My Two-for-Tuesday post holiday weekend morning train reads:
• For S&P 500, Expensive Is the New Cheap (Bloomberg) but see Don’t Count on Happy Returns for U.S. Stocks (MoneyBeat)
• Hedge Funds: The Awkward Victors (Market Mogul) see also Hedge funds’ conspiracy of mediocrity keeps fees high, returns low (Fortune)
• Yanis Varoufakis: Austerity Is the Only Deal-Breaker (Project Syndicate) see also What Would Happen If Greece Doesn’t Pay the IMF: Q&A (Bloomberg)
• BEA Works to Mitigate Potential Sources of Residual Seasonality in GDP (BEA) see also First-Quarter Growth May Look Better After Upcoming Statistical Tweaks (Real Time Economics)
• What Liberals Still Don’t Understand About Fox News (Politico) see also Bartlett: Are Polls Always “Skewed” Against Republicans? (TBP)
Re: Productivity is a drag
They left out No. 6 – Abysmal Management of People and Strategies
We are in the day and age of shareholder value which has meant many companies simply manage by the financial numbers, rarely digging below the numbers to understand how their company really functions. So, I have seen examples of very talented people let go because of perceived overhead costs (for one of those people, the executives didn’t understand that the client was paying for that person’s cost through some unconventional approaches – it took a year of hard work and groveling by the remaining people to retain that multi-million dollar revenue client and that person went to another firm that may now compete for the work), incredibly unrealistic and inefficient management of staff on teams (“good people can accomplish anything even if their staffing and resources are cut 50% – they just need to be more efficient”), focusing on services that are only ever going to be niche markets and not understanding why they aren’t growing, etc. Just about everybody I talk to has numerous stories along those lines and more – Parkinson’s Law and the Peter Principle are still alive and well.
Meanwhile, one of my kids works in a high-tax state at a foundry that is producing steel and iron parts for clients in North America and elsewhere, competing head-to-head with China through a relentless focus on good staff management and quality work. All of the economic theorists out there would say this company shouldn’t exist but it does, and it even still has a pension plan in addition to the 401k.
I work in a company that has outsourced a lot of its engineering and software development and support to China and India. Yes, we pay less per person, but in my observation the results are not as good. But it’s cheaper, as long as you only measure what you pay!!
Somebody grabbed the stevenharper.ca domain. Looks like it wasn’t Steven Harper.
http://www.stevenharper.ca/
“When a reputable venture firm leads two consecutive rounds of investment in a company, Andreessen told me, Thiel believes that that is “a screaming buy signal, and the bigger the markup on the last round the more undervalued the company is.” Thiel’s point, which takes a moment to digest, is that, when a company grows extremely rapidly, even its bullish V.C.s, having recently set a relatively low value on the previous round, will be slightly stuck in the past. The faster the growth, the farther behind they’ll be. Andreessen grinned, appreciating the paradox: the more they paid for Mixpanel—according to Thiel, anyway—the better a deal they’d be getting.
Most businesses don’t work like this. At least, not yet.”
Obviously I don’t understand Venture Capitalism…
http://www.newyorker.com/magazine/2015/05/18/tomorrows-advance-man
Banisters are the new organized crime?
https://medium.com/bull-market/organized-crime-on-wall-street-2df24e632088
Geek Heresy: Rescuing Social Change from the Cult of Technology (ht E’sV)
Don’t believe the hype! Technology is never the main driver of social progress. Geek Heresy inoculates us against the glib rhetoric of tech utopians by revealing that technology is only an amplifier of human conditions.
NB: True, technology is leverage above all, but that doesn’t mean it’s agency is neutral (hand-on-lever is not necessarily reducible to hand alone). Bruno Latour’s Network Theory (1993, 2005) develops this much further.
Unless You Are Spock, Irrelevant Things Matter in Economic Behavior
…. Economists discount any factors that would not influence the thinking of a rational person. These things are supposedly irrelevant. But unfortunately for the theory, many supposedly irrelevant factors do matter.
Economists create this problem with their insistence on studying mythical creatures often known as Homo economicus. I prefer to call them “Econs”— highly intelligent beings that are capable of making the most complex of calculations but are totally lacking in emotions. ….
Of course, most economists know that the people with whom they interact do not resemble Econs. …But for decades, this realization did not affect the way most economists did their work. They had a justification: markets. To defenders of economics orthodoxy, markets are thought to have magic powers. ….
Canada works on eliminating red tape. The goal is to get better regulation without as much burden. This will probably not work in the US as increasing the complexity of laws and regulation is a primary goal of lobbyists.
http://www.npr.org/2015/05/26/409671996/canada-cuts-down-on-red-tape-could-it-work-in-the-u-s