Wednesday Highlights

Good morning.

  1. Over four years late … Obama background begins to be investigated.
  2. Politics 101: How not to spin.
  3. OK. I get it you didn’t like the paper (linked a few days ago). But, geesh, when criticizing a paper isn’t it bad form to use wrong/bad examples, i.e., house construction is not “bloated” because rents are going up … except why might rents go up? Could there be reasons other than a underultilization of construction resources? Perhaps because people aren’t buying because (with good reason) don’t trust property values to be stable yet? I’m no economist but that argument was just plain dumb.
  4. Simple analysis of musical forms.
  5. My first thought after seeing this is, well, Biden is worse … what ya complain’n about?
  6. A political commentator whose never heard of Sarbanes Oxley apparently. Actually, that’s just the tip of the iceberg. You don’t have to scratch hard at all to find anti-business in the beltway.
  7. Not enough information and cheap puzzles.
  8. Transliteration vs translation and maps.
  9. Tort and adultery.
  10. Hack spit. SAY WHAT? Let’s see, a policy success for the US, China threatens a man’s wife, he leaves the protection of the US embassy … and that somehow somewhere is a policy success?
  11. Tripos (whatever that is) entertainment continues.
  12. A good question, what does it take to get a higher rating?
  13. What they don’t tell you is high reps (20+) to failure is amazingly painful compared to 4-10 rep to failure weights.
  14. Atheists, believers and damned lies akin to statistics.

27 responses to “Wednesday Highlights

  1. 1.Over four years late … Obama background begins to be investigated.

    The background is that before he got married, in his early 20’s he had a girlfriend? Sounds more like biography to me than investigation.

  2. 3.OK. I get it you didn’t like the paper (linked a few days ago). But, geesh, when criticizing a paper isn’t it bad form to use wrong/bad examples, i.e., house construction is not “bloated” because rents are going up … except why might rents go up? Could there be reasons other than a underultilization of construction resources? Perhaps because people aren’t buying because (with good reason) don’t trust property values to be stable yet? I’m no economist but that argument was just plain dumb.

    He has gone into housing in much more detail, of course, and yes housing is simply not bloated. If anything we have gotten to the point of not having enough houses just as in the midsts of the auto crises we were buying cars at a rate that was too low….unless the population had suddenly decided to drive cars for 40 years before buying a new one.

    But leaving it to just the one factoid of rents going up, it’s kind of hard to see how the housing industry could be building too many houses but rents going up? An analogy may be the dot com crash in 2000. When the dot com bubble burst, it became clear that way too much fiber optic cable had been set down. Like your hypothetical I would imagine few companies would want to *own* cable….they would rather rent it when they needed because who wants to own an asset that’s been so overbuilt. Yet data transfer rates didn’t go up, they went down. Even with people opting to rent over owning cable, too much cable means the price to rent cable has to fall. Likewise I think it’s probably impossible for you to come up with a plausible explanation for how we can have too many houses AND rents are going up.

    Rajen has an obligation to explain how he has determined that we have ‘too many houses’ and he should explain why he is able to determine this but the market seems unable to do so, insisting on foolishing pricing rent too high and building more houses when none are needed.

  3. Boonton,
    Let me know your distinction between investigating background information about a candidate’s early life and biography.

  4. Boonton,

    Likewise I think it’s probably impossible for you to come up with a plausible explanation for how we can have too many houses AND rents are going up.

    Uhm, I did that, oddly enough. Rents would go up if there was a shortage of rental units even if there was a glut of non-rental properties if people feel that non-rental housing prices are going to fall again. I don’t know why that doesn’t make sense to you. You might explain how you don’t understand my explanation.

    … building more houses when none are needed.

    Isn’t that not “building new houses” but houses unsold on the market?

  5. Bush I and II, Romney, Palin, Santorum….can you name the people they had romantic relationships with in their early 20s (marriages don’t count).? To my knowledge this information is not widely known, although it might be in a ‘big book’ biography of some of these people. This would indicate that Obama’s treatment would seem to be no different than other Presidents and candidates.*

    * ‘Treatment’ here also supposes the media is the cause. Clearly if someone who dated, say, Sarah Palin when she was a teen or a 20-something came forward to talk about it that would be an action on his part, not so much the media itself.

  6. Uhm, I did that, oddly enough. Rents would go up if there was a shortage of rental units even if there was a glut of non-rental properties if people feel that non-rental housing prices are going to fall again.

    what exactly is a ‘non-rental house’? Any house that can be owned can also be rented. As a matter of fact, any house that is rented has to be owned by someone.

    Isn’t that not “building new houses” but houses unsold on the market?

    So Rajen is saying we have too many houses, not that we are building houses that we don’t need. Yet why does he also say we have to ‘adjust’ to moving workers out of the housing building sector. whose paying construction workers to build new unneeded houses if we aren’t building unneeded houses? And if you have an empty house that you can’t sell why wouldn’t you put it out for rental thereby competiting against other rental units, esp. if rental income was going up?

    You haven’t accomplished what you think you accomplished, presenting a coherent case where one might have ‘too many homes’ but see rents increasing. I’m skeptical that it can really be done but if you do manage to pull that off the next task is to show how that explanation applies to the world we actually live in right now.

  7. Boonton,
    When Palin was in the news there was talk of her former paramours. I think my remark “newsflash: women athletes date male athletes” was a response to one such announcement. We know/knew found out quite a bit about W’s former career, alcoholism, his recovery and his wife’s involvement, his college career, his military record. I think collegiate “playboy” was a term used, and if journalists were credible this had to be backed up with data. Riiight. I’ll bet you’ve heard, even casually, more about Romney’s family history than you have about Mr Obama. W’s college record and grades were examined and compared to his opponents (Gore/Kerry). No different, eh?

    Clearly if someone who dated, say, Sarah Palin when she was a teen or a 20-something came forward to talk about it that would be an action on his part, not so much the media itself.

    Is this your way of excusing the “tell all” biography that came out and was trumpeted in the news media? Let’s see, the news media was dumpster diving Ms Palin’s abode and hotels. When did they do that for Mr Obama if your suggesting treatment is even handed.

  8. Boonton,

    You haven’t accomplished what you think you accomplished, presenting a coherent case where one might have ‘too many homes’ but see rents increasing.

    I’ve said people might rent and not buy because they don’t trust the stability of the housing prices. This could cause rents to rise in a environment where construction is falling and houses are not being bought. You haven’t actually offered anything that contradicts that.

  9. Boonton,
    Your argument is that you can’t imagine (odd that) how rents might go up but where housing prices/demand does not. Imagination, fail?

  10. We know/knew found out quite a bit about W’s former career, alcoholism, his recovery and his wife’s involvement, his college career, his military record. I think collegiate “playboy” was a term used, and if journalists were credible this had to be backed up with data. Riiight. I’ll bet you’ve heard, even casually, more about Romney’s family history than you have about Mr Obama

    Palin might be an exception in that we know a tad of her dating life….and to what degree do we know this because it was investigated versus people actually coming forward to say they dated her?

    You’ve confirmed my statement regarding Romney and W., didn’t try to address Santorum but I’d imagine it would be the same story. You can’t say much of anything about who, if anyone, they dated in their early 20’s (excluding marriage(s) which are public records). Regarding Romney’s ‘family history’, you gotta be kidding me. Not only was Obama’s story well known from his books, the media went all over town finding distant relations in Nigeria and the US and even his biological mother has a full book length biography.

    Is this your way of excusing the “tell all” biography that came out and was trumpeted in the news media?

    Wasn’t aware it needed an excuse? Why would it need to be excused?

    Let’s see, the news media was dumpster diving Ms Palin’s abode and hotels.

    That must be a big dumpster if the entire news media was diving it. And why exactly would she need a dumpster for her ‘abode’ (I assume you mean house)?

    W’s college record and grades were examined and compared to his opponents (Gore/Kerry).

    Really? Where exactly can I find Romney’s grades? Where exactly can I find McCains? If you’re talking about the hands not being even then I should be able to locate grades for those two on Google but be unable too for Obama. If I can’t locate grades for all 3 then you have evenhandedness.

    Housing rent v. price

    I’ve said people might rent and not buy because they don’t trust the stability of the housing prices. This could cause rents to rise in a environment where construction is falling and houses are not being bought.

    If people don’t want to buy a house, then the price of homes will drop. But if the price of homes drops, then rent.v.buy decision changes in favor of buy. If rents go up, the rent.v.buy decision is likewise pushed towards the buy side.

    Your argument is that you can’t imagine (odd that) how rents might go up but where housing prices/demand does not. Imagination, fail?

    No more like I’m not obligated to use my imagination to fill in the holes of your argument (or the arguments of people you like). If you want to say an increase in rent prices is not a market signal that we need more rather than fewer houses then it’s you’re case to make, not mine. I think the orthodox economic theory is a better fit for reality here, not Mr. Rajens or yours (if you accept his view).

  11. Notice in terms of evenhandedness Mark failed to meet the challenge I set out. If the test is who did the person date when they were 22 we have no consistent data from the news media about that. Mark thinks he recalled hearing something about Palin and that’s about it. So in that respect we have more info about Obama now than we do any of the other major candidates.

    He then tries to change the goalposts. We heard about W’s drinking, but not about Obama’s. But what if Obama never got himself into trouble with drinking the way W did, there would be little, if any, information to report? His idea of balance here is quite unbalanced. He seems to think that if it’s reported that, say, Newt Gingrich is a oversexed creep, then it’s unfair not to report that everyone else running isn’t also an oversexed creep. I think balanced should mean its reported that you’re an oversexed creep if you are and it’s not if you’re not.

    Regardless, now you know that when Obama was 22 he had a girlfriend (assuming, of course, that this woman’s story is true and she just isn’t trying to cash in on having been in the same place at the same time as someone else who ended up becoming famous).

  12. Sarbanes-Oxley has been great for at least some businesses. Particularly for PriceWaterhouse, Deloitte, E&Y, and KPMG; also for a bunch of law firms. It’s probably been a net benefit for brokerages like Morgan Stanley, E1, Merrill, etc., and for banks because of increased disclosure on the companies they invest their clients’ (and their) money in.

    Now, I agree that SOX is a real drag if you don’t want to file all those nasty, inconvenient, and expensive 10-Q’s for whatever reason, or if there are things you would prefer to to keep out of your annual stockholder report. And on a more serious note, I don’t dispute that compliance costs can be high, particularly for large companies. I’ve little sympathy for “small family companies” groaning under the burden of compliance, because SOX only applies to publicly-traded companies — and by definition these are not “small family companies” but rather companies big enough to be publicly traded even if they would prefer not to be.

    A fair look at the question of whether the benefits of the disclosure and reporting and resulting increase in stockholder and market confidence exceeds the compliance costs would suggest that the answer is, at best, unclear.

  13. Burt,
    I work in a small industrial automation firm. From a worms-eye view SOX sucks. My clients who are working for large firms that I interact with what SOX means is that the people in IT that I work with are hamstrung with a zillion regulations and constraints they deal with in doing their work. Your “I don’t dispute that compliance can be high” is basically a concession that this measure is anti-business.

    The real reason that there are no Legislators calling themselves “anti-business” is the same one that pro-choice people don’t call themselves pro-fetal-slaughter and/or pro-life people don’t call themselves anti-womens-rightists. They have positive justifications for their anti-business legislation, which may or may not be justified. But the fact remains that there are many many Legislators who, even in a time of recession, feel that restrictions on business is still a good idea.

    Recall, when Mr Obama asked (likely a rhetorical question) of some business leaders “what things is government doing that hamper you” he got a 10 (100?) page reply itemizing the anti-business legislation that businesses have to cut through to get their job done. That anti-business legislation was sponsored and voted to by … who? Well, frankly, by those anti-business legislators you pretend (naively) don’t exist.

    (Quote from Burt’s comment fixed … the Android dialog didn’t let me copy his original comment (or see it) in the WordPress app)

  14. Burt,
    Benefits to law firms, &c, is not exactly a shining commendation either. The difference between the economy now and the economy 200 years ago is automation. Via automation one person can do the work of many, in some cases hundreds of people 200 years ago. In turn this gives us cheaper stuff, it makes us all richer. By adding regulations and requirements which decrease the automation effect, requiring more people, be they lawyers or finance, is still a step backwards. If company X makes drugs, gears, bearings, or shirts … productivity is measured at the bottom line by few people can produce that thing, not how many or how transparently. Anti-business regulations are those that require that number to increase. Pro-business ones are those that allow it to shrink, because it is only in each of us being more productive do we as society increase our wealth.

    How then does SOX increase productivity. It, I offer, does not. It is a direct decrease of productivity. It is the essence of anti-business, like so many other requirements.

  15. Burt

    It’s probably been a net benefit for brokerages like Morgan Stanley, E1, Merrill, etc., and for banks because of increased disclosure on the companies they invest their clients’ (and their) money in.

    Actually I think it’s better for investors than brokerages. Brokerages make a bit of money processing transactions and more money selling their ‘advice’ to customers. Differentials in information are great for brokerages who can use their power to get the ‘inside scope’. Full disclosure is better for investors who can get the information themselves for free and use brokerages only for the run of the mill service of processing their orders.

    Now, I agree that SOX is a real drag if you don’t want to file all those nasty, inconvenient, and expensive 10-Q’s for whatever reason, or if there are things you would prefer to to keep out of your annual stockholder report.

    Most of these costs are already sunk. Once you, say, document your control systems and confirm they are secure that’s the bulk of the burden. After that ‘paperwork’ is a trivial expense when compared to the expenses of a large company. The benefits, though, of having well documented and tested control systems continue. 10-Q’s are filed by companies that are public and were not invented by SOX.

    Mark

    My clients who are working for large firms that I interact with what SOX means is that the people in IT that I work with are hamstrung with a zillion regulations and constraints they deal with in doing their work. Your “I don’t dispute that compliance can be high” is basically a concession that this measure is anti-business….

    You confuse the purpose of a corporation. The company exists not to make employees happy but to make money for shareholders. The key problem with a corporation is the agency problem….those who run a corporation have a conflict of interest in that they aren’t the ones who own it. Being ‘hamstrung’ then is a feature, not a bug of the system, like it or not.

    The difference between the economy now and the economy 200 years ago is automation. Via automation one person can do the work of many, in some cases hundreds of people 200 years ago. In turn this gives us cheaper stuff, it makes us all richer.

    This may sound paradoxical but the direct result of this will be most businesses will make money in services that either cannot be automated or can only be automated to a limited extent. Regardless, I doubt you could document any negative effect SOX has had on highly automated processes. In fact, SOX has probably been easier to implement in such businesses than in non-automated ones. Making, say, widgets, it’s rather easy to document what the input is, what the output is, where the cash is and who owes money and from whom money is owed. A firm that’s less automation friendly, such as a hedge fund or even a large law firm, these things become much more murkey and the requirement to document them feels and really is much harder. That doesn’t, though, mean doing so is not a useful exercise.

  16. Boonton,
    Burt pointed out that the costs are high. I concur.

    This may sound paradoxical but the direct result of this will be most businesses will make money in services that either cannot be automated or can only be automated to a limited extent

    This may come as a surprise to you, but most companies which make stuff don’t make their money hiring accountants, lawyers and IT guys whose job it is to document what they are doing in great detail. They make their money, oddly enough, selling stuff they manufacture and develop. Yes, making “widgets” is easy to document. But this isn’t a static world. If you think you can make widgets now, and keep making them the same, the same way and be in business 10 years from now … you’re living a pipe dream. Making yourself less flexible, less able to adapt and change how your widget is made, how it looks, is counter productive, or as Burt points out, it has a high cost.

  17. Boonton,
    The point is, “employment” isn’t the goal, productivity is. We’d all be 100% employed it we were all subsistence farming. But our standard of living would be slightly lower.

    Armies in the 17th century supposedly had 10 people in “support” roles for every one with a pointy stick in the field. Today we try to maximize the percentage of actives (ones with pointy sticks). Lawyers and accountants, and people hired for reporting purposes, from the point of view of a corporation are those in support roles. When the government requires more of that, it cuts, not helps productivity. That’s never good, less so in a recession.

  18. This may come as a surprise to you, but most companies which make stuff don’t make their money hiring accountants, lawyers and IT guys whose job it is to document what they are doing in great detail.

    Six Sigma. And no most SOX duties are not done by accountants, lawyers and IT guys hired specifically for SOX but are done by accountants, lawyers and IT guys who are…well working because a large enerprise needs accountants, lawyers and IT guys.

    The point is, “employment” isn’t the goal, productivity is. We’d all be 100% employed it we were all subsistence farming. But our standard of living would be slightly lower.

    So what are you trying to say here, that SOX has increased employment but lowered productivity? Or that SOX has destroyed jobs?

    Lawyers and accountants, and people hired for reporting purposes, from the point of view of a corporation are those in support roles. When the government requires more of that, it cuts, not helps productivity. That’s never good, less so in a recession.

    I think you’re missing something here, the tug of war between the corporation (owned by shareholders) and the people who run the corporation. The problem that SOX and numerous regulations before addresses is the conflict of interest that is inherit in this. The owners of the corporation are, believe it or not, at the mercy of those who run it. Since they have access to the nitty gritty details and control over the day to day operations the enterprise is essentially a ‘black box’ to shareholders. What did it do last quarter/month/year? Whatever the people running it say it did. Are there checks? Yes, auditors can confirm some basic datapoints like cash in the bank account, spot check some transactions, evaluate controls etc. That doesn’t change the fact that those running the ship have an edge over those owning it.

    To the degree that SOX aligns the enterprise with the goals and interests of its owners, and if you believe in the power of competition and the merits of private ownership then you should believe that assets are used most productivity when they are used with the interests of their owners rather than their users as the primary focus.

    This I think is where Burt goes off track. Take a very simple type of financial audit. You ask to see a list of employees who work at a plant and randomly ask to be introduced to several of them. You ask to see a list of suppliers to whom money is owed and then you mail those companies privately and ask for statements. Burt asks who gets paid for doing this and he correctly answers accountants, lawyers, IT guys and so on. He implicitly assumes, though, that his is done simply to provide ‘make work’ to highly paid white collar workers while slowing down the real productive workers by making them chase down information. But that neglects the reason why its done. It’s very easy for managers to add people to payroll for ‘no-show jobs’, perhaps getting a kickback from their ‘pay’. It’s very easy to inflate expenses by claiming money is owed to various suppliers. Left to their own devices managers can and will do this. When asked to produce the random person added to payroll in the last few months or when ABC Corp. says they are only owed $100K but the books say $1.5M incentives are realigned in favor of shareholders.

    In a very small enterprise such scrutiny is not needed. If Tom of Tom’s Dinner wants to have a waitress whose always goofing off but looks really hot, well it’s his bottom line at the end of the day. When you start growing to the point where you cannot really know everyone who works for you matters become quite different and when you’re a shareholder, you’re lucky if you even know who the CEO of the company is.

  19. Boonton,
    SOX is not an industry internal standard, is a required compliance law put in place by our government. It is not “between” shareholders and those who run the organization. It is an external requirement.

  20. So what?

  21. Boonton,
    You are plugging this as an affair between shareholders and management. It isn’t. So, your push to paint this as such is irrelevant.

  22. You are plugging this as an affair between shareholders and management.

    It’s not? What do you think happens if management consistently breaks SOX requirements?

    See this is a classic class conflict where you have one group that is in a position to take advantage of another. Labor union law was developed to counter the fact that managent’s power but labor on uneven footing in trying to negotiate on behalf of workers. One doesn’t usually think of stockowners as an oppressed class and they may not be, but they are a class whose footing is uneven and that results in lost productivity.

  23. Boonton,
    Which group? Stockholders have a board which can fire/hire management.

    You seem to forget that raising the cost of doing business for US firms in a global market isn’t in the interest of the stockholders whom you are putatively protecting.

    Try again.

  24. Which group? Stockholders have a board which can fire/hire management.

    I’m going to give you a simplified story and a brief assigned reading. First the reading

    http://modeledbehavior.com/2011/09/11/would-a-ponzi-by-any-other-name-the-case-of-apple-inc/

    Now Apple has increased its dividend a bit so the case against them isn’t quite as extreme as he makes it out, but the point still holds. Now the story.

    Once there was a sleepy power plant that had been running for years. Pretty mundane stuff, buys fuels, burns it, makes electric, sells it…rinse and repeat. One day some people hatched upon scheme. Let’s sell a billion shares for $10 each to stupid investors. Our story will be we’ll take the $10B, buy a bunch of plants and create a digital stockmarket for electrons. And they did.

    They got $10B, brought a bunch of stuff, and started selling their services for $1B a year while paying $0.95M in expenses. It seemed so new and novel that stock holders didn’t have to get cash from the profits of the company, instead they sold their shares (when they needed cash) to other investors who thought it would just keep getting bigger. The next year they decided to sell more shares. This time they raised $40B.

    The people who ran the company started paying themselves huge bonuses. They also hired a lot of people. They got the company’s name on a big stadium. They hired top notch celebrities to give motivational talks to their highly productive teams (i.e. employees) at lavish company events. Day in day out an army of workers and suppliers collected their payments while the stock price shot thru the roof….then one day someone noticed none of the revenue was real and the liability as reported was but a fraction of the true liability on ‘off balance sheet accounts’. Then it all collapsed and a year later you can buy the office chairs at the bankruptcy auction.

    Now the usual story that gets played here will be about the jobs lost, the people who came to work after just getting a big mortgage only to be told it was now all gone. That’s a good story but I’m going to ask you to focus on another angle…

    This entity took a total of $50B in resources. When it was all over, it transformed them into, say, $5B in resources. If you had a giant machine that would take a $2 bill, issue a $1 refund to the customer and burn the other $1 that would have been less of a drain than this enterprize. Who did this? The investors? No, while technically they owned thing and hired the board the rules of stock ownership are designed to make it almost impossible to really use it to control a company….unless you’re willing to buy a huge chunck of the shares and be an activist investor. It was the people who worked there. They basically took $50B, paid it to themselves and suppliers (who no doubt lavished them with ‘gifts’, outings and ‘business meals’) along with what little actual revenue they scored and left it free and clear with a fraction of the value.

    Now get some of these guys together and go thru this and no doubt they will become infuriated. The admin will scream did she not do her boss’s expense reports? Did she not schedule numerous meetings for him? Did she not work late hours copying and binding the handouts? Will her boss not object that he always pushed suppliers to cut their rates? Did he not spend many a late night scrutinizing contracts for the sake of the company, missing out time with his family? See that’s true, they worked very hard, but they worked very hard to destroy wealth…..but not their wealth, the wealth of the luckless stock investor. They cashed every paycheck and won’t be giving any back.

    And how did they manage to pull this off? Well by stacking the deck against the investor. Yes the stockholders select the board, but they vote on a slate of candidates they recommended. Yes in theory you can ‘write in’ alternatives….but it’s not easy to coordinate action among so many diverse investors, many of whom are spreading their allocations and have little time to listen to a campaign to hold reckless management in check. And, this is esp. devious, the stock market is designed to make it hard for owners of companies to run them. Stock owners are kept secret from each other while management knows every one of them. The ‘system’ is designed to make it super, super cheap for unhappy stockholders to simply sell their shares but very, very expensive for them to actually use them! Objecting stockholders are also effectively bribed to shut up. Why fight bad management and possibly see your shares drop like a rock when you can pretend everything is rosy and sell for cash to some other sucker whose willing to buy the line? In effect, management chooses the stockholders rather than the other way around! Granted the game isn’t a sure thing. You can get an activist shareholder or face a coup by a takeover artist who mounts a hostile bid for all the shares. Life isn’t without risk but this is a good one.

    But this is not a good balance for the economy. The capital isn’t owned by the employees but the stockholders so while management still probably has the edge in many cases, there’s some measure of balancing out. Management has to actually report the financials. And while they don’t have to report every transaction, they do actually have to get an outside entity to audit them. And there are criminal and civil penalties for gaming the system too much…..now from your POV all you see is the ‘cost’. This is like going to Wal-Mart and telling them they are spending $500M a year on shoplifting detection gear and should spend $0. True they could save $500M, but probably at a cost of seeing $5B start walking out of the store free and clear.

  25. I think the disconnect is happening here because you’re mindset is centered on automation. But machines are pretty easy to deal with. They behave pretty much to spec and when they don’t there’s usually a reason behind it. Most importantly, though, you work to understand and work them, they don’t return the favor. You change the configuration and you don’t have to gently put up with the oldest machine on the line resisting change because ‘it knows how things work around here’. When your back is turned some machines don’t help a slacker machine out because it’s the favorite. They don’t decide to start breaking because they don’t like your bossy persona and start working for the guy who they like more.

    But big corporations do not run on machines but people and they make the most complex engineering look like Legos. Given what corporations do, let people legally take other people’s money and pay it to themselves allowing them nearly unlimited power to do pretty much as they please with it….it’s pretty amazing they more often than not actually produce more in resources than they consume. They actually stand in defiance of the principle’s of private property and competition but yet they amazingly grab capital up and deploy it in ways that weren’t possible before they came along.

  26. Boonton,
    Some brief remarks:

    Yes, I’ve heard of Enron. The problem is with making this somehow a horrible exceptional problem is that A.Anderson was destroyed in the aftermath. This is the consequence that prevents other accounting firms from following that step. If others profited and got away with it, that’s a justice problem. It’s not one that is/will be fixed by saddling all large US firms with high costs and making the US just that much less competitive than their global neighbors. You Democrats seem to think that pontificating and begging from the Beltway that firms “don’t ship business/manufacturing” overseas. Well, to do that you don’t beg or pontificate but make it cost effective to do your work locally. That means cutting costs, lowering wages (if necessary), streamlining and making regulatory burdens lower than elsewhere, having a highly educated motivated workforce (education), and better automation (workers can produce more per person). None of these are accomplished by SOX in fact, being “anti-business” it just pushes more work overseas. Is the high cost worth the benefit? This is a question, seemingly never asked by Democrats or other putative anti-business Congress-critters. You, for example, typically minimize, scoff, or ignore any costs of regulatory burdens. Why?

    I’m not “centered” on automation and no, it isn’t “easy” to deal with in the way you think it is. Yes machines are fairly straightforward. But they aren’t static. They change every year, everywhere. Processes change. Making the change more expensive is on of the high costs of SOX.

  27. making the US just that much less competitive than their global neighbors…

    9 times out of 10 people who talk about competitiveness are talking about no coherent concept at all, and this is no exception.

    None of these are accomplished by SOX in fact, being “anti-business” it just pushes more work overseas.

    You’re free to find evidence of this if you can. Note that SOX came online back in 2002. Tell me where you see the SOX-caused loss of competitiveness.

    http://www.newsday.com/news/nation/u-s-still-leads-world-in-manufacturing-1.2648878

    Just notice how you leap from jobs being lost because of SOX to so many jobs having to be done because of SOX. What is it? Has an army of lawyers, accountants and analysists been raised to comply with SOX? Or have they not? If they haven’t then where’s the cost?

    I’m not “centered” on automation and no, it isn’t “easy” to deal with in the way you think it is. Yes machines are fairly straightforward. But they aren’t static. They change every year, everywhere. Processes change. Making the change more expensive is on of the high costs of SOX.

    SOX does not add any real cost to changes in machines and people change every year too…even the same people change in their dynamics and relationships to one another. Managing 1,000 people is nowhere nearly as simple as managing 1,000 machines and that’s not because I’m saying machines are easy to handle.

    You haven’t really addressed what I said. Yes Enron was an exceptional fraud but you didn’t do the assigned reading. At the end of the day Apple will probably screw investors just as much as had many other successful companies before. Outright fraud is only the most extreme example. The inefficiency comes from the agency problem and exists even in very successful companies that are not scam operations.

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