Entries for June 2009
Information Economy - Real Economy
I am in a state of confusion, I am trying to answer the question whether the information economy helps or hurts the real economy. With the advent of the information economy in the last 12 to 13 years (probably the duration of the public availability of Internet). Two big recessions and two slowdowns (1996&2005)have occured probably faster than anytime in history. I am trying to explain this in a series of hypothesis below:
Hypothesis I: Information Economy has led to gross misallocation of capital. Since a large amount of capital is concentrated in information economy, it has starved the real economy of capital for its renewal, leading to stagnation of real economy which forms a large part of economy.
Hypothesis II: Information Economy creates myths that can hurt real economy in the long run. In information economy it is easy to create myths like housing prices will go up infinitely or dot com stocks never fails, which will come back to haunt the real economy.
Hypothesis III: Information Economy creates a culture of nothing is of value. Look at people expecting news, music, movies and books for free, one can see people have lost the sense that these products have value. (one can argue new talent has sprouted in information economy, but the notion remains there is no need to pay for many products).
Hypothesis IV: Information Economy is supposed to "Creatively Destruct" but looking at long range employment and per capita income in the recent past it appears that Information Economy's ability to destruct is more than create.
I couldn't find evidence contrary to what I have said. Probably Information Economy needs some more time.
Cuyahoga River - 40 Years After-Lessons for Global Warming
This afternoon I had a boat ride along the Cuyahoga River here in Cleveland. For many it may sound like one of the thousand rivers that flow in America. Cuyahoga is an unique one in that it is the only river that actually burned, 40 years ago.
Actually, river didn't burn but the pollutants like shipping fuel oil burned. Soon after the incident Cleveland became known for the burning river, fodder for late night comedians and infact led to the decay of Cleveland as an industrial power. This incident led to the formation of EPA. the opposition to the EPA's regulation is detailed in its grotesque form here in the interview with first administrator of EPA under Nixon administration.
Despite the efforts of various administrations to undermine the EPA, Cuyahoga river is now thriving with aquatic life. Attitude towards EPA, Pollution and Control of pollution, is strikingly similar to conservatives approach to Global Warming, they are in denial phase just like they were with pollution. They didn't foresee burning rivers or any other eventuality, I hope they see the disaster they almost caused with pollution and keep away from from Global Warming.
Against All Odds
Yesterday was the student achievement recognition day at our Local GED program. This program provides a chance to those dropped out of high school to come back and get a diploma which is equal to High School's diploma. I was at the event because I extensively volunteer with the local GED program teaching math. This is the most prosaic part of it.
When students were asked to take the mike and say what made to come back to GED program. These were some of the reasons they shared.
A middle aged lady said "I lost my job, next time around I want to reduce one reason-- that is not having High School Diploma"
I didn't have a choice a Judge made getting GED a condition for my release, now I am going to college.
I was drifting in life, somehow got GED, and now I am joining the Navy.
I had to take care of my mother from a young age now I have GED, I have enrolled in College to get my Registered Nurse degree.
The themes across experiences of the students that they couldn't complete High School are 1)Family circumstances 2) Parental neglect and 3) Serious violations of law which kept in Juvenile Justice System. Most of the students have put their past behind them are looking towards a bright future, I am sure the path they crossed would have made them strong.
From being expected to fail, to a stage talking about college options, it is a success "Against All Odds"
Don't Repeat 1953 - Iran Elections
Let us face it, President Ahmedinejad won his second term yesterday, despite the claims of voter fraud. A simple arithmetic of votes, rural plus urban poor plus others, will show that Ahmedinejad is the ultimate winner.
US in all probability had a clandestine program to stop the Iran's nuclear program, which was revealed in an Seymour Hersh's article in 2008. This report was not refuted, so I, presume this time around western powers might have used money and strategic assets to have different outcome.
The western media went on a overdrive as the election approached, magnified any opposition activity and predicted Ahmedinejad's downfall. A guest on a NPR talk show said yesterday we will be having a new president in two weeks, so much for journalist objectivity. All western journalists violated the first rule of research don't search for a pattern that suits the desired result.
With current street demonstrations I hope nobody is trying to repeat coup of 1953. The coup brought in Shah. Shah was pathetic leader for a civilization that produced Cyrus the Great
The effects of the coup were summarized by none other than former Secy. of State Madeleine Albright
"In 1953 the United States played a significant role in orchestrating the overthrow of Iran's popular Prime Minister, Mohammed Massadegh. The Eisenhower Administration believed its actions were justified for strategic reasons; but the coup was clearly a setback for Iran's political development. And it is easy to see now why many Iranians continue to resent this intervention by America in their internal affairs"
Shah's (mis) rule led to a strong resentment towards US and eventually to the 1979 revolution, which led to the current form of Government in Iran. It is easy to live in a fool's paradise thinking that because bulk of Iran population was not alive in 1979 they will automatically tend towards US. It is easy to believe iPods and internet will make the youth look toward US for intellectual vigor. This thought of small section of youth living in cities will disappear in front of huge Friday prayer crowds chanting death to America.
Whatever the policy is adopted by Obama administration, it should not assume that Iran is a pushover. Administration should think twice before spilling blood in streets of Iranian cites.
I was surprised by Secy. Clinton's statement that US is not recognizing the Iranian election result because of electoral fraud. This surprising because western media was everywhere and reporting what they saw rather what they wanted to see.
Ma'am Secy. Clinton if anybody sees an election in Cleveland and Cuyahoga County no country will recognize the election of an US president. With minority voting suppression, difficulties in registering and difficulties in getting absentee ballots, US elections doesn't set any standards.
Aging in America
Aging in America conjures the image of people enjoying their golden years in Florida or seniors aging with dignity in nursing homes. Contrary to this image there is a large number of people who fall through the cracks. These are the seniors who depend on Medicaid for nursing care. The care is not free, the total expenses incurred will be collected from the Medicaid beneficiary's estate. This program has a rider, if a person can be taken care for 60% (in Ohio) of nursing home cost, the person will be provided care at home.
Every Friday, I distribute meals to seniors who are provided care at home and it raises the question in me on what basis the decision to provide care at home is made.
One person to whom I deliver meals, turned 94 last week, he is severely arthritic whose leg freezes in Cleveland winter, he lives alone, I am sure he wouldn't have chosen to live alone but for the Medicaid rules.
Another person aged enough to call a 80 year old kiddo, collects soda cans as donations to supplement her meager Social Security Income, she lives alone in an apartment, an existence beyond description.
These people are not free riding the system, during their productive years they went to wars, produced steel and automobiles and worked as teachers.
Throwing the rule book at these seniors and subjecting them to discomfort seems............
Industrial Policy and USA
What is common through Toyota, Honda, Hyundai, Samsung, Nokia and Sony. These corporations are product of Industrial Policy, of the governments of the countries from which these corporations originated. For these corporations governments, spent time, effort, feeding them with ideas and making their success in overseas market as part of their diplomatic corps' work ( In fact South Korean foreign minister is designated as Minister for Foreign Affairs and trade).
One of my earlier work on Industrial Policy was cited for the first time in a paper about the present condition of Korean Industrial Policy, I thought this gave me license to talk about Industrial Policy and US.
What the Industrial Policies have done to US industry? Decay of US automobile is largely attributable to Industrial Policy of Japan and now South Korea. Motorola becoming irrelevant in mobile market can be attributed to Industrial Policies of European Union and South Korea. These examples prove there is nothing called free market, if US keeps harping on free market while the foreign governments keep helping their corporations to have the US market for lunch, US has a serious problem.
US Govt. is being criticized for just investing in companies without any operational role, it is being called Industrial Policy or Socialism. Since, I have a researched a bit on Industrial Policy and since I grew up in socialistic India, I know US Govt. role is neither Industrial Policy or Socialism.
US has reached a stage where it cannot cede any more industry to foreign companies, because it destroys the economic base of the country and continued $ 1 trillion trade deficit cannot be justified by any argument, I don't see any new industry coming up in the near future that will make the trade deficit go away. US has to make some serious decisions about its relation with its corporations, rest of the world has shown the way.
PS: I think I need a job...ideas
Judicial Impartiality
Two days back Supreme Court delivered a precedent setting judgment on judicial conduct. The case Caperton vs A T Massey Coal Company was about "Whether the Chief Justice of West Virginia Supreme Court should have recused himself in a case involving a corporation that spent $ 3 Million on his election.? The decision on a 5 to 4 split was yes, I was surprised by the slim margin. I thought the issue of judicial fairness is something black and white with no shade of Grey.
It is a basic principle of justice that "justice is done and justice is seen to be done", when a judge who has drawn heavy campaign contributions from a litigant, I think this basic rule is violated.
In my opinion the members of the minority should have recused themselves from this case because they don't believe in recusal or go back on their words about recusal. Justice Scalia refused to recuse from cases involving Dick Cheney despite going on hunting trips with him, nobody expects a person to be impartial towards a hunting buddy. Justice Alito didn't recuse himself from cases involving Vangaurd despite giving assurances that he will not judge cases involving Vanguard during his confirmation hearing as noted in this NPR report
The main argument of the minority is that it will open a lot of recusal claims , I think judges are uniquely qualified to work thru this and avoid these claims. Their actions should prove justice is blind and not selectively blind.
PS: After the Supreme Court judgment the Supreme Court of Ohio delivered a judgment that favored the police and firefighters in relaxing the residency requirements. All the Justices in the majority were endorsed by police and firefighters in their elections.
CEO Pay
Other day in a coffee shop a free enterprise supporting lady was defending CEO pay saying it is supported by free market and pay is determined by market, like the salaries of athletes.
The truth is salaries of performers like athletes are determined by market because billions of viewers watch them performing, when billions vote with their pockets or remotes the salary of a permformer is determined, it is like an everyday American Idol.
Whereas number of people who manage to look at a CEO perform is less. With heavy concentration of stock holding and CEOs performing tricks to please Wall Street it is very difficult to determine what the CEO does is for the benefit of the organization.
Normally pay is for competence and competition, for example an average welder in an organization may get a certain pay and a brilliant welder will get a different pay. Competition may try to pouch the brilliant welder so he/she may be compensated more to be retained. In case of a CEO, the work often falls in grey area, like planning, the value of the work can't be determined so the board negotiates, since the board is not any wise it gives in to the CEO demand. The pay of CEO since is not in direct proportion to any measurable value in many cases the CEO pay tend to resemble Rent Seeking behaviour. This tends to dimish the validity of arguement CEO pay set by the market.
PS: Costco CEO pay is $315,000 and underperforming Sams Club CEO pay is an annual salary of $800,000 and $2 million in restricted Wal-Mart stock
When did I realize Internet has made me dumb?
When I checked the local temperature on Internet before going and sitting in my balcony