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Forbes and the "Self-Made" Label

by cactus

Forbes and the “Self-Made” Label

I’m kinda busy these days, but this topic is small pet peeve of mine: what the heck is up with Forbes and the “self-made” label? On occasion, I’ve gone through the Forbes 400 list of richest Americans and marveled at who Forbes manages to decide qualifies as self-made.

Case in point. Take Aubrey McClendon, head of Chesapeake Energy, the largest independent gas producer in the US. His great-uncle was a governor and a three-time senator, and also co-founded a large oil company. His father worked for the company for 35 years, and one imagines he wasn’t a janitor or nightwatchman.

McClenond himself will tell you:

I had some early financial advantages in life that probably let me take a chance or two that I wouldn’t have been able to

But to Forbes, McClendon is a self-made man.

A few spots up from McClendon is another self-made dude (according to Forbes), Paul Tudor Jones II. The “II” is not an automatic marker of wealth, but it should have been a tip-off to Forbes that perhaps it was worth visiting “teh google”, which would have been kind enough to guide them toward this interview:

I already had an appreciation for trading because my uncle, Billy Dunavant, was a very successful cotton trader. In 1976, after I finished college, I went to my uncle and asked him if he could help me get started as a trader. he sent me to Eli Tullis, a famous cotton trader, who lived in New Orleans. Eli is the best trader I know, he told me. I went down to see Eli and he offered me a job on the floor of the New York Cotton Exchange.

And the name “Dunavant” should have rung a bell to Forbes – after all, Forbes ranks Dunavant Enerprises as one of the 400 largest private firms in the US. Another thirty seconds of “research” would have told the folks at Forbes this:

His paternal grandfather, Colonel William P. Dunavant, was in the railroad business and created one of the main cotton transporting railroads of the time, a railroad that grew into the southern leg of the famous Frisco Railroad. Billy’s father, William Dunavant, began working for T. J. White and Company at the age of twenty-one. After White retired, the company was passed to William Dunavant; however, because of the untimely death of his father in 1961, Billy Dunavant took over the company at the age of twenty-nine.

I’ll concede that a stream of events where all this is true and Tudor Jones was none-the-less a penniless guy who pulled himself up by his bootstraps in a way that the rest of us were just too lazy to accomplish. It does seem unlikely, though. A more reasonable description of events is that this is another example (I’ve had a post or two on this in the past) that Forbes simply has a tendency label some very unlikely individuals as being self-made. And from what I can tell, this is a Forbes thing; most of the folks Forbes gives this label to that the rest of us might not don’t go around insisting they’re self-made. (I believe I recall one counter-example.) So what’s up with Forbes and the use of this label?
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by cactus

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Same labels, same old stuff

One Salient Oversight sends some thoughts from down under on recycling labels:

Think of the common labels thrown out against political opponents these
days. What sort of political thinking would be labelled in the following
way?

* The propagation of ideas like Darwinism, Marxism, the teachings of
Nietzche, Liberalism, Socialism, Communism and Anarchism.
* A focus on Utopianism that is actually unattainable because of the
underlying conspiracy within the group.
* A movement towards materialism.
* Supporting supranational entities notions such as World Government.
* A control of the media to promote these evil ideas, under the
guise of a “free press” (which is actually controlled by the conspiracy).
* Sexual licence.
* An opposition to Christianity and a promotion of secularism and
atheism – but with an actual evil religion under girding it.

All those descriptions can quite easily be seen as being directed by
conservatives against progressives. Consider the following:

* Conservatives often use progressive ideas as a pejorative, and
will quite easily label a progressive by a general term. Labelling them
as “communists”, for example, even though they don’t espouse Communism.
* An argument that progressive ideas are based upon a vision of a
“false utopia”.
* An argument that progressives cannot tolerate faith and are
inherently materialist.
* Complete opposition to any notion that supranational entities like
the United Nations and the European Union are useful. Such entities are
either threats to freedom or full of incompetents. Those who support
such entities are thus evil.
* That the “Mainstream Media” is inherently “liberal” and has an
agenda to promote a particular point of view under the guise of the
“free press”.
* That sexual licence promoted by progressives will end up leading
to the destruction of traditional marriage and enforced sexual
perversions (like paedophilia and bestiality).
* That a conspiracy of progressives is trying to destroy
Christianity and replace it with atheism, and that such a conspiracy
has, at its base, Satanic and pagan influences.

Sounds terrible doesn’t it? Or maybe it sounds true. Or maybe, just
maybe, someone came up with the same sort of thing during the late
nineteenth century (Protocols of the Elders of Zion) and directed it towards a societal group that they
thought was destroying the world?

In the case of the late nineteenth century, these beliefs were outright
lies that were fabricated with the intention of creating ill-will and
hatred towards their “enemy”. It therefore gives you an idea of how
these people – even those today – think.
——————–
This one by reader One Salient Oversight

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Mike sends a response to rdan on off-label drugs

It is evident that this will lead to less pressure on the Drug Companies
to get their drugs approved by the FDA. I would suggest that we consider
letting the market help. i.e.

1) If a drug is prescribed off-label, then the patient be permitted
to return it to the drug store for a full refund, no questions asked. —
Obviously many people might be helped, and others would not bother to try to
get a refund, but it would encourage the Drug Company to test the drug to be
able to sell it without the possibility of having ineffective drugs being
returned.

2) If a drug is being prescribed off-label, with the cooperation of
the Drug Company, then the patient can go to court and have a presumption
that the drug is the cause of any reasonable harm to the patient. Obviously
one would want a judge to eliminate unreasonable cases, but if it is
reasonable that the off-label use of the drug might have caused the damage,
then the encouraged off-label use would lead to an assumption of guilt until
proven by the preponderance of evidence otherwise.

Obviously the details of these can be adjusted to make them more
reasonable, but their purpose is to let the Drug Company have some reasons
for testing their drugs and for not encouraging their off-label use unless
they feel they are safe and effective.

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Off label drug pushers

FDA doesn’t just approve drugs, it approves drugs for specific uses. However, doctors can prescribe drugs for unapproved, or “off-label,” uses.

Under a law that expired in 2006, pharmaceutical reps were legally able to distribute journal articles touting the benefits of off-label uses. But, according to the Associated Press, FDA maintained some regulatory oversight: “Under the expired law, companies had to submit reprints of articles to the FDA before sending them to doctors. That way, the articles’ accuracy could be reviewed.”

If FDA chooses to finalize this policy, which it published today as “proposed guidance,” drug companies would be able to use journal articles to market off-label uses willy-nilly. The AP article continues, “Under the new proposal, drug companies don’t have to submit articles.”

Off-label use of drugs is big business. According to The Wall Street Journal, “[FDA] is stepping into a high-stakes business issue, because off-label uses of prescription drugs are a mainstay of the industry — an estimated 21% of drug use overall, according to a 2006 analysis published in the Archives of Internal Medicine.”

According to Merrill Goozner at the GoozNews blog, the pharmaceutical lobby pushed for FDA to go forward with the policy which will be a boon for the industry:

So what was in today’s proposed guidance? It pretty much gives industry everything it was looking for. It would allow drug salespersons to drop off article reprints as long as they came from a peer-reviewed journal that had a conflict-of-interest disclosure policy. Articles from industry-funded supplements would not be allowed…

Note what isn’t in the policy: It doesn’t say that the studies of unapproved uses must be from randomized controlled clinical trials, which is the gold standard of medical research.

Rep. Henry Waxman(D-CA) caught wind of this policy last November and asked FDA to refrain from going forward.

We probably will get exactly what we wish for, and then get blamed for the result. I call it sneered at..”Suckers!!”

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Thoughts on the War on Terror as a Label

I have a vague recollection of GW saying something to the effect that if we change our behavior or lifestyle, the terrorists have won. (Anyone have the quote?) As I was waiting, barefoot, for my carry-on, my flip-flops (the easiest thing to travel in these days), my laptop and my cell-phone to clear the X-ray machine, I looked over at the octogenarian lady standing next to me waiting for her belongings. Then I reflected on the fact that GW has not flown commercially since at least the year 2000.

Calling it a “War on Terror” means one day, when we win, we’ll be able to go back to the days when we weren’t fighting. Put another way… one day we’ll be able to go back to the days before our carry-on items were scrutinized this carefully. That day will never come, even if every last islamofascist is rounded up and GW has Osama’s testicles in a jar of formaldehyde sitting on the mantle. Calling it a “War on Terror” is just silly.

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NY Times Calculator Mislabels Salaries as Wealth

Dean Baker has a lot of praise for this calculator:

The NYT has a very nice feature in today’s paper, a calculator that allows you to see how wages have grown over the last four decades. You can make comparisons for a wide variety of demographic characteristics, occupations, and industries. You can even plus your own info in and see how you’re doing compared to your peers. This is nice, it’s giving people real information. That’s what newspapers are supposed to do.

I agree but I have one nitpick with the title which talks about “wealth” whereas the calculator graphs real salaries. Their instructions continue the error in terminology by calling this salary calculator a “wealth calculator”. Could someone let the New York Times know that stocks and flows are different concepts.

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Pork Barrel Spending Labeled “Fiscal Responsibility”

An AP story carried by CNN shows that the White House was paid many visits by “Republican activists Grover Norquist and Ralph Reed” over the past 6 years. White House spokeswoman Dana Perino had an odd way of excusing the visits by Mr. Norquist:

He is one of a number of individuals who worked to advance fiscal responsibility, which is one of the key aspects of the president’s agenda

I seriously doubt Mr. Norquist asked Karl Rove if the pork barrel spending for his clients could be reduced.

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Greece’s Missing Drivers of Growth

by Joseph Joyce

Greece’s Missing Drivers of Growth

Analyses and discussions of Greece’s economic situation usually begin—and often end—with its fiscal policy. The policies mandated by the “troika” of the European Commission, the European Central Bank and the International Monetary Fund have undoubtedly resulted in a severe contraction that will continue for at least this year. But little has been said about the private sectors of the economy, and why they have not offset at least part of the fiscal “austerity.” Consumption spending is linked to income, so there is no relief there. But what about the other sources of spending, investment and net exports?

Investment expenditures provide no counterweight, as they have plunged in the years since the global financial crisis. The same phenomenon took place in other countries in the southern periphery of the European Union, but the change in Greece’s investment/GDP ratio between its pre-crisis 2007 level and that of 2014 was an extraordinary decline of 16 percentage points at a time when GDP itself was falling:

{graphs under the fold}

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Don’t buy eggs at Costco. Buy them at Walmart instead. Seriously.

LOS ANGELES (AP) — Brad Pitt and Bill Maher say Costco contributes to animal cruelty by selling eggs from caged hens.

Pitt sent a letter to the chief executive of the big-box chain Thursday asking the company to stop selling eggs produced this way. Pitt’s letter to Craig Jelinek says caged birds suffer atrophy of their muscles and bones from years of immobility, adding that the cages have been banned in California and much of Europe.

“As you know, these birds producing eggs for your shelves are crammed five or more into cages that are not large enough for even one hen to spread her wings,” Pitt writes.

Maher took aim at the company in an editorial published last week by The New York Times.

“Multiple investigations into battery cages document animals with deteriorated spinal cords, some who have become paralyzed and then mummified in their cages,” Maher wrote. “Imagine cramming five cats or dogs into tiny cages, hundreds of thousands in each shed, for their entire lives. That would warrant cruelty charges, of course. But when the egg industry does it to hens, it’s considered business as usual.”

Both commended Costco for its other animal-welfare efforts and called on the company to make good on its 2007 promise to move toward uncaging its egg-laying hens.

– Brad Pitt, Bill Maher slam Costco, speak up for caged hens, Associated Press, today

A few years ago I became a mostly-vegetarian because agribusiness’s treatment of animals was bothering me enough for me to make the change.  I eat fish, cage-free eggs and free-range chicken, but no other meat or poultry. I’ve become very conscious of which stores sell cage-free eggs and free-range chicken, and the relative prices for these.  Trader Joe’s has by far the least expensive cage-free eggs.  Their free-range chicken—they sell two brands—is relatively reasonable, too.  Which is to say, it’s more expensive than non-free-range, of course, but not exorbitant.

A few weeks ago, I stopped in at a Walmart that has a full grocery store within it and as I was passing the eggs saw …  these.  Wikipedia explains:

The Happy Egg Company is one of the UK’s largest free-range egg brands. Originally setup in January 2009 by Noble Foods, the brand’s annual turn over for 2013 was close to £75 million. The brand philosophy is to put the welfare of their hens first and the company claim to operate above established free-range egg production standards. The company’s farms have 20% tree coverage and assorted environmental enhancements.

The brand launched in the US in October 2012. In January 2015, the American Humane Association announced that the company is the first egg producer to receive humane certification.

Okay, they’re expensive—about $.40 more per dozen than a cage-free brand that Walmart sells, which in turn are well more expensive than the eggs from caged hens.  But everyone has his or her priorities.  I love eggs but would no longer eat them if I couldn’t get them from cage-free hens.  And free-range, of course, is better.  And apparently there are a lot of Brits who think the extra cost is worth it, too.  The company is only six years old and doing quite well.

Here in this country an epidemic of bird flu in several western states has caused a significant rise in the price of eggs recently.  And most of the eggs Walmart sells are, of course, other brands, most of them not cage-free.  But let’s hear it for Walmart for offering this brand.  And may The Happy Egg Company find this country a friendly market.

As for Costco, people who care about this issue and who shop regularly at Costco should buy their eggs elsewhere.

—-

UPDATE: Actor Ryan Gosling beat the other celebs to the punch.  In an open letter to Costco’s CEO last month in the wake of an undercover investigation by the Humane Society of the United States, Gosling wrote:

…. Video footage revealed abhorrent cruelty including rows upon rows of birds confined in filth-laden cages with the mummified corpses of their cage-mates—eating, sleeping, defecating, and laying eggs on top of dead birds—and hens’ wings, legs, and necks trapped in the corroded wires of their battery cages.

Furthermore, it is appalling that Costco has been selling these eggs with deceptive labeling on cartons featuring graphics of birds living out in a green pasture. You’re already eliminating cages for veal calves and pigs – don’t you feel that chickens also deserve the same mercy?

So many corporations are meeting public demand for more humane products and transparency in the food chain.

I sincerely hope that Costco will set plans now to go completely cage-free for its eggs.

 

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More Socially Desirable Firms gain strength from Normalization of Monetary Policy

http://centrance.com/products/new/blog/wp-content/uploads/2013/02/highRoad.jpeg

If the Fed raises interest rates and marginal companies are pushed into struggling for survival, is this a bad thing? Won’t we lose jobs? Won’t wages be hurt? Well, the question is… Are the healthier companies (those that can better survive a higher Fed rate) willing to make employees happier?

Well, we now have a study that supports the view that healthier companies are more likely to have happier employees. And I safely assume for the moment that happier relates to better pay. What did the study find?

“Companies that employees report to be a good place to work have significantly outperformed the S&P 500 over the past six years… Since 2008, the S&P 500 has returned 121%, but the companies that employees rate well have returned 218.5%.” (source WSJ)

These more profitable companies are the ones that would easily survive a normalization process of monetary policy… And the employees are much more satisfied.

Even though the source article from the WSJ offered some explanations for this condition, labor economists have been aware of this condition for a long time. Beatrice Webb and her husband wrote about it over a hundred years ago. Here is a quote from a paper by Bruce Kaufman.

“Apropos labels today are “low road” vs. “high road” employment systems.”

“This duality comes from a combination of technological, institutional and human features. A consequence of assuming heterogeneity in factor inputs and production sets is that firms have different cost curves and, given a uniform market price for the good, different levels of profit. As a useful generalization, some firms are very technologically advanced, have efficient managements, and operate at a larger minimum efficient scale. These firms earn above normal profits and, for human motivational reasons, share some of their rents with workers. On the other end of the same product market are undercapitalized, small-scale, and poorly managed firms with higher cost curves that put them in a constant struggle to stay in business. Here, instead of sharing rents, these firms stay in business by taking it out of workers in the form of wages and conditions below the competitive social cost level. The Webbs characterize the worst of these firms as sweatshops and note, “the bottom of the industrial army…. suffers not from great capitalists but from small masters”.” (Kaufman 2013)

These “high-road” firms are more likely to pay better wages. And the implication is that accommodative policy to keep marginal firms alive has put a drag on wage increases. This is why I say that a properly-timed raise in the Fed rate is efficient for the economy and allows better wages in the medium-term. Recent accommodative monetary policy has kept “low-road” firms in business.

More from Bruce Kaufman on the dual structure between “high-road” and “low-road” firms…

“Institutional factors also encourage a dual structure. The larger and better managed firms often develop internal labor markets (Doeringer and Piore 1971). This term was not invented when the Webbs wrote but they observed that certain large employers in the late 19th century were already using various devices to create a long–term employment relationship on the belief it increases productivity and profit (1897: 661 – 62). Smaller–scale and less efficiently managed firms, on the other hand, gain cost advantage by relying on the external labor market with low wages, high turnover, and bare bones training and conditions. Other institutional factors creating a dual structure are sectional collective bargaining, gendered social norms, and labor laws specific to occupations and industries.” (Kaufman 2010)

In the absence of unions and other institutions boosting labor power, we need to support the profitable firms that are already taking better care of their employees. So if less-profitable & marginal companies struggle under a raise in the Fed rate, there is security in knowing that the surviving firms are more likely to raise wages and make their employees happier. Normalizing monetary policy would help weed out the “low-road” firms.
References
Kaufman, Bruce E. “Sidney and Beatrice Webb’s Institutional Theory of Labor Markets and Wage Determination.” Industrial Relations: A Journal of Economy and Society 52.3 (2013): 765-791.
Kaufman, Bruce E. “Institutional economics and the minimum wage: broadening the theoretical and policy debate.” Industrial & Labor Relations Review 63.3 (2010): 427-453.

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