Tag Archives: Business

Want to Make a Lie Seem True? Say It Again. And Again. And Again

By Emily Dreyfuss – The facts don’t actually matter: People repeat them so often that you believe them. Welcome to the “illusory truth effect,” a glitch in the human psyche that equates repetition with truth.

Marketers and politicians are masters of manipulating this particular cognitive bias—which perhaps you have become more familiar with lately.

President Trump is a “great businessman,” he says over and over again. Some evidence suggests that might not be true.

So what’s going on here? “Repetition makes things seem more plausible,” says Lynn Hasher, a psychologist at the University of Toronto whose research team first noticed the effect in the 1970s. “And the effect is likely more powerful when people are tired or distracted by other information.” So … 2017, basically. more> https://goo.gl/D5eOfK

A New Reason for Foreigners to Avoid Google and Facebook

By Leonid Bershidsky – A Philadelphia court has made the unfortunate decision to reopen the legal debate on whether the U.S. has the right to access e-mails stored on foreign servers if they belong to U.S. companies.

That’s a dangerous approach that hurts the international expansion of U.S. tech companies. Privacy-minded customers in Europe are already suspicious of the U.S. government’s cooperation with the tech giants, revealed by National Security Agency leaker Edward Snowden. Nationalist politicians in some countries — for example, Marine Le Pen of the French National Front — want to ban cross-border personal data transfers, arguing that such data must be stored on servers inside the internet user’s country. That, however, does not appear to guarantee that the U.S. won’t get at it, either.

Those who are uneasy about the degree of the U.S. government’s reach into their private files and communications need to start thinking about alternatives, no matter how hard it may be to replace Google, Microsoft or Facebook. more> https://goo.gl/a1hqfP

A Blunt and Counterproductive Travel Ban

By Mohamed A. El-Erian – As designed and implemented, there are genuine doubts about the order’s effectiveness in meeting its stated objective of preventing terrorism. It also risks a lot of collateral damage and unintended consequences that ultimately could prove counterproductive and harmful to national security, the economy, and America’s moral authority, values and standing in the world. Even the order’s merits as a domestic signal are in doubt, and it risks damaging the credibility and effectiveness of future policy initiatives from the White House.

This is an extremely blunt approach to an important issue. Early reports on its application suggest that even long-time holders of multiyear visas for the U.S., together with green card holders and dual nationals, are being refused entry at airports or being prevented from boarding planes destined for America. This includes people who have been living in the U.S. legally for many years, have been vetted, and are productive and integrated members of their local communities. more> https://goo.gl/sljXfS

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A General Logic of Crisis

BOOK REVIEW

How Will Capitalism End? Author: Wolfgang Streeck.
Buying Time, Author: Wolfgang Streeck.
The Deluge: The Great War and the Remaking of Global Order 1916-31, Author: Adam Tooze.

By Adam Tooze – The core of Streeck’s crisis theory is non-Marxian. It does not rest on the violence of original primitive accumulation, or on the alienation or exploitation inherent to the productive process, or even primarily on the declining rate of growth or accumulation.

In one disarming passage he describes capitalism as a ‘a non-violent, civilized mode of material self-enrichment through market exchange’. What makes capitalism toxic is its expansiveness, its relentless colonization of the rest of society. Drawing on Karl Polanyi, Streeck insists that capitalism destroys its own foundations.

It undermines the family units on which the reproduction of labor depends; it consumes nature; it commodifies money, which to function has to rest on a foundation of social trust. For its own good, capitalism needs political checks.

The significance of 2008 and what has happened since is that it is now clear these checks are no longer functioning. Instead, as it entered crisis, capitalism overran everything: it forced the hand of parliaments; it drove up state debts at taxpayers’ expense at the same time as aggressively rolling back what remained of the welfare state; the elected governments of Italy and Greece were sacrificed; referendums were canceled or ignored. more> https://goo.gl/T9bS8i

How Bad Can It Get? Prepare For Economic Nationalism

By Kurt Huebner – 2016 was already quite miserable in so many respects; 2017 promises to get even worse. Looking at the chamber of horrors President-elect Trump is putting together and assuming that he will indeed prove at any price that he is the maverick President he promised to be during the campaign, then Washington D.C. will turn into the capital of evil, kind of.

For a long time, political observers from the left analyzed political and economic developments through the lenses of neoliberalism. This concept had at its core the idea that only unfettered markets can deliver growth, jobs, income and wealth. Getting rid of ‘red tape’ not only in the realm of product regulation but also and more importantly in that of environment, labor markets and financial industries was the hallmark for any neoliberal project in the world of western capitalism. This project has come to an end.

2017 will be about economic nationalism where crude elements of growth-enhancing fiscal policy programs go hand in hand with mercantilist and protectionist policies that will erect barriers not only for the flow of goods and services but also for labor. more> https://goo.gl/rroMAl

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Resisting The Lure Of Short-Termism: Kill ‘The World’s Dumbest Idea’

By Steve Denning – Inside the firm, enhancing short-term shareholder value is what most CEOs are currently paid to do. Stock-based compensation is the main reason why the “hijacked version” of MSV (maximize shareholder value)—that the goal of a firm is shareholder value as reflected in the current stock price—has become so pervasive. By focusing CEO attention on the current stock price, stock-based compensation is often at odds with long-term growth.

When a firm embraces the goal of making money for the shareholders and its executives, it can’t inspire its staff to pursue that goal with any commitment or passion. Making money for the boss at the expense of the customer doesn’t put a spring in anyone’s step or excite anyone to give his or her very best. The goal is inherently dispiriting.

So once a firm commits to MSV, it has little choice but to manage itself with strict command-and-control to force employees to pursue a goal that they don’t really believe in. So MSV and top-down bureaucracy fit together in a perfect interlocking relationship, like a hand and a glove. If a firm tries to move away from bureaucracy, for instance by introducing Agile team practices, then the goals, prescriptions and metrics of MSV kick in to undermine the change and force a reversion to bureaucracy. more> https://goo.gl/Qt3pdu

In 2017, Cost Per Bit Exceeds Revenues

By Carol Wilson – This is the year when most telecom network operators will see their revenue-per-bit fall below their cost-per-bit, says a veteran industry analyst, and that financial reality is going to reverberate through the industry for at least the next two years, prompting further consolidation and cuts by network gear makers, as operator capex budgets shrink.

Companies such as AT&T Inc. (NYSE: T) have been very open in saying the revenue-cost crossover drives their aggressive transformation efforts, because they recognize it is impossible to meet bandwidth requirements of the future doing things the way they’ve been done in the past.

That will mean continued price pressure on equipment vendors, CIMI Corp. CEO Tom Nolle, maintains. He points to declining revenues, quarter over quarter, for companies such as Cisco Systems Inc. (Nasdaq: CSCO), and to the fact that Huawei Technologies Co. Ltd. is alone among vendors in growing its revenues because it is a price leader in many categories.

The analyst expects 2017 and 2018, at minimum, to be pretty bleak years for the telecom equipment space. more> https://goo.gl/ayoS7W

Is a peace deal possible if Israelis and Palestinians simply don’t trust each other?

By Joel Braunold and Sarah Yerkes – Secretary of State John Kerry said:

In the end, I believe the negotiations did not fail because the gaps were too wide, but because the level of trust was too low. Both sides were concerned that any concessions would not be reciprocated and would come at too great a political cost. And the deep public skepticism only made it more difficult for them to be able to take risks.

That line is important for multiple reasons. First, it underscores that the belief gap between the Israeli and Palestinian leadership today is so wide that even if they agree completely on all of the final status issues—borders, Jerusalem, refugees, security arrangements—they are incapable of making a deal.

The leaders on both sides will never take the necessary risks for an agreement without overwhelming public support. That is, while public trust and support may not be a sufficient condition for a just and lasting peace, it is a necessary one. more> https://goo.gl/bJNfc7

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It Takes a Village of Media, Business, Policy, and Academic Experts to Maintain a Dangerous Financial System

BOOK REVIEW

The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It, Authors: Anat Admati and Martin Hellwig.

By Anat Admati – The notion that regulators are doing their best to protect the public is false, as they succumb to “willful blindness.”

The financial system is incredibly important and it enables people to move money across time. How did we move from helping the economy to the system collapsing and needing so many bailouts? What was going on?

The financial system, writes Admati, is not only riddled with conflicts of interest, but also the potential and actual damage from excessive risk taking is largely hidden from view.

Excessive risk taking in banking, by contrast, specifically by excessive use of debt, is hard to detect or trace to specific individuals, and the harm it causes is abstract and spread out.

The victims of excessive bank borrowing, specifically the broad public, are led to believe that risks and failures are unavoidable. Because their borrowing is effectively subsidized by the government, when they seek profits banks effectively compete to endanger their depositors and the public.

“An analogy,” writes Admati, “would be subsidizing trucks to drive at reckless speed even as slower driving would cause fewer accidents.” more> https://goo.gl/UXt60f

The Hidden Meaning of Dow 20000

By Paula Dwyer – Since Donald Trump won the U.S. presidential election, the Dow Jones Industrial Average has risen almost 9 percent, flirting with closing for the first time ever at the 20,000 mark. The year-end rally is the market’s way of saying it approves of the president-elect’s ideas.

As well it should. Trump’s tax-cutting, deregulating and deficit-spending policies are tailor-made to boost corporate profits.

Now would be a good moment to wave the yellow flag. This may not be such great news for the rest of the economy.

What’s happening is exactly what some economists had predicted over the summer: In Trump’s first two years as president, business-friendly policies would lower corporate costs, and stock investors would get a bigger share of the economic pie. more> https://goo.gl/YjeH34