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November 14, 2005

John Edwards lessons

From a recent article in The Nation, here are the lessons of John Edwards (plus two more that were there but weren't in the count):

  1. Think big.  Think big things that unify America.
  2. Move beyond self-interest.  Support big, moral causes that take people beyond their own self-interest and bring the community together.
  3. Inclusive vision.  Have a vision for the whole country, not just blue states; rural, not just urban; poor white as well as poor black.
  4. Lead from strength.  People respond to strength and leadership: leaders who have the backbone to stand up for something they believe in.
  5. The world is different.  Post Katrina, people see that we need government, it's just not working; government haters can’t run a government; how to compete globally with China ascendency and limited resources; falling real wages and growing financial and health insecurity.

Book: The Battle for the Soul of Capitalism

John C. Bogle: The Battle for the Soul of CapitalismJohn C. Bogle: The Battle for the Soul of Capitalism (Bogle is the founder of the Vanguard mutual funds.)

A commited capitalist and Republican, Bogle’s premise is that the current financial system is in need of an overhaul in approach and new regulation.  The problem he sees is that stock ownership, which provides governance oversight of management, has become both so diffuse (lots of little owners) and so remote (via mutual funds, etc.) that owners don’t have the ability or interest in ownership duties.  Because they don’t, “ownership capitalism” has been replaced with “management capitalism” and the executive suites are robbing owners by diverting unreasonably large amounts of owner returns to managements' own compensation.  This is bad because the people taking the risk (owners investment $) aren’t getting appropriate returns and eventually the system will implode from manager greed.

Bogle presents a variety of recommended principles, including regulations requiring mutual fund companies to take a fudiciary trustee responsibility to maxmize investors return, just as a pension fund trustee has the same responsibility, as well as several recommendations for changes to give the investor owners real say in board composition and proxies for things directly affecting their ownership rights (as opposed to ordinary-course-of-business), such as executive compensation, etc.

An extensive section on how executives are not paid for performance and how the current compensation system is rigged to ramp up executive compensation regardless of results.  He makes several proposals for compensation being based on out-performing peers or market results (so doing better than others even in a declining market is rewarded), indexed over time rather than fixed-price options.

I would like to have seen more specifics on how damaging excessive pay is to shareholder value, as opposed to generalities.  He argues from the corrupting influence extraordinary returns have, plucked from the many headlines, and how they have devestated shareholder value.  But even without near-total implosions ala Enron, I would have added things like:

  • every $1M paid is 10 fully-loaded people, so paying an exec $10M extra is like killing a 100-person R&D team that would otherwise have been designing the next generation products; or that
  • $10M, post tax is $7M which means (1) in less than a year they earned more then their typical employee will in their entire life and (2) they could retire immeditately and still live in the top 1% of the world for the rest of their life: on $350,000 a year!

November 09, 2005

Re: Kansas Board Approves Challenges to Evolution [NYT]

[Re: Kansas Board Approves Challenges to Evolution 11/9/2005]

To the Editors of the New York Times:

The Kansas School Board requires teaching the “controversy” about whether life on earth has evolved.  With the principle established, let’s apply the standard to every part of the curriculum.

Creationists dispute radioactive carbon dating: a “controversy” that physics isn’t real.  They say fossils can’t have formed by chemical replacement over millions of years: we’d better warn our kids that chemistry may not exist.

Most of history is just things written down by people who weren’t there, so off with its controversial head!

No one has produced an authenticated birth certificate for Jesus Christ and there are billions of adherents with competing claims for God, so “controversy” stickers must be placed on any bible, Koran, or other document making theistic claims that children might see.

The Board’s lesson?  There are no facts, just opinions; every kid should be free to choose to believe what they want.

Heavens, it makes you wonder why we have public schools anyway when it is all just some fluff that those darn liberals made up to confuse us!  With no facts to burden us, our minds will be free at last!

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