Tag Archives: Capital

Investing in People to Build Human Capital

World Bank – Scientific and technological advances are transforming lives: they are even helping poorer countries close the gap with rich countries in life expectancy. But, poorer countries still face tremendous challenges, as almost a quarter of children under five are malnourished, and 60 percent of primary school students are failing to achieve even a rudimentary education.

In fact, more than 260 million children and youth in poorer countries are receiving no education at all.

“Human capital” – the potential of individuals – is going to be the most important long-term investment any country can make for its people’s future prosperity and quality of life.

In many countries, the workforce is unprepared for the future that is fast unfolding.

This is a key insight from the World Bank’s forthcoming World Development Report 2019: The Changing Nature of Work. The frontier for skills is moving faster than ever before. Countries need to gear up now to prepare their workforces for the tremendous challenges and opportunities that are being driven by technological change. more>

The Temp Economy and the Future of Work

BOOK REVIEW

Temp: How American Work, American Business and the American Dream Became Temporary, Author: Louis Hyman.

By Gabrielle Levy – The way people work is changing. Machines and computers reduce the need for labor. Companies have shifted to hiring relatively few permanent staff and opting instead to strike temporary contracts with outside workers.

Uber, the ride-sharing behemoth, is perhaps the best known of these modern companies, with its thousands of drivers operating as independent contractors, but it did not invent the form. The roots of the gig economy go all the way back to the years after World War II, with the creation of the first temp and consulting agencies, including Manpower Inc. and McKinsey & Co.

We will see work become less tied to a particular employer in lots of ways. For some people, that’s fantastic, If you’re a consultant or independent contractor and you have lots of control over your life and you get paid pretty well, then this is a fabulous turn. And if you are a gig worker and you are running errands for somebody else, it’s kind of a nightmarish turn.

Do people really want full-time work? Do they want secure work? And the answer is, yes and no.

Everybody likes to work when they want to work, just like every employer wants workers who will start and stop as needed.

How do we create a system where work can be flexible but we can still have a baseline level of security for our health and our families that allows us to take risks and be entrepreneurial and explore new economic possibilities? more>

Is Silicon Valley’s giant foundation just hoarding money?

By Ben Paynter – In late July, the Institute for Policy Studies warned that one of the fastest growing ways of giving to charity could be manipulated to benefit super-rich donors instead of those most in need.

The charitable vehicle in question is called a donor-advised fund (DAF), which allows donors to give money and non-cash assets, including public stock, to charity to receive an immediate tax benefit, but then wait to distribute the money. It’s a clever incentive that’s particularly en vogue among the 1%, in part because it allows for contributions of non-cash assets, such as stock, private company shares, and real estate, to avoid capital gains tax.

The issue is that there isn’t any formal timetable for that money to flow back out again, or necessary guidance on how particularly large sums might effectively be spent. Both issues appear to affect the Silicon Valley Community Foundation, a $13.5 billion cause fund that has received donations from Mark Zuckerberg, among other tech elite.

Among the 80% of charities that have tried to expand in recent years, half have exceeded their sustainable budgets, a precarious position for any organization that relies on (hard to access) grant money to remain afloat. Per Open Impact’s report, the region’s tech elite may be giving billions to philanthropy annually, but community groups have historically received next to nothing. more>

Where Did Qualcomm Go Wrong?

By Bolaji Ojo – It’s a justifiable question. The Qualcomm–NXP trip was an expensive sortie: Qualcomm has paid $2 billion in mandatory break-off fees to NXP, but the bill for the hidden costs may be much higher. For nearly two years, the communications IC and IP supplier and its target endured prolonged uncertainties. Even now, the spasms from customer disruptions remain strong while many employees, though heaving a sigh of relief, must figure out where they truly belong in the enterprise.

Qualcomm is moving on resolutely from the NXP debacle. It must. However, the implications and lessons — if any — are industry-wide. One of the largest acquisitions in the history of the semiconductor industry foundered because of oppositions from various fronts, including customers who might have benefited from it. Simply dumping the blame on nebulous factors and faceless regulators will result in the industry learning nothing from the experience. Perhaps the transaction was destined to fail. Perhaps it could have been better managed and successfully, too. A thorough assessment of why this deal collapsed would offer lessons that can be applied to future deals.

There are no signs that Qualcomm will conduct a detailed analysis of why and how the bid unraveled. It is easier — again — to simply toss more money at stakeholders and move on. NXP’s management and shareholders who had tendered their equity could slake their thirst with $2 billion in Qualcomm’s money. more>

What did Max Weber mean by the ‘spirit’ of capitalism?

By Peter Ghosh – Max Weber’s famous text The Protestant Ethic and the Spirit of Capitalism (1905) is surely one of the most misunderstood of all the canonical works regularly taught, mangled and revered in universities across the globe.

We use the word ‘capitalism’ today as if its meaning were self-evident, or else as if it came from Marx, but this casualness must be set aside. ‘Capitalism’ was Weber’s own word and he defined it as he saw fit. Its most general meaning was quite simply modernity itself: capitalism was ‘the most fateful power in our modern life’.

More specifically, it controlled and generated ‘modern Kultur’, the code of values by which people lived in the 20th-century West, and now live, we may add, in much of the 21st-century globe. So the ‘spirit’ of capitalism is also an ‘ethic’, though no doubt the title would have sounded a bit flat if it had been called The Protestant Ethic and the Ethic of Capitalism.

Weber supposed that all previous ethics – that is, socially accepted codes of behavior rather than the more abstract propositions made by theologians and philosophers – were religious. Religions supplied clear messages about how to behave in society in straightforward human terms, messages that were taken to be moral absolutes binding on all people. In the West this meant Christianity, and its most important social and ethical prescription came out of the Bible: ‘Love thy neighbor.’

As a guide to social behavior in public places ‘love thy neighbor’ was obviously nonsense, and this was a principal reason why the claims of churches to speak to modern society in authentically religious terms were marginal.

The ethic or code that dominated public life in the modern world was very different. Above all it was impersonal rather than personal: by Weber’s day, agreement on what was right and wrong for the individual was breaking down. The truths of religion – the basis of ethics – were now contested, and other time-honored norms – such as those pertaining to sexuality, marriage and beauty – were also breaking down. more>

Updates from Chicago Booth

By Michael Maiello – Yale University’s Bryan T. Kelly, Chicago Booth’s Dacheng Xiu, and Booth PhD candidate Shihao Gu investigated 30,000 individual stocks that traded between 1957 and 2016, examining hundreds of possibly predictive signals using several techniques of machine learning, a form of artificial intelligence.

They conclude that ML had significant advantages over conventional analysis in this challenging task.

ML uses statistical techniques to give computers abilities that mimic and sometimes exceed human learning. The idea is that computers will be able to build on solutions to previous problems to eventually tackle issues they weren’t explicitly programmed to take on.

“At the broadest level, we find that machine learning offers an improved description of asset price behavior relative to traditional methods,” the researchers write, suggesting that ML could become the engine of effective portfolio management, able to predict asset-price movements better than human managers.

Of almost 100 characteristics the researchers investigated, the most successful predictors were price trends, liquidity, and volatility. more>

Related>

Are Stock Buybacks Starving the Economy?

By Annie Lowrey – Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a new report by Irene Tung of the National Employment Law Project (NELP) and Katy Milani of the Roosevelt Institute, who looked at share buybacks in the restaurant, retail, and food industries from 2015 to 2017.

Buybacks occur when a company takes profits, cash reserves, or borrowed money to purchase its own shares on the public markets, a practice barred until the Ronald Reagan administration.

The regulatory argument against allowing the practice is that it is a way for companies to manipulate the markets; the regulatory argument for it is that companies should be able to spend money how they see fit.

In recent years, with corporate profits high, American firms have bought their own stocks with extraordinary zeal.

Federal Reserve data show that buybacks are now equivalent to 4 percent of annual economic output, up from zero percent in the 1990s. Companies spent roughly $7 trillion on their own shares from 2004 to 2014, and have spent hundreds of billions of dollars on buybacks in the past six months alone. more>

The Western Illusion of Chinese Innovation

By Zhang Jun – In the West, many economists and observers now portray China as a fierce competitor for global technological supremacy. They believe that the Chinese state’s capacity is enabling the country, through top-down industrial policies, to stand virtually shoulder-to-shoulder with Europe and the US.

This is a serious misrepresentation.

While it is true that digital technologies are transforming China’s economy, this reflects the implementation of mobile-Internet-enabled business models more than the development of cutting-edge technologies, and it affects consumption patterns more than, say, manufacturing.

In fact, Western observers – not just the media, but also academics and government leaders, including US President Donald Trump – have fundamentally misunderstood the nature and exaggerated the role of China’s policies for developing strategic and high-tech industries. Contrary to popular belief, these policies do little more than help lower the entry cost for firms and enhance competition. In fact, such policies encourage excessive entry, and the resulting competition and lack of protection for existing firms have been constantly criticized in China. Therefore, if China relies on effective industrial policies, they would not create much unfairness in terms of global rules.

Clearly, there is a big difference between applying digital technologies to consumer-oriented business models and becoming a world leader in developing and producing hard technology. more>

Marginalized People Don’t Need Lessons in Civility

By Terese Marie Mailhot – White people tend to use the word “civilized” in its adjectival form. To them, it describes being polite and respecting other people’s opinions and beliefs. For me, as for many other natives, “civilized” is a historical verb, recalling a bloody ultimatum imposed on us by an invading army. White people were never more “civilized” than us; they perpetuated the dichotomy of civilized versus savage to dehumanize us.

Those who posit themselves as most civil are often the people with the most power and privilege, and they’re also often the most forgetful of the history of this continent, which was founded in blood. I do not believe in civility, just as I do not believe in savagery. I believe in decency and see the living traumas still unresolved in my own people’s history. There are remnants of distrust that go back to when my grandmother went to Indian residential school, and indigenous people still distrust the government, not only for the massacres throughout indigenous history, but also for parts of our history that are often neglected or overlooked, like the coerced and forced sterilization of indigenous women in both Canada and the United States, which occurred as recently as 1990.

Civility is an invention that has been weaponized against indigenous people since settlers first started coming to indigenous lands. The rhetoric Europeans used, the language settlers used, the words presidents used against indigenous people argued that Indians were savages. more>

Towards The Disappearance Of Politics?

BOOK REVIEW

The Human Condition, Author: Hannah Arendt.

By Valerio Alfonso Bruno – Today, erosion of the public sphere is once more a harsh reality, as is particularly evident in the current weakness of “Western Democracies.”

The substantial risk of leaving democratic institutions only formally alive, but significantly lacking any content, is encouraging a deep reflexion on the reasons behind this erosion of the space for public debate and active political action.

However, some frequent arguments are employed by different people (belonging to political parties, policy-makers, academia, analysts, media) to justify the impossibility of developing a comprehensive political debate within contemporary democracies. At least four main orders of arguments can be identified that are used to justify the shrinking of the Vita Activa:

  1. technical complexity,
  2. global issues,
  3. trivialization of politics and
  4. ideological taboo.

Open, pluralistic, debate within democratic societies is unfortunately the first victim of the current political environment, as seen recently in the US and Italy.

The limitation of the public debate by reason of technical complexity and growingly global issues, or trivial generalization and ideological taboos, is dangerously forcing democracies’ citizens into political passivity, narrowing de facto the window of alternatives to an extreme degree, and resulting is an increased polarization. more>