Will Diversity Become Part of Corporate Governance?

In the USA, the Nasdaq asked the Securities and Exchange Commission if it can require all 3,300+ companies that trade on its exchange to (a) publicly disclose diversity statistics about their boards of directors, and (b) retain at least two diverse directors (one woman, one who identifies as an underrepresented minority and/or LGBTQ).

If the SEC gives the nod, boards will have two years to bring on at least one diverse director and two+ years to hire the second. If companies miss the deadline and fail to provide a sufficient explanation of why they missed it, they could get delisted.  

As of now, 75% of Nasdaq-listed companies would not meet that benchmark. We know corporate America has made slow progress improving diversity at the top. In 2018, women held less than 1/4 of Fortune 500 board seats. From 2010–2018, seats held by Black directors increased just one percentage point to 9%.

This would mark the first time a major exchange would impose such requirements, but it's not alone in pushing for board diversity. California requires at least one diverse director for companies headquartered in the state, and Goldman Sachs does as well to underwrite an IPO. 

For diversity as a success story, just turn to Europe: EU companies and others are successful in bringing more women into the top ranks of business. Norway was the first to introduce quotas for women in 2003. Iceland, Spain, and France followed with 40% targets. In 2015, Germany became the largest economy to impose a quota, mandating 30% of supervisory board seats be filled by women. Across Europe, the number of women on boards is climbing, although from a low base. The number of women board members at 734 large publicly traded companies across the Europe in 2016 was 23%, up from 11% in 2007, according to EU data. In countries with quotas in place, it’s higher: 44% in Iceland, 39% in Norway, 36% in France and 26% in Germany (2016 numbers).

                

Oppose Censoring the Internet

 The government wants to control access to the Internet. This is a very bad idea, opposed to all the principles it was founded on. 

https://gizmodo.com/trump-wants-to-build-a-wall-around-the-internet-how-wo-1844691997

SIFT Score - the West's Answer to China's Social Credit Rating. Thanks, Big Brother

Data on what you buy, how, and where is secretly fed into AI-powered verification services, according to the Wall Street Journal. These are supposed to help companies guard against credit-card and other forms of fraud.

More than 16,000 signals are analyzed by a service called Sift, which generates a "Sift score," used to flag devices, credit cards and accounts that a vendor may want to block based on a person or entity's overall "trustworthiness" score. From the Sift website: "Each time we get an event -- be it a page view or an API event -- we extract features related to those events and compute the Sift Score. These features are then weighed based on fraud we've seen both on your site and within our global network, and determine a user's Score. There are features that can negatively impact a Score as well as ones which have a positive impact."

The system is similar to a credit score except there's no way to find out your own Sift score. This sounds a lot like the data that China's social credit system, in part, uses. In the PRC, a person's social score can vary depending on their behavior. The exact methodology is a secret — but examples of infractions include bad driving, smoking in non-smoking zones, buying too many video games and posting fake news online. While Edward Snowden certainly demonstrated the global extent of the US surveillance state, corporate entities have not implemented anything on the level of the Chinese social scoring system. Yet.

After 18 Years, SAAS provider NetSuite Pays off Big

Oracle is to acquire NetSuite, a software-as-a-service provider that makes the ambitions claim of being the very first cloud company. NetSuite has been working for 18 years to develop a single system for running a business in the cloud.


Read more here...

The next hit to the labor market: robot lorries

Autonomous cars such as the GoogleCar tend to get our attention, but the autonomous vehicles most of us are likely to interact with first are going to be lorries and trucks. The big rigs that haul almost anything consumed will be much safer if drivers do not get fatigued on long trips. They are also far more efficient if they can "platoon" together, drafting behind each other.

So check your rear-view mirror: the driverless truck is coming, and it’s going to automate millions of jobs -- I mean, eliminate! From TechCrunch:

A convoy of self-driving trucks recently drove across Europe and arrived at the Port of Rotterdam. No technology will automate away more jobs — or drive more economic efficiency — than the driverless truck. Shipping a full truckload from L.A. to New York costs around $4,500 today, with labor representing 75 percent of that cost. But those labor savings aren’t the only gains to be had from the adoption of driverless trucks. Where drivers are restricted by law from driving more than 11 hours per day without taking an 8-hour break, a driverless truck can drive nearly 24 hours per day. That means the technology would effectively double the output of the U.S. transportation network at 25 percent of the cost.

Robot trucks?! If you just passed a truck glowing blue on the Nevada highway, it means that a robot is at the controls. For testing, autonomous models have LED lights that turn different colors according to whether a human – or the computer – is in control. From the BBC: Daimler’s truck is capable of “level three” self-driving – on a scale that goes from zero to four - which means it can take over the driving itself if required. But the company says the driver will only become a passenger under a controlled set of circumstances.
The system was first demonstrated in Germany last year but on a closed section of road. When BBC Future joins the testing team, it’s on a section of a public highway. And on Nevada’s freeways, the driver can now chill out, or even take care of paperwork on the truck’s built-in tablet.

Drones (well, unmanned aerial vehicles) Are Gaining Ground

A recent report highlights the increase in momentum for commercial adoption of unmanned aerial vehicles:

Drone manufacturers and software providers are quickly developing technologies like geo-fencing and collision avoidance that will make flying drones safer. The accelerating pace of drone adoption is also pushing governments to create new regulations that balance safety and innovation. The FAA is set to release new regulations this spring could help boost adoption. Safer technology and better regulation will open up new applications for drones in the commercial sector, including drone delivery programs like Amazon’s Prime Air and Google’s Project Wing initiatives.

Of course, you still need a pilot's license to operate commercial drones. This is smart, but the size o said aircraft need to be taken into consideration. And, much like the GoogleCar, we need a framework for artificial intelligence-controlled aerial vehicles.

Gary Ritter, director of the Center for Advanced Transportation Technologies at Volpe, The National Transportation Systems Center: "Google's recent self-driving car is programmed to be courteous and cautious...." Based on artificial intelligence software, some Google vehicles have driven over 200,000 miles on public roads, using high-accuracy map data, video, LIDAR, radar, and wheel sensors.

Ritter cited many reasons to move towards increasing automation, including improved safety, reduced congestion, energy savings, and innovative mobility options such as advanced rapid transit, on-demand vehicle sharing, and providing mobility to currently ineligible drivers. One of the biggest consumer-oriented reasons is driver convenience.

Shooting A Drone Out of The Sky? Not so fast, private property rights still exist...

It may sound funny, or perhaps even your right, to blast an unmanned aerial vehicle out of the skies over your property. But, in California at least, private property rights still prevail. Further, many suggest that shooting down a drone with a gun should technically be a federal felony offense. Because the Federal Aviation Administration has decided to consider drones "aircraft" (and has fought for that distinction in court) and has not yet created specific rules about their use, shooting at one should be a violation of federal code 18 §32, which carries a maximum sentence of 20 years in prison.

The judge ruled that "McBay acted unreasonably in having his son shoot the drone down regardless of whether it was over his property or not." Though it’s not necessarily precedent-setting, it’s still an important case, according to Brendan Schulman, an attorney at Kramer Levin who has more experience in drone law than anyone else in the country.

"Even though it’s from small claims court, it supports the proposition that destruction of someone’s property is not an appropriate way to respond to the presence of a drone," Schulman told me. "Even if a drone is causing a nuisance, potentially invading privacy, creating a hazard, or violating some other law, the appropriate way to respond is to call the authorities, not to take self-help measures involving firearms. Notably, the verdict states that the discharge of the firearm was unreasonable regardless of whether the drone was being flown over the shooter’s property. I think this case is more about the response to the drone operation than it is an indication of what laws apply to the operation of the drone itself."

So before you go off half-cocked, remember to respect others' properties. And know the privacy laws of your jurisdiction.

Read more here...

Capitalism is first and foremost about people

Let's be clear: capitalism is based on meeting people's wants and needs, not short-term profit and growth. The focus many put on the actions of companies ignores the situation surrounding these companies: unfair and unbalanced access to markets, monopolization of capital, and utilization of the government to restrain competition.

Production in capitalism is aimed at the creation of surplus value -- and the transformation of a part of that value back into capital, that is returned to the shareholders of the company. That "surplus value", in the form of dividends, is free to be used by the shareholder as he or she sees fit. This freedom of choice is why capitalism is a lynchpin of American values.

Of course there is nothing wrong with making profit a company's goal. What is important is how one achieves it -- leaders of the most profitable corporations, in my opinion, treat profit as the result of other efforts, efforts they devote most of their attention. Steve Jobs had a focused strategy to deliver outstanding products to carefully-selected customers. Marissa Mayer pursued policies and practices to leverage results over costs, hiring people with the right attitude. Google does this: find the smart people who fit with the organization's culture, and good things will come. Matthias Müller looked for proper training and teams work to achieve success with Porsche.

In all these cases, profit naturally comes from the efforts of the organization. But remember, capitalist markets are an expression of the value of individual freedom, organized around voluntary exchange between people. Nobody is forced to engage in any particular exchange or trade. And free markets are an extremely effective mechanism for coordinating complex economic systems; they accomplish this remarkable result through supply, demand, and the autonomous price mechanism.

Adam Smith cautioned us that “the man whose whole life is spent in performing a few simple operations...” will be unable to solve problems and to think for himself, and “...generally becomes as stupid and ignorant as it is possible for a human creature to become.”

Free markets demonstrate efficiency of allocation. When suppliers and consumers have completed their transactions, the market reaches a state of “pareto optimal” – no one can be made better off without someone being made worse off. We see that capitalist markets create incentives for risk-taking and innovation (why capitalism is an engine of economic growth). But government regulations of firms and markets interferes with these virtues. There is clearly a balance to be struck between regulation (the needs of the many) and freedom to choose (the needs of the few).

Silly Americans, You Already ARE Socialist

I aim to be more on the laissez-faire / free markets kind of guy, but I do believe there are plenty of people who need our collective help. Isn't that why we have government? To set the rules of the road, to make sure the needs of the few are taken above the needs of the many.

This article makes a reasonable argument: when one evaluates the data on: 1) federal business regulation, 2) federal and state government subsidies, 3) corporate taxation, and 4) the level of “economic freedom” that exists in the United States, the palette paints an economic landscape with much greater government interference in business than the myth of “cowboy capitalism” would suggest. A factual analysis of these four areas reveals a modern-day America that is much closer to a European socialist-style economy – like Germany, Denmark, or Sweden – than to a capitalist frontier. And by some measures of government intervention, the United States is actually much more “European” than any country in Europe today.

Food for thought, this lovely Spring morning.

Health care and capitalism -- together like haggis and stout

The basic need for insurance and pension arrangements stems from personal risk and uncertainty -- and it is not a modern phenomenon. Even ancient civilizations fostered early versions of the concept of the insurance fund, with the grant of pensions in ancient Greece and the formation of burial societies in ancient Greece and Rome. In the Middle Ages it was sometimes possible to secure one's old age with a pension or even to purchase a room at a monastery with board and lodging provided. Marine insurance was invented, in order to help the expansion of trade, and this was followed by the beginnings of life insurance. Inevitably this is partly a book about "firsts".
Of course, the concept of deceit is not new, either. The earliest insurance fraud apparently was attempted in 350BC, when the owner of a ship tried to sink it.

Other examples of early insurance can be found: The earliest insurance policy seems to have been issued in 1350, on a cargo of wheat supplied from Sicily to Tunis. Life insurance goes back at least as far a 1399, when a policy was issued covering someone on a voyage from Barcelona to Italy. Astonishingly, the first occupational pension fund was established as early as 1590, the Chatham Chest, which paid pensions to disabled seamen and was financed by members' contributions deducted from their pay.

There was a great concern about the losses which people suffered in the Great Fire of London and in other fires in towns, and the first British fire insurance company was founded in 1680.
Many believe Napier, the Scottish inventor of logarithms (1614), may have been inspired to do so by studying the properties of compound interest tables. And Scotland provides the source of many a source about the use of insurance: the grant of pensions by Edinburgh Burgh Council in the 17th centuries; the pensions payable by Leith Trinity House in 1747; and, of course, the pioneering pension fund for Scottish ministers' widows (established 1743). Later, some prominent Scotsmen gathered in the Royal Exchange Coffee Rooms in Edinburgh to discuss setting up ‘a general fund for securing provisions to widows, sisters and other female relatives’ of fundholders so that they would not be plunged into poverty on the death of the fundholder during and after the Napoleonic Wars. Scottish Widows Fund and Life Assurance Society opened in 1815.

One might recall that Scotland is the home of Adam Smith, father of capitalism. Today's state of capitalism might, for Smith, demonstrate not the intrinsic faults of the system, but what happens when the moral dimension is neglected. In his 1759 book, Theory of Moral Sentiments, Smith takes on social and moral psychology and sociology: how one might understand how individuals and societies function not in separate compartments, but as parts of a complex whole. One of the key themes of the book is an opposition to the view that all morality or virtue is reducible to self-interest, as if individuals operated in isolation only concerned with their own particular well-being. Failure to craft an insurance approach to our society's medical needs is one such example of moral failure -- we need to look out for one another. When Smith later wrote The Wealth of Nations, he made it clear that the 'wealth' lay in the well-being of the people.


Want to learn more? Read Pensions and Insurance Before 1800: A Social History By C.G. Lewin and look up Adam Smith.


- Posted by Tom/Bluedog

Someone to drive you home? That's worth alot!

In this Forbes article, the author makes some audacious claims:

...the driverless car has broad implications for society, for the economy and for individual businesses. Just in the U.S., the car puts up for grab some $2 trillion a year in revenue and even more market cap. It creates business opportunities that dwarf Google’s current search-based business and unleashes existential challenges to market leaders across numerous industries, including car makers, auto insurers, energy companies and others that share in car-related revenue.

As readers of this blog may have noticed, I like cars. Particularly German ones (even if one is owned by an American company. Driving is more than just reaching a destination, in my mind. It is about freedom, excitement, and more.

However, commuting is another story. One of my other loves, the bicycle, addresses this problem neatly. Still, as a SciFi fan, I find the thought of a self-driving car irresistible. An autonomous car, or robot car, is an autonomous vehicle capable of fulfilling transportation needs of a traditional car -- without a human to drive it. As an autonomous vehicle, such a car should be capable of sensing its environment and navigating without human input. The goal is -- you choose the destination, but you are required to operate the vehicle.

Perhaps the elderly or other less-ably-bodied will be the initial focus of the robot car? One aspect I like about Google's approach: there is no centralized control, like in the next-generation air traffic control, where each aircraft "controls" the space around it, communicating directly with others in its vicinity. Safer, higher volume/higher density of traffic, and more direct routing (for quicker arrivals). Getting that on the beltway or at the airport would be welcome.

Lanthanum? Unubtanium? What's the Most Valuable Resource.

As readers may have come to realize, my position on the most valued commodity is, in fact, not a commodity at all. I see knowledge workers as the key to success, at the micro-economic level (talented staff, discerning customers), and, as The Economist reports, at the macro level:

THE world’s most valuable resource is talent. No country grows enough of it. Some, however, enjoy the colossal advantage of being able to import it. Rich, peaceful countries can attract clever immigrants. Unlike other useful imports, they cost the recipient country nothing. They come, they study, they work, they set up businesses, they create jobs: 40% of the founders of Fortune 500 companies are immigrants and their children. Yet they are only 23% of Americans.

I've consistently advocated for immigration, both in the U.S. and in the Republic of Ireland, as the secret sauce to boost entrepreneurialism. My grandfather arrived illegally in New York, and made his way to being a successful baker, in spite being an "enemy of the state" during the 2nd World War. He, like many others, chose to be American (nobody chooses their heritage/nationality) -- the hallmark of civilized human rights is the freedom to migrate. And these two countries remain magnets for the talented, the motivated, the (learned or not) quick-witted.





- Posted by Tom/Bluedog

Cloud computing puts CPU horsepower in anyone's hands

In a decade, the infrastructure to build awesome new services has become widely affordable. Amazon’s efforts are just the start of a global competition among many -- Google and Apple have major cloud initiatives, and there are hundreds of platform or software-as-service offerings.

Daniel Gross, Cue’s 20-year-old co-founder, concedes that “I don’t even know what the ballpark number for a server is — for me, it would be like knowing what the price of a sword is.”

Cloud computing -- such as Amazon's offering -- is now powering all kinds of new businesses around the globe, quickly and with less capital.

Make Stuff, Don't Waste Energy on Fighting

San Francisco Chronicle says it best: stop wasting energy (and lots of money. Lots.) on court cases. Invest in the future.

The problem is that neither company seems to have any idea what to do with its riches. The very act of cash hoarding suggests as much. If either company had projects deemed worthy by corporate execs holding the purse strings, the money would be spent.

The author continues,
Rather than invest in technology that might be commercially viable a decade or two down the road, Apple seems content for now to amass an ocean of cash, defend its 50 percent profit margins with an army of lawyers, and focus on incrementally adjusting - and protecting with a bulwark of broad patents - its current product designs. Sleek and user-friendly designs to be sure, but society-changing technological innovations comparable to the transistor or disk drive they are not.
- Posted by Tom/Bluedog

Capitalism - on the ropes?

This blog is about "intellectual capitalism." But the economic notion of capitalism is certainly at the roots of much of my writing. So where does this word come from?

The term ‘Capitalism’ has a long history. Adam Smith, thought of as the ‘father of capitalism,’ was the first modern proponent of a comprehensive philosophy defending an entire package of basic principles related to individual liberty as an indispensable ingredient to a moral, prosperous, and free society.

Today the term ‘Capitalism’ is used imprecisely-- many suggest that the term ‘Capitalism’ and ‘Capitalist,’ was first derived in English from a translation of the pejorative term used by Karl Marx to describe the class of men he called the elite “bourgeois” society who owned and controlled “society’s capital resources.” With much in etymology, word origins can be multiple and imprecise. The Oxford English Dictionary credits William Thackeray for the first published use of the word ‘capitalism’ in his novel, The Newcomes, although the word seems to refer to finance capital, rather than a discrete system.

Even if Marx didn't invented the term "capitalist," he was hip to the need to label those who control the life blood of economies, oft referred to as "M1" in the broad macroeconomic sense. Right now, there is a massive transfer of capital from labor to management. According to the Congressional Budget Office, between 1979 and 2007 incomes of the top 1% of Americans grew by an average of 275%. In 2007 the richest 1% of the American population owned 34.6% of the country's total wealth, and the next 19% owned 50.5%. Thus, the top 20% of Americans owned 85% of the country's wealth and the bottom 80% of the population owned 15%.

We have a hoarding of capital by banks. This impacts the opportunities for 'labor' (non-management) to enjoy prosperity. In fact, Banks actually create money when they lend it: Most of a bank's loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a when you deposit a check from any other source, the bank holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process over and over.

Are these side-effects of the global economic crisis, or just an extension of what has been going on for 130 years?
We see governments funneling social spending away from big pension firms, organizations that might have realized institutionalization of the collective needs, if they had not been pillaged by the likes of Bain Capital.

Is private property is increasingly frustrating capitalism, by putting the brakes on spending/investment?
Wholesale buy-out of bad mortgages, while being a massive give-away, would end the arterial blockage in the flow of capital.

Now is not the time to give up on the Internet

The opposite of liberal is, well, IMHO, the desire to inflict on others a reduction in 'adaptive potential'. I would suggest this means the ability to choose between a range of attractive opportunities. Barriers to social mobility, relentless mega-corporation dominance, endless growth of government, restrictions on human sexuality and freedom of expression all qualify as narrowing.

I find the Internet has proven to be a means to facilitate growth in adaptive potential. Opening markets globally for large and small businesses. Amplifying peoples' voices. Reducing cost of public service delivery.

Supply chain and e-commerce improvements are contributing to overall economic growth. With the size of the global market getting bigger, the rewards for uncovering lucrative new ideas grow -- a multiplier effect. Moreover, as new ideas flow across national boundaries faster and more easily, humans all benefit.

Public officials, potential laws, and other public policy issues are scrutinized and influenced by Internet-organized movements.

Public spending should focus on broad-based, pro-growth, pro-poor services like primary education, primary health care and infrastructure investment.

A few thoughts on OWS

From an economics and sociology discussion -- under the right circumstances, conservatives and libertarians were as likely as anyone on the left to give wrong answers to economic questions. The proper inference from our work is not that one group is more enlightened, or less. It’s that “myside bias”—the tendency to judge a statement according to how conveniently it fits with one’s settled position—is pervasive among all of America’s political groups.

And, on a somewhat related note -- the top 1% are a killin us! [ read more ]