Archive for the 'Business and Economics' Category

One Fifth Avenue–when is enough enough?

Monday, January 19th, 2009

We have grown so accustomed to hearing such numerical terms as ‘billion” and “trillion” in the past few months that “million” has almost lost its cache, despite the fact that most of us will never see that many figures attached to anything belonging to us. A company such as AIG has had the chutzpah to petition the government for a bailout of 70 billion dollars ( and rising) even while it rewards its executives with huge bonuses and treats them to wildly extravagant retreats.

Banks have been losing billions, our national debt totals in the trilliions, and meanwhile many of us who have been prudent are worried about paying our monthly mortgages and car payments. We ask our “financial experts” how a wealthy country like ours ever got itself into such a bind, and we shudder when these same experts are unable to explain it using standard models of economics. If they don’t know, who does?

I’ve read so many recently published economic tomes that I decided to take a break and do some light reading. I have never watched “Sex in the City,” nor have I watched the film, but the book I settled on as my light fare was One Fifth Avenue, by Candace Bushnell, the author of SitC. I had seen it listed in the NY Times book review section and decided to indulge my senses with something akin to a hot fudge sundae rather than a serving of brain food. By so doing, I learned what many of the learned economists seem to have overlooked in their quest for enlightenment.

At first I was overwhelmed by the extent of self-indulgence ot the characters, most of whom truly believe that they are entitled to all their excessive behavior, whether it is sexual or monetary. Nothing is too over-the-top if it provides pleasure or profit. Sadly, eventually there is no satisfaction to be had in anything so long as the possibility exists that there is yet more to be had. The setting of the novel is, of course, New York City, and the main characters are the super rich or s-r wannabes. The competition to be wealthiest, best looking, best dressed or best anything (or everything) guides their lives and actions and finally takes over their souls.

Men in this setting become obsessed with increasing their wealth, and women are determined to boost their egos by displaying it. Lavish co-op apartments with walk-in closets the size of some middle income family ranch homes are lined with shelves just for the dozens of pairs of Jimmy Choo, Manolo Blahnik and other designer name brand shoes. The wives of the super-rich don’t even darken the doorways of department stores because they employ fashion consultants to choose their clothes, which can be sent to their homes and tried on in comfort and privacy.

Husbands spend their days in conferences and sometines in planes as they jet around the world seeking out ever more profitable (and often questionable) deals. Their wives, meanwhile, devote their time to charitable causes such as fund drives to promote the arts and lunching with the ladies at fashionable spots where they can spot each other and check out the outfits. They also spend hours at the health club working off the calories acquired by the other activities.

I would not want to spend too much of my time following such trivial pursuits, but I must admit to the guilty pleasure of enjoying the few hours I did spend visiting One Fifth. And I did not leave that address empty-handed. I came away with a better understanding of why we are mired in the financial morass in which we find ourselves. So long as men and women are so driven to acquire everything their hearts desire and so long as they are able to achieve this shallow goal without anyone regulating their overwhelming greed, the door remains open to the kinds of results we are seeing. Maybe our revered economists need to read about what drives the machine that causes the greed that causes individuals to sell their souls before they can apply the brakes that make it impossible for a few people to own so much that there’s little left for everyone else.

“The World is Curved… Hidden Dangers to the Global Economy” by David M. Smick

Saturday, January 10th, 2009

Alan Greenspan referred to this book, The World is Curved… Hidden Dangers to the Global Economy by David M. Smick, as “An essential read… an insightful and entertaining book.” This does describe the book, but although revealing an unbelievable amount of background trading and speculating and facts, still does not enlighten the novice on world economics. In fact, the “waters seem murkier.” One of Smick’s quotes is that of a Chinese executive on fishing and monetary policies, “The best fishing takes place in murky waters.” The book does awaken the reader to the very wide scope of risk and danger in world economics today. Especially impressive is the fact revealed that China has large amounts of bad debt hidden away; Japan makes do with a very low interest rate, prompting Japanese housewives to invest overseas via the computer, and the great losses taxpayers suffer in almost all developed countries.

Smick entertains us with observations on the clothing and mannerisms of the great in economic and political circles around the world. He doles out the dry and startling facts with a light, optimistic touch. Smick also points out a most encouraging fact, that the United States has done more for the poor of the world, especially in China, than has been done at any time in history. A middle class of workers is emerging in China, rather than oceans of poverty-stricken families, and this is also happening in other countries. This far surpasses the old handouts to Africa, China, and other third world countries.

I recommend the book highly. However, I still feel anxious about the world economy, whether the world is flat or curved. It seems to me that really bad debtors, such as very poor countries and big banks and corporations, get away with it just by declaring they are destitute or bankrupt. The rest of us not only have to pay their price, but do not get any breaks with normal family finances. What a world we live in!

The Appeal by John Grisham

Sunday, December 7th, 2008

I had already returned one book and checked out three more from my hold list when I happened to pass the express book table and noticed that John Grisham’s latest novel was prominently displayed. I know that books on that table are available for just one week with no renewals permitted. Immediately the thought crossed my mind that my problem with a Grisham novel is not whether I can read it in seven days but rather whether I can stop reading once I’ve read the first page. I decided to go ahead and check it out because if I did not, it would quickly disappear and not be available again for ages.

I had a few chapters yet to read from a prior loan and so finished that shortly after my return home. I waited until after lunch before picking up The Appeal. It occurred to me that this author’s page-turners should come with a warning–something Like Dante’s “Beware all ye who enter here.” I knew that I was hooked as soon as I read the first line: “The jury was ready.” At that point, there was no turning back. Once again, I had been caught up in a journey which allowed for no stopovers.

I interrupted my reading long enough to prepare and eat dinner, but I wasted little time before getting back to the characters involved in the long drawn- out lawsuit against a company whose reckless behavior had caused a small town to become a “cancer center” due to disposal of carcinogenic waste into the town’s water. The story was not a new one; it has been told all too often, but the primary focus on this one was the length and strength of the appeal waged by the guilty company to avoid admitting wrong or paying claims to the victims.

According to the premise of the book, an individual or corporation with deep pockets is willing to pay far more money to cover up its sins than to pay for them. Thanks to an enormous outlay of cash to an enormous cast of shadowy and often downright shady characters, it is possible to buy people to fill public positions which have the potential to make decisions favorable to the one(s) paying the bills. I am not so naive as to be unaware of the wheeling and dealing of lobbyists and others who exist for the sole purpose of making things happen, but I was intrigued by the depth of the depravity. The fact that there is seemingly no connection between the buyer and the sellers of influence peddling makes it all the more frightening. Occasionally the candidate chosen to occupy a position solely for the benefit of a rogue corporation is completely innocent of the reason for his selection. He starts out as a virgin and ends up as a prostitute for the party that selected him and bought his victory. Along the way, he has no idea that he has compromised his integrity and abandoned his principles.

As Grisham states in his disclaimer, the book is fiction and only loosely based on fact, but the reader can speculate on how closely the fiction parallels the facts. The author is himself a lawyer and has seen examples of both the noble and the “no-good” plyers of his trade. He knows that money can be used to purchase a man’s time or even his very soul. The latter is far more costly for the buyer and more profitable for the seller.

I took time out from my read to watch Washington Week, my Friday night must-see PBS summary of the previous seven days. I had also made up my mind to turn out the light at 10 pm when my husband came to bed. But by then, I was too caught up in intrigue to close my eyes and I moved across the hall to the room I use as my office. It was 12:45 a.m. before I finished the last page and closed the book. At 11 the pre-set thermostat had dropped eight degrees and I ignored the cold rather than take time to fetch slippers or a blanket to wrap around me. Even after I had crawled into my warm bed, I was unable to fall asleep immediately as I considered how many times similar behind-the-scenes manipulation might have resulted in outcomes favorable to a few predators instead of to the victims of these predators. At last. I fell asleep and put it out of my head. After all, it is merely a book–one that you might consider if you don’t mind a late night.

Robert B. Reich discusses Supercapitalism

Monday, December 1st, 2008

Much thanks to North Carolina State for pushing the envelope in higher education and life long learning.  

ncstate has sent you a message on YouTube:

Re: Supercapitalism Video

carolyn,

by all means, feel free to embed it!

hope you are having a wonderful morning

mark mclawhorn,
web communications
nc state university

This free video partnership is greatly appreciated as WDFPL Adult Services programming runs on a very small budget.  The Library could never afford to secure Mr. Reich’s services for an in house book talk. 

Supercapitalism by Robert Reich

Saturday, November 29th, 2008

Because economics is my second favorite subject, after English, I read many articles and books written by economists. One of the best I have read lately is the work of the highly respected Robert Reich,a professor at Brandeis University and President Clinton’s Secretary of Labor. In his book, Supercapitalism, which came out shortly ahead of the current economic crisis, Reich explains some of the reasons for the current meltdown. The subtitle of the book, “The Transformation of Business, Democracy and Everyday Life” says much about its content.

According to Reich, the aftermath of WWII led to a new American middle class with new opportunities and new expectations. Thanks to the GI Bill and later to generous grant programs, Americans attended college in unprecedented numbers, and as result of this educated workforce, possibilities became boundless. Families watched as their younger members rose to positions once unimagined, and with these advances their achievement goals rose as well. Although their grandparents and parents had lived through a Depression and were once happy to survive, this new generation had more lofty aspirations. The security of money in the bank became a desire to make that money grow, and eventually that desire became almost obsessive.

The stock market, once the preserve of the rich, became the playing field for anyone with a few dollars to invest and a willingness to gamble. But, as the markets opened up to new investers, the rules began to change. Profits became so all-important to shareholders in the new economy, that it ceased to matter how those profits were achieved. Workers, once a vital part of industry, were often seen as impediments to profits, and when the demands of these workers to share in the prosperity became too cumbersome, their jobs were sent to places where there were no such demands. The social compact that once linked labor and management was broken.

Need and greed became virtually indistinguishable, as companies cut corners to reduce costs and jobs were eliminated. Manufacturing, once the centerpiece of the American economy, became almost non-existent, and service jobs took their place. The most easily available jobs were those as clerks in discount department or dollar stores. Mom and Pop shops gave way to vast megastores where cashiers rang up sales and accepted money (or more likely credit cards). The personal service offered by staff who at one time were also owners was replaced by indifference and ignorance of the merchandise.

Whereas their grandparents were willing to do without or at least wait until they could pay for what they needed, young people had an entitlement mentality that gave them license to have what they wanted when they wanted it. Because it could be bought today and paid for tomorrow, there was no reason to miss out on the latest and greatest.

Reich’s book provides some insight into the milieu that made it possible for corporations to overlook their mission to participate in a democratic society and to bring about the result of actions (or inaction) that created our present situation. Individuals are not let off the hook and many readers may be uncomfortable with the premise that we are partially at fault for the problems that face us.

I heartily recommend this book to openminded readers willing to invest not money but time and objective thought to a work that might bring insight if not necessarily entertainment.

Hot, Flat, and Crowded by Thomas L. Friedman

Friday, November 21st, 2008

Why we need a green revolution-and how it can renew America

Thomas Friedman of The World is Flat fame acknowledges the contributions of many.  The book describes today’s problems and identifies the need to empower people to live locally and act globally to create change. 

K.R. Sridhar, the Indian-born cofounder and CEO of Bloom Energy sums it up this way in the text, “For the first time in the history of the world we have the opportunity to achieve a balance between localization and globalization at scale.  And when you can get localization and globalization into balance, what you end up with is humanization – an age of humanization.  You can realize your full human potential.  But that can only happen if IT and ET, information technology and energy technology, flat and green, are working together, because on then can everyone and everything be both distributed and connected.”  If we can get that, said Sridhar, “the world will have a new operating system.”

The author shares stories of individuals who are poised to change the status quo.  He claims the title of “sober optimist” for himself.  “If you are not sober about the scale of the challenge, then you are not paying attention.  But if you are not an optimist, you have no change of generating the kind of mass movement needed to achieve the needed scale.”

My favorite story is nested in a eulogy concluding the book.  “A CEO had to babysit for his young daughter.  He was trying to read the paper but was totally frustrated by the constant interruptions.  When he came across a full page of the NASA photo of the Earth from space, he got a brilliant idea.  He ripped it up into small pieces and told his child to try to put it back together.  He then settled in for what he expected to be a good half-hour of peace and quiet.  But only a few minutes had gone by before the child appeared at his side with a big grin on her face.  “You’ve finished already?” he asked.  “Yep,” she replied.  “So how did you do it?”  “Well, I saw there was a picture of a person on the other side, so when I put the person together, the Earth got put together too…”

“The future is our choice, not our fate.  We have exactly enough time-starting now,” declares the author.  

I enjoyed reading Thomas Friedman’s overview of our troubled time.  I cannot say the book held my attention continually.  The World is Flat provided fresher insights into global shifts from my vantage point.  My lack of exuberance may be symptomatic of the November 2009 malady, election platform overload.  The work does not suggest easy solutions to today’s problems. 

The Acknowledgement Index highlights contributions of many luminaries and researchers.  I commend Tom Friedman on the breadth of his research and question the short and somewhat vague analysis of solutions. 

Today’s global citizens understand the world is hot, flat and crowded.  The question is “what do we do about it?” 

Much thanks to Rita, WDFPL friend and avid library user, for sharing her signed copy.   The book talk she attended must have been hot and crowded given the author’s popularity.

Check out Mr. Friedman in action: