Smart people saying smart things

Smart people saying smart things May 26, 2012

Vorjack: “Ur Doing It Wrong

Religions are variegated things that allow the individual more control than most folks acknowledge. We’re fond of treating religion as something you’re born into and stuck with barring deconversion. We don’t often talk about the streams of tradition within the religion that an individual must accept or reject.

Look around you: in our culture the chances are you’re going to see someone who is a Christian but holds to different interpretations of what Christianity means. Every sect has a tradition that explains how they’ve come to understand their religion the way they do. Every permutation has an argument as to why their tradition is legitimate. And this is fractal: every community has within it different streams of tradition that emphasis and interpret the components differently.

Perhaps you’re an evangelical who places high importance on the words of the Bible. But why do you take this passage at face value, while interpreting that passage in its historical context? Why is this verse intended only for that time and place while that verse is immortal and internal? Why do you interpret this passage in light of that passage instead of the other way around?

… Rabbi Hillel is supposed to have said that the golden rule is the core of the law, and that all the rest is commentary. If your interpretation of the law leads you towards treating someone in a way that you would find hateful if the situation were reversed, then your interpretation is wrong.

Nick Hanauer: “The Inequality Speech That TED Won’t Show You

For thousands of years people were sure that earth was at the center of the universe.  It’s not, and an astronomer who still believed that it was, would do some lousy astronomy.

In the same way, a policy maker who believed that the rich and businesses are “job creators” and therefore should not be taxed, would make equally bad policy.

I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is a “circle of life” like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary middle-class consumer is far more of a job creator than a capitalist like me.

So when businesspeople take credit for creating jobs, it’s a little like squirrels taking credit for creating evolution. In fact, it’s the other way around.

Josh Kosman: “Why Private Equity Firms Like Bain Really Are the Worst of Capitalism

Romney didn’t make his fortune through venture capital­; he made it through private equity. … Here’s what private equity is really about: A firm like Bain obtains cheap credit and uses it to acquire a company in a “leveraged buyout.” “Leverage” refers to the fact that that the company being purchased is forced to pay for about 70 percent of its own acquisition, by taking out loans. If this sounds like an odd arrangement, that’s because it is. Imagine a homebuyer purchasing a house and making the bank responsible for repaying its own loan, and you start to get the picture.

O.K., but what about this much more virtuous business of swooping in and restoring struggling companies to financial health? Well, that’s not a large part of what private equity firms do, either. In fact, they more typically target profitable, slow-growth market leaders. (Private equity firms presently own companies employing one of every 10 U.S. workers, or 10 million people.)

And that’s when the fun starts. Once the buyout is completed, the private equity guys start swinging the meat axe, aggressively cutting costs wherever they can – so that the company can start paying off its new debt – by laying off workers and cutting capital costs. This process often boosts operating profit without a significant hit to the business, but only in the short term; in the long run, the austerity approach makes it difficult for companies to stay competitive, not least because money that would otherwise have been invested in expansion or product development – which might increase revenue down the line – is used to pay off the company’s debt.

It takes several years before the impacts of this predatory activity – reduced customer service, inferior products – become fully apparent, but by that time the private equity firm has generally resold the business at a profit and moved on.


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