Monday, July 28, 2014

Crony Capitalism, Corporate Executives, Hogs at the Trough

In fact, political activity and connections do not lead to higher profits for the vast majority of firms or industries, with the only notable exception being banking-related firms. Using firm-level data spanning a decade, we see no statistically significant correlation between firm or industry profitability and firm (or industry) lobbying or political action committee activity. If lobbying and political efforts do not increase returns for firm shareholders, why would firm executives channel resources in this direction? Our research suggests that — while measures of firm performance and profitability are not correlated with political activity — the compensation of top firm executives is strongly correlated. (source infra)

Crony Capitalism Pays Well For Rent-Seeking Corporate Executives - "In the wake of the financial crisis, businesses have rushed to ensure that their interests were and continue to be heard in Washington. With more than 12,000 registered federal lobbyists seeking influence in policymaking, the reported expenditures on lobbying federal government in 2013 topped $3 billion. Remember Solyndra This is perhaps no surprise, given that programs such as the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act of 2009 (or the "stimulus") doled out more than $1 trillion in federal subsidies, grants and contracts directly to specific private businesses. It's now a common belief that business success depends partly on a company's ability to secure favors through political connections. Known as "cronyism," in this system the government — rather than consumer-driven market forces — picks the winners and losers in the marketplace." (read more at the link above)


Monday, July 21, 2014

Defined Benefit Pensions, Enemy of the Poor

Across the U.S. and around the world, defined benefit programs are in decline because corporations and governments can't handle the uncertainty and because millions of workers prefer the control and portability that comes with an individually controlled defined contribution (DC) account. Despite the popularity and simplicity of DC plans, the public sector in America remains largely entrenched and unwilling to shift away from DB plans.(source infra) 

Defined Benefit Pensions Are An Enemy of the Poor | RealClearMarkets: "... The system sounds outrageous and unbelievable, and liberals should be among the most outraged: A sacred progressive program of theirs is no And, easy, obvious solutions that empower the poor through personal accounts are available and have worked in the private sector and in some states. Like most problems involving the poor, the problem is not a theoretical one or a policy problem per se, but, rather, a political one: entrenched interests have strong incentives to protect the status quo against change. And, when those in power dig in put their own well-being ahead of fact and truth, the result for us is that important issues for the poor and younger people--financial security, poverty alleviation, leaving our children something better--get evaded and ignored." (read more at link above)


Monday, July 14, 2014

Book Discussion on Fixing Illinois

Book Discussion Fixing Illinois | Video | "J. Thomas Johnson and James Nowlan, co-authors of Fixing Illinois: Politics and Policy in the Prairie State, talked about their book. They spoke with Chicago Tribune political reporter Rick Pearson. This event took place in the north auditorium of Jones College Prep High School at the 2014 Chicago Tribune Printers Row Lit Fest." (go to link above)


Monday, July 7, 2014

David Brat, Elizabeth Warren of the Right

David Brat, the Elizabeth Warren of the Right : The New Yorker: "What was useful to Brat about the Wall Street Journal article was not that it echoed his own views, but that it clarified for him everything that Cantor was for and that Brat was against. “Stability,” for Brat, was simply code for a status quo in which companies like AT&T fleece the government... Instead of lecturing the most vulnerable about the moral beauty of the marketplace, Brat targets the most well off. “Free markets!” he declared in Hanover, like a teacher about to reveal the essence of the lesson. “In a nutshell, what does it mean?” It means no one is shown favoritism. Everyone is treated equally. Every firm, every business, and you compete fairly. And no one, if you’re big or small, is shown special attention. And we’re losing that." (read more at link above)