Posted by Marc Hodak on December 30, 2007 under Executive compensation | 
I took Larry Ribstein to lunch a couple weeks ago as a meager thank you for his guest lecture in my “Scandal” class this Fall. Eating with Larry, one expects to partake of his keen insights on corporate law, business, and the media. The bonus of this particular lunch was Larry’s hearty recommendation of oPtion$ by Fake Steve Jobs (aka, Daniel Lyons of Forbes).
Despite being an FSJ fan since before Thanksgiving, I didn’t think I’d have time to add another book to my Christmas list. I decided to chalk it up to “research” on my own options idea I would be developing during my iLess break on the farm.
My wife, wrapping last-minute presents in the kitchen and hearing me laughing from the living room, was wondering what could be so funny about modeling a complex financial product. I disclosed the nature of my preliminary ‘research’, and tried to read a passage to her.
Friends, I simply couldn’t get it out coherently. I ended up needing a paper bag to catch my breath from laughing so hard. No spoilers, here, but the passages with Apple’s Chairman, who hilariously hates Jobs, and FSJ’s run-in with the attorneys investigating him as well as the one hopelessly trying to defend him are priceless. Various celebrities get skewered in cameo appearances, any one of which is worth the price of the book.
Having sampled the FSJ site over several weeks, I was initially concerned that oPtion$ would read like a collection of blog entries forced into a book just to cash in on the site’s popularity. Folks, it didn’t read that way at all. Each funny chapter hewed to a story line that was faithfully maintained to nearly the very end. At that point, some hints of character development emerge, only to be gratefully suppressed in a suitably goofy denouement.
When I was done with it, I thought, “God, I wish I could write like that.”
Posted by Marc Hodak on December 29, 2007 under Collectivist instinct |
Spain has banned spanking. Spain, of course, is not the first political jurisdiction to suggest that maybe Daddy doesn’t know best.
Now, I have often joked about not beating my kids enough–almost always with my kids in hearing distance–but I personally never saw a reason to actually strike them. I remember being struck by my own dad many times (probably more than he actually did), and not with fond memories, and resisted creating those same memories for my kids. But I would not have surrendered my right to do so. I certainly wouldn’t have handed power to the state to develop the bureaucratic machinery necessary to distinguish, say, a pat on a youngster’s butt, or aggressive handling of a child in need of reminding who is in charge, versus illegal “striking.”
It takes a certain mindset to presume that the government can effectively make these distinctions. One such genius is Sally Lieber. As is typical of the kind of blindly liberal buttinsky that regularly gets elected in California, she proposed a bill to ban spanking, i.e., expanding government’s reach into the family room, without actually having raised any children herself.
“Responsible parents have to give up the privilege to physically discipline their children for the sake of protecting children that aren’t being hit once in a blue moon or in a light way.”
I think the same line of reasoning should apply to severely curtailing state power on account of those who would exercise it irresponsibly.
Posted by Marc Hodak on December 26, 2007 under Executive compensation |
I came across this survey showing that most employees, including senior executives, consider CEOs “overpaid.” Nevermind this survey’s schlock statistical methods; the question that immediately came to mind for me was whether the question itself made any epistemological sense. Consider this definition:
Overpaid: Any person receiving a wage in civilized society.
Consider the perspective of people making far less than American employees. To someone struggling in the third world, anyone living an American middle class lifestyle by doing, say, electronic filing from their cushioned chair might be considered overpaid. We can’t ask our dead great-grandparents who tried to pull survival from the ground what they would think, but is it far-fetched to consider that they might regard their progeny pushing paper in cubicles, or Big Macs out of a drive-thru windows, as “overpaid?”
Yet innumerable articles continue to be based on the premise that CEOs are “overpaid.” Sure, one might argue that certain individuals are “overpaid” based on how they get their pay, e.g., cheating or stealing. But that’s not what this question is asking, nor is it the premise behind so much jaw-boning about the subject of CEO pay. No, this survey was simply pulling a subjective response from an uninformed audience, and the press was simply reflecting this response back to them in the guise of informing them. This study’s authors and the media, then, become a critically passive route by which useless information gets processed–kind of like intestines that push along the crap with the nutrients, failing to sort them for the nourishment of the body.
Posted by Marc Hodak on December 22, 2007 under Self-promotion |
I’m leaving for a farm in southern Missouri with no internet connection. For those of you not familiar with U.S. geography, that will place me squarely in the middle of…nowhere.
I usually take this week of peaceful isolation to develop an idea for the following year. Two years ago, I used the time to write up some research that became the basis for our highly regarded, compensation governance advisory work. Last Christmas, I developed a proposal to NYU for what would become my “History of Scandal” course. I’m still amazed that the department deans approved the course last spring, but having just finished its opening semester, I’d like to think they’re pretty happy they did.
The idea I’ve teed up for next week is quite novel, but I’ve gotten spoiled by my successes these last couple of years, so I’m getting bolder. (Hint: if you’re a public company CEO, your options will multiply as your excuses shrink.)
To the couple dozen of you who faithfully–or otherwise–follow these scribblings, I hope that this season is one of relaxation, hope, and good cheer with your loved ones.
Posted by Marc Hodak on under Collectivist instinct |
314. That’s the number of congresscritters who voted to ban the incandescent light bulb.
If you care about reasons why Congress would do such a thing, you can read this. If you think Congress is a bunch of dim bulbs, you can read this (gated). If you want to see why the intended effects are likely to be outweighed by the unintended effects, read this.
If you’re, like me, wondering where Congress gets off even being able to ban the light bulb, read this, and get back to me with an explanation that Washington or Madison might understand.
Posted by Marc Hodak on December 20, 2007 under Unintended consequences |
The Coast Guard gives a helpful update of their success this past year. They celebrate a record year for cocaine seizures “with 355,755 pounds seized, worth more than $4.7 billion.” They trumpet these high-profile achievements:
* In September, the Coast Guard and its partners interdicted a vessel loaded with 3,600 gallons of cocaine dissolved in diesel fuel, a technique used by smugglers to avoid detection. The liquid cocaine could be converted into 15,800 pounds of pure cocaine.
* In August, Coast Guard, Navy and Customs and Border Protection crews interdicted and boarded a self-propelled, semi-submersible vessel loaded with an estimated $352 million of cocaine.
* The Coast Guard made its largest maritime cocaine seizure when it intercepted the Panamanian vessel Gatun carrying more than 33,500 pounds of the narcotic — or approximately 20 tons — in March 2007.
Cmdr. Robert Watts, chief of Coast Guard drug and migrant interdiction, said, “The more we push them to adopt extreme measures, the more difficult we make it for them to succeed.” The drug warriors have been making these statements for over 30 years. So, what is the end result of all these achievements?
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Posted by Marc Hodak on December 17, 2007 under Scandal |
Isn’t that what everybody wants?
No.
First of all “The Whole Story” is more boring than the story based on selected facts and biased interpretations. Any time a reader has a choice between a “whole story” and a “good story,” guess which one they’ll buy and which goes into the stack of unread manuscripts?
Second, “The Whole Story” is uneconomical to produce. Most stories are outlined based on facts that have already captured people’s interest (“good story” facts) before they are written up. Once the story is outlined, the story-writers job is to get the interviews and documentary support before a deadline. The worst thing that could happen under deadline pressure is uncovering information that undermines the impact of the story by providing nuance or inconsistent evidence. So, given their limited time and energy under a deadline, how much time will a writer spend chasing down the “other side” of the story, even if contrary evidence is left in their inbox? Especially if that evidence will be met with skepticism by the reader, anyway?
Third, “The Whole Story” is impossible to obtain. Even if a journalist had plenty of resources and time, and they were able to amass all the information into a plausible time line with all of the player’s motives candidly volunteered in a blizzard of interviews, it would not be the whole story. Every historical event or figure has an almost unlimited amount that can be written about them. A historian tracking a recent event, where all the players are still alive, will invariably miss witnesses who have no incentive to volunteer their version, which may offer a valuable perspective. A historian tracking a distant event or figure will invariably miss a welter of material that might have provided key insights. Every time we discover a cache of letters by the relative of some major historical figure, we end up with a new take on the past.
Of course, most people producing words and images for mass consumption aren’t even trying.
Posted by Marc Hodak on December 15, 2007 under History |
You will hardly find anything about F. Joseph Giessler in or out of the blogosphere, so I’ll provide this landing point on Google.
Joe grew up in northeastern Ohio, I believe it was on a farm near Akron, during the Depression and war. He went to Case University (now Case Western Reserve) to study engineering, where he graduated at the very top of his class. There he met his wife, JoAnne. After a stint in the military, they settled in Dayton, near her family and the Wright-Patterson air base that would directly or indirectly employ his considerable engineering talents for most of his working life.
The first time I met Joe was in 1986, at a lunch in Philadelphia that his daughter had somewhat anxiously arranged for me to meet her parents. We got along well from the start. Joe and JoAnne became wonderful in-laws and grandparents to our children. Although their daughter and I split when the kids were still infants, I continued to get cards or presents from her parents every birthday and Christmas to this day. On one of my birthdays when I happened to be in Cincinnati on business, they drove down from Dayton to take me out to dinner. We always appreciated our time together. Even after being forced to retire due to rapidly deteriorating vision, Joe never lost his optimism and willingness to explore new things. He even took up ballroom dancing.
The fact that my older son is now studying to become a ‘third-generation’ engineer derives from a lineage through me from Joe, and likely reflects a greater respect for the latter. I always had a unique regard for Joe in a similar way that I do for engineers in general. Most other disciplines–literature, philosophy, economics–invariably devolve into myriad conceptions of what mankind could be, resulting in a normative push on society toward some distant ideal. Engineers solve problems. They pull society up one measured step at a time. That’s what Joe was like–in his work, with his family, and with everyone else privileged to gain his friendship. The world is several steps improved by him.
Joe passed away at age 75 last week. Even in his brief, but vicious illness, he retained that uniquely Midwestern mixture of sobriety and humor, while clearly and courageously communicating his sense that his love for his family, at least, was undying.
Posted by Marc Hodak on December 13, 2007 under History |
Anna Mary Robertson was born on a small farm in rural New York in September of 1860. As soon as she was able to work, she hired herself out to help older couples in their homes. At the ripe age of 27, she married a farmer named Thomas Moses. They moved south, settling in Virginia on a 600 acre farm doing mostly dairy chores.
“Here our ten children were born, and there I left five little graves in that beautiful Shenandoah valley, coming (back) to New York state Dec. 15, 1905, with our five children to educate and put on their own footing.”
They bought a dairy farm, and raised their family. Twenty-two years later, with the oldest children having since struck out on their own, her husband died, and their youngest son and his wife took over the farm.
“Leaving me unoccupied, I had to do something, so took up painting pictures in worsted, then in oil…”
Anna Mary was 76 when she began to paint. By the time she passed away on this day in 1961, at the age of 101, she was one of America’s most famous artists, known around the world as Grandma Moses.
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Posted by Marc Hodak on December 12, 2007 under Regulation without regulators |
One of my alert students, after a discussion of informal (e.g., market-based) regulation versus formal (e.g., government) regulation in class last night provided this video by leftist animator Mark Fiore:
If I were of Fiore’s ilk, I would probably object that animators should not be allowed to produce socio-political commentary without a basic education in political science and economics, using this video as an example of how dangerous that would be.
Alas, since I believe in freedom, all I can do is shake my head that people might actually believe that problems with meat or toys or mine safety are actually the result of too little government regulation.
In fact, despite voluminous government regulations that actually exist in nearly all markets, the most potent regulations remain the informal type. To understand the depth and power of informal regulation, one can begin by looking at the incentives of the players involved. Why would a regulator in Washington have more of an interest in Mattel’s product safety than Mattel’s managers or investors? How did Mattel’s shareholders or managers come out ahead after this summer’s string of recalls? It’s hard to imagine that anyone has a greater interest in not harming Mattel’s customers than Mattel itself, especially for a large company where any scandal in even the smallest area of their business affects their brand across all their businesses.
Then, one must consider the responsiveness to particular scandals. In a CNN article about the third of Mattel’s recalls, they included the government’s reaction in the middle of the article, and the market’s reaction at the very end. It’s kind of a Rorschach test of one’s view of the world to select which statement gives you the most comfort:
“The CPSC has its own investigations currently underway to make sure products on shelves are meeting US safety standards,” said (Julie) Vallese (CPSC Director of Information)
Wal-Mart has also hired independent laboratories to carry out 200 tests a day, focusing first on toys made for children up to the age of three, it said.
I don’t know what got us to the point where most people seem to believe that any failure in the marketplace is the product of market failure, correctable by government regulation. Somehow, people leave school with the premise that businessmen are indifferent to harming their customers, that the leaders of the largest businesses are the most remote and indifferent, that their reputations have no value to them, and that only government officials have the unerring care, foresight, and capabilities to to actually protect consumers.
