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"According to a trade publication called Corporate Secretary, it's time for the banks to do a little crisis management of Occupy the Boardroom:"
Thomas Friedman recites the catechism of the race to the bottom. All hail the powers of freelance.com and the poor, hungry, and driven.
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Barrie offered me a few examples on his site right now: Someone is looking for a designer to design “a fully functioning dune buggy.” Forty people are now bidding on the job at an average price of $268. Someone is looking for an architect to design “a car-washing cafe.” Thirty-seven people are bidding on that job at an average price of $168. Someone is looking to produce “six formulations of chewing gum” suitable for the Australian market. Two people are bidding at an average price of $375. When Barrie needed a five-word speech to accept a Webby Award, he offered $1,000 for the best idea. He got 2,730 entries and accepted “The Tech Boom Is Back.” Someone looking for “a rap song to help Chinese students learn English” has three bids averaging $157.
in list: Economic Crisis
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PP: It’s really interesting that you mention the lack of scientific funding after the Cold War. The eminent economic historian Philip Mirowski has noted this time and again. In his books he writes about how scientists found themselves increasingly in oversupply as the Cold War ran down and spending on military research dwindled. He contends that much of the ‘mathematicisation’ of modern economics – that is, the move away from realistic theories that help the public purpose and into ‘pure’ models that don’t really do or say anything – was due to this emigration from the hard sciences. Clearly without the threat of the ‘Evil Empire’ Western governments no longer see as much need to spend on expensive research. I mean, while I’m not hugely keen on the military-industrial complex, at least a lot of this research ended up serving the public purpose when it was released by the military.
"For many years now, societies have been limping on with broken institutions and splintered social contracts — right into the heart of this perfect storm. And I'd bet most of us have assumed that we'll continue to "get by" — that we can wait for the economy to repair itself, for the next economic boom to provide shelter from the approaching cyclone, for the invisible hand to pick us up and put us back on our feet. Yet, I'd suggest: the upheavals we're seeing now are stark evidence that the status quo's faith-based modus operandi hasn't worked — and isn't working. We're not magically going to "find" shelter from the gathering clouds of this economic whirlwind. We're going to have to build shelter: more resilient, less dysfunctional institutions that can deliver on the promise of real human prosperity that matters, lasts, and multiplies. Because if you didn't know what a lost decade looked and felt like before — well, you sure do now."
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Call it the logic of opulence: a paradigm of plenitude centred on more, bigger, faster, cheaper, nastier, now. Its glittering, unattainable fever dream seems to have driven the rioters mad. As one told the Guardian, "Why are you going to miss the opportunity to get free stuff that's worth loads of money?" Indeed: why, given a poisonous compact tattooed into the deeper calculus of everyday culture, not? Hence, as many have pointed out, the mob hasn't exactly been looting bookshops, but the stuff of faux-luxe, mass-designer plenitude: plasma TVs, fast fashion, video games. The vision they seemed to be pursuing, as if their long-denied birthright, is less one of sign-waving activism, fighting against deep-seated social injustice, and more one of raiding a consumerist Disneyland to which they've long been glumly denied a ticket.
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I call it a Great Splintering — not purely an economic phenomenon, as in "Great Contraction," but a social one: an era when social contracts are being torn up, abrogated, betrayed, abandoned, by accident, by design, by "regulatory capture," or simply by polities too gridlocked to progress. Broken social contracts aren't just tidy abstractions, empty of visibly real consequences, disconnected from the noise and clamor of our messy human lives. As they break, yesterday's ways of living, working, and playing rupture; yesterday's organizations, from corporations to banks to nations, creak and crack.
"This interchangeability of visions for the future underscores the fact that the precise content of most colleges' strategic plans is pretty much irrelevant. Plans are usually forgotten soon after they are promulgated. My university has presented two systemwide strategic plans and one arts-and-sciences strategic plan in the past 15 years. No one can remember much about any of those plans, but another one is in the works. The plan is not a blueprint for the future. It is, instead, a management tool for the present. The ubiquity of planning at America's colleges and universities is another reflection and reinforcement of the continuing growth of administrative power."
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The synthetic CDOs that caused the trouble were expensive bespoke instruments that were very profitable for the banks involved – JPMorgan was paid $19m to structure and market the Squared CDO alone before it got stuck with $880m in unanticipated losses. Their complexity meant that only a few professionals could grasp them – most “sophisticated” investors went by credit ratings.
For investors, it was akin to being informed by a mechanic at the local garage that your vehicle needs expensive new parts and servicing. The garage has an incentive to charge you as much as possible and the information asymmetry between professional and customer makes it easy to pad the bill.
As long as the structure encourages it, investment banks will place their interests above those of their clients, no matter what they say. That is one reason why the US and European reforms to push as much of the derivatives market on to to exchanges and clearing houses – and into sight – are vital.
"And so again and again, the realists, pundits and technocrats and advisors, find themselves dully amazed to be on the wrong side of history, staring forlornly from a ditch at the side of the road as their ride disappears into the distance. Eventually they pick themselves up, dust themselves off and say, “I knew it all along”. And a few days after that, “We must be realists about what will happen next”, as they restore a managerial composure, make scenarios, wargame out the possibilities, repaint and reframe what was for them a black swan event."
There's something you won't see mentioned by too many advocates of cloud computing – the main attraction is making money from you
The truths outlined here: that a cold peace has descended, the mandate of 2008 is expended, and the results are a pathetic failure of wit, wisdom, and will -- stand by themselves. That the coalition of catastrophe is gathering, preaching burn and churn as its new policy -- burn carbon, churn land --- is evident to anyone who can read Dick Morris' new book, or watch MSNBC. Hooverism hovers close. Don't believe me, believe Paul Krugman.
Taibbi gives a good rant on the subsidies that boosted Goldman Sachs profits to record levels.
Shoshana Zuboff outlines why we need a philosophy of business that incorporates others, not just the self.
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The economic crisis is not the Holocaust but, I would argue, it derives from a business model that routinely produced a similar kind of remoteness and thoughtlessness, compounded by a widespread abrogation of individual moral judgment. As we learn more about the behavior within our financial institutions, we see that just about everyone accepted a reckless system that rewards transactions but rejects responsibility for the consequences of those transactions. Bankers, brokers, and financial specialists were all willing participants in a self-centered business model that celebrates what's good for organization insiders while dehumanizing and distancing everyone else—the outsiders.
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As in war, that emotional distance made it easier to operate in one's own narrow interests, without the usual feelings of empathy that alert us to the pain of others and define us as human. The narcissistic business model provided the modern day "circumstances" that enabled individuals to ignore the poisonous consequences of their choices. This paved the way for a full-scale administrative economic massacre.
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Story about the paper industry dumping diesel into lignin in order to collect a tax credit for combining alternative and taxable fuels, thus thwarting the intent of Congress to reduce fossil fuel use.
Bush administration officials, in their last weeks in office, are pushing to rewrite a wide array of federal rules with changes or additions that could block product-safety lawsuits by consumers and states.
Behind all the genteel business-speak, allow me to offer a plain-speak translation of what the New York Times business section declared today:
“Hurry, hurry, hurry! Step right up and sell off your public infrastructure treasures financed by generations of previous taxpayers! Give them to Wall Street – whom you just bailed out at discount prices – and let them earn fantastic, guaranteed rates of return for decades to come while cutting amenities and ignoring evolving public needs. You poor schlumpy taxpayers can continue to shoulder the high-risk, long-term investments. And if any of those public assets begin to look attractive – say, the Internet, wifi spectrum or federally financed drug research — why, we’ll be sure to swoop down and be the first take them away from you. After all, we have more money and better access to your elected leaders than you do!”
The New York Times is a great institution, but can we please shed the “liberal” moniker that is so often attached to it? A precious commons is threatened by enclosure, and all we hear is cheering.
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