Tag Archives: Regulations

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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Free speech debates are more than ‘radicals’ vs ‘liberals’

BOOK REVIEW

Hate Speech and Democratic Citizenship, Author: Eric Heinze.
Excitable Speech, Author: Judith Butler.
On Liberty, Author: John Stuart Mill.

By Eric Heinze – The main schism in today’s free speech debates pits liberals, advocating unbridled speech as a tool of freedom, against radicals, who unmask unbridled speech as a tool of class privilege. But that rift tells only one story.

In almost all democracies today (the United States being the sole and oft-criticized exception), mainline liberal doctrines overwhelmingly require limits on provocative speech. Liberals today largely consent to drawing lines between the lawful and the unlawful expression of ideas.

They disagree only about where that boundary should lie. Indeed, an ever more distinct libertarianism has arisen in diametric opposition to the ‘balance of interests’ approaches of our more conventional liberal approaches. The strident (though still minority) libertarian would wholly abolish those lines in favor of free speech. Accordingly, far from dissenting from the more mainstream liberal line-drawing, radicals wish merely to draw the lines more tightly around certain types of expression. They differ from liberals only as a matter of degree, not as a matter of principle, even when they appear to adopt different philosophies or vocabularies.

If we want to avoid the impasses and repetitions plaguing the free-speech debates, one way is to stop assuming that ‘the liberal position’ always dictates one outcome, and ‘the radical position’ another. Both approaches supply plausible justifications for supporting restrictions on public discourse – but even stronger grounds for opposing them. more> https://goo.gl/DxjOMc

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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

The cult of the expert – and how it collapsed

BOOK REVIEW

The Man Who Knew: The Life and Times of Alan Greenspan, Author: Sebastian Mallaby.

By Sebastian Mallaby – Bernanke repeated his plan to commit $85bn of public money to the takeover of an insurance company.

“Do you have 85bn?” one sceptical lawmaker demanded.

“I have 800bn,” Bernanke replied evenly – a central bank could conjure as much money as it deemed necessary.

But did the Federal Reserve have the legal right to take this sort of action unilaterally, another lawmaker inquired?

Yes, Bernanke answered: as Fed chairman, he wielded the largest chequebook in the world – and the only counter-signatures required would come from other Fed experts, who were no more elected or accountable than he was.

Somehow America’s famous apparatus of democratic checks and balances did not apply to the monetary priesthood. Their authority derived from technocratic virtuosity.

The key to the power of the central bankers – and the envy of all the other experts – lay precisely in their ability to escape political interference.

Democratically elected leaders had given them a mission – to vanquish inflation – and then let them get on with it. To public-health experts, climate scientists and other members of the knowledge elite, this was the model of how things should be done. Experts had built Microsoft. Experts were sequencing the genome. Experts were laying fibre-optic cable beneath the great oceans. No senator would have his child’s surgery performed by an amateur.

So why would he not entrust experts with the economy?

How did Greenspan achieve this legendary status, creating the template for expert empowerment on which a generation of technocrats sought to build a new philosophy of anti-politics?

The question is not merely of historical interest. With experts now in retreat, in the United States, Britain and elsewhere, the story of their rise may hold lessons for the future. more> https://goo.gl/7rAAmg

The Five Lies Of Rentier Capitalism

BOOK REVIEW

The Corruption of Capitalism: Why Rentiers thrive and Work does not pay. Author: Guy Standing.
The Precariat: The New Dangerous Class, Author: Guy Standing.
A Precariat Charter: From Denizens to Citizens, Author: Guy Standing.

By Guy Standing – ‘Rentiers’ derive income from possession of assets that are scarce or artificially made scarce. Most familiar is rental income from land, property, minerals or financial investments, but other sources have grown too.

They include the income lenders gain from debt interest; income from ownership of ‘intellectual property’; capital gains on investments; ‘above normal’ company profits (when a firm has a dominant position); income from subsidies; and income of financial intermediaries derived from third-party transactions.

The game became finding ways to attract and retain foreign investment, boost exports and limit imports. This led to the justification for cutting direct taxes, particularly on capital, and providing subsidies to investors. But corporations and financiers have used their power to induce governments and supranational finance to construct a global framework of institutions and regulations that enable elites to maximise rental income.

The claim that global capitalism is based on free markets is the first lie of rentier capitalism. more> https://goo.gl/wGkECv

Why Tax Cuts Worked for Russia, But Not Kansas

By Leonid Bershidsky – Republican governor, Sam Brownback’s tax reform immediately deprived the Kansas State General Fund of $800 million a year, when revenue had been just $6.17 billion in the 2013 fiscal year, the last before the cuts took effect.

The resulting shortfalls have caused Brownback’s administration and legislators to scramble for extra revenue. Since the income tax cuts, Kansas has raised its sales tax twice. Combined local and state sales taxes are now higher here than in New York or California. The state has also plundered the highway construction fund to pay other bills and used every legal opportunity to defer payments.

Russia avoided a similar predicament because President Vladimir Putin was trying to solve a specific, narrow problem. In a country where tax evasion was a way of life, he was trying to give Russian employers an incentive to pay salaries legally rather than under the table. This benefited the budget, businesses (the tax environment became clearer and more stable) and the workers — suddenly, they had official income that allowed them to take out bank loans, creating a credit boom and speeding up growth. more> https://goo.gl/fPXxp6

THE ISSUES: What’s at Stake

BOOK REVIEW

The President’s Club: Inside the World’s Most Exclusive Fraternity, Authors: Nancy Gibbs and Michael Duffy.
The Preacher and the Presidents: Billy Graham in the White House, Authors: Nancy Gibbs and Michael Duffy.

By Nancy Gibbs – Issues in a presidential-election year are often like the fat books that we’re glad to own but don’t plan to read.

And most voters say that policy matters more than personality when they cast their ballots.

But watch what we do, not what we say. The least substantive campaign in modern history has drawn the most massive audience.

Trump’s success during the pri­mary season exposed just how profoundly Republican leaders misunderstood the mood of rank-and-file voters.

As a politician, he is incorrect in every way, with his tax returns secret, his Twitter stream radioactive, his treatment of facts appalling.

But when have we ever seen a race like this one, with one candidate so deeply devoted to policy detail and the other so allergic to it?

Whoever wins in November will eventually have to govern. The issues this country faces, from decrepit bridges and failing schools to cyber­threats and spiraling debt, will require muscular action, not magical thinking. more> https://goo.gl/HF7CyY

Updates from Chicago Booth

Zip-Code Economics
By Dee Gill – Researchers are interested in huge issues that affect us all, regardless of where we live, but often they’re finding the answers to these big questions embedded within small data sets focused not nationally but rather at the state, city, or even zip-code level. By analyzing variations in local and regional economies, they are increasingly uncovering insights obscured by the big picture.

The 2007–10 financial crisis stung individuals across the economic spectrum and around the globe—but some people felt it more acutely than others. Even within the US, certain geographic areas experienced a steeper decline, and were slower to recover, than others.

So why did some regions fare comparatively badly? One factor seems to be the ease with which lenders can foreclose on homeowners.

Foreclosure laws vary by state and can be divided between those that require lenders to sue borrowers in court before they can sell the foreclosed property—known as judicial foreclosure—and those that don’t.

The researchers studied the effect of judicial foreclosure by examining foreclosure activity in zip codes located near each other but in neighboring states with contrasting foreclosure laws.

They find that at times of crisis, slowing down the foreclosure process and making it more expensive for lenders made a substantial difference in the rate of foreclosure.

“During the heart of the foreclosure crisis in 2008 and 2009, a delinquent homeowner in a non-judicial foreclosure state was more than twice as likely to experience foreclosure on a delinquent home,” they write. more> https://goo.gl/VUgoeP

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WHY IT MATTERS: Wall Street Regulation

By Marcy Gordon – he financial crisis that struck in 2008 touched off the worst recession since the 1930s Great Depression, wiping out $11 trillion in U.S. household wealth and leaving about 8 million Americans jobless. More than 5 million families lost their homes to foreclosure. Reckless trading and aggressive practices on Wall Street in the prior boom years were pinned with much of the blame.

Eight years on, the economy’s recovery from the havoc brought by the financial crisis has been halting and slow.

And popular resentment still smolders over the multibillion-dollar bailout by U.S. taxpayers of Wall Street mega-banks and financial firms in the crisis. It gave a big lift to Sanders’ upstart campaign.

It also created some heartburn for Clinton because of her financial connections. She and husband Bill have collected tens of millions of dollars in speaking fees from Wall Street banks, insurance companies and other financial firms. Over her 15-year political career, she’s received tens of millions in campaign donations from people in the finance, insurance and real estate industries.

Beyond their stake as taxpayers, American consumers have an interest in the financial regulations that came in after the meltdown. more> https://goo.gl/e3uSIs

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How US prisons violate three principles of criminal justice

BOOK REVIEW

Distant Strangers: Ethics, Psychology, and Global Poverty, Author: Judith Lichtenberg.

By Judith Lichtenberg – People can find common ground on three fundamental moral norms that should govern the use of imprisonment as punishment. First, punishments should be proportional to crimes. Second, like cases should be treated alike. Third, criminal punishment should not do more harm than good. Unfortunately, the US system violates each of these principles.

Proportionality requires that the punishment fit the crime. This is more than a mere cliché. It means punishments should be neither excessive nor insufficient.

here’s no precise formula for proportionality, but its opposite is often easy to spot.

In 2012, about 10,000 people serving life sentences in the US had been convicted for non-violent offences. Altogether, nearly 50,000 people in the US are serving sentences for life without parole; in the United Kingdom, with about a fifth the population, the number is around 50.

Finally, there’s the axiom that punishment must not do more harm than good. The most obvious costs of prison are monetary: the US pays around $30,000 per inmate per year, funded by billions of dollars from the federal budget. Custody is the most expensive form of punishment. This money could be used instead to treat addiction, a significant cause of criminal activity, and to improve conditions for communities where crime is endemic. more> https://goo.gl/1Ky2S1