The Real Problem with Work

28 June 2015 | By ken in Society | No Comments Yet

Foe Men and for Women

A recent study suggests that the chief problem facing women at work is no different from that facing men. It is not balancing the demands of home and the job. It is, simply, too much work.

According to research conducted by two business school professors: “men were at least as likely as women to say the long hours interfered with their family lives.” But the truly astonishing finding: “they quit at the same rate.”

This flies in the face of conventional wisdom – as well as the prolonged conversations about how companies could become more gender friendly. Adjustments like flexible schedules or working at home often end up penalizing women who are seen as lacking the commitment to sacrifice as much as men for their careers. Indeed, the company that invited the research started out presuming that they were losing more women, an assumption belied by the facts.

According to a report on this research in The New York Times, “Men and women dealt with the pressure differently. Women were more likely to take advantage of formal flexible work policies, like working part-time, or to move to less demanding positions that didn’t involve serving clients or earning revenue for the company. Men, on the other hand, either happily complied, suffered in silence — or simply worked the hours they wanted without asking permission. About a third of them, according to another paper . . . would leave to attend their children’s activities while staying in touch on their phones. They also developed more local clients to reduce travel or informally arranged with colleagues to cover for them. Decisions like these tended to get men promoted.”

Men are expected to be devoted to their work, and women to their family. A female associate said: ‘When I look at a female partner, it does leak into my thinking: How do I think she is as a mother in addition to how do I think she is as a partner? When I look at men, I don’t think about what kind of father they are.’”

These are stereotypes, of course. But they are also prejudices, whose impact is vastly augmented as the volume of work in our society continuously ramps up. Men and women alike suffer from overwork, and it is getting worse. “The time Americans spend at work has sharply increased over the last four decades,” the Times noted. “We work an average of 1,836 hours a year, up 9 percent from 1,687 in 1979.” This is substantially above the norms for other industrialized western countries.

The researchers said that when they told the consulting firm that had hired them to research the problems faced by their female employees, they found a bigger problem: long hours were taking a toll on both men and women. But “the firm rejected that conclusion. The firm’s representatives said the goal was to focus only on policies for women, and that men were largely immune to these issues.”

They did not want to know, perhaps because they were not prepared to do anything about it

To be sure, those speaking for “the firm” on this were almost certainly men. The official view was at variance with the research findings. But it would very difficult for firms to change their attitudes towards work as their competitive advantage often depends on the forms of exploitation that had become standardized and taken for granted.

It is the new norm.

THE SIMPLE SOLUTION TO INCOME INEQUALITY

18 June 2015 | By ken in Society | 1 Comment

And Why it’s Unlikely to Work

It is a no-brainer, basically: a progressive rate in income taxes, along with estate taxes that target the super wealthy.

In a new book, the British economist, Anthony Atkinson, leaves no doubt these are the keys to fixing the problem. According to a review by Thomas Piketty: “the spectacular lowering of top income tax rates has sharply contributed to the rise of inequality since the 1980s, without bringing adequate corresponding benefits to society at large. We must therefore waste no time discarding the taboo that says marginal tax rates must never rise above 50 percent.” (See his review of Inequality: What Can Be Done?.)

He calls it a “taboo,” suggesting that he knows resistance to the idea is beyond logic or reason – and would be very hard to change.

Reagan in the US and Thatcher in the UK were responsible for drastically lowering the tax rate on the wealthy back in the 80’s. In the UK the top rate was reduced from 83% to 40%. In the US, it was reduced to 28%. But how did the idea of changing these rates become taboo? Why did economists fall into line behind this idea?

With Reagan and Thatcher, the wealthy began their contemporary, sophisticated effort to dominate the political process, as corporations and their associations learned how to influence congressmen, regulators, and other government officials, while getting more involved in political campaigns. That, together with the new power of the investment industry, essentially made economists into agents of business. They have become, with some rare exceptions, the advisors, philosophers, and courtiers of our new elite, making it hard for them to challenge what their patrons want to hear. That is what makes it taboo

Piketty, in his review, notes other reforms that could affect inequality. “At the core of [Atkinson’s] program is a series of proposals that aim to transform the very operation of the markets for labor and capital, introducing new rights for those who now have the fewest rights. His proposals include guaranteed minimum-wage public jobs for the unemployed, new rights for organized labor, public regulation of technological change, and democratization of access to capital.”

The point is that the rules, the policies and ideas that underlie income inequality are neither unworkable nor unthinkable. They can be challenged. They may be taboo to other economists who know what side their bread is buttered on. But others are coming along with newer ideas and different constituencies.

The public conversation is changing, but up until now silence from mainstream economists not only signaled disapproval, but also proscribed conversation and debate. Taboo is a somewhat strong way to describe the limits on talk, usually implying the risk of disgust or horror or revulsion. That may apply to economists, and sometimes it may also rub off on the public who would usually not feel that level of intensity.

But perhaps a new tradition of populist economists is in the making, not only less easily intimidated, but actually eager to change the terms of debate and confront what have been “taboos.” Perhaps the issue will be raised in the un-coming U.S. election.

WHY SO MUCH FINANCIAL CRIME?

01 June 2015 | By ken in Society | No Comments Yet

Too Much Money

If money is our universal solvent, allowing us to exchange anything for anything else, we seem to have reached the point where virtually all other values are dissolved as well.

The financial industry, awash with cash, is desperately looking for ways to use it to make more money, and the banks, staffed with smart, ambitious bankers, are ceaselessly searching for new ways to outdo their competitors. Fraud, insider trading, manipulating rates, cronyism, etc. etc. have become standard practices.

Reflecting on this, recently, The New York Times noted that “for the world’s biggest banks, what seemed like the perfect business turned out to be the perfect breeding ground for crime. The trading of foreign currencies promised substantial revenues and relatively low risk. It was the kind of activity that banks were supposed to expand after the 2008 financial crisis.”

“But like so many other seemingly good ideas on Wall Street, the foreign exchange business was vulnerable to manipulation, so much so that traders created online chat rooms called ‘the cartel’ and ‘the mafia’.”

Even worse, a new report suggests, corruption is increasingly accepted:
“Nearly one in five respondents feel financial service professionals must sometimes engage in unethical or illegal activity to be successful in the current financial environment. One in 10 said they had directly felt pressure ‘to compromise ethical standards or violate the law.’ And nearly half of the high-income earners say law enforcement and regulatory authorities in their country are ineffective ‘in detecting, investigating and prosecuting securities violations.’”

Add to this the fact that those who regulate the industry are largely hamstrung by a political process dominated by donors to political campaigns, not to mention the lobbyists who eviscerate efforts to impose restraints. Moreover, they know that when they leave their under-funded government jobs, lucrative opportunities await them as they work to thwart their successors.

The larger picture includes how money is overwhelming other values in our society. Scientists succumb to the temptation to falsify data to make a splash. Job seekers amplify their resumes. Cheating on campuses is on the increase.

Recent indictments of FIFA officials for bribery, point to the fact that soccer, like other sports, has become a huge and profitable industry. To be sure, the players make good money but the billions generated by TV coverage eventually filter down to the officials changed with regulating the business, selling their votes to those who stand to make yet more money from the game.

There has always been corruption, and, no doubt, there always will be. But the financialization of our world, the sheer scale and complexity of global business, along with the inexorably growing disparity between the rich and poor, has dramatically changed the problem.

Just as global warming has crept up on us to the point where now we are virtually helpless against the storms and floors that wreak havoc on our lives, corruption has become pervasive, and we are in danger of simply accepting it as a feature of normal life.

Many have been concerned about the effect of the growing wealth gap: cynicism, hopelessness, resentment, the erosion of ambition – and the potential rise of class warfare and revenge. But here is yet another effect: the normalization and increase of crime and corruption.

THE JUGGERNAUT OF CEO COMPENSATION

18 May 2015 | By ken in Society | 1 Comment

No Shame

All “10 of the top-paid C.E.O.s received at least $50 million last year,” according to Equilar, a firm that tracks executive compensation. Much of the “overall compensation came in the form of stock.” But, in addition, many “chief executives received generous cash bonuses, a form of compensation that does little to incentivize long-term performance.”

“It’s really an outmoded way of paying,” notes Robert Jackson Jr., a professor of corporate governance at Columbia Law School.

According to The New York Times, these ballooning payouts occur “despite sustained efforts to restrict excessive executive compensation . . . . Employers are no longer footing the tax bills for departing C.E.O.s who enjoy golden parachutes. Supplemental pension plans, which heaped benefits on executives regardless of how well the company did, are largely a thing of the past. Stock awards are mostly tied to performance, not simply awarded at regular intervals.” Moreover, there is more public disclosure of executive compensation, because, it was believed that if “companies have to report C.E.O. pay that is 1,000 times that of the average worker or justify growing pay in spite of weak results, perhaps shame will kick in.” A recent study concluded that C.E.O pay as “a multiple of the typical worker’s pay rocketed from an average of 20 times in 1965 to 295.9 in 2013.”

But The Times concluded, shame “hasn’t worked.” (See, “For the Highest-Paid C.E.O.s, the Party Goes On.”) We have to wonder why?

C.E.O.s actually form a club, a tight-knit oligarchy, and in that group there is only one measure of success. C.E.O.s know where they stand relatively to each other, and they want to be treated with respect. For one thing, many of them sit on the boards that determine the salaries of other C.E.O.s, and the boards make a point of knowing what the “standards” are. They may actually believe that compensation works as an incentive, but it’s probably more a matter of playing by the rules and being “appropriate” and “fair” to members of their group – in that rarefied world.

But there is another factor: the status and power of the oligarchy depends on large sums of money required to sustain their social position. In paying each other such immense sums, they are also ensuring the continuation and power of their class.

It takes a lot of money to pay for the armies of lawyers, accountants, advisors, consultants, lobbyists, and others enabling them to protect the wealth through which they maintain control of the political process, and guard their wealth against taxation. To be sure, they also spend a great deal of cash on their private homes and planes, their art collections, and so forth. And they also want to donate hospital wings, museum galleries, while funding their favorite charities. But the essential expense is about preserving the power and control of the oligarchy itself.

It sometimes seems as if our growing wealth inequality is a mystery, an insoluble problem. But simple changes in the tax code could do much to levy reasonable rates on the income of oligarchs’, eliminate tax shelters, and deplete the estates the super-wealthy pass onto their children.

The “invisible hand” of oligarchy keeps that from happening.

FIXING CORRUPTION

10 May 2015 | By ken in Society | No Comments Yet

Can Anything Be Done?

Given the amounts of money involved and the sprawling global landscape within which it occurs, it’s no surprise how much insider trading, bribery, deception, and just plain theft occurs in business. This is been augmented by the powerful role played by the financial industry, promoting mergers, acquisitions, restructurings, and divestments, without much interest in making more reliable goods or providing truly useful services. The sums of money involved are irresistible.

Recently, The Economist looking into the effort of containing bribery, noted that “the cost and complexity of investigations are spiraling beyond what is reasonable.” It cited the fact that Siemens, convicted of handing out bribes in developing countries, has “spent a staggering $3 billion on fines and internal investigations” while Walmart “will soon have spent $800m on fees and compliance stemming from a bribery investigation in Mexico.” (See “Daft on Graft.”)

It complained of “a ravenous ‘compliance industry’ of lawyers and forensic accountants” as well as “competing prosecutors” in different jurisdictions getting into the act and, in the process, inflating costs.

In his recent book, Too Big to Jail, Brandon Garrett notes that many efforts to get companies to reform themselves have inevitably backfired. Many regulators and watchdogs tried an approach of “rehabilitating” companies, based on a legal strategy developed with youthful, first-time offenders. The idea is that punishment is deferred, pending efforts by offenders to fix themselves.

Garret notes that some companies really try, but the record is mixed, to say the least. The essential problem is that changing a company’s culture is truly difficult, and even those that set out with good intentions have little idea of the complexities and resistances they will inevitably run into. Moreover, in only 25% of cases is any over-sight provided, and, even when monitors are charged to track compliance with reforms, seldom is any real effort made to check that the monitors are trained, adequately motivated or free from bias.

Fundamentally, the incentives for corruption usually remain in place. In the cases of Siemens and Walmart, western companies were dealing with officials in Africa and parts of Asia where bribery is an accepted way of doing business. No doubt, the company officials charged with managing their entry into those markets felt they had no choice but to go along with those culture’s practices. To be sure, they could have refused to engage in “corruption,” but almost certainly they would have been replaced by others less troubled by the unorthodox requirements of the job.

Corruption is not acceptable, but it will never be fully eradicated. Like the weather, it is something we have to understand and monitor if we are going to be able to cope effectively and limit the damage it can do. It requires constant vigilance, oversight, and, yes, money. It needs regulatory agencies and ambitious (even over zealous) prosecutors, expensive trials, and punishments that target the perpetrators.

Garrett notes the vital role of whistle blowers and informants in calling attention to corruption. Those who go public with their company’s crimes play an indispensible role, though often vilified and shunned by “loyal” co-workers. But he also notes the valuable effects of a simple hot-line to report ethical abuses, something many companies fail to offer.

Among other things we have to over come our own ambivalence about the battle. And he gives a nicely detailed account about how Siemens did finally engage in a massive and successful effort to change its culture. It replaced most of it top management and hired a former minister of finance in Germany to over see its efforts at reform.

Progress is not impossible – just very, very hard.