In an analysis released last week of data from the Bureau of Labor Statistics (BLS), Heidi Shierholz of the Economic Policy Institute presented figures that cast a stark light on the condition of the U.S. job market from a seldom-reported perspective.
The analysis was based on data from the Job Openings and Labor Turnover Survey (JOLTS) report from the BLS.
By comparing the number of job openings reported for March of 2.7 million to the 13.2 million workers reported as unemployed for the same month, Shierholz calculated a ratio of nearly five unemployed workers for every available job.
As if that number weren’t staggering enough on its own, Shierholz added further perspective by comparing that figure to the ratio of 1.7 unemployed workers for each job opening as of the start of the current recession, or 1.1 per opening in December 2000, the date that the BLS first released JOLTS data.
Anticipating the release of April figures in the context of already-reported jobless figures for April, Shierholz projects that the April ratio will remain at five or higher. This creates a sobering view an unemployment picture that, in spite of increasing reports of “green shoots” in the economy, remains at crisis levels and is showing, at best, signs of improvement at only a very slow pace.
“There are still millions of jobless workers with little hope of finding employment in this dramatically weakened labor market,” Shierholz wrote in the close of her analysis, which I believe adds further weight to the proposition that the Obama administration’s economic interventions, as I have argued previously, may not yet be sufficient to truly address the human costs of an unemployment crisis of this magnitude.
Sphere: Related Content
Friday, May 22, 2009
Sunday, May 17, 2009
In the Midst of Crisis, Let’s Not Lose Sight of the Good Things About Deregulation
Deregulation, at least of financial markets, has been taking some heavy hits in the news in general, and in this blog. So before I start getting accused of being some kind of big-government, tax-and-spend commie pinko, which is far from the truth, let me acknowledge that deregulation of certain industries has produced many positive effects:
1. In the airline industry, deregulation created more competition and paved the way for the lower fares, in constant dollar terms, that we see today in comparison to those of the 1960s and 1970s. Air travel changed from a luxury to something that was affordable to middle class Americans.
2. Deregulation in telecommunications opened the door to competition in such areas as long distance service which, in its earlier days, was ridiculously overpriced. And telephone bills in general are now substantially less expensive in real terms than they were thirty years ago, and often include, for a flat rate, unlimited long distance and premium services.
3. Opening up more of the spectrum of radio frequencies for commercial use made innovations such as cellular telephones and wireless data transmission possible.
What’s the lesson? Some industries need more regulation than others. And some industries need more regulation in certain stages of their evolution.
So why not take government out of the equation and let industries regulate themselves? Because it won’t work, any more than making payment of your water bill a voluntary option would work. Issues that have no effect on the short-term bottom line or that would affect it negatively tend to be ignored by businesses. This is why there was a time, for example, when factories that were not subject to environmental regulations freely polluted rivers, streams, and groundwater. Without regulation, there was no incentive to do otherwise.
The most dicey issues come up when the need for regulation of an industry emerges in mid stream. There was a time when we didn’t know that tobacco causes lung cancer, or that lead paint in homes can poison children. In this kind of situation, introducing regulations in product categories that are already widely distributed or, if necessary, transitioning them out of the market entirely, can be extremely difficult.
We’ll no doubt face similar challenges in the future. Examples include the question of whether there is a provable link between electromagnetic energy from wireless devices and cancer. In such situations, there may be no easy answer. And this is precisely why transparency of publicly accessible information, disclosure requirements on businesses when negative issues are known, openness of communication, and collaborative dialogue among industry, government, and consumers will remain essential to guiding optimal regulatory decisions and preventing abuses. Sphere: Related Content
1. In the airline industry, deregulation created more competition and paved the way for the lower fares, in constant dollar terms, that we see today in comparison to those of the 1960s and 1970s. Air travel changed from a luxury to something that was affordable to middle class Americans.
2. Deregulation in telecommunications opened the door to competition in such areas as long distance service which, in its earlier days, was ridiculously overpriced. And telephone bills in general are now substantially less expensive in real terms than they were thirty years ago, and often include, for a flat rate, unlimited long distance and premium services.
3. Opening up more of the spectrum of radio frequencies for commercial use made innovations such as cellular telephones and wireless data transmission possible.
What’s the lesson? Some industries need more regulation than others. And some industries need more regulation in certain stages of their evolution.
So why not take government out of the equation and let industries regulate themselves? Because it won’t work, any more than making payment of your water bill a voluntary option would work. Issues that have no effect on the short-term bottom line or that would affect it negatively tend to be ignored by businesses. This is why there was a time, for example, when factories that were not subject to environmental regulations freely polluted rivers, streams, and groundwater. Without regulation, there was no incentive to do otherwise.
The most dicey issues come up when the need for regulation of an industry emerges in mid stream. There was a time when we didn’t know that tobacco causes lung cancer, or that lead paint in homes can poison children. In this kind of situation, introducing regulations in product categories that are already widely distributed or, if necessary, transitioning them out of the market entirely, can be extremely difficult.
We’ll no doubt face similar challenges in the future. Examples include the question of whether there is a provable link between electromagnetic energy from wireless devices and cancer. In such situations, there may be no easy answer. And this is precisely why transparency of publicly accessible information, disclosure requirements on businesses when negative issues are known, openness of communication, and collaborative dialogue among industry, government, and consumers will remain essential to guiding optimal regulatory decisions and preventing abuses. Sphere: Related Content
Doyle Does it Again with Disingenuous Disinformation
Another Saturday night, another rebroadcast of The Jerry Doyle Show. I have to admit: as much as I might disagree with much of his politics, Jerry Doyle might just be the smartest person in talk radio today.
He’s highly articulate and urbane, and refrains from the simpleminded name calling and other cheap tactics of some of his conservative peers like Rush Limbaugh and Sean Hannity. He seems to draw callers who are more sophisticated and well spoken. And he doesn’t shout.
Doyle often cites persuasive facts and figures to back up his claims, even though he often uses them in ways that seem subtly misleading and out-of-context. He puts impressive, expert talking heads on the air to serve as seemingly credible supporters of his viewpoints. It may be lost on much of the audience that these guests may not represent a preponderance of opinion in their fields or may be affiliated with institutions that represent only a one-sided view of complex issues.
During the broadcast I caught yesterday, Doyle was commenting on a recent commencement speech from President Obama. Doyle focused on sound bites from the speech about “a poverty of ambition” that the President said has characterized the most recent chapter of U.S. history, which closed with the beginning of the current economic crisis. These ambitions, according to the President, were fueled by excessive self-interest, self-enrichment for its own sake and by any means, and superficial, status-oriented aspirations such as having the fanciest corner office.
Predictably, Doyle interpreted these statements as socialistic, anti-capitalist, and representative of a direction American attitudes that, to Doyle, is frightening. In Doyle’s interpretation, the President was attacking the self-interest that is the very fuel of capitalism, the driver of great inventions and industries. He went on to assert that the speech was just another example of the President acting as a puppet for the far left, advocating the surrender of all personal ambition in favor of ever-expanding government, all in the name of “public service.”
I find Doyle’s interpretation disingenuous. There is nothing, per se, anti-business, anti-capitalist, or even particularly “anti-ambition” about the President’s comments. In fact, I would even argue that Doyle’s interpretation depends on a fundamental error in “parsing” the phrase “a poverty of ambition.”
For Doyle, the interpretation seems to be that the President’s phrase “a poverty of ambition” is equivalent to “ambition equals poverty,” or that Obama was suggesting that ambition, as a human motivation, is impoverished in some absolute sense.
I submit, however, that the more accurate interpretation, based not only on the context in which Obama used the phrase but also on the content of the phrase itself, is that the President was referring to an impoverished form of ambition: one that pursues personal gain purely for its own sake, and by any means; that condones self-interest at the expense of others; and that seeks the reward of a superficial status defined solely in material terms, rather than striving for achievements that have the virtue of also benefiting others.
By speaking of a poverty of ambition, the President was asking the students to aspire to a higher standard, one that allows for individual gain while also benefiting society as a whole. This, in my view, is in no way incompatible with capitalism.
While monetary gain is a key incentive to innovate in business and industry, it is not the only one. The true innovators of the world are passionate about what they do and, while money is an important motivator, so, too, is the intrinsic reward of work that produces something of quality, to the benefit of society as well as the innovator.
A higher form of ambition is one that drove, for example, a Henry Ford to invent an industry that revolutionized personal transportation and created a new level of mobility for the common man. Or a Steve Jobs, who has criticized Microsoft for building “so little culture” into their products, to infuse elegance and ease of use into desktop operating systems.
An impoverished form of ambition, on the other hand, is one that drives an investment bank to recklessly trade risky, overly leveraged securities that have the potential to bring down an entire economy, or a CEO of a failing company to move forward with a seven-figure renovation to his corner office.
The case for my interpretation can be supported on a purely linguistic basis. To be correct, Doyle’s interpretation would require the phrase to have been “the poverty of ambition. But the President said “a poverty of ambition,” which can mean one of two things: (1) an impoverished form of ambition, as I have argued here, or (2) a poverty consisting of a lack of true ambition. Either one of these interpretations is in opposition to Doyle’s.
Should we give Doyle the benefit of the doubt and assume he simply erred in his grammatical perception? But if that’s the case, maybe he’s not the smartest person in talk radio after all. Sphere: Related Content
He’s highly articulate and urbane, and refrains from the simpleminded name calling and other cheap tactics of some of his conservative peers like Rush Limbaugh and Sean Hannity. He seems to draw callers who are more sophisticated and well spoken. And he doesn’t shout.
Doyle often cites persuasive facts and figures to back up his claims, even though he often uses them in ways that seem subtly misleading and out-of-context. He puts impressive, expert talking heads on the air to serve as seemingly credible supporters of his viewpoints. It may be lost on much of the audience that these guests may not represent a preponderance of opinion in their fields or may be affiliated with institutions that represent only a one-sided view of complex issues.
During the broadcast I caught yesterday, Doyle was commenting on a recent commencement speech from President Obama. Doyle focused on sound bites from the speech about “a poverty of ambition” that the President said has characterized the most recent chapter of U.S. history, which closed with the beginning of the current economic crisis. These ambitions, according to the President, were fueled by excessive self-interest, self-enrichment for its own sake and by any means, and superficial, status-oriented aspirations such as having the fanciest corner office.
Predictably, Doyle interpreted these statements as socialistic, anti-capitalist, and representative of a direction American attitudes that, to Doyle, is frightening. In Doyle’s interpretation, the President was attacking the self-interest that is the very fuel of capitalism, the driver of great inventions and industries. He went on to assert that the speech was just another example of the President acting as a puppet for the far left, advocating the surrender of all personal ambition in favor of ever-expanding government, all in the name of “public service.”
I find Doyle’s interpretation disingenuous. There is nothing, per se, anti-business, anti-capitalist, or even particularly “anti-ambition” about the President’s comments. In fact, I would even argue that Doyle’s interpretation depends on a fundamental error in “parsing” the phrase “a poverty of ambition.”
For Doyle, the interpretation seems to be that the President’s phrase “a poverty of ambition” is equivalent to “ambition equals poverty,” or that Obama was suggesting that ambition, as a human motivation, is impoverished in some absolute sense.
I submit, however, that the more accurate interpretation, based not only on the context in which Obama used the phrase but also on the content of the phrase itself, is that the President was referring to an impoverished form of ambition: one that pursues personal gain purely for its own sake, and by any means; that condones self-interest at the expense of others; and that seeks the reward of a superficial status defined solely in material terms, rather than striving for achievements that have the virtue of also benefiting others.
By speaking of a poverty of ambition, the President was asking the students to aspire to a higher standard, one that allows for individual gain while also benefiting society as a whole. This, in my view, is in no way incompatible with capitalism.
While monetary gain is a key incentive to innovate in business and industry, it is not the only one. The true innovators of the world are passionate about what they do and, while money is an important motivator, so, too, is the intrinsic reward of work that produces something of quality, to the benefit of society as well as the innovator.
A higher form of ambition is one that drove, for example, a Henry Ford to invent an industry that revolutionized personal transportation and created a new level of mobility for the common man. Or a Steve Jobs, who has criticized Microsoft for building “so little culture” into their products, to infuse elegance and ease of use into desktop operating systems.
An impoverished form of ambition, on the other hand, is one that drives an investment bank to recklessly trade risky, overly leveraged securities that have the potential to bring down an entire economy, or a CEO of a failing company to move forward with a seven-figure renovation to his corner office.
The case for my interpretation can be supported on a purely linguistic basis. To be correct, Doyle’s interpretation would require the phrase to have been “the poverty of ambition. But the President said “a poverty of ambition,” which can mean one of two things: (1) an impoverished form of ambition, as I have argued here, or (2) a poverty consisting of a lack of true ambition. Either one of these interpretations is in opposition to Doyle’s.
Should we give Doyle the benefit of the doubt and assume he simply erred in his grammatical perception? But if that’s the case, maybe he’s not the smartest person in talk radio after all. Sphere: Related Content
Friday, May 15, 2009
Economic Policy Institute Says Workers Over 45 Hit Hardest
A news brief issued today by the Economic Policy Institute (EPI) argues that the current recession has taken an unusually high toll on workers over age 45, many of whom “say their job search is fruitless.” As one of the organizations co-sponsoring the Retirement USA initiative, EPI is particularly focused on concerns of older workers.
In an April 28 post, I argue as well for the need to re-think the retirement system in the U.S., based on the big question marks, raised by that the performance of equities markets over the past 10 years, over whether we can still think of the 401(k) model as a viable retirement solution for the average worker. My post also suggests that increasing the expected retirement age may also need to be a factor in an overhauled system, with the caveat that allowances may need to be made for the fact that, in spite of longer life expectancies, the health profile of Americans past age 60 remains highly variable.
Today’s brief from the EPI, however, references a briefing paper by economist Monique Morrissey that raises valid counterpoints on the retirement age issue, at least in the context of the existing Social Security system, favoring instead an increase to the rate cap on income subject to the Social Security tax.
According to a press release announcing Morrissey’s paper, “Most of the increase in life expectancy in recent decades has been among higher-income workers. Raising the Social Security retirement age would be especially hard on lower-income and minority workers, given large and growing disparities in life expectancy and poor health and/or job prospects.”
The point is well taken and, along with the issue of the current recession impacting older workers disproportionately, makes me recall a comment I heard a few weeks ago from a guest on Bob Brinker’s Moneytalk radio program that the administration should even consider allowing displaced workers as young as 55 to begin collecting Social Security benefits, based on how poor their job prospects may be in the current economy.
However, if we buy into the concept that the 401(k) model is not delivering on its early promises as a viable model, we can’t afford to lose site of the likelihood that tweaking Social Security will not be the long-term answer. Sphere: Related Content
In an April 28 post, I argue as well for the need to re-think the retirement system in the U.S., based on the big question marks, raised by that the performance of equities markets over the past 10 years, over whether we can still think of the 401(k) model as a viable retirement solution for the average worker. My post also suggests that increasing the expected retirement age may also need to be a factor in an overhauled system, with the caveat that allowances may need to be made for the fact that, in spite of longer life expectancies, the health profile of Americans past age 60 remains highly variable.
Today’s brief from the EPI, however, references a briefing paper by economist Monique Morrissey that raises valid counterpoints on the retirement age issue, at least in the context of the existing Social Security system, favoring instead an increase to the rate cap on income subject to the Social Security tax.
According to a press release announcing Morrissey’s paper, “Most of the increase in life expectancy in recent decades has been among higher-income workers. Raising the Social Security retirement age would be especially hard on lower-income and minority workers, given large and growing disparities in life expectancy and poor health and/or job prospects.”
The point is well taken and, along with the issue of the current recession impacting older workers disproportionately, makes me recall a comment I heard a few weeks ago from a guest on Bob Brinker’s Moneytalk radio program that the administration should even consider allowing displaced workers as young as 55 to begin collecting Social Security benefits, based on how poor their job prospects may be in the current economy.
However, if we buy into the concept that the 401(k) model is not delivering on its early promises as a viable model, we can’t afford to lose site of the likelihood that tweaking Social Security will not be the long-term answer. Sphere: Related Content
Tuesday, May 12, 2009
Department of Justice Launches Initiative to Combat Stimulus Fraud
WASHINGTON — The Antitrust Division of the Department of Justice announced details today of an initiative to prepare government officials and contractors to recognize and report efforts to profit unlawfully from stimulus projects awarded under The American Recovery and Reinvestment Act of 2009.
The program aims to help government agencies insulate procurement, grant and program funding processes from collusion and fraud, and ensure prosecution of those who abuse those processes.
"It is not lost on anyone, public servants and taxpayers alike, that along with the tremendous opportunity to help revive the economy that the Recovery Act provides, comes tremendous responsibility," said Christine A. Varney, Assistant Attorney General in charge of the Department's Antitrust Division.
"Fraud, waste and abuse of these stimulus funds will not be tolerated and the Antitrust Division is committed to doing everything possible to help protect the integrity of the government funding processes that are critical to making the stimulus plan a success."
The American Recovery and Reinvestment Act of 2009 was signed into law by President Obama on Feb. 17, 2009. It is an effort to jumpstart the economy and create or save jobs.
The Antitrust Division's Recovery Initiative involves training procurement and grant officials, government contractors, and agency auditors and investigators, on techniques for identifying the "red flags of collusion" before stimulus awards are made and taxpayer money is unnecessarily wasted. The initiative makes Antitrust Division competition experts available to agencies, to evaluate procurement and program funding processes. These experts will make recommendations on "best practices" to further protect processes from fraud, waste and abuse and maximize open and fair competition. Finally, the initiative commits the Antitrust Division to a significant role in investigating and prosecuting suspected fraud.
According to the announcement, the Antitrust Division's Recovery Initiative is already making a significant impact. Since March 2009, in partnership with agency Inspector Generals handling stimulus funds, the Antitrust Division has already assisted in training thousands of federal and state procurement, grant and program officials nationwide, with thousands more scheduled to be trained in the coming months.
The Antitrust Division has also launched a Recovery Initiative Web site through which consumers, contractors and federal, state and local agencies, can review information about the antitrust laws and the Division's training programs, request training, and report suspicious activity. The Web site is located at http://www.usdoj.gov/atr/public/criminal/economic_recovery.htm.
This Web site is linked to www.recovery.gov, the official website of the Recovery Accountability and Transparency Board, which is responsible for overseeing federal agencies to ensure that there is transparency and accountability for the expenditure of Recovery Act funds. Sphere: Related Content
The program aims to help government agencies insulate procurement, grant and program funding processes from collusion and fraud, and ensure prosecution of those who abuse those processes.
"It is not lost on anyone, public servants and taxpayers alike, that along with the tremendous opportunity to help revive the economy that the Recovery Act provides, comes tremendous responsibility," said Christine A. Varney, Assistant Attorney General in charge of the Department's Antitrust Division.
"Fraud, waste and abuse of these stimulus funds will not be tolerated and the Antitrust Division is committed to doing everything possible to help protect the integrity of the government funding processes that are critical to making the stimulus plan a success."
The American Recovery and Reinvestment Act of 2009 was signed into law by President Obama on Feb. 17, 2009. It is an effort to jumpstart the economy and create or save jobs.
The Antitrust Division's Recovery Initiative involves training procurement and grant officials, government contractors, and agency auditors and investigators, on techniques for identifying the "red flags of collusion" before stimulus awards are made and taxpayer money is unnecessarily wasted. The initiative makes Antitrust Division competition experts available to agencies, to evaluate procurement and program funding processes. These experts will make recommendations on "best practices" to further protect processes from fraud, waste and abuse and maximize open and fair competition. Finally, the initiative commits the Antitrust Division to a significant role in investigating and prosecuting suspected fraud.
According to the announcement, the Antitrust Division's Recovery Initiative is already making a significant impact. Since March 2009, in partnership with agency Inspector Generals handling stimulus funds, the Antitrust Division has already assisted in training thousands of federal and state procurement, grant and program officials nationwide, with thousands more scheduled to be trained in the coming months.
The Antitrust Division has also launched a Recovery Initiative Web site through which consumers, contractors and federal, state and local agencies, can review information about the antitrust laws and the Division's training programs, request training, and report suspicious activity. The Web site is located at http://www.usdoj.gov/atr/public/criminal/economic_recovery.htm.
This Web site is linked to www.recovery.gov, the official website of the Recovery Accountability and Transparency Board, which is responsible for overseeing federal agencies to ensure that there is transparency and accountability for the expenditure of Recovery Act funds. Sphere: Related Content
Sunday, May 10, 2009
I Think I Just Heard John Galt Fart: How the Ex Fed Chairman Finally Learned That There’s Greed on Wall Street
According to a May 6 report by Kat Aaron of the Center for Public Integrity, the aftermath of the subprime mortgage crisis and the ensuing global economic meltdown have left former Federal Reserve Board Chairman Allan Greenspan utterly dumbfounded by the failure of lenders and investment firms to act on their own to prevent the crisis."Those of us who have looked to the self-interest of lending institutions to protect shareholder’s equity, myself especially, are in a state of shocked disbelief,” said Greenspan (as quoted by Aaron) in his October 2008 testimony before the House Committee on Oversight and Government Reform.
So there’s greed and irresponsibility in the financial industry? Really? Who’d have thunk?
Duh. I’m sure, Mr. Greenspan, that even my seven-year-old child could have told you that.
It’s not my intention to pick on the financial industry here, or to suggest that subprime lenders or investment bankers are inherently any more greedy than anyone else. They’re simply imperfect human beings who, like you and I, need some basic rules to keep their human weaknesses from getting the best of them.
So it seems that “the virtue of selfishness” may not be so virtuous after all. And maybe now that Ayn Rand has gone on to her reward, her protégé, Maestro Greenspan, may finally, this late in his life, get a healthy dose of the reality that those of us who choose to make our careers in private business are not inherently any more virtuous than any other human beings. We are just as prone to the human pitfalls of greed, self deception, arrogance, corruptibility, and even irrational exuberance as are, for example, all those dreaded government bureaucrats that Rand and her followers despised so much.
Self-regulation of industry is a naïve and misguided concept for the simple reason that human beings, due to their imperfect nature, need checks and balances. We can’t have business without rules any more than we can have streets without stop signs and traffic lights, football games without officials, or Scrabble without a dictionary.
This seems so obvious, really, that it’s difficult not to question the underlying motives of those who would argue otherwise. Sphere: Related Content
Saturday, May 9, 2009
That Story on Page A38 that Makes You Go “Hmm” -- Or, Why We Might be in Deep Doo-Doo if Newspapers Truly Go Down the Tubes
The idea for this post took shape as I read a copy of Michael Moore’s Dude, Where’s My Country? that my wife found in a box we never unpacked after moving a few years ago. As I read the first few pages and saw how well Moore had documented each assertion by citing newspaper articles supporting his points, I was saddened by the thought, which has been frequently on my mind of late, that the newspaper as we’ve known it for so long seems now to almost certainly be a dying medium.
Like Noam Chomsky (in his political rather than linguistic work), Moore demonstrates that, in major, page-heavy newspapers like the New York Times and the Washington Post that have extremely expansive coverage, in-depth articles are there, for the enlightenment of anyone willing to make a little extra effort to find them, that show just how much more than meets the eye is going on beneath the simplistic surface of front-page headlines and broadcast sound bites. They’re just more likely to be buried 20 or so pages in.
For instance, one of the articles Moore cites to support his assertions about the heavy influence of Saudi Arabian money on U.S. politics and policy appeared on Page A38 of the August 9, 1990 edition of the Post.
Moore’s work consists mostly of after-the-fact research and analysis, and it seems likely that he took every advantage of the power of online research to find source material to shape his ideas and support his points. But print newspapers that include those sorts of “articles that make you go ‘hmm’” in the deeper reaches of their pages theoretically provide the opportunity for people to learn about issues that, while currently receiving limited attention, may be of great concern, at a time when there is still a chance to do something about them by such means as providing feedback to politicians or changing voting decisions based on better information.
As the newspaper crisis has worsened over the past year, much has been made of the impact of Google News on the business. I haven’t looked into hard data, one way or another, on the factors behind declining newspaper subscriptions. But I’m skeptical about just how much of a role that online newspaper content has really played.
Do people really sit at their computer monitors and comprehensively scan through all of the news articles of a major daily edition the way they used to flip cover to cover through print? I know that I don’t, and I have my doubts about how many people do.
Content from newspapers, largely free of charge, has been available online for some time now, and Google News for not quite as long. But based on my unscientific, personal observations, the gradual trend toward seeing fewer and fewer morning papers on residential stoops seems to go back further. The effect of online content might be just the tip of the iceberg, or the last nail in the coffin, if you will.
The decline of newspaper reading may be generational rather than technological in origin. For the parents or grandparents of people my age, reading the daily newspaper was a much more entrenched ritual. But subsequent generations, starting with the baby boom, became increasingly accustomed to relying on the briefer news treatments of television and radio, and many perhaps came to view a newspaper subscription as an expense they could forgo.
I also think the dynamics of the online news phenomenon might be different from what people tend to assume they are, or from what they want to admit. While people might like to think they don’t need a print newspaper anymore because they are reading everything they need online, the reality may be that they’re forgoing the newspaper not because they’re reading it online, but because they know that everything they could need is available online. There’s a big difference. They’re right, to the extent that the content is there for the reading; but my doubt concerns how much they actually are reading.
I’m not being self-righteous here -- I don’t currently subscribe to a print newspaper either. I love Google News as much as the next guy, and I use it all the time. The feature that proactively builds a page of relevant content based on your past search history is quite effective. But even though I know I’m getting a good selection of relevant stuff, I don’t delude myself that I’m getting everything, or that I’m going to have as deep an understanding of the day’s news as I would if I scanned a high-quality print paper cover to cover.
My use of Google News has a “quick in, quick out” pattern. Normally I scan headlines on the main page a couple of times a day for major stories on topics that interest me. Sometimes, for certain sections like Business, I may click through to the full list. When I’m looking for stories on a specific event of the day or doing research on a particular topic, I use the Search function.
Neither the scanning nor the Search habit gleans as full a level of news awareness as does a scan of a major daily’s print edition. Google News pulls headlines into the main page from numerous sources, and what shows up on that screen is driven largely by rankings based on the popularity of stories and topics.
One could theoretically create an analogue of scanning page by page through a print edition by going to a major newspaper site like washingtonpost.com, clicking on each section (Front Page, Metro, Business, Style, etc.) of the daily edition, scrolling through all the headlines, and clicking through to the full-text of those articles that warrant reading. I never do that, however. And, although I again have no data to support this, I doubt that many other people do, either.
Ironically, even though we’re dealing with an electronic environment that has the supposed virtue of speed, the main issue that would seem to discourage people from this approach is probably time. It seems self-evident that it’s faster to flip through each page of every section of a print edition than to click and scroll through every section of an online edition.
The online medium is well suited to finding specific things, but less so to serendipitous discovery of interesting things you didn’t realize you wanted. A good analogy for those of us who’ve spent a lot of time in a university library is the difference between searching for items in an online catalog vs. browsing through books that have been shelved together in a topical section.
During my academic career, more often than not, I would find neighboring books on the shelf that would prove much more valuable than the book I originally came to retrieve from the stacks after a catalog search. This is not to say that online searching doesn’t provide its own form of serendipity, but that its dynamics are different from the serendipity of print -- for which, it seems, an effective online analogue has not yet been developed.
And therein lies the problem. As long as major papers like the Washington Post and New York Times remain in business, “stories that make you go hmm” will be published, and they will appear online. How widely they will be read, however, is a different question.
With online content, the ease of access is both the greatest strength and the greatest weakness. If I think something is there any time I need it, I have less urgency and may fall into the trap of taking it for granted. A print newspaper on the doorstep, in contrast, confronts one immediately with the force of a limited range of choices. One can read it in a reasonable timeframe and then dispose of it; or one can leave it lying around indefinitely until getting around to reading it; or one can simply dispose of it immediately, unread. Since the second two choices are inherently less appealing, the first choice carries a strong motivational force to read the newspaper promptly that, in my opinion, does not yet have an electronic analogue.
In an online environment, the stories that venture into greater depth than the basic front page items are likely to be at even more of a disadvantage than they are in print. The result will be even fewer people exposed to a deeper and more sophisticated treatment of the news and, in turn, less accountability for political leaders, who will be receiving less feedback from a constituency less informed on issues ranging from the economy to foreign policy.
To close on a less grim note, however, I believe that, with some emerging technologies, there may be some cause for rekindling (pardon the pun) our hope. While I have not yet had the pleasure of reading a newspaper on the Amazon Kindle, I have heard positive reports from others that it succeeds in delivering a much more print-like experience.
When and if newspaper publishers finally discover a sustainable electronic business model, an approach along the lines of the Kindle that maintains some strong points of the print model may be what will preserve and renew the status of in-depth written journalism. For the sake of having an informed public that truly participates in democracy and political processes, let’s hope so. Sphere: Related Content
Like Noam Chomsky (in his political rather than linguistic work), Moore demonstrates that, in major, page-heavy newspapers like the New York Times and the Washington Post that have extremely expansive coverage, in-depth articles are there, for the enlightenment of anyone willing to make a little extra effort to find them, that show just how much more than meets the eye is going on beneath the simplistic surface of front-page headlines and broadcast sound bites. They’re just more likely to be buried 20 or so pages in.
For instance, one of the articles Moore cites to support his assertions about the heavy influence of Saudi Arabian money on U.S. politics and policy appeared on Page A38 of the August 9, 1990 edition of the Post.
Moore’s work consists mostly of after-the-fact research and analysis, and it seems likely that he took every advantage of the power of online research to find source material to shape his ideas and support his points. But print newspapers that include those sorts of “articles that make you go ‘hmm’” in the deeper reaches of their pages theoretically provide the opportunity for people to learn about issues that, while currently receiving limited attention, may be of great concern, at a time when there is still a chance to do something about them by such means as providing feedback to politicians or changing voting decisions based on better information.
As the newspaper crisis has worsened over the past year, much has been made of the impact of Google News on the business. I haven’t looked into hard data, one way or another, on the factors behind declining newspaper subscriptions. But I’m skeptical about just how much of a role that online newspaper content has really played.
Do people really sit at their computer monitors and comprehensively scan through all of the news articles of a major daily edition the way they used to flip cover to cover through print? I know that I don’t, and I have my doubts about how many people do.
Content from newspapers, largely free of charge, has been available online for some time now, and Google News for not quite as long. But based on my unscientific, personal observations, the gradual trend toward seeing fewer and fewer morning papers on residential stoops seems to go back further. The effect of online content might be just the tip of the iceberg, or the last nail in the coffin, if you will.
The decline of newspaper reading may be generational rather than technological in origin. For the parents or grandparents of people my age, reading the daily newspaper was a much more entrenched ritual. But subsequent generations, starting with the baby boom, became increasingly accustomed to relying on the briefer news treatments of television and radio, and many perhaps came to view a newspaper subscription as an expense they could forgo.
I also think the dynamics of the online news phenomenon might be different from what people tend to assume they are, or from what they want to admit. While people might like to think they don’t need a print newspaper anymore because they are reading everything they need online, the reality may be that they’re forgoing the newspaper not because they’re reading it online, but because they know that everything they could need is available online. There’s a big difference. They’re right, to the extent that the content is there for the reading; but my doubt concerns how much they actually are reading.
I’m not being self-righteous here -- I don’t currently subscribe to a print newspaper either. I love Google News as much as the next guy, and I use it all the time. The feature that proactively builds a page of relevant content based on your past search history is quite effective. But even though I know I’m getting a good selection of relevant stuff, I don’t delude myself that I’m getting everything, or that I’m going to have as deep an understanding of the day’s news as I would if I scanned a high-quality print paper cover to cover.
My use of Google News has a “quick in, quick out” pattern. Normally I scan headlines on the main page a couple of times a day for major stories on topics that interest me. Sometimes, for certain sections like Business, I may click through to the full list. When I’m looking for stories on a specific event of the day or doing research on a particular topic, I use the Search function.
Neither the scanning nor the Search habit gleans as full a level of news awareness as does a scan of a major daily’s print edition. Google News pulls headlines into the main page from numerous sources, and what shows up on that screen is driven largely by rankings based on the popularity of stories and topics.
One could theoretically create an analogue of scanning page by page through a print edition by going to a major newspaper site like washingtonpost.com, clicking on each section (Front Page, Metro, Business, Style, etc.) of the daily edition, scrolling through all the headlines, and clicking through to the full-text of those articles that warrant reading. I never do that, however. And, although I again have no data to support this, I doubt that many other people do, either.
Ironically, even though we’re dealing with an electronic environment that has the supposed virtue of speed, the main issue that would seem to discourage people from this approach is probably time. It seems self-evident that it’s faster to flip through each page of every section of a print edition than to click and scroll through every section of an online edition.
The online medium is well suited to finding specific things, but less so to serendipitous discovery of interesting things you didn’t realize you wanted. A good analogy for those of us who’ve spent a lot of time in a university library is the difference between searching for items in an online catalog vs. browsing through books that have been shelved together in a topical section.
During my academic career, more often than not, I would find neighboring books on the shelf that would prove much more valuable than the book I originally came to retrieve from the stacks after a catalog search. This is not to say that online searching doesn’t provide its own form of serendipity, but that its dynamics are different from the serendipity of print -- for which, it seems, an effective online analogue has not yet been developed.
And therein lies the problem. As long as major papers like the Washington Post and New York Times remain in business, “stories that make you go hmm” will be published, and they will appear online. How widely they will be read, however, is a different question.
With online content, the ease of access is both the greatest strength and the greatest weakness. If I think something is there any time I need it, I have less urgency and may fall into the trap of taking it for granted. A print newspaper on the doorstep, in contrast, confronts one immediately with the force of a limited range of choices. One can read it in a reasonable timeframe and then dispose of it; or one can leave it lying around indefinitely until getting around to reading it; or one can simply dispose of it immediately, unread. Since the second two choices are inherently less appealing, the first choice carries a strong motivational force to read the newspaper promptly that, in my opinion, does not yet have an electronic analogue.
In an online environment, the stories that venture into greater depth than the basic front page items are likely to be at even more of a disadvantage than they are in print. The result will be even fewer people exposed to a deeper and more sophisticated treatment of the news and, in turn, less accountability for political leaders, who will be receiving less feedback from a constituency less informed on issues ranging from the economy to foreign policy.
To close on a less grim note, however, I believe that, with some emerging technologies, there may be some cause for rekindling (pardon the pun) our hope. While I have not yet had the pleasure of reading a newspaper on the Amazon Kindle, I have heard positive reports from others that it succeeds in delivering a much more print-like experience.
When and if newspaper publishers finally discover a sustainable electronic business model, an approach along the lines of the Kindle that maintains some strong points of the print model may be what will preserve and renew the status of in-depth written journalism. For the sake of having an informed public that truly participates in democracy and political processes, let’s hope so. Sphere: Related Content
Monday, May 4, 2009
The Strange History of Non-Bank Banks -- and its Link to the Origins of the Current Economic Crisis
Researching the origins of the current economic crisis makes me feel old. I’m used to thinking of the Reagan administration as a fairly recent era. But here I am reviewing policies that were put in place at the time I came of age, and I realize that what I’m doing is basically historical research.Looking back from here in the late 2000s at the administration that was in power in the 1980s is not too different from someone in the 1960s researching the Roosevelt administration. And that thought makes me feel old.
The topic du jour that sent me once again back to the 1980s is the concept of the “non-bank bank,” to which a Reuters UK article indirectly alludes in an analysis of comments President Obama made on Saturday in an interview for the New York Times magazine.
Discussing the Obama administration’s outline of expanded financial regulatory powers to prevent a future crisis of the sort that the U.S. is now currently confronting, the Reuters article says that part of the proposed strategy is to create a regulatory body “with the authority to seize large non-bank financial firms, such as insurers, hedge funds, or private equity companies, if they are deemed to threaten the stability of the financial system.”
This made me recall the concept of the “non-bank bank.” It’s a term that I suspect most of us, like me, haven’t heard in some time -- which is probably an indication of just how much of a taken-for-granted fixture this kind of institution has become since its origin in the 1980s.
Although I don’t precisely remember what year it was that I first heard the term, I do have a fairly vivid recollection of the incident. I was in the kitchen at my parents’ house, where I was still living as a commuting college student. My dad and I were going through the evening ritual of dinner among the avocado appliances, accompanied by a news broadcast from a local AM radio station on the NuTone radio/intercom console built into the wall of the eat-in kitchen.
The kitchen, wallpapered in an early-American country pattern of reddish-orange flowers, would have served as a perfect model for the set designer for That 70s Show. Mom, due to a bad back that made it uncomfortable to sit on the hard kitchen chairs, usually didn’t join us at the dinner table. She was enjoying her repast in the living room which, with its rust-colored carpet, could also have served as an exhibit of 1970s decor.
One of the stories on the news broadcast Dad and I were listening to as we dined was about non-bank banks. I don’t recall what specifically was being reported about them, but perhaps it was September 1984 when, according to an article in the January 23, 1986 edition of the New York Times, a Federal appellate court ruled that the Federal Reserve Board did not have the power, without new legislation, to broaden its definition of a bank in order to exercise regulatory authority over an emerging category of financial institution sometimes referred to as a non-bank bank.
“What in the world is a non-bank bank,” Dad wondered out loud after hearing the news story. It was a rhetorical question, of course, because neither one of us knew the answer. It was the 80s, after all, so a quick hop on to Google to find out wasn’t an option. But we did have a vague awareness that certain types of financial organizations, such as insurance companies and investment firms, were trying to get into services traditionally provided by banks. Little did we know that this news story was just one indicator within a much bigger picture of a vast wave of change in the financial landscape that, about 25 years later, would have such profound consequences for the U.S. and world economy.
The Fed appealed the non-bank banks case all the way to the U.S. Supreme court, but lost in an 8 to 0 decision on January 23, 1986. That decision was the main subject of the New York Times article referenced above. Prophetically, the article went on to say that the Court’s ruling was “likely to speed the movement toward interstate banking and the expansion of insurance, retail, securities and other companies into financial services traditionally performed by banks” and quoted Federal Reserve Board Member Charles Partee, in what reads like a warning of dire consequences to come, that “Every merchandiser in the country will have a bank” [with “have a bank” presumably meaning “operate its own bank”].
Now, do you remember who was Chairman of the Fed in 1986, when the Supreme Court made this decision? It was none other than Paul Volcker, who now happens to be one of President Obama’s top economic advisors. So in 1986, under Volcker’s leadership, the Fed appears to have been fighting what it found to be alarming efforts to expand, outside of its regulatory authority, financial activities traditionally associated with banks.
But the story gets even more interesting, because the New York Times article goes on to say that “the Reagan administration, which favors more competition and less regulation,” joined the large companies that wanted to offer financial services competing with those of traditional banks in “urging the court to invalidate the Fed’s regulation.”
So we see the Fed, under the leadership of Volcker, an appointee of President Carter, at odds with the Reagan administration, advocating for a more cautious and controlled approach to the development and growth of the financial services industry.
But the Fed did not prevail. And the rest, as we now know, is history. Interstate banking and the entry of other financial services institutions into traditional banking functions indeed expanded rapidly, paving the way for the folks who brought us such brilliant innovations as the credit default swap.
Local and community banks all but disappeared. In my home town, for example, Suburban Trust Company became Suburban Bank and then Sovran Bank, which before long was absorbed by NationsBank, which was in turn absorbed by Bank of America. My first credit card from an unsolicited, pre-approved offer -- with a whopping $5,000 line extended to me as a student in the 1980s taking home about $50 weekly from a weekend-only job -- was from an out-of-state bank I’d never heard of that ultimately became part of Chase.
In 1987 Volcker departed the Fed, not long after it lost the non-bank banks case. His successor, Allan Greenspan, was once a disciple and part of the inner circle of Ayn Rand. Rand espoused views that are perhaps among the most extreme in history on the supposed virtues of markets free of government regulation. On the subject of regulation, she believed that all that was necessary was the self-regulation of heroic captains of industry who, based solely on the motivation to protect their profitability and reputations, would never do anything lacking in integrity. In the context of the current crisis, those views look astonishingly naïve, given the reckless lack of self-regulation we have witnessed from certain key players.
There’s a certain poetic justice in the fact that Volcker is finally getting a chance to help clean up the same mess that the Fed under his leadership apparently tried to stop, during its earliest stages, in the 1980s. And it even helps put into perspective the issue I opened with of “feeling old” when I dig into the origins of the current crisis. While I was in college and still living with my parents during the non-bank bank controversy, Volcker was already old enough to be the Fed chairman. So imagine how old he must feel now.
I’m also amazed at how consistently, so far, the eye seems to fall squarely into the 1980s when one looks for the origins of the current crisis. It seems that we are truly witnessing the end and final outcome of an era that began when President Reagan, in one of the earliest and most famous speeches of his administration, proclaimed a freeze on new regulations and pledged to get rid of as many as possible. And so he did, including what appears, in effect, to have been a systematic dismantling of certain safety measures that were put in place after the Great Depression to prevent a recurrence -- to which as a consequence, we seem to have come alarmingly close. Sphere: Related Content
Subscribe to:
Posts (Atom)
