Category Archives: Business

What’s Elizabeth Warren’s wealth tax worth?

By Isabel V. Sawhill and Christopher Pulliam – On both sides of the Atlantic, economic inequality has rocketed up the political agenda and inspired a new wave of populism. Wealth inequality is high and rising in the UK and staggeringly so in the US. The top 1% of American households now have more wealth than the bottom 90%. In the UK, the top 10% holds over half the wealth. The richest 400 individuals in the US average a net worth of $7.2 billion.

How did we get to this point? As Thomas Piketty, in his book Capital, famously argued, a capitalist economy left to its own devices will tend to produce not just inequality but ever-rising inequality of wealth – and the income derived from wealth. The main reason is because the returns earned on assets such as stocks and bonds normally exceed the growth of wages.

Imagine an economy with one capitalist and one wage earner. If the annual rate of return to financial assets is, say, 3%, but wages are only growing by 2%, more and more income ends up in the hands of the capitalist. Wealth then begets more wealth as the capitalist, not needing to spend all of his added income, adds to his existing wealth and reaps ever-growing income from that wealth. Unless a war or other shock destroys his wealth (think depression or the devastation in Europe after the Second World War), or government decides to tax it away, we end up with the rise in wealth inequality that we are now seeing in many rich countries – the US in particular.

There is something deeply disturbing about Piketty’s work. If one takes his thesis seriously, it means that the inequality of wealth and its corollary, income inequality, along with their continued growth, is the new normal. They are baked into a capitalist economy.

Of course, some financial capital gets invested in productive assets that help the economy grow. But productive investment and growth have slowed in recent decades, making it hard to argue that the rise in wealth at the top has benefited everyone. In the meantime, the accumulation of wealth in high-income households is one reason that income inequality is rising so sharply at the very top. While the richest 20% of US households, which benefit from a lot of human capital but not a lot of wealth, saw their market incomes rise by 96% between 1979 and 2016, the top 1% – which receives far more of their income from wealth – saw their incomes rise by a staggering 219%.

In short, growing wealth inequality spawns growing income inequality, so if we care about the latter, we cannot focus only on redistributing income. We need to tackle the accumulation of wealth as well.

What to do? Senator Elizabeth Warren, a serious contender for the US presidency, has proposed a wealth tax. more>

Updates from Chicago Booth

Want to pay less tax? Improve your firm’s internal reporting
By Marty Daks – When companies engage in the great American pastime known as tax avoidance, many parse the Internal Revenue Code for loopholes to reduce their effective tax rate. But research suggests they should also scrutinize the quality of their internal reporting.

Internal information quality (IIQ), a term coined by Chicago Booth’s John Gallemore and University of North Carolina’s Eva Labro, encompasses computer reporting systems and any other resources that a company devotes to ensuring the quality and ease of access of information within a firm. The elements that constitute IIQ have been largely overlooked in tax-avoidance literature—perhaps because they are usually not observable, and are difficult for academics to measure.

Gallemore and Labro argue companies should pay more attention to these issues, which they define in terms of the accessibility, usefulness, reliability, accuracy, quantity, and signal-to-noise ratio of the data and knowledge within an organization. Their findings suggest that firms with high IIQ tend to enjoy lower effective tax rates and, all else being equal, a smaller tax bite.

Gallemore and Labro employed four publicly available variables, using data from 1994 to 2010, to rate firms’ IIQ: the speed at which management released an earnings announcement after its fiscal year closed, the accuracy of management’s earnings forecasts, the absence of material weaknesses in internal controls, and the lack of restatements due to errors.

The researchers used these measures to identify companies that released earnings more rapidly and forecasted them more accurately, and had fewer Section 404 citations and restatements due to errors. They assigned these firms higher IIQ ratings.

High-IIQ firms, they find, tend to exhibit some positive traits, including centralized and standardized business transaction processing, more-efficient reporting practices, and the ability to share data across business units and geographical locations. more>

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Updates from Siemens

Spaceport America Cup Student Competition Soars to 30,000 Feet, Now with Siemens Software Partnering
Siemens commitment to workforce development
By Chris Penny – Siemens Digital Industries Software’s academic partnering staff recently attended the Spaceport America Cup (SA Cup) for the first time as a sponsor. We are very excited to be working with these teams to provide software and training grants to help team excel in the design and manufacturing of their rockets. Leigh Anderson from the global academic team and Chris Penny from the US academic team met with virtually every team of 120 teams from 14 countries, and Chris gave two workshops on Siemens software featuring demonstrations in STAR-CCM+ for aerodynamic analysis.

We selected this competition to sponsor due to the sophistication of the student challenge, the opportunity to engage with and support these students, and the high level of industry support (many of which use Siemens software).

A great example of how this competition prepares students for the workforce could be seen when James Ferrese (University of Washington) who led the development of an advanced plasma actuator payload obtained on-the-spot job offers from Raytheon and Northrup Grumman after their design presentation. more>

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Updates from Adobe

A Catalogue of Imaginary Beings
By Serena Fox – Imagine a world of monumental mythical beings dressed in surreal costumes: people made of mountains, city streets, rough-sawn logs, or plumes of steam; people who wear houses, bird wings, crystalline geodes, or even the moon.

That was the vision of collage artist Johanna Goodman in 2015 when she embarked on A Catalogue of Imaginary Beings, a personal project inspired by magical realism, surrealism, and symbolism that explores the role of the individual in fashion, history, and the artistic imagination. Four years later, the project has grown into a series of moret than 350 playful and strangely iconic images, and has led to a New York Foundation for the Arts fellowship, commissions from National Geographic and the New York Metropolitan Transport Authority, and ad campaigns ranging from skateboards to West Elm home furnishings.

“I keep thinking it’s run its course, but it hasn’t,” says Goodman. “I have not run out of ideas, and I keep getting more interest from the outside world.”

A diverse artist, Goodman works in paint, ink, and digital collage, and she brings more than 20 years’ experience in editorial illustration and portraiture to the project. A lifelong freelancer based in Nyack, New York, she creates illustrations for newspapers and magazines, book covers, hotel chains, and product advertising. Her work has appeared in the New Yorker, Time, Rolling Stone, Le Monde, the Los Angeles Times, Smithsonian, and the Rock & Roll Hall of Fame. The Imaginary Beings are her current passion.

The basic concept is straightforward: a single figure—defined by head, arms, and feet—dressed in unusual objects and placed in a surreal setting. But the resulting images are both humorous and oddly archetypal and statuesque, like pop-culture totems.

Goodman takes photographs of everyday objects and landscapes, cuts them into pieces, and arranges them to “clothe” her characters in bizarre and beautiful outfits. She plays with cumbersome proportions, favors out-of-context facial expressions, and adds innocuous items like iPhones or coffee cups as if they were talismans. more>

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Hello From the Year 2050. We Avoided the Worst of Climate Change — But Everything Is Different

By Bill McKibben – Let’s imagine for a moment that we’ve reached the middle of the century. It’s 2050, and we have a moment to reflect—the climate fight remains the consuming battle of our age, but its most intense phase may be in our rearview mirror. And so we can look back to see how we might have managed to dramatically change our society and economy. We had no other choice.

There was a point after 2020 when we began to collectively realize a few basic things.

One, we weren’t getting out of this unscathed. Climate change, even in its early stages, had begun to hurt: watching a California city literally called Paradise turn into hell inside of two hours made it clear that all Americans were at risk. When you breathe wildfire smoke half the summer in your Silicon Valley fortress, or struggle to find insurance for your Florida beach house, doubt creeps in even for those who imagined they were immune.

Two, there were actually some solutions. By 2020, renewable energy was the cheapest way to generate electricity around the planet—in fact, the cheapest way there ever had been. The engineers had done their job, taking sun and wind from quirky backyard DIY projects to cutting-edge technology. Batteries had plummeted down the same cost curve as renewable energy, so the fact that the sun went down at night no longer mattered quite so much—you could store its rays to use later.

And the third realization? People began to understand that the biggest reason we weren’t making full, fast use of these new technologies was the political power of the fossil-fuel industry. Investigative journalists had exposed its three-decade campaign of denial and disinformation, and attorneys general and plaintiffs’ lawyers were beginning to pick them apart. And just in time. more>

‘American Factory’: It’s Not the Culture, It’s the Current

By Sunny Wang – Telling the story of a factory in Dayton, Ohio, that a Chinese manufacturer has invested in, the documentary “American Factory” has been gaining tons of attention in China. It’s currently #3 on the trending chart of documentaries on Tencent Video — a Chinese video streaming website with over 900 million monthly active users — as the only foreign documentary in top 10 of the chart.

The film offers clear views from both the Chinese and the Americans in the story, bringing out the unsettling conflict to the viewers – it’s not just about the differences between two cultures; it’s more about the conflict that comes with primitive accumulation of capital, the one that comes along with the changes taking place in the manufacturing industry.

I think this is a great metaphor describing how the Chinese workers are positioning themselves. The society is always moving forward; anyone standing still — not improving or educating themselves, or working extra hard constantly — can easily be left behind. Our current situation is even crueler than before, because we’re in the age of A.I. and automation, which would only accelerate the changes, or the “current” in this metaphor. The Chinese factory workers found their place in this “current” by being cost-efficient laborers in the manufacturing process — they chose to work harder to ensure high efficiency. But the conflict sets in on the other side of the ocean where automation outperforms labor at a lower cost.

As seen in the film, the working environment was dangerous, pay was low, and working shifts were long at FGA, yet the workers in the Dayton plant chose to stay and complain instead of leaving for better jobs that are safe, easy, and with better pay. Could it be because they didn’t have a choice? more>

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Updates from ITU

Here’s how we can build public trust in self-driving vehicles
By Chaesub Lee – The automotive industry is undergoing extraordinary transformation.

The future of transport looks to be electric; highly automated; and – increasingly – shared.

This transformation is ambitious, and this ambition is very welcome.

In mobility, we can impact billions of people’s lives for the better.

We can save countless numbers of lives. We can improve environmental sustainability. And we can expand access to the many opportunities that mobility brings.

New technologies are at the heart of this transformation, and international standardization will be essential to ensure that these technologies are deployed efficiently and at scale.

That is why the ITU membership includes Volkswagen Group and Hyundai – and a diverse range of other automotive industry players such as China’s Telematics Industry Application Alliance, Continental, Bosch, BlackBerry, Tata Communications and Mitsubishi Electric.

By joining the United Nations specialized agency for information and communication technologies, ICTs, they are helping to shape international standards that protect and encourage key investments, improve road safety and help build intelligent transport systems. more>

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A European pivot from space to time

By Kalypso Nicolaïdis – Although Europe has never ceased to reinvent itself, we the peoples of Europe love to announce to the world that peace, like diamonds, is forever. That is a nice thought. But peace is never a done deal. Its foundations need to be reinvented by every generation, every polity, every era. Deep peace is not an inheritance but a way of life. It is not about harmony but struggle. It needs armies of defenders, with all sorts of clever strategies, all sorts of ingenious weapons, all sorts of parochial accents.

Journeys of reckoning often have to do with re-knowing something anew that we had almost forgotten. Can we know peace anew?

We can do so through many different paths. One such path is this: a European pivot from space to time. The EU and its critics have focused on the politics of space, a space made single by markets, regulators and judges, a space where free movement reigns supreme and from which we can choose who and how to exclude. What if the EU were to refocus on the politics of time, time when we reflect back and look ahead, time that can be slowed down better to engage with the needs of the next generation, time to allow for a hundred indecisions, and for a hundred visions and revisions …

Would it not be okay to renationalize space a little if we could radically Europeanize time? Inspired by the journey of Er, who at the end of The Republic comes back from the dead, can we shape our present life to serve future lives through the virtues we abide by? more>

Are ‘you’ just inside your skin or is your smartphone part of you?

By Karina Vold – Most democratic constitutions shield us from unwanted intrusions into our brains and bodies. They also enshrine our entitlement to freedom of thought and mental privacy. That’s why neurochemical drugs that interfere with cognitive functioning can’t be administered against a person’s will unless there’s a clear medical justification. Similarly, according to scholarly opinion, law-enforcement officials can’t compel someone to take a lie-detector test, because that would be an invasion of privacy and a violation of the right to remain silent.

But in the present era of ubiquitous technology, philosophers are beginning to ask whether biological anatomy really captures the entirety of who we are. Given the role they play in our lives, do our devices deserve the same protections as our brains and bodies?

After all, your smartphone is much more than just a phone. It can tell a more intimate story about you than your best friend. No other piece of hardware in history, not even your brain, contains the quality or quantity of information held on your phone: it ‘knows’ whom you speak to, when you speak to them, what you said, where you have been, your purchases, photos, biometric data, even your notes to yourself – and all this dating back years.

In 2014, the United States Supreme Court used this observation to justify the decision that police must obtain a warrant before rummaging through our smartphones. more>

Violence, fabricated news, and responsible media

By Egemen Bağış – In history no medium of any kind has evolved as the way media has. From radio broadcasting to large box-sets, to today’s social media networks and online viewing capabilities.

In 1946, Darryl F. Zanuck, a powerful Hollywood producer at 20th Century Fox, said that television wouldn’t last because “people will soon get tired of staring at a plywood box every night.” Today we can only smile with amazement at the sheer inaccuracy of this prediction.

Another prediction by British journalist, publisher, and politician C.P. Scott was slightly truer when he proclaimed, “Television? The word is half Latin and half Greek. No good can come of it.” While it is not true that no good comes of media, it wouldn’t be a far-fetched call to assert that modern day mass media exposes society to violence, degradation, and vulgarity.

The effect of media is profound and far-reaching. It influences our values, our daily routines and even our thinking with our deep-seeded ideologies and beliefs. Also today media is much more accessible. Media is in our homes and our mobile phones.

It is through TV and internet that our communities are introduced with extreme visions of violence. Social media brings forth a steady stream of live atrocities at the touch of a finger. Video games teach our young how to handle weapons they would otherwise never even heard of. We must, therefore, take extra precautions to ensure that our families and communities do not get contaminated from this toxic fallout. more>