JWG via DTN 15 January 2023 JT and Rae have been reading the tar baby saga and are trying hard…
Wednesday Night #1411
Written by Diana Thebaud Nicholson // March 18, 2009 // Canada, David Mitchell, David/Terry Jones, Economy, Education, Environment & Energy, Europe & EU, John Moore, Public Policy, Reports, Science & Technology, U.S., Wednesday Nights // Comments Off on Wednesday Night #1411
A last-minute (but worthy) update from our friend Jim Heffernan, who occasionally blogs on the HuffPost. “Since I believe that even bonus recipients deserve equal time in all this controversy over AIG, I am turning over my blogspace today to one of them.” Why I deserve my bonus
AIG and corporate bonuses
What makes capitalism moral is ‘to the winner the spoils and to the losers the consequences’. When the losers get the bonuses, it is unacceptable.
Wednesday Nighters’ reaction was mixed to the contractual ‘retention’ bonuses accorded to CEOs and other executives of large American corporations receiving bailout money from the U.S. Treasury – AIG being the current flash point on this issue. The confusion may lie in the fact that these were not performance bonuses but retention bonuses – although some point to the underlying question: in view of the performance of these individuals, why would there be any desire to retain them? Others argue that as they created what is a very complicated mess, the retainees are the only ones who can sort it out. While Edward M. Liddy, the beleaguered CEO of AIG (whose annual salary is $1), maintains that the bonuses were negotiated before the bailout and are therefore non-negotiable, in this crisis, contractual arrangements, particularly labour contracts, have been renegotiated in order to reduce labour costs [Editor’s note: Frank Rich is particularly lucid on this topic]. Logic would apply the same principle to bonuses.
The situation is an irritant to the American public who see their own salaries and tax dollars defraying the cost of unearned bonuses to CEOs whose companies were victims of their own folly. In this instance, the political optics of the situation become as, if not more, important than the issue itself. The real culprits of the situation are essentially the legislators, the electorate, but more especially, the shareholders who created the un-regulated system did not take the initiative to ensure that executive salaries reflected the skills of their recipients. This oversight failure is not new, but is now especially evident when shareholders and employees whose income has been drastically diminished, find themselves subsidizing what they see as obscene bonuses to senior executives. In the larger scheme of things, the total expenditure for bonuses is miniscule in relation to the size of the bailout, but it was inevitable that the optics would elicit a negative response from taxpayers. [ Update: And thus from legislators as was evidenced when House Passed Heavy Tax on Bonuses at Rescued Firms voting to get back most of the money by levying a 90 percent tax on it, exactly as recommended by Gerald Ratzer!]
Executive remuneration unrelated to performance has always constituted a potential problem for corporations, especially those with large numbers of shareholders. This appears to be one – of many – factors that ultimately led to the decline of Nortel. An (obvious) solution is that shareholder committees be established to be responsible for setting executive salaries, with a greater emphasis on performance, based on the hypothesis – or in some cases, evidence – that high performance has not proven to be a direct function of retention bonuses.
The current recession, as have its predecessors, will go through three phases, namely financial, social and political, the latter having the potential for the greatest problems. The countries on the periphery of the Euro Zone are having great difficulties but the remainder of Europe has, thanks to the common currency escaped what could have been an even more disastrous situation. A question arises as to whether the U.S. dollar will ultimately maintain its position as the world’s reserve currency. There will be a fundamental systemic change but we don’t know exactly the direction in which it is heading. The shape of the new system will take two to five years to evolve. The unregulated global system has not worked. The obvious solution is global governance, a laudable goal that appears, like the bold lover in Keats’ Ode on a Grecian Urn, to have so far eluded our grasp. It may be that two or three reserve currencies will evolve. The upcoming meeting of the G20 will undoubtedly arrive at no conclusion, but a statement of soothing words will be issued with no proposed action.
The Internet and education – Information Overload Information Underuse?
Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?
[Editor’s note: checking the reference for the quotation from T.S. Eliot – correctly cited by David Mitchell – we discovered a thoughtful essay on the topic Where is the wisdom … on a new-to-us site, Foundations Magazine]
A carefully edited video of Charlie Rose’s conversation with Eric Schmidt, CEO of Google, launched a lengthy debate on the merits and demerits of Google in particular and the Internet as a source of information in general. Although certainly not the only source, Google in particular has earned the reputation of making available incredible amounts of information. Google Earth pales by comparison to some of the exciting new offerings discussed by Mr. Schmidt. But are we paying too high a price for this plethora of information? It seems the more information, the less knowledge and even less wisdom. Information is analogous to water, we need it to survive, but too much and we drown. Thus filtering of information is essential, but difficult to design.
For some the concern is the effect of ever-more sophisticated electronic technology on the erosion of intellectual property rights. For those who are information workers, i.e. produce information, if everything is publishable and available on the Internet, the question becomes, how can they make a living? In the case of popular music, some accommodation has been made, but the business model for on-line publication is not clear.
The way a student learns is with a pencil, a piece of paper, in a classroom with a teacher
Whereas reading books on line cannot compete with the satisfaction derived from reading them in bound tomes (although Kindle has its enthusiastic advocates), newspapers have certainly suffered as have other conventional sources of information.
With respect to education, the Internet poses several problems. Educators’ notes and examinations are ubiquitous, depriving their authors of their intellectual property rights and providing students with information aimed at enabling them to successfully pass their exams without taking into account any real understanding of the material. The ease of accessibility to copyright material enables downloading, cut and paste and repackaging as a student paper or – worse – as the product of some less industrious academic colleague. On the other hand, the availability of courses on line, including all course notes, makes available to students in remote regions a quality of material and education that they could never have dreamed of in pre-Internet days.
The indiscriminate use of the Internet by students to obtain information can be problematic. Not only is it evident that overwhelming amounts of unfiltered information do not encourage a disciplined approach to study (we all succumb to the temptation to follow links until we are hopelessly lost and have wandered far away from the original topic), but the purpose of education is to help and enable the student to acquire not only information, but knowledge.
Exams have traditionally been the yardstick by which the acquisition of such knowledge was measured, but through the availability of notes without the accompanying explanation of their context, or of on-line examinations that provide only the answer without the understanding, mediocrity has, in many cases, replaced excellence. As in the world of business where the profit has traditionally been seen as a measure of the excellence of a product or service, profit has now become the goal, so the grades in the education system, traditionally the measure of academic success have, in many instances, become the goal rather than the measure of a student’s grasp of the subject. This does not mean that excellence in teaching and learning no longer exists, but suggests that the real acquisition of knowledge may be less distinguishable. When it is used as a study aid in combination with classical teaching, the resultant generation of children is extraordinarily bright and open to the world.
Finally, there are reports that there is a thriving business of proxy exam-taking for online quizzes and exams (who knows who is sitting at the terminal, armed with the student ID?) , along with the business of supplying papers on demand to students with more cash than probity. [Editor’s note: On this subject, June Riley forwarded the following Cheating Goes Global as Essay Mills Multiply – a long and thorough investigation of ‘essay mills’]
As time limits prohibited the continuation of the discussion through the night, the debate continued electronically throughout the next days, with excellent points raised by passionate people. Possibly the best summation:
Education is a process that leads a person from cocksure ignorance to thoughtful uncertainty.
Despite the problems that it may cause within the education system, the Internet remains an extremely important source of information throughout the world, and a formidable development tool for the Third World. In retrospect, the Internet has been in wide use by the public less than 15 years (remember Netscape?). We, who use this medium appear to have forgotten how rapid its development has been and to what extent its utility has changed us. Major changes are recognized slowly. The electronic revolution may well prove to be as important as the industrial revolution.
On a related note, the assumption by those who lead communications technology that once everyone is able to communicate with everyone else, there will be harmony, peace and light is sometimes known as the UNESCO fallacy. Proximity to one another has often led to tribal wars among peoples who previously had been at peace – at a distance. Another topic for further discussion.
Politics and funerals
The perceived cynicism of successful – if not most – politicians, has again come to the fore with Mr. Harper’s attendance at the service for the 17 victims of the tragic helicopter crash in Newfoundland. One is moved to conjecture what criteria are used in the attendance of the Prime Minister at the services for these particular accident victims whose tragic deaths appear to have been more important to Canadians or at least to their Prime Minister than the funerals of the one hundred and twelve Canadian Soldiers killed in the service of their country in Afghanistan, none of which has been attended by Mr. Harper.
T H E I N V I T A T I O N
While the financial crisis has become the world’s version of Quebec’s ‘neverendum’, we are cheered by the new focus on education President Obama has recently announced. As John Ibbitson said in his recent column Obama’s revolutionary reform of U.S. education, “Barack Obama proposed revolutionary reforms in Canadian education yesterday. Actually, he laid out a plan to transform America’s beleaguered public education system. But in education, as in so much else, ideas flow south to north. Mr. Obama’s plans for his schools will come to Canada one day. If we’re lucky.”
Like the United States, Canada, although rich in natural resources, must focus more and more on creating a knowledge-based economy, no longer one based on making things. [Mr. Harper, are you listening? Funding for science and research is part of this – see below.] And to do that, we must have an educational system that nurtures gifted students, while raising the average, and encouraging the least apt to want to achieve their optimum level. President Obama, rightly, is focusing on the K-12 students. His goals can only be accomplished, as he recognizes, by fostering excellence in teaching – we really like the idea of merit pay for excellent teachers (in our view, those who can inspire a passion for learning); not so sure about higher pay for teachers of maths and sciences vis à vis those who teach less marketable, but more fundamental subjects like reading, writing, history and what used to be called ‘civics’.
As in the U.S., the federal government’s power is limited by that of the provinces, but that does not exempt the feds from playing a leadership role. What should be done and how can it be accomplished?
As the financial crisis continues, the Canadian media is cheerleading the faint glimmers of hope (‘Hurricane’ in house market downgraded thanks to lower … mortgage rates, and Canadian banks are turning down some of the funding that the government is making available to them, a sign that they are recuperating from the financial crisis.). Along with that happy news, is the increase in assets of Canadian banks as they rise through the ranks of the biggest banks in North America – but of course it’s not really that our banks are bigger, it’s that U.S. banks are getting smaller. One Wednesday Nighter notes that BMO received $1.1 bln from AIG and asks “Is there more owed and will BMO come clean and specifically tell us? I wonder which other Canadian banks and Canadian companies and pension fund groups are standing in line, cap in hand? AND: Does this mean that BMO must return $1.1 bln. US to Ottawa to partially offset the “stimulus” package awarded them?” Another comments: “$175 million in AIG bonuses is $530,000 for every man woman and child in the US if the population is 330,000,000. Wouldn’t that avoid a few foreclosures? It could even help with car purchases, imagine!” And might help to solve the problem of credit card debt.
What we would like to see is a real effort to force a reduction of the outrageous interest rates on credit cards that entrap consumers into spirals of debt from which it is virtually impossible to escape. We note that there is a petition, sponsored by the Consumers Union and addressed to the U.S. Congress circulating on the petition site . Remembering the good advice given to Wednesday Night by Senator Lucie Pépin, Glenn Goucher and David Kilgour, the power to enforce change is in our hands – so what are we doing about it?
AIG — a uniquely enraging situation. Is there NOTHING these people will stop at? We wish President Obama the best of luck in rolling back the latest bonuses (Obama Orders Treasury Chief to Try to Block A.I.G. Bonuses ) as one Wednesday Nighter offers this solution: “announcing an investigation/audit of the last 5 years of bonuses to verify merits and if these previous bonuses were based on ‘questionable’ performance….then these bogus bonuses must be rolled back and repayment be demanded and enforced for these fraudulent or incorrect payments.” He suggests that the mere hint that such an investigation is being considered, will be followed by a rush of voluntary returns of the recent bonuses. We like it, especially as it might be almost cost-free.
There’s still lots of room for ‘Eyeore mode’, as Paul Krugman points out in A Continent Adrift , Europe is facing at least as severe a slump as the United States, yet has failed to respond effectively to the downturn. Don’t look for much help emerging from the forthcoming G20 Crisis Summit (G20 is problematic ) – despite a certain amount of unanimity at the Finance Ministers meeting – interesting to see the emerging economies gaining more clout
Like everyone else, we love good news, which is often in short supply. Thanks to Terry Jones who scours Eureka! for us, we have a couple of encouraging science items to offer, along with The Next Really Cool Thing ,Tom Friedman’s column on a laser-powered fusion energy power plant. WOW!
Engineer helps poor in developing nations purify drinking water
Projects in Guatemala, South Africa aim to improve health of residents
The device looks deceptively simple – a porous clay pot placed in a five-gallon plastic bucket with a spigot – but Vinka Craver believes it can save millions of lives each year.
Carolina “Clean” Coal: NC State Researchers Work to Make Wood a New Energy Source
Is wood the new coal? Researchers at North Carolina State University think so, and they are part of a team working to turn woodchips into a substitute for coal by using a process called torrefaction that is greener, cleaner and more efficient than traditional coal burning.
Finally – and a great follow-up to the above mini-miracles of science – it would not be Wednesday Night if we did not find a flaw in the Harper Government. This particular item boggles the mind. “Canada’s science minister, the man at the centre of the controversy over federal funding cuts to researchers, won’t say if he believes in evolution. ‘I’m not going to answer that question. I am a Christian, and I don’t think anybody asking a question about my religion is appropriate,’ Gary Goodyear, the federal Minister of State for Science and Technology, said in an interview with The Globe and Mail. We are speechless – and that, as all know, is pretty miraculous!
Update: Science minister ends evolution brouhaha … A spokesman for Prime Minister Stephen Harper stressed that creationism is not part of the federal science agenda. Well, now, that’s a relief, but did not soothe John Moore’s ruffled feathers. His acerbic rant in the National Post Ignorance is not a civil right is glorious and right on the mark: “When asked by a Globe and Mail science reporter, Canada’s Minister of State for Science and Technology wouldn’t say if he believed in evolution. Was that a problem, or just a niggling matter of personal conscience? Let’s put it this way: If Finance Minister Jim Flaherty were to say he didn’t understand how the money supply works but he prays daily for an end to the current economic turmoil, I believe we would all think we had a problem.” More on the story