely to survive any tech disruption, and the country’s biggest export sector — its chemical and pharmaceutical industries — is already using far more intellectual than manual inputs. more> http://goo.gl/yaIpKi

Related>