Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985. Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand. She attended the University of Michigan and Wayne State University.
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Andrew Ross Sorkin has been a major force in business entertainment this year--as a consultant for the TV series Billions, and the creator of a DealBook digest of business news. He also has some reading suggestions for business aficionados, which include:
Happy reading! I've got the Ray Dalio book on my bookshelf...
Source: "In a Year of Nonstop News, a Batch of Business Books Worth Reading," by Andrew Ross Sorkin, New York Times, December 25, 2017.
Follow up: Have you read any of these books? Which ones interest you? Why?
image by Chris Philpot for NYT
In many MBA schools traditionally, a "bro" mentality has been fostered. Faculty offices, fraternities, exclusive meetings with alumni and appointments with recruiters have all been arenas where exclusion has been taught by example. Today, however, the atmosphere is changing. At Vanderbilt University, Professor Tim Vogus teaches about the "bro" culture at Uber. Stanford and Harvard are covering sexual harassment, free speech and human resource ethical issues. Topics such as gender privilege, empathy, and the sociology of decision-making are also being addressed.
From the article linked below: "An M.B.A. education is no longer just about finance, marketing, accounting and economics. As topics like sexual harassment dominate the national conversation and chief executives weigh in on the ethical and social issues of the day, business schools around the country are hastily reshaping their curriculums with case studies ripped straight from the headlines."
A program called Manbassadors was started by two men in the Berkeley Haas MBA program, and has been gaining traction. Might this become a resume must-have?
Source: "Business Schools Now Teaching #MeToo, N.F.L. Protests, and Trump," by David Gelles and Claire Cain Miller, New York Times, December 25, 2017.
Opening this holiday season is the film Molly's Game, which is a biopic about an Olympic-hopeful who became an extremely successful poker-game-hosting entrepreneur. Molly Bloom, portrayed by Jessica Chastain, thinks on her feet, embodies an ideal of self-discipline, and takes advantage of opportunities to make money and control her own life--while assuming an increasing amount of risk. At one point, she crosses the line into what is technically illegal activity, which leads to the dramatic climax of the movie arc.
Thematically, the movie addresses motivation in a major way--as well as decision-making, risk, and what a clear ethical stand might mean for one's personal life. In addition, it is fun (and easy, with a little internet research) to guess what real-life characters are being portrayed by the film.
Source: "Molly's Game," written and directed by Aaron Sorkin, produced by STX Entertainment, et. al., in theaters beginning December 25, 2017.
Ajit Pay, FCC Chairman; photo by Tom Brenner, NYT
The Chairman of the FCC, Ajit Pai, put forth a motion to repeal the rules that ensured that the internet was open in terms of bandwidth. He vigorously defended the repeal before the vote. He said the rollback of the rules would eventually benefit consumers because broadband providers like AT&T and Comcast could offer them a wider variety of service options. His two fellow Republican commissioners also supported the change, giving them a 3-to-2 majority.
Others note that there is nothing in the rule change that would incentivize service providers to provide more content, although it may be that additional content may be provided at additional (and uncapped) costs.
Sources: "Farhad and Mike's Week in Tech: Net Neutrality is Gone," by Farhad Manjoo and Mike Isaac, New York Times, December 15, 2017.
Seraina Maag (Macia), age 49, has had a remarkable international career in insurance and finance. So far, it has included these highlights:
Inspiring, isn't it?
Whether or not one agrees with the wisdom of the GOP tax bill, if it becomes law (as it looks like it will, as of December 17th, 2017), then each taxpayer probably wants to make the best of it on a personal basis. Some of the strategies include:
I, personally, am in a state where the income tax rate is high and the property taxes are a significant portion of housing expenses. On my joint tax return, I have itemized deductions for most of my middle-to-upper-middle-class adult life--so I will have to do some "what-if" calculations to see how I should proceed in the future. I feel a bit aggrieved that the new tax law creates corporate tax rates that are lower than individual rates--especially because corporate tax-payers benefit in an extraordinary way from tax-supported infrastructure (roads, bridges, railroads, ports, police protection, fire protection, military protection). I am also concerned that the lack of support for home ownership in the current tax bill will de-stabilize the middle class and make it harder for the young to move up in economic status. Worst case, it will widen the divide between the extremely wealthy and The Rest Of Us. And create more debt. Alas.
Nevertheless, I may personally benefit from the GOP tax plan--but just a little: enough to take the family out to a very fancy dinner, maybe. Or to pay an accountant to crank the numbers for a few different tax scenarios, in case I don't trust myself to do it right.
I do encourage everyone to make the best of their own situation in light of the current reality, but also to work for other tax reform bills if this one doesn't seem to be the best the U.S. can do.
Source: "Hacking the Tax Plan: Ways to Make Money Off the Republican Tax Bill," by Quoctrung Bui and Margot Sanger-Katz, New York Times, December 12, 2017.
With the declining availability of defined benefit pensions, the risk of having enough income in retirement is falling on the individual shoulders of a larger percentage of the workforce. In order to retire, not only does a person have to be good at one's profession, he or she also has to be good at investing. The current reality, however, is that only one-half of U.S. families have more that $5,000 saved for retirement. That certainly will not be enough--and the societal burden of caring for the elderly poor may become a larger problem. Fortunately, an MIT-trained person (whose profession is investing) has invented a financial product that could help prudent individuals provide for their own retirements.
Marketplace interviewed Arun Muralidhar, co-founder of Mcube Investment Technologies, about his proposed investment vehicle, pronounced almost like "selfies": SOLFIS (Standard-Of-Living Forward-starting Income-only Securities). These would be government bonds that would pay the purchaser $5 per bond, each year for 20 years. This would presumably create a defined-benefit retirement income from age 65 to age 85 (at which point the retiree would need to have another source of income). To have a realistic income of $100,000 per year in retirement, a future retiree would have to buy 20,000 SOLFIS over his or her working life.
In current market conditions, a single SOLFIS would cost a 25-year old $15, and this amount would increase if the purchase was made closer to retirement. The concept is supported by Nobel Laureate Robert Merton--but can it become a reality?
Source: "An invention aimed at revolutionizing retirement savings," by David Brancaccio, Marketplace Morning Report, December 8, 2017.
Marketing communication is a primary component of the sale of "Health And Beauty Aids." Magazines and social media abound with "solutions" for problems that may or may not even need to be remedied. Sometimes the products retail for many times over the cost of the product as manufactured. What is the price tag on hope?
People have been chasing the Fountain of Youth for generations. As Gen Xers deal with becoming middle-aged, and as millennials hover around age 30, there are new potential customers starting to panic about the aging process and becoming desperate for solutions. A current fad is a 12 step Korean Beauty System, which actually can vary from 10 to 17 steps. At any rate, because people don't know what really works--but want to believe that someone has The Answer--products that are "new" have a marketing edge.
The NYT article below is written by Euny Hong, an American writer of Korean descent, who is multi-lingual and has lived around the world. She wants to warn Americans that they "have been had" by the promises of Korean beauty systems. (She limits her use to snail slime.) Check out the products below.
image by Na Kim in NYT article linked below
Source: "I Grew Up Around Korean Beauty Products. Americans, You've Been Had," by Euny Hong, New York Times, December 9, 2017.
a primer on Electrochaea's storage process my NTD.TV
Think about the sources of carbon-based energy--coal, petroleum, propane, natural gas. One thing they have in common is that they are tangible, transportable products that are not consumed in transport. This also means that they are finite--as well as being a part of several causing environmental problems. Solar and wind power are different, in that they capture energy from constantly-renewing sources. But unless that energy can be used when it is produced, it needs to be stored in some separate medium so that it can be transported and/or used later.
So far that medium has been batteries. Battery technology is becoming more efficient, but it does not represent a cost effective, long term solution in a world where a larger and larger percentage of energy is produced from renewable sources. Lead-acid battery technology has evolved into newer lithium ion batteries. And salt, silicon and graphite are also being studied as more efficient and economical battery materials. But batteries add to the expense of renewable energy...and may not be the best solution at all. One company is doing something totally different, with demonstrated effectiveness.
The German company Electrochaea GmbH, in its own words, "has developed a commercially viable and disruptive solution for utility scale energy storage, grid balancing and carbon reuse." In other words, Electrochaea has a completely new approach to solving sustainable energy storage: converting it into methane. Methane gas is the primary component of the natural gas that powers many hot water heaters, furnaces, stoves and clothes dryers, so we already know how useful it is. Moreover, the infrastructure for delivering methane to the final consumer already exists.
The process has many steps, but the most interesting step involves the use of "methanogenic archaea"--a biological catalyst. The process is described in detail in the linked article, but is summarized on an Electrochaea webpage graphic:
A "commercial scale demonstration facility" has been built by a Danish Electrochaea subsidiary, and their initial goal is to decarbonize the Danish grid. A major revenue stream will be the sale of natural gas.
Source: "Batteries can't solve the world's biggest energy storage problem. One start-up has a solution." by Akshat Rathi, Quartz, December 11, 2017.
It is a little ironic for me, as an instructor, to read an article in which the REQUESTOR of the letter of recommendation is making an argument for changing the process. Often it is the professor or former boss that is inundated by requests for letters and imagines a better process. However, it may be that the process could be improved on both sides.
The author of this article has requested TWENTY-FOUR recommendation letters in the current year so far--and expects to ask for more. Why? Because they are required by grants, potential employers, internships, fellowships, residencies and others. Rosen, the author, suggests that the process could be streamlined by using one or more of the following:
Until there is a pervasive standard, however, there will be striving, duplication of efforts, occasional duplicity, and other problems.
Source: "Please don't ask me for another letter of recommendation," by Kenneth R. Rosen, New York Times: Preoccupations, December 1, 2017.
Planet Money, the podcast series on business from NPR, has obtained space on a satellite (owned by Planet) orbiting the Earth and taking pictures. (But they still need a rocket.) This may sound exciting, but then they asked themselves: Why are they doing it?
One of the reasons is "Space Fever." And if there is "fever", it may mean there is a business "bubble" rather than a long-going investment opportunity. They rationalize their pictures as being a time machine, even though their first impulse is to find their personal homes using the satellite data. Still, that is not all that is happening with space data.
In developing their rationale, the Planet Money people talk to spies at Genscape. Genscape professionals obtain and gather data for clients--measuring whether power plants are running for example. Genscape actually can spy on how much oil is in a tanker in a Chinese port as well. This is useful, salable data.
So, (again referencing a personal interest) a possible mission for Planet Money pod 1: avocado pricing prediction, based on the timing of supply. They can look at heat patterns for ripening and track avocado trucks or ships or avocados on pallets. "Tracking complementary commodities" might also be utilized in this mission.
All of these measurements can be accomplished from space. And Planet Money is planning on zeroing in on one of the many reasons that can be summed up as "industrial espionage."
Source: "Space 2: Wait, Why are we going to space?" by Stacey Vanek Smith and Robert Smith, NPR: Planet Money, December 1, 2017.
Depending upon where you live, the puppies you see at your local adoption center may not be local strays...but rather may be imports from elsewhere in the country. There are a few factors that set up the business model that make this a reality:
Entrepreneur drivers like Joy Harklerode make a difference in states where the economic hardship of paying for the spaying an animal outweigh any "greater good for the greatest number" concerns. She, and others like Rusty's Legacy and Brother Wolf Animal Rescue make the economics of animal rescue work by acting as intermediaries in the transporting of unwanted pups to states where there is an undersupply of adoptable dogs.
This is one example of making a business that aligns with personal values. Wanna see more puppy pictures? Visit Topic.com.
Source: "What Rescue Puppies Teach Us About Supply and Demand," by Peter Balanon-Rosen and Lizzy O'Leary, Marketplace: American Public Media, December 7, 2017.
Have ever tried to buy concert tickets and have logged in again and again from the moment the ticket sales opened--but have failed to successfully complete a transaction? If so, it is totally possible that tickets were being bought up by "bots". Their efficiency at analyzing markets and split second timing can foil even the most dedicated of fans. Companies employing bots then resale tickets to diehard fans at a mark-up above ticket price.
The same technique is being used in the online retail market--against children, albeit indirectly. Bots are buying up coveted Christmas-requested toys, then reselling them on Amazon or eBay at inflated prices. Some toys that have been affected for Holiday season 2017 include:
And from previous years:
Chuck Schumer, the Senate Minority Leader, has taken a stand against bots: "When it comes to purchasing products online, major retailers should put forth policies that will help prevent future Grinch bots from stealing the season’s hottest toys.”
What will it take to enable consumers to get a fair deal?
Source: "Can't Find Any Fingerlings? Bots Snap Up Popular Christmas Toys For Resale," by Christina Caron, New York Times, December 5, 2017.
Proposed GOP tax reform promises increased global competitiveness of American companies. One of the supporting arguments of this is that the "U.S. has the highest corporate tax rate among developed countries." This is misleading, as the taxes paid for social services are not included, AND few corporations pay the full rate, according to Jonathan Traub of the Tax Policy Group at Deloitte Tax LLP in the article linked below. Also, there is no "quid pro quo" in the tax reform bill: corporations are not required to give any benefits to workers when they take advantage of reduced tax rates.
One logical outcome, according to Virginia Haufler (whose research at the University of Maryland, College Park, focuses on transnational corporations), could mean that corporations might “pay out big dividends to their shareholders instead of investing in new technology and upgrading their workforce skills.”
The big question is: WHAT IS THE UNDERLYING AIM OF DECREASING CORPORATE TAXES? And Individual Tax rates? Who benefits the most? Who is hurt, or benefits the least? What is the effect on future generations of increasing the deficit?
Source: "There's more to America's global competitiveness than the tax rate," by Kimberley Adams, Marketplace: American Public Media, December 5, 2017.
Business has a way of sneaking into politics in every corner of the world. When celebrities get involved, they can raise awareness and money with appeals that can be understood by those in the United States--the terrible danger and atrocities described by George Clooney are an example.
But some values are more difficult to understand. Cows as currency--and as a way of relating on a social basis--is one aspect of South Sudan that may be difficult to grasp. In South Sudan, cows function as both currency and credit cards, so cows are an integral part of a majority of business transactions.
The United States was instrumental in setting up South Sudan as a political entity...but the current administration feels that maintaining support for the entity is too expensive. But continued support is needed--primarily to contain the corruption inflicted by rustlers that steal cows and rob individuals of "their whole life." No amount of cash can compensate--though it is difficult for us in the USA to understand how that can be possible.
In international trade transactions, it is important to understand what is valued by cultures that are very different from one's own. Protecting and funding a farm animal might be far less costly in terms of dollar expenditures, but may produce greater value. So investing with understanding can be more cost-effective than just throwing money at a problem when cultural understanding is lacking. According to the article, 85 cows cost only $14,000--but are very valuable in terms of status, worth and security.
Source: "Episode 805: War and Peace and Cows," by Gregory Warner, with Noel King, NPR: Planet Money, November 15, 2017. [Transcript]
"Arbitrage" is a Wall Street word for selling assets (or companies) at a profit at almost the same moment you are buying them at the lower price. The Planet Money episode linked below highlights two entrepreneurs who have applied the concept to used textbook buying and selling on a grand scale. Wildly divergent prices create an opportunity for profit. They call it a "guaranteed" way to double their investment. There is a built-in market for textbooks, and the market is predictable--the schedules of classes describe the market size. The textbooks are very expensive, and the price is very volatile, as the price rises at the beginning of each semester. Editions are current for about three or four years. The entrepreneurs used computer data to find out which textbooks were the most lucrative.
The market is changing somewhat for textbooks that have current online content. And more people are getting into the market. But the opportunity exists for those willing to do the research and can manage the logistics.
Source: "Episode 581: Free Money" by David Kestenbaum and Jacob Goldstein, NPR: Planet Money, October 18, 2017. (podcast)
images of Leandra English and Mick Mulvaney from Heavy.com
When Richard Cordray resigned last week as head of the Consumer Financial Protection Bureau (CFPB), he followed the law that established the independent consumer watchdog agency: he appointed his deputy director,Leandra English, as acting director. But then President Trump double-appointed his Office of Management and Budget pick, Mick Mulvaney, to the same position, claiming that all agency positions were his to appoint.
Ms. English filed a lawsuit on Sunday against both Donald Trump and Mick Mulvaney, seeking a restraining order to block Mulvaney's appointment. But on Monday, Mr. Mulvaney showed up to work earlier than Ms. English with doughnuts and instructions to staff to ignore Ms. English.
The confusion about who should fill the vacancy rests on two laws with conflicting procedures for appointments--one of which may or may not apply to the CFPB (quotations are from the Charlie Savage article linked below):
By late on Tuesday, Judge Timothy Kelly ruled that the 1998 law superseded the 2010 Dodd-Frank Act and cleared the way for Mick Mulvaney to head the CFPB. But it appears that Mulvaney would like to deregulate himself out of the job. Slate cited his testimony to the House Subcommittee on Oversight and Investigations: "I don’t like the fact that CFPB exists, I will be perfectly honest with you.” Mulvaney also co-sponsored HR 3118, a bill to eliminate the CFPB.
Backlash. The word has a negative connotation, but the phenomenon is almost inevitable--no matter what the topic. But when the topic is sexual harassment, conversations can become so polarizing that "overwhelm" sets in with a vengeance. Lili Loufbourow explains the phenomenon:
"With every news story there comes a moment of satiety so absolute that the weight of it trumps any story's actual merits. After everyone reads one too many descriptions of the same incident — whether it's allegations about Russian electoral interference or sexual harassment or rape — a reactionary mood sets in. It's the urge everyone gets as a news cycle crests: That's all very well and good, but come on. Time for the takedown, the pushback, the cooler heads that will reason the volume of the tide away."
Here's an example of how it happens:
"We all know what will come next. As in 2006, when the Duke lacrosse case gripped the news; as in 2014, when Rolling Stone published its piece about an alleged rape at UVA, one of the accounts coming out during this wave will be in some way disproved. When that happens, the familiar landslide of public opinion will turn. The incident will become a muted indictment of the hundreds of real victims who have come forward to tell their stories. Much of the public will seize that one false story as an excuse to facilitate the calming of the waters, the burying of a conversation so ugly and difficult that we regress to truisms about 'human nature' and try to explain sexual predations as mere 'awkwardness' or hapless attempts at flirting."
There are also the actualities of what the New York Times terms the "unexamined realities of the male libido." An observer needs to over-ride any knee-jerk responses to situations in order to consider all aspects and all inputs to complicated interpersonal situations. What tools can a person access in a situation where a gut-feel response might be inappropriate?
One choice: "Mindfulness" is meta-awareness about what one is experiencing. In a simple example, one can experience frustration or even road-rage in bad traffic among selfish drivers. Meta-awareness would be noting that one has a strong feeling and that a choice exists as to whether to run with those feelings or just sit and notice that the feeling has arisen. In other words, one can swear or yell at the other driver...OR take a breath and notice how much a part of the experience of delay is shared with other humans.
With respect to the backlash issue, meta-awareness might look like this: if one experiences a thought such as: "They are not being fair to Louis C.K." or "That's not an apology!!"-- it is possible to have two responses (at least). One response is to feel moral indignation and ramp up one's emotional agitation regarding the unfairness. Another response is to have a meta-awareness: "Oh, I am experiencing a sudden thought that might get me riled up. I can choose to let it take over, or I can just sit in this meta-awareness until it subsides." One then has the chance to ask--again and again if necessary: What really happened?
Source: "The sexual harassment backlash is coming. Here's how to respond," by Lili Loufbourow, The Week, November 3, 2017.
The GOP tax reform plan is far from being finalized, but certain aspects of the bill have a disproportionate (and negative) impact on specific populations. These groups tend to be people who don't make much money anyway. These education-related "losers" with respect to the proposed tax plan are:
Many observers feel the plan disproportionately affects STEM students and diverse populations. The Senate plan will be different; before any bill becomes law the differences will have to be reconciled.
Since today's students will be employed over the next few years, the next question to ponder is:
image from Wealth Management
As the details in the legislation get ironed out, the data that can provide realistic answers will become available.
image from YouTube video produced by Wah! Banana
Interviewing for a job means that you have your "foot in the door." You have made the "paper cut" and the employer is interested enough in you as a future employee to take the time to meet you. But a job interview can be more stressful than a first date. A person can do their homework on the company and have excellent qualifications, but might be get flummoxed when asked one of several tricky and tough interview questions--designed to put an interviewee on the spot. Here are a few from Forbes Magazine:
A few of the above questions shouldn't surprise anyone who is preparing for the interview process--experience solving problems or learning from mistakes is pretty standard interview fare. But some of the other questions can test for emotional intelligence and, without asking directly, for honesty.
Here are a few more tough questions, these from Onward Search:
And, especially if a person has been stretching the truth in the interview process, the really tough question to answer is: When was the last time you told a lie?
The Detroit area is growing again. The Mumbai, India-based company, Mahindra, had a ribbon-cutting ceremony today signaling a new plant to be built in Auburn Hills, MI. This is the first auto plant investment in the Detroit area in over 25 years. Off-road vehicles will be manufactured there.
Reasons cited by Anand G.Mahindra, CEO, for the location of the plant include:
Source: "Indian Automaker's Plant is Latest Sign of Detroit Comeback," by Bill Vlasik, New York Times, November 20, 2017.
image from the The Daily Worth blog
The recent rise in sexual harassment complaints has highlighted one aspect that may arise in dealing with a "bad boss." But bosses can be troublesome in a variety of ways. Four general behaviors that indicate a supervisor may be problematic are:
Forbes magazine recently did an article on how to deal with a difficult supervisor, suggesting five constructive ways:
It is difficult to apply these rational responses and deal with the emotions that arise in the moment when being criticized or otherwise poorly treated. Mindfulness is a technique that might help. Mindfulness is meta-awareness about what one is experiencing. In a simple example, one can experience frustration or even road-rage in bad traffic among selfish drivers. Meta-awareness would be noting that one has a strong feeling and that a choice exists as to whether to run with those feelings or just sit and notice that the feeling has arisen, not taking the situation personally.
With respect to the bad boss issue, meta-awareness might look like this: if one experiences a thought such as: "I am really being treated unfairly! What a jerk!"-- it is possible to have two responses (at least). One response is to feel moral indignation and ramp up one's emotional agitation regarding the unfairness. Another response is to have a meta-awareness: "Oh, I am experiencing strong emotions here. One is anger. Another is fear. I could really let this build until I want to explode. I can choose, however, to just sit in this meta-awareness until the strong feelings of helplessness subside.Then I will think about the situation rationally and maybe discuss it with a trusted friend or colleague so I I can handle it more skillfully."
Source: "5 Constructive Ways To Deal With Bad Bosses," by Victor Lipman, Forbes, September 14, 2017.
According to a recent Wall Street Journal/NBC poll, sexual harassment is a reality for 48% of women in the workforce. Individuals who do not identify as women are being harassed as well. Human resource departments (now often heavily staffed with attorneys) often use "trainings" in an attempt to mitigate corporate liability resulting from sexual harassment, which can be costly in terms of productivity and turnover, as well as dollar settlements. These trainings clearly are not doing enough to address the realities of harassment if so many are still experiencing it.
The humorous skit from Saturday Night Live is far more direct than any HR training might be. It deals with the issue in substance, rather than side-stepping the interpersonal issues by focusing on the legalities. Marketplace's Sabri Ben-Achour addressed the effectiveness of various approaches to sexual harassment training in a previous podcast: "What makes sexual harassment training effective--and ineffective."
Source: "SNL's Claire From HR nails sexual harassment, but she won't be part of your training," by Jana Kasperkevic, Marketplace: American Public Media, November 13, 2017.
image from flexjobs
Holiday seasonal employment creates new opportunities in the "gig economy." The number of jobs spike in delivery and other logistics arenas, as well as in both on-ground and online sales. Employers can maximize both short and long term benefits by hiring millennials, according to the linked article and information from the National Retail Federation. The reasons include:
In addition to the reasons listed in the article, the acceptance of short-term employment as a lifestyle make the millennial generation a first-choice for seasonal hiring. I'm sure there are plenty of other reasons...
Source: "3 Reasons Why Your Seasonal Hires Should Be Millennials," by Deborah Sweeney, Business.com, October 19, 2017.