Keep you doped with religion and sex and TV
And you think you’re so clever and classless and free
But you’re still f#@&ing peasants as far as I can see
A working class hero is something to be
- John Lennon, Working Class Hero
The new trend in books and documentaries seems to be exposing the inequality gap that exists in the United States. Robert Reich, in the documentary Inequality for All makes the case that income inequality has risen to crisis levels. In 1978, according to Reich, a “typical male worker” made $48,302, while the typical top 1 percenter earned $393,682, more than eight times as much. In 2010, the same worker’s wage fell to $33,751 while the typical top 1 percenter earned more than $1.1 million, 32 times the average earner.
In “Who Stole the American Dream?”, Hedrick Smith explains how the middle class prosperity after World War 2 starting reversing in the 1980′s, continuing in the 1990′s and 2000′s. Between 2002 – 2007, according to Smith, the top 1% got two-thirds of the U.S. economic gain with the bottom 99% getting one-third.
In Park Avenue: Power, Money, and the American Dream Alex Gibney contends that America’s rich have “rigged the game in their favor,” and created unprecedented inequality in the United States. As of 2010, according to Gibney, the 400 richest Americans controlled more wealth than the bottom 50 percent of the populace — 150 million people.
Nobel Prize winning economist Joseph Stiglitz, in the article “Of the 1%, by the 1%, for the 1%” writes:
Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.
Newsflash. Somehow, somewhere along the line, somebody forgot to tell you that “middle class” is a historical anomaly. Throughout history, you were either dirt poor or filthy rich depending into which class you were born into. Being part of the “middle class” is not a right, nor is it the norm. Being part of the “middle class” is a historical anomaly. “Middle Class” is a recent invention. The Treaty of Detroit is dead, replaced by the Washington Consensus. Absent government regulations, the income inequality trend will continue. Frank Levy and Peter Temin put it this way in “Inequality and Institutions in 20th Century America”:
If our interpretation is correct, no rebalancing of the labor force can restore a more equal distribution of productivity gains without government intervention and changes in private sector behavior.
Freedom, Freedom, Freedom, (Oh) Freedom
Everything I have, everything I own
All my mistakes man, you already know
I wanna be free, I wanna be free
- Akon, Freedom
I’m surprised that people are surprised that the National Security Agency (NSA) intercepts and stores electronic communications – emails, phone calls, texts and other electronic communications – without warrants or suspicion of wrongdoing. To be fair, Congress amended the Foreign Intelligence Surveillance Act (FISA) in 2008, giving the NSA a green-light on conducting this type of surveillance. No warrants needed. No probable cause. Retroactive immunity for disclosing Americans’ communications.
Blah blah blah. This is old news. Wired reported last year that two companies linked to Israel’s intelligence service provided hardware and software to wiretap the U.S. telecommunications network for the NSA. Verint taps the communication lines at Verizon, and Narus taps the communication lines at AT&T allowing it to record and reconstruct all emails, attachments, pages that were clicked on, and VOIP calls. Other old news is that Facebook’s chief security officer left the social media company in 2010 to work for the NSA. Need more signs? CIA’s in-house venture capital company, In-Q-Tel, invests in many high tech start-ups. Long rumored but unproven, your favorite search engine and social network might have been built with funding from the government themselves.
People are upset. You can see it in the news, in the endless debates on TV, radio and internet: “Warrant-less searches, whether electronic or in person, are unconstitutional. And wrong. It’s becoming a police state. It took a foreign newspaper to blow the cover off this. Where was the American media? The people should know what’s going on.”
These debates are akin to other debates in that they simplify complex issues to the point of an “either or” or “yes and no” answer. There are no in-betweens. You are either a Republican or a Democrat. You are either for or against abortion. You are either for or against gun-rights. You are either for or against gay rights. You are either for or against military intervention. And so on.
I’m all for debates and discourse, however debates only simplify otherwise complex issues to make it understandable to the average viewer or reader. The average viewer or reader wants a simple Yes or No. The average reader wants 140 characters. The average mind wants to simplify an issue and put it in either column A or column B. Like it or Unlike it, and move on with their lives.
What does all this have to do with the NSA, wiretapping, and national security? Here is the bottom line: National Security is not an area that can be left to simplification. Simplification, for the sake of simplifying an issue to fit one’s worldview does not apply to National Security. National Security is not a “are you for it or against it” issue. National Security is a survival issue. National Security is a life and death issue. National Security is an economic issue.
Every nation has a right to look out for its own national security interests. If a nation is not looking out for its interests, it is, by default, giving up its right to decide the outcome. If a nation is not looking, it is, pure and simple, not protecting its national interests.
I do not want to live in a country that does not look out for its own national interests.
It’s a beautiful day
Sky falls, you feel like
It’s a beautiful day
Don’t let it get away
- U2, Beautiful Day
According to an analysis of surveys by Christian Kroll of Jacobs University in Germany and Sebastian Pokutta of Georgia Tech, people could achieve greater happiness by spending fewer minutes each day working and commuting and more minutes having intimate relations.
The researchers found that a day organized for maximum happiness would include 106 minutes of intimate relations, 82 minutes socializing, 78 minutes relaxing, 75 minutes eating, 73 minutes praying or meditating, 68 minutes exercising, 57 minutes talking on the phone, 56 minutes shopping, 55 minutes watching TV, 50 minutes preparing food, 48 minutes computer use, 47 minutes housework, 46 minutes napping, 46 minutes caring for children, 36 minutes of work, and 33 minutes of commuting.
My opinion? 36 minutes a day working? 33 minutes a day commuting? Wishful thinking if you live in SoCal.
Talking to the people in a congress
A we vote you in, so you must put out your best
After all we no in a contest
It’s the state of the union address
- Thievery Corporation, The State Of The Union
Some say that this century will be called the Chinese century. I, for one, do not believe it. I believe that the United States is repositioning itself on a path of continuous growth for the coming decades. Why am I so bullish? Energy.
By 2020, the United States will displace Saudi Arabia as the world’s largest oil producer. Around 2030, we are projected to become virtually self-sufficient in oil and become a net oil exporter. All the while, we are becoming a natural gas superpower.
What does this mean for the U.S. economy?
1) The long-standing U.S. trade deficit will narrow and might disappear over time as energy exports increase.
2) Domestic manufacturing will revive due to the abundance of cheap energy (especially natural gas) which will attract energy-intensive industries such as aluminum, paper, iron, steel, or petrochemicals, where feedstock costs can represent over 80 percent of total operating expenses.
3) Unemployment will dip as manufacturing jobs are reshored to the states due to supply chain and logistical advantages and increased worker productivity. Higher oil prices have increased the cost of shipping goods across oceans, making domestic manufacturing more appealing. Rising wages and other forces are eroding China’s once-overwhelming cost advantage. BCG estimates that around 2015 it may start to be more economical to manufacture many goods in the United States.
Now we see everything that’s going wrong
With the world and those who lead it
We just feel like we don’t have the means
To rise above and beat it
- John Mayer, Waiting on the World to Change
I’m currently reading a book on leadership by Barbara Kellerman, the James MacGregor Burns Lecturer in Public Leadership at Harvard University’s John F. Kennedy School of Government. The book, The End Of Leadership, talks about the disconnect between leadership theory and practice. The book strikes a cord with me because I too have questioned the gap between what is being taught and what is actually practiced. As customer demands increase year after year, companies will need to become more efficient, more effective, and more proactive. Leaders at the top of the organizational chart will not be able to meet the challenges by themselves. Companies of all sizes will need leaders at all levels of the organization – team, strategic, and operational – to meet the growing demands and opportunities. The pressure for companies and individuals to become more efficient and more productive can make leaders cut corners and make questionable decisions.
Some years ago I wrote a paper comparing and contrasting the different leadership theories, their limitations, and what they mean for today’s leaders. The leadership theories discussed in the paper (trait-based, situational, transformational) try to explain how one becomes a leader. How is one a leader? Why are people following that somebody? And what do all of these leadership paradigms mean? In light of today’s corporate scandals, I wanted to revisit the leadership topic and ask whether these leadership theories are all flawed. If so, what can begin to replace them?
Leadership, in a nutshell, is organizing a group of people to achieve a common goal. Trait-based theories represented the earliest attempts to quantitatively study leaders and leadership effectiveness by focusing on the innate skills and traits of the person (leaders are born, not developed). Situational theories expanded to explore the influence of different situations on leadership (different situations call for different characteristics). Transformational leadership theories, the leadership paradigm employed by most leaders today, expand on the role of the leader as a moral exemplar in leading followers through selflessness, inspiration, articulation of an energizing vision and challenging goals, all the while working towards the benefit of the team, organization, and/or community (selflessness, inspirational motivation, intellectual stimulation, individualized consideration).
Transformational leadership has spread in all areas of our lives. Many leadership training and development programs are based on the theory of transformational leadership. The leaders of today are taught to motivate, inspire, act transparent, and look at the big picture when making decisions. Sounds good in theory, but does it happen in practice?
In the past three months alone firms in Great Britain and the US have agreed to pay out over $10 billion because of wrongdoing. Recent corporate scandals and banking scandals at the highest levels of management , and the biggest consumer fraud in history carried out for decades has brought to question whether human nature can be transcended by selfless leadership paradigms. Faced with making profits or playing by the rules, it seems that the corporate leaders have chosen profits. Leadership, Emotional Intelligence, Morals have shown themselves to be wishful theories taught across college classrooms. In the real world, it seems, practice differs from theory. As noted in this article and others, the scandals over the past years include:
Barclays was fined £290 million for rigging Libor, which helps set interest rates across the globe.
Goldman Sachs agreed to pay $550 million in July 2010 to settle civil fraud charges brought by the Securities and Exchange Commission. The SEC said Goldman had misled buyers of mortgage-related investments. Under the agreement, Goldman said it would pay $300 million in fines to the SEC and the rest of the money would go to compensate those who lost their investments. It was the largest penalty against a financial company in SEC history.
Countrywide Financial Angelo Mozilo, the co-founder and CEO of the failed mortgage lender, agreed to a $67.5 million settlement with the SEC in October 2010 to avoid a trial on civil fraud and insider trading charges. He was accused of misleading investors about the health of Countrywide’s mortgage business. The SEC said Mozilo also sold $140 million in Countrywide stock while he had inside information about the company’s increasing risk from bad home loans.
JPMorgan Chase The nation’s largest bank agreed in June 2011 to pay $153.6 million to settle civil fraud charges brought by the SEC. The bank was accused of misleading buyers of complex mortgage investments just as the housing market was collapsing. The SEC said that a division of the Wall Street bank failed to tell investors that a hedge fund helped select the investment portfolio and then bet that the portfolio would fail.
CitiGroup The bank in July 2011 agreed to pay $75 million to settle civil charges with the SEC that it had understated Citi’s exposure to risky subprime mortgages. Former Citigroup Chief Financial Officer Gary Crittenden agreed to pay $100,000 in civil penalties and Arthur Tildesley Jr., the bank’s former head of investor relations, agreed to pay $80,000 in civil penalties. The two were accused of failing to disclose more than $50 billion worth of potential losses from subprime mortgages.
Citigroup also agreed to a separate $285 million settlement with the SEC. The SEC alleged that Citi steered investors toward a complete mortgage investment that it bet against in 2007. But the deal was struck down in November by a federal judge in New York City who said he could not determine whether the deal was fair.
The SEC in February 2011 brought civil fraud charges against three former IndyMac executives. Blair Abernathy, a former chief financial officer, agreed to pay more than $125,000 to settle the charges against him without admitting wrongdoing. The SEC charged Abernathy and the other two executives of misleading investors about the mortgage lender’s finances before it collapsed in July 2008. The collapse and seizure by the government of IndyMac Bank with about $30.2 billion in assets was one of the biggest bank failures in U.S. history.
Robert Reich, former U.S. Secretary of Labor, sums up the recent scandals as a crisis of public morality:
We’re in trouble because CEOs are collecting exorbitant pay while slicing the pay of average workers, because the titans of Wall Street demand short-term results over long-term jobs, because America’s biggest banks continue to make irresponsible bets with other people’s money, and because of a boardroom culture that tolerates financial conflicts of interest, insider trading and the outright bribery of public officials through unlimited campaign “donations.”
Our crisis has nothing to do with private morality. It’s a crisis of public morality – of abuses of public trust that undermine the integrity of our economy and democracy and have led millions of Americans to conclude that the game is rigged.
Some studies have shown that 10% people working in the financial sector exhibit symptoms similar to psychopaths, with some saying it’s even higher. In an influential paper on the economics of crime, Gary Becker of the University of Chicago set out a framework in which criminals weigh up the expected costs and benefits of breaking the law. The expected cost of lawless behavior is the product of two things: the chance of being caught and the severity of the punishment if caught. This framework can be used to examine the appropriate level of fines, and to see if there are ever reasons to exempt companies from fines.
Can business leaders transcend human nature and become transformational leaders with integrity? Or is transformational leadership just another ‘feel good’ theory, ‘doing the right thing when everybody is watching’ while doing business as usual when no one is watching? While transformational leadership advanced the notion that leaders should be self-less in order to build follower commitment, recent leadership scandals paint an opposing picture. Now, more than ever, researchers need to examine the relationship between leadership theories and human nature, and ask: “Is transformational leadership compatible with the human nature? If not, what new paradigm can begin to replace it?”
If I got to choose a coast I got to choose the East
I live out there, so don’t go there
But that don’t mean a n&*#$@ can’t rest in the West
See some nice breasts in the West
- Notorious B.I.G, Going Back to Cali
Have an idea you want to make happen? Tired of reading about the movers and shakers that are making stuff happen? First, get off Facebook. Secondly, create something. Anything. Just get off the couch and stop checking those Facebook notifications.
I love LA. Not just for the weather. Or the fast paced lifestyle. Or that I work harder. Or that I’m more efficient. I love LA because it is the content creation capital of the world. Content creation – media, entertainment, tech, networking – is the lifeblood of this city. It is exciting. LA produces content. The rest of the country consumes the content. LA pushes. The rest of the country pulls. LA innovates. The rest of the country follows.
Most people consume all day. That is why they’re called consumers. Consuming products/services won’t make you a penny. Playing Farmville all day? Consuming social media news 24/7? Watching the reality TV shows all day? Playing the latest Playstation or XBox game? Reading the latest Stephen King book? That won’t make you a penny.
Creating content will make you money. You have to create the content to make money. If you want to create wealth, create content. Any content. Audible. Edible. Visual. Culture. Knowledge. Information.
Am I saying that everyone should start their own company, or for that matter, that everyone is capable of creating content? I am not. Furthermore, the economics wouldn’t work out if everybody was creating and not consuming. The good news is that in the real world, only a tiny percentage of people are capable of creating content. Within that, an even smaller percentage will actually create something. Be one of them. As Bruce Lee said:
Now that ain’t workin’ that’s the way you do it
You play the guitar on the MTV
That ain’t workin’ that’s the way you do it
Money for nothin’ get your chicks for free
Money for nothin’ get chicks for free
- Dire Straits, Money for Nothing
Now is the time to be an entrepreneur. The time has never been better to create something and get it out to the marketplace. Have a service or good that you produce? Want to cut out the middleman? Become an entrepreneur. The tools for forming and creating your company have never been cheaper. It is a buyer’s market from capital to talent to knowledge. Here’s why it’s a good time to become an entrepreneur.
1) Money is cheap
The capital to start a business has never been cheaper. The Federal Reserve is writing checks for free through quantitative easing. The long term policy of zero-bound interest rates for an extended period of time is bad for savers and those on fixed incomes. To those looking to finance businesses or start a new venture, the Fed’s actions mean one thing: cheap money.
In “A World Awash in Money”, Bain & Company estimates that total global capital will expand by 50% to $900 trillion in 2020 (from $600 trillion in 2010). That, in no small part is due to the emerging economies developing their own financial sector. The world’s GDP will increase by $27 trillion over the same period, from $63 trillion to $90 trillion. The excess capital will need to be parked somewhere – investments, realty, start-ups, etc. Entrepreneurs stand to grab a big piece of the pie as investors look for riskier and riskier investments with higher ROI’s.
2) New consumers from developing markets
It’s estimated that by 2020, consumers in China and India will generate about $10 trillion of total annual revenue for companies selling to them. Yes you read that right. There will be nearly one billion middle-class consumers in China and India within the next ten years. These two countries are a big opportunity for American businesses and entrepreneurs. Both markets are experiencing unprecedented growth. Indians are growing their per capita income from $1,000 to $4,000. Chinese are growing their incomes from $4,000 to $12,000.
Another opportunity for entrepreneurs are the developing BRIC countries (Brazil, Russia, India, China). By 2027, the emerging BRIC economies will overtake the G7 economies. By 2050, the BRIC countries could eclipse the combined economies of the current richest countries in the world.
3) The Internet has leveled the playing field
The internet has made it possible for you and your business to appear as big as the multinational company down the street. By 2016, there will be 3 billion Internet users globally—almost half the world’s population. The Internet economy will reach $4.2 trillion in the G-20 economies. If it were a national economy, the Internet economy would rank in the world’s top five, behind only the U.S., China, Japan, and India, and ahead of Germany. Consumers want a good deal. You are there to give them the good deal. The internet is the medium of exchange. Give the consumer choices, convenience, and they will come. The rise of online buying is eroding store traffic, forcing retailers to rethink their costly real-estate assets and merchandising formats. To succeed, retailers must determine what their customers value and are willing to pay for—and go out of their way to provide it.
4) Human capital is cheap
The economic meltdown has left former professionals and ‘company men’ in look for work. Everybody has had to take haircuts or work for less. The glut of professionals is a boon for entrepreneurs looking to add talent to their new venture. Find the ones with similar interests as yours and start a business. Need a legal contract, logo, website or some programming done? How about some graphic design or advertising? Not a problem.
5) The government wants you to start a company.
There are different loans for different needs. The U.S. Small Business Administration helps businesses grow and access capital. Federal initiatives, like the Small Business Innovation Research (SBIR) program, awards grants to high-tech small businesses or start-ups to carry out R&D and bring innovative technological products to market. Grants.gov has a searchable directory of more than 1,000 federal grant programs. You can search for a grant by eligibility, issuing agency, or category.