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Archive for June 5th, 2017

Socially responsible capitalism is losing

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Back in the 1970’s I recall at various business seminars the conventional wisdom about a company’s “stakeholders”: thos who benefited from (and were responsible for) the company’s success: the customers, the employees, the shareholders, and the community. The company had a responsibility to each of those.

That died. Companies now view their only responsibility is to the shareholders. Employee wages are kept to a minimum, employee benefits likewise—and if possible, employees are disguised as “independent contractors” so that no benefits are paid and labor protections are lifted. Customers are to be fleeced as efficiently as possible—for example, airline companies deliberately worsen the flying experience (tiny seats with no legroom (to encourage the payment of extra fees to get minimally better seating), no amenities that you don’t pay for, extra fees for checking luggage, more requirements that you must check luggage, beating passengers senseless to free up a seat for company employees, and so on. And the communities? Companies now feel zero loyalty to the community and shutter factories to relocate elsewhere if it even slightly improves profits.

Greed is a terrible thing, and the corrosive effect that wealth has on ethics has been demonstrated, but seldom so clearly by the wealthy Scrooges who own companies today.

Sheelah Kolhatkar reports in the New Yorker:

In December, 2015, a new startup called Juno entered the ride-hailing market in New York City with a simple proposition: it was going to treat its drivers better than its competitors, notably Uber, did theirs—and do “something that was socially responsible,” as one of Juno’s co-founders, Talmon Marco, told me last fall. In practice, that meant drivers would keep a bigger part of their fares and be eligible for a form of stock ownership in the company. But, on April 26th, when an Israeli company named Gett announced that it was buying Juno for two hundred million dollars, that changed. The merged company is dropping the restricted stock plan for drivers, and those who already hold stock are being offered small cash payments, reportedly in the hundred-dollar range, in exchange.

Juno’s founders had adopted the language of a doing-well-by-doing-good philosophy that has spread in the business world in recent years. Some call it conscious or socially responsible capitalism, but the basic idea is that any business has multiple stakeholders—not just owners but employees, consumers, and also the community—and each of their interests should be taken into account. The idea arose in response to an even more powerful principle: the primacy of investor rights. In a new book, “The Golden Passport,” the journalist Duff McDonald lays much of the blame for that thinking at the feet of a Harvard Business School professor named Michael Jensen, whose “agency theory,” developed in the nineteen-eighties, sought to align the interests of managers with those of the company’s investors. (Gordon Gekko spoke eloquently on its behalf in the movie “Wall Street.”) This alignment led to huge stock-option pay packages for top corporate managers and, McDonald argues, provided an intellectual framework that justifies doing anything (within the law) to increase a company’s stock price, whether that be firing workers or polluting the environment.

In this philosophical tension, the investors-above-all doctrine seems to have triumphed over the more inclusive approach. “I think what’s recent is maybe being so completely blatant about it,” Peter Cappelli, a professor and labor economist at Wharton, said. When American Airlines agreed to give raises to its pilots and flight attendants in April, analysts at a handful of investment banks reacted bitterly. “This is frustrating,” a Citigroup analyst named Kevin Crissey wrote in a note that was sent to the bank’s clients. “Labor is being paid first again. Shareholders get leftovers.” Jamie Baker, of JPMorgan, also chimed in: “We are troubled by AAL’s wealth transfer of nearly $1 billion to its labor groups.”

Those comments were mocked online, but similar sentiments are everywhere in the financial establishment. Both Costco and Whole Foods—whose C.E.O., John Mackey, wrote the book “Conscious Capitalism”—have been criticized by Wall Street investors and analysts for years for, among other things, their habit of paying workers above the bare minimum. Paul Polman, who, as C.E.O. of the Anglo-Dutch conglomerate Unilever, has made reducing the company’s carbon footprint a priority, recently fought off a takeover bid from Kraft Heinz, which is known for its ruthless cost-cutting.

Newer platform companies have also encountered the phenomenon. An app called Maple, which made the nearly unheard-of decision to offer health benefits and employee status to its food-delivery people, folded in recent months. Etsy, which allows craftspeople to sell their goods online, and which became known for its employee perks, has lost most of its stock-market value since it went public, in 2015; hedge-fund investors have been pushing the company to reduce its costs and to lay off employees. In the case of Juno, according to a person familiar with its operations, the founders sold the company and agreed to cut its driver stock awards because they couldn’t find new investors to finance its growth. “They were stuck from an expansion perspective, and this was what had to give,” I was told. “It came with some huge compromises.”

Many factors contributed to the troubles of these companies, but Cappelli notes how “vociferously the investment community seems to object to being nice to employees. It’s a reminder that, in the corporate world, things are constantly yielding to the finance guys—whether they know what they’re doing or not.”

This fixation on short-term stock gains is inherently unstable, Cappelli said. “The interesting thing is always to ask them, ‘What’s the value proposition for employees? Why should these people work only for the interest of the shareholders? How are you going to get people to work hard?’ ” He went on, “I don’t think they have an answer.” . . .

Continue reading.

It is the role of the government to act as a counterforce against the excesses of big business, protecting the welfare of employees (through labor laws) and of customers (through regulatory protections and oversight agencies) and of communities (by blocking inappropriate mergers and takeovers through antitrust actions). But the US government is rapidly failing, and corporations now call the shots—and the only goal of corporations is to extract as much money as possible from customers, from employees, and even from the government (with tax avoidance schemes).

Here’s a good example of (a) corporate indifference to anything but money and (b) corporate takeover of government: “How G.O.P. Leaders Came to View Climate Change as Fake Science.” That article, by Coral Davenport and Eric Lipton in the NY Times, begins:

The campaign ad appeared during the presidential contest of 2008. Rapid-fire images of belching smokestacks and melting ice sheets were followed by a soothing narrator who praised a candidate who had stood up to President George W. Bush and “sounded the alarm on global warming.”

It was not made for a Democrat, but for Senator John McCain, who had just secured the Republican nomination.

It is difficult to reconcile the Republican Party of 2008 with the party of 2017, whose leader, President Trump, has called global warming a hoax, reversed environmental policies that Mr. McCain advocated on his run for the White House, and this past week announced that he would take the nation out of the Paris climate accord, which was to bind the globe in an effort to halt the planet’s warming.

The Republican Party’s fast journey from debating how to combat human-caused climate change to arguing that it does not exist is a story of big political money, Democratic hubris in the Obama years and a partisan chasm that grew over nine years like a crack in the Antarctic shelf, favoring extreme positions and uncompromising rhetoric over cooperation and conciliation.

Continue reading the main story
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“Most Republicans still do not regard climate change as a hoax,” said Whit Ayres, a Republican strategist who worked for Senator Marco Rubio’s presidential campaign. “But the entire climate change debate has now been caught up in the broader polarization of American politics.”

“In some ways,” he added, “it’s become yet another of the long list of litmus test issues that determine whether or not you’re a good Republican.”

ince Mr. McCain ran for president on climate credentials that were stronger than his opponent Barack Obama’s, the scientific evidence linking greenhouse gases from fossil fuels to the dangerous warming of the planet has grown stronger. Scientists have for the first time drawn concrete links between the planet’s warming atmosphere and changes that affect Americans’ daily lives and pocketbooks, from tidal flooding in Miami to prolonged water shortages in the Southwest to decreasing snow cover at ski resorts.

That scientific consensus was enough to pull virtually all of the major nations along. Conservative-leaning governments in Britain, France, Germany and Japan all signed on to successive climate change agreements.

Yet when Mr. Trump pulled the United States from the Paris accord, the Senate majority leader, the speaker of the House and every member of the elected Republican leadership were united in their praise.

Those divisions did not happen by themselves. Republican lawmakers were moved along by a campaign carefully crafted by fossil fuel industry players, most notably Charles D. and David H. Koch, the Kansas-based billionaires who run a chain of refineries (which can process 600,000 barrels of crude oil per day) as well as a subsidiary that owns or operates 4,000 miles of pipelines that move crude oil.

Government rules intended to slow climate change are “making people’s lives worse rather than better,” Charles Koch explained in a rare interview last year with Fortune, arguing that despite the costs, these efforts would make “very little difference in the future on what the temperature or the weather will be.” . . .

Read the whole thing.

Written by LeisureGuy

5 June 2017 at 8:39 pm

Google’s new ad blocker is for their benefit, not yours

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David Dayen reports in The Intercept:

Google, a data mining and extraction company that sells personal information to advertisers, has hit upon a neat idea to consolidate its already-dominant business: block competitors from appearing on its platforms.

The company announced that it would establish an ad blocker for the Chrome web browser, which has become the most popular in America, employed by nearly half of the nation’s web users. The ad blocker — which Google is calling a “filter” — would roll out next year, and would be the default setting for Chrome when fully functional. In other words, the normal user sparking up their Chrome browser simply wouldn’t see the ads blocked by the system.

What ads would get blocked? The ones not sold by Google, for the most part.

The Chrome ad blocker would stop ads that provide a “frustrating experience,” according to Google’s blog post announcing the change. The ads blocked would match the standards produced by the Coalition for Better Ads, an ostensibly third-party group. For sure, the ads that would get blocked are intrusive: auto-players with sound, countdown ads that make you wait 10 seconds to get to the site, large “sticky” ads that remain constant even when you scroll down the page.

But who’s part of the Coalition for Better Ads? Google, for one, as well as Facebook. Those two companies accounted for 99 percent of all digital ad revenue growth in the United States last year, and 77 percent of gross ad spending. As Mark Patterson of Fordham University explained, the Coalition for Better Ads is “a cartel orchestrated by Google.”

So this is a way for Google to crush its few remaining competitors by pre-installing an ad zapper that it controls to the most common web browser. That’s a great way for a monopoly to remain a monopoly.

There’s more to the story, however. The real goal for Google appears to be not just blocking ads sold by other digital suppliers besides Google, but to undermine third-party ad blockers, which stop Google ads along with everyone else’s.

According to the Financial Times, Google will allow publishers what it’s calling “Funding Choices.” The publisher could charge the consumer a set price per page view to use third-party sites that block all advertising. Google would do the tracking of how many pages users view, and then charge them. Users could then “white list” particular sites, allowing ads to be shown on them and removing the charge. If users decided to pay to block ads, Google would receive a portion of that payment, sharing it with the publisher.

Web users will quickly recognize their only options: pay to use the internet, or uninstall the ad blockers and surf the web for free. At least 11 percent of all web users, and perhaps as many as 26 percent of all desktop users, have third-party ad blockers on their devices, a number that will likely grow in the next few years. But it’s easy to see how Google’s policy would depress ad blocker usage — except for the case of Google’s ad blocker, which creates preferences for Google’s own ads.

Google has already been found to have paid off ad blockers to keep its own ads intact. But this new policy creates an internet landscape where Google ensures viewing of its own ads, to the relative disadvantage of competitors.

Senior Vice President of Google Sridhar Ramaswamy describes the concept as a way to support internet websites and users alike, by making online ads less annoying and helping to “maintain a sustainable web for everyone.” It’s hard to build a coalition in favor of annoying ads. And publishers would be guaranteed a revenue stream, either through charging consumers for an ad-free experience, or from the ads themselves. So the policy aligns the interests of virtually everyone on the web content side.

Improving Google’s bottom line and crushing anyone who tries to compete is just a nice side benefit. . .

Continue reading.

Written by LeisureGuy

5 June 2017 at 8:20 pm

Koch Brothers campaign to support global warming becomes overt

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Jane Mayer writes in the New Yorker:

If there was any lingering doubt that a tiny clique of fossil-fuel barons has captured America’s energy and environmental policies, it was dispelled last week, when the Trump Administration withdrew from the Paris climate accordSurveys showed that a majority of Americans in literally every state wanted to remain within the agreement, and news reports established that the heads of many of the country’s most successful and iconic Fortune 100 companies, from Disney to General Electric, did, too. Voters and big business were arrayed against leaving the climate agreement. Yet despite the majority’s sentiment, a tiny—and until recently, almost faceless—minority somehow prevailed.

How this happened is no longer a secret. The answer, as the New York Times reported, on Sunday, is “a story of big political money.” It is, perhaps, the most astounding example of influence-buying in modern American political history.

As the climate scientist Michael Mann put it to me in my book “Dark Money,” when attempting to explain why the Republican Party has moved in the opposite direction from virtually the rest of the world, “We are talking about a direct challenge to the most powerful industry that has ever existed on the face of the Earth. There’s no depth to which they’re unwilling to sink to challenge anything threatening their interests.” For most of the world’s population, the costs of inaction on climate change far outweigh that of action. But for the fossil-fuel industry, he said, “It’s like the switch from whale oil in the nineteenth century. They’re fighting to maintain the status quo, no matter how dumb.”

Until recently, those buying the fealty of the Republican Party on these issues tried to hide their sway, manipulating politics from the wings. But what became clear this past weekend is that they can remain anonymous no longer. With their success dictating America’s climate policy, the fossil-fuel industry’s political heavyweights have also won new notoriety. Charles and David Koch, the billionaire owners of the Kansas-based fossil-fuel leviathan Koch Industries, used to attract attention only from environmental groups such as Greenpeace, which labelled them “the Kingpins of Climate Denial.” They were so secretive about their political activities that, when I first wrote about their tactics in The New Yorker, in 2010, the article was titled “Covert Operations.” But now references to the Kochs are becoming almost as commonplace as the Dixie Cups, Lycra, and other household products that their business produces. As the Times noted, Republican lawmakers’ swerves to the right on climate issues “did not happen by themselves. Republican lawmakers were moved along by a campaign carefully crafted by fossil-fuel industry players, most notably Charles D. and David H. Koch, the Kansas-based billionaires who run a chain of refineries. . . .” The Kochs were called out on the Sunday talk shows this past weekend, too. On ABC’s “This Week,” former Vice-President Al Gore cited “dark money” from fossil-fuel companies as the explanation for Trump’s withdrawal from the Paris accord; on NBC’s “Meet the Press,” former Secretary of State John Kerry specifically chastised the Kochs.

Now that they have been flushed from the shadows, the Kochs and their political operatives have proudly taken credit for obstructing the U.S. government from addressing climate change. Charles Koch, who is a hardcore libertarian, has argued that government action was only “making people’s lives worse, rather than better,” as he put it in an interview with Fortune last year. Meanwhile, Tim Phillips, the president of Americans for Prosperity, the Kochs’ main political-advocacy organization, has boasted about the group’s success in killing the careers of politicians who broke with the brothers’ anti-climate-change agenda. . .

Continue reading.

Written by LeisureGuy

5 June 2017 at 6:37 pm

The Wrecking Crew: The Demolition of American Education

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Environmental protections are gone, national parks and national forests will be sold off, federal agencies will be given to private corporations to run for profit (by cutting costs and services, reducing employee pay, outsourcing, and so on), with the Air Traffic Controllers being the first to go. Diane Ravitch (here’s an interesting interview with her about her changing positions—on No Child Left Behind, for exaple) writes in the NY Review of Books:

Donald Trump and Betsy DeVos’s proposed budget for the US Department of Education is a boon for privatization and a disaster for public schools and low-income college students. They want to cut federal spending on education by 13.6 percent. Some programs would be eliminated completely; others would face deep reductions. They want to cut $10.6 billion from existing programs and divert $1.4 billion to charter schools and to vouchers for private and religious schools. This budget reflects Trump and DeVos’s deep hostility to public education and their desire to shrink the Department of Education, with the ultimate goal of getting rid of it entirely.

The proposed budget would shrink the assistance programs that now enable 12 million students to attend college: funding for college work-study programs would be cut in half, thus “saving” $490 million. It would eliminate a student loan forgiveness program, enacted in 2007, that encourages college graduates to enter careers in public service—such as social work, teaching, or working as doctors in rural areas—by relieving them of their college debt at the end of ten years of such employment. Some 550,000 young people have joined this program in the past decade; the first wave are due to have their debts forgiven in 2017, but it is not clear if the administration will follow through on the promise to cancel their debt.

The proposed budget would maintain funding for Pell grants for needy college students, but would eliminate more than $700 million in Perkins loans for disadvantaged students. No attempt would be made to lessen the burden of escalating college costs for students, whether middle-income or poor. Student debt is currently about $1.4 trillion, and many students, whether they graduate or not, spend years, even decades, repaying their loans. These cuts will reduce the number of students who can afford to attend college.

The most devastating cuts are aimed at programs for public schools. Nearly two dozen programs are supposed to be eliminated, on the grounds that they have “achieved their original purpose, duplicate other programs, are narrowly focused, or are unable to demonstrate effectiveness.” In many cases, the budget document says that these programs should be funded by someone else—not the US Department of Education, but “federal, state, local and private funds.” These programs include after-school and summer programs that currently serve nearly two million students, and which keep children safe and engaged in sports, arts, clubs, and academic studies when they are out of school. They have never been judged by test scores, but the budget claims they do not improve student achievement, and aims to save the government $1 billion by ending support for them. The budget assumes that someone else will pick up the tab, but most states have cut their education budgets since the 2008 recession. No mention is made of how other sources will be able to come up with this funding.

The administration wants to end many programs that are aimed at the poorest students and disadvantaged minorities in particular, while canceling vital enhancements to public school education like arts and foreign-language funding. These include supplementary educational services for Alaskan Native and Native Hawaiian students ($66 million); arts education ($27 million); American history and civics academies ($1.8 million); full-service community schools that provide comprehensive academic, social, and health services to students and their families ($10 million); library-based literacy programs ($27 million); “impact aid” to districts that lose revenue because of federal facilities like military bases ($66 million); international education and foreign language studies ($73 million); the Javits program for gifted and talented students ($12 million); preschool development grants to help states build or expand high-quality preschool services ($250 million); Special Olympics programs for students with disabilities ($10 million); and Supporting Effective Instruction State Grants, funds used to train teachers and to reduce class sizes ($2.345 billion). In addition, the Trump-DeVos budget would eliminate funding for a potpourri of programs including mental health services, anti-bullying initiatives, and Advanced Placement courses ($400 million). This is only a sample of the broad sweep of programs that would be eliminated, not just reduced. Some of the programs, like the Special Olympics for handicapped students, are small grants but they have both real and symbolic importance. The cuts to funds for reducing class sizes will have an immediate negative effect.

With billions cut from existing education programs, the only area of increase in the education budget would be grants for school choice. The department’s Title I program consists of billions of dollars distributed to states and districts to aid in the education of poor children, by providing smaller classes, extra aides in the classroom, or other assistance. Trump would set aside $1 billion of Title I funding as a reward for states that create open enrollment policies, which allow parents to choose schools that are not their neighborhood schools, and that allow federal, state, and local dollars to follow students to the public school of their choice. In “reform” circles, this is known as the “backpack-full-of-cash” method of financing school. The money goes wherever the student goes.

The other Trump-DeVos initiative is $400 million to “create, develop, implement, replicate, or take to scale entrepreneurial, evidence-based, field-initiated innovations to improve student achievement…and rigorously evaluate such innovations.” This murky statement is aimed at setting aside funds to underwrite vouchers that could be used at private and religious schools, as well as research on the effectiveness of these programs.

Ironically, the Trump administration is modeling some of its approach on the Obama administration’s Race to the Top program, which held a contest for states in 2009 and 2010. . . .

Continue reading.

Written by LeisureGuy

5 June 2017 at 5:55 pm

XKCD’s Timeline of Global Temperature

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Well worth looking at.

Written by LeisureGuy

5 June 2017 at 2:55 pm

Posted in Global warming

A Very Powerful Study That Bolsters the Lead-Crime Hypothesis

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Do read Kevin Drum’s post on yet another study on the problems caused by environmental lead. (Exposure to lead in early childhood results in violent adults 20 years later.)

Here’s a chart from the post, but do read the post:

Written by LeisureGuy

5 June 2017 at 10:49 am

The on-going clown show: Donald Trump Doubles Down on Boorish Temper Tantrums

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Kevin Drum reports at Mother Jones on Trump’s weird tweets. From the post (but do read it at the link, since it includes the tweets):

First he deliberately undermines his own Justice Department by needlessly calling his immigration EO a “travel ban.” Why? Because he got criticized for accidentally doing this over the weekend, and by God, that means he needs to double down. Having done that, he then proceeds to slam the Justice Department as if they worked for someone else. If he wanted them to stay with the original travel ban, he should have told them to. If he wussed out, it’s his fault, not theirs.

It’s worth noting, by the way, that we’re now in the fifth month of Trump’s childish refusal to go ahead with new travel regulations while we wait for the courts to rule on his temporary travel ban that was meant to give him time to write new travel regulations.

Then, after a bit of random whining, Trump decides to back to the well on the mayor of London.

Drum displays the tweet, which says “Pathetic excuse by London Mayor Sadiq Khan who had to think fast on his “no reason to be alarmed” statement. MSM is working hard to sell it!” and comments:

Even for Trump, this is close to unbelievable. His original tweet about this yesterday was a lie, and would have been wildly inappropriate even if it weren’t. The city of London had just been hit by a deadly terrorist attack! Trump got blasted for this breathtaking display of churlishness, of course, and that meant he had to hit back today even more boorishly in front of the whole world. Because Donald Trump never, ever, backs down from anything, no matter how stupid. . .

I think everybody on earth, except possibly Donald Trump, knows that the London mayor said that the public “had no reason to be alarmed” by the greater police presence on the street. The mayor was not talking about the attacks, but about the increased number of police in public, and he did not want people to be alarmed by that.

Trump is so dishonest it turns, and being incredibly stupid to boot doesn’t help.

Written by LeisureGuy

5 June 2017 at 10:46 am

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