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jlyer
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Name: Timothy
Country: United States
Birthday: 10/11/1980
Gender: Male
Interests: IV Christian Fellowship, Swing Dancing, and writing computer scripts
Occupation: Computer related
Industry: Computers (Software)
Message: message me
Member Since:
10/13/2003
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| This is cool -- bringing accountability to predictions!I just found this cool site:
http://www.longbets.org/
Don't let the name fool you -- I don't consider long bets as gambling. Read the site for yourselves -- whether you win or lose, the money goes to charity. The question is more of whose charity gets the money (the predictor or the challenger).
Why do I like this site? I think it helps us all. I think all too often, in the stock market, in economics, in politics, in fashion, in arts, in technology, in health, ad nauseum there are predictions galore. There are predictions about how the world will look like 2, 5, 10, or even 50 years from now. All too often, I hear downright frightening predictions, and too often...get this...THEY DON'T come true! This meant we worried about something that we should never have worried about.
On that site -- if you have some money, want name visibility and are confident that you know what will happen years down the road -- you can put it on the record. I honestly think more stock analysts should go on the record for predictions they make about stocks. I also think politicians need to go on the record about what they believe the consequences of their decisions are. Then if they are wrong often enough, it should be quite clear to everybody that if they continue to believe in their principles, then their principles are indeed broken, and they deserve to be voted out of office.
Sometimes the single best thing you can do in improving your understanding of the world is to keep a journal. I should do that, but the idea is -- in a journal you write down everything that you think AT THE MOMENT that it happens. Not a minute later -- because the next moment, your mind changes. As events turns out, your feelings about how things will turn out in the future is bound to change. So, the challenge is to look back at your journal and analyze how things looked and felt back then, and the consequences in the aftermath. If your predictions was wrong -- was there something you were missing that you could learn from in order to apply to today so you can be more accurate for tomorrow?
-Tim | | |
| Quite timely economic researchIsn't it cool that right in the middle of my economic discussion with nidan, Mises.org actually wrote an article that demonstrates quite conclusively (at least to me -- please find holes if you can) that corporate tax rate is negatively correlated with growth in the economy.
Article here
It also explains a symptom that nidan has complained about -- why are companies moving to another country, not investing here? Clearly, our tax environment is unfavorable... If we changed that, then they would be willing to stay here AND pay our taxes. It furthers my analogy that I made in yesterday's comment that rich people are like a lion, and we are a circus performer. And when a lion has its mouth shut over our head, we'd be an idiot to hit and beat up the lion to get our head free -- we'd better pet the lion so it will open up its mouth.
But...I realized that yesterday's post is a bit misleading on a few levels. I'd like to set a few things straight about the "Ratcheting effect" post.
1. Unfortunately, waste DOES happen in private businesses too.
2. I do NOT wish to see huge inequality of income.
3. Unlike what I implied about the $70K salary, I do NOT think that 70K (or even a few million dollar a year) salary is necessarily ridiculous.
However, there are differences. Let me tackle each of them point by point.
In the case of waste in private businesses. I know it does happen -- like backwards CEO pay. Nardelli of Home Depot fame got over $200 million a year, then something like that is severence in a day when he left. Some CEO get a raise even when their business is crumbling -- no accountability. I can think of a couple of things that can fix it. First, at the end of the day, any business will collapse, and close shop IF the waste gets too far out of hand. You cannot say that of the government. Second, I really think that shareholders of those companies should speak up, and do their due diligence in reining in corporate waste, and board of directors who have conflict of interest. Lot of board of directors are CEO's too, and they have every interest in seeing another CEO's pay go up because when the CEO's pay goes up, that means they are justified in asking for higher pay themselves.
Inequality of income -- like I said in the previous paragraph -- I think if more common people were shareholders, we COULD rein in some of the excesses by voting our shares. So far, it is too hard to go against the board of directors decision, but lately, more activist shareholders have gotten into the fight. However, we are bound to have inequality in income because not all jobs require the same set of skill or produce the same amount of money for the employer per hour. At the end of the day, no rational business can pay a salary that exceeds the income they get for the work performed.
That brings me nicely to point #3. What salary is fair -- I don't know, and frankly, I don't really care. Any salary, whether it is $10K to $100M or beyond is fine with me -- as long as the bottom line is met: that the work performed is worth the salary rendered!
So...can a $100 million a year salary be justified? You betcha! When it comes to leading a business, sometimes a good CEO can make a HUGE difference between whether the company makes it or doesn't make it. Take one of my company -- Middleby, for example. They were in debt, they were in the hole, they were drowning, and losing money quarter after quarter in the 2000's. Then CEO Salim Bassoul took the reins. He dramatically improved the company's bottom line, cut out underperforming departments, focuses all the business on what they were good at. And he even bought other companies in the cookware department to complement the products Middleby already sold. The result: Middleby is now very profitable, and increasing profit in the order of 20-30% every year! That helps shareholders big deal, and I think Salim earns almost every penny of the multimillion dollar a year he earns for turning Middleby around, and continuing to push Middleby to higher profitability year by year.
But, the trick here is -- the compensation policy needs to be tied to performance. If a CEO sinks a company that was otherwise doing well, I don't think it is right (actually, I think it is wrong), if on the CEO's last day, the severance pay in the ten of millions of dollars! CEO is one thing, and probably the biggest area of waste. Too many CEO use the tried and true 5-year-old kid argument "mom, but all my friends have it too!" When it comes to pay, pay them $1 million a year, they will be happy until they see another CEO of similar size company making $2 million a year, then like a 5 year old... However the "he" might be an order of magnitude better CEO.
But, like my prior post...performance tied compensation policy applies at every level. I don't think anybody has the right to continue working at the same job if they decide one day that they aren't going to do their job. If they are slacking day after day -- they should be shown the door. Or at the very least, their employer should be able to say "ok, your work is no longer worth $70K to us, but we will keep you onboard for $50K a year". A corollary is, expectations of a job needs to be clearly communicated. It should be possible for a high performing entry-level worker to raise up quickly through the ranks. What's more is -- when business has a hard time, they should have the freedom to reduce their employee's salary, instead of letting inflation water it out.
If the environment was not inflationary, THEN I think that pay cut and pay raises would actually be a possibility, but all too often people think "I have worked here for 30 years, I'm entitled to more". Unfortunately, that is NOT always true. Take sign language interpreter as an example -- I've seen interpreter interpreting for only 2 years that interpret superior to someone who has been working for 15-20 years! What happened? Face it, some people relive their 1st year 20 times, whereas others learn something new every day, every year, and constantly improve over decades, and go on to become truly superior in their profession in every sense. I'd think that in an ideal environment, those continuous improver would be paid more every year, whereas those who are reliving the same year over and over will never have a pay raise (no inflation, remember...). Unfortunately, all too often, the continuous improver's fair share is distributed to the slackers too. Meanwhile, I'd challenge you to be a continuous improver.
-Tim | | |
| Ratcheting effect...In my last post, there was a discussion with nidan about various issues. In my latest response, I mentioned that government expansion tends to have a ratcheting effect. In that anytime you add a new government bureau or committee, that bureau tends to last practically forever. In a real business -- if a division is no longer performing (like losing money), the business would actually put the ax to it, and end that line of business or at least downsize it.
Not the government! Herein lies one of the problem with increasing the size of government -- there is no accountability beyond us voters calling and telling our representatives to cut something out. But the problem is neither the public nor the representatives are aware to the full extent of government waste, and what can be cut out. One benefit of being paid to do something (as a business are) is the revenue they generate is an indication that their service is STILL useful. With the government -- what metrics, what measure do we have to measure how useful their programs are? How useful will the roads that they build be? Is welfare really doing its job? I am a firm believer that if it relied on donation -- then there would be more pressure to give it to only the people who really need it. As for unemployment insurance -- hey, we can pay for unemployment insurance out of our pocket (we already are...face it) -- except the government has a monopoly on it!
However, this is only ONE type of ratcheting. I just read about another one that kind of makes me angry too -- it is automatic raise that government employees get at the end of each year to account for the supposed inflation here.
As I read this, memories of my roommate who worked for the government, and him telling me about two co-workers. One co-worker, everyone in the department knew that he had all the answers, he knew how to solve the problems they have. So everyone went to him. But...he was only paid something like $50K. Meanwhile, the other guy he worked with was paid $70K (because he worked longer), and did almost nothing. He knew almost nothing about his job, and all too often, the former guy picked up the slack and did his job for him!
Such is a waste of the government. If this was a private business, I think that $70K salary would be lower, or that guy would be fired. But not in the government -- it is almost like everyone there are "entitled" to work there for the rest of their life. Something isn't right. | | |
| Where's our liberty?Nidan posted a excerpt from Obama's campaign in which O is reaching out to conservatives. See here.
When I got to the part where it said that Obama supports governmental regulation on charity's hiring and firing decisions -- like faith-based charities cannot hire or fire somebody based on faith, I was thinking "no way!" Because think about it -- if we have the big brother telling us who we have to accept for employment, I'd say that isn't freedom. True liberty means you can hire or fire somebody for ANY reason. Unfortunately, I don't think that we really have that, and I know some would argue that we shouldn't have that.
However, shortly after I read that, I thought "wait a minute, whose money is being used here?" Therein lies the root of the problem: if you are a charity, and you accept federal grant money -- you don't have freedom. At least in the portion of the activity that is federally funded. Actually...I think that if they are going to fund charity -- how about cutting out the whole enchilda of tax, and letting the people decide for themselves where their money ought to go? I'd argue that letting people decide where their money ought to go would be more effective since I have yet to meet a donor who donates to a charity that they don't think is doing good work! Oh, and while we are at it -- tax deductible status should NOT limit anybody's freedom. Unfortunately, it does -- if you are tax deductible, you aren't allowed to, for instance, campaign for or against any political candidate. I hope it doesn't get worse than it is currently, since I think that is bad enough. Because of this tenet, I have a love-hate relationship with tax deductibility.
What's more is -- like it or not, even people who work for profit are doing good work. That is why they are getting paid -- because someone values their work enough to part with their money in order to benefit from its service. That is why libertarians have said something along the lines of instead of giving food to the poor in third-world country, why not hire them? Think about that for a moment -- how do we hire the poor in third-world countries? They often sit on top of fertile land that can EASILY grow lot of food...if they had the incentive to grow it. Unfortunately, they don't grow food, and we pay them to NOT grow food. We have import tariff that makes importing their food more expensive than food here, then we turn around and send them food because they don't have enough. I'd think that the poor over there would much prefer to produce their own living rather than accept handouts. What say you? | | |
| Sometimes people just don't understand.I had an experience today where I was trying to explain to someone for almost an hour about how to split a series of bills. What happened is...we wanted to split 50-50. We agreed that 50-50 was $120. With me putting in $196 at that point, and him $44 (check the math yourselves, that add up to $240). I tried to convince him that to break even, he only needed to pay $76. I couldn't get him to understand that in order to both pay $120, we need to first subtract how much he had paid so far, which was $44! We'd keep getting to $120 as the 50-50, but when it came time to "how much does he owe", he kept thinking we can't subtract what he already paid! He kept insisting that I ought to take the $120 -- it was like the $44 he has already paid doesn't count towards the halfway point 
It seemed quite obvious to me...and considering I was #1 in my high school graduating class in math, I'd think people should trust me to know how to split series of bills . Well, I didn't use that as an "evidence" -- I much prefer to be able to explain it so the other person understands. Oh well, we did come up with a solution that I think is "close enough" -- in which we both think that the other person paid more than necessary, and not worry about it. We both more or less agreed that if we are wrong...too bad Isn't it amazing that in spite of not being able to agree on the math, we still settled on something nonetheless?!?
But you know what hit me after this situation. I thought, "hey, how often do we all debate politics, and nobody agrees?" Consider that politics is FAR more complicated than splitting bills fairly -- how many situations in our lives do we THINK we know what we are doing, or we convince ourselves that we know something, but we don't really? Think about it -- if some people cannot "get" something that can be proven to be correct or incorrect (like mathematics), how much confidence can you really put in people's ability to determine what laws will actually make the desired changes they are looking for?
Indeed, I see few instances of things in politics where things just quite simply aren't what they seem. And all too often, they wind up being at the heart of endless debates since everyone thinks that their understanding is the correct understanding.
Here is a few counterintuitive bits:
1. Sometimes cutting taxes actually CAN bring more revenue into the government. How counterintuitive is this...
2. I read somewhere that...the economic stimulus bill -- the refund you got in May actually hurted the economy, not help it!
3. Raising minimum wage can actually hurt the poor by pricing their job out of the market and/or raising the price for the lowest priced items.
4. Vitamin and minerals added to food doesn't actually help us. Despite the fact that cereals are often fortified with "nutrients", lot of those nutrients aren't usable. Read the information on calcium absorption and how some food inhibit our body's ability to consume calcium.
5. Raising food price does not necessarily help the farmers!
That is just starter. Caveat here is -- I'm not sure I believe all of them (especially #2), but I think one thing is quite clear: sometimes there are simply too many moving parts that it is very difficult to really understand conclusively the full effect of any policy that is made. Sorry, but I cannot say with absolute certainty what policy is the best in every situation, and I doubt you can either. I can only say what I believe is best. Every law that are passed to regulate, or otherwise manipulate the market have side effects. Some of them are good. Some of them are actually worse than the problem it aims to cure. And still others actually makes the problem it aims to cure worse.
Anybody who tells you that they truly do understand...
They might be one of those who don't understand. And watch out because maybe that someone is you! This is something that I keep a lookout for -- am I missing something? Unless you are God, it isn't worthwhile telling anybody they are wrong no matter how convinced you might be.
-Tim | | |
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