• "Soft skills": the key to money, job success, and personal fulfillment

    image from mappio.com

    The advisory board to our college Business Department often requests that we pass this information on to our students: In hiring and promoting employees, they look for those individuals with well-developed "soft skills."  Several of these skills are delineated in the graphic above. The skills mentioned most frequently by our advisory board include:

    • positive regard for others
    • good attitude
    • communication skills
    • personal presentation
    • respect for time requirements
    • mindful responsiveness rather than reactivity in difficult situations

    Having well-developed soft skills often means having emotional maturity--or at least the tools to accept oneself and others even when things go wrong.

    People with soft skills are trustworthy and likable.  They make others feel comfortable. They are so important to students considering a career in business, that I will devote several blogs over the next few weeks to soft skills.

    Source: "When Soft Skills Stop Being Soft," by Sukhvinder Pabial, The Training Journal, January 23, 2013.

    "Minutes," Santa Monica College Business Advisory Committee meetings, 2010-2012.

    Follow up:

    • Go through each of the case studies in the article by Sukhvinder Pabial and identify the "soft skills" that made the difference.
    • Which "soft skills" come naturally to you at this point? Which skills do you need to work on?
    • What steps are you taking to improve your soft skills?
  • Understanding the trillion dollar coin

    During the debt crisis, one "solution" surfaced that was out-of-the-box and surprisingly comprehensive. It was a legal work-around that would theoretically make the fiscal debt-ceiling crisis go away. According to Paul Krugman, here is how it would work:

    "The Treasury would mint a platinum coin with a face value of $1 trillion (or many coins with smaller values; it doesn’t really matter). This coin would immediately be deposited at the Federal Reserve, which would credit the sum to the government’s account. And the government could then write checks against that account, continuing normal operations without issuing new debt." [from the article linked below]


    Here is a quick explanation of the debt ceiling problem , and how the coin would solve it:  The US government is currently not bringing in enough revenue to cover all of its expenses. A Congressional law limits the amount of debt (overspending) that the government can assume. If the Trillion Dollar Coin was minted, it could be deposited into the government's account, and "Voila!" the US government would no longer be in debt.

    Weird as this may seem, minting the coin is legal. 

    By the way, the debt ceiling crisis was resolved temporarily by another piecemeal compromise.  The threshold for violation will probably arise again in a few months. Perhaps the trillion dollar coin "solution" will be considered once again.

    Source: "Coins Against Crazies," by Paul Krugman, New York Times, January 10, 2013.

    Follow up:

    • What was the law allowing a trillion dollar coin to be minted probably intended for, according to the article?
    • Even though the minting of the coin seems to have no underlying substance, why might it make sense, considering the current structure of monetary policy, both domestically and globally?
    • What are the global economic risks of minting a trillion dollar coin, if any?
  • Management issue: The Flu...


    image from www.smokymountainurgentcare.com

    The flu season this year is particularly debilitating.  It can be tough to manage one's own personal health during flu season.  But what about managing the health of those who work for you?  A flu epidemic can negatively affect productivity and can ultimately have an effect on profits and on the performance evaluations of your department.

    In the "soft skills" area of human resource management--personal health care can have implications for business.

    A manager needs to be respectful of personal boundaries and cultural differences with respect to health practices, but also has a responsibility to maintain a productive and professional environment. Taking a pro-active stand to support an employee taking a "sick day" at the beginning of an illness is one option.  Newer employees need to know what behaviors are supported by the corporation toward maintaining a disease-free work environment. It might even be helpful, if approved by those in the chain of command, to post a document like this one:


    image from everydayreadiness.com

    In any event, a manager should be mindful of the messages being given to employees with respect to expectations that they "work sick" or "show up at any cost."

    Be well !

    Source: "Do You Have A Plan For Flu Season?" by Laura Vanderkam, CBS News MoneyWatch, January 25, 2013.

    Follow up:

    • Did you get a flu shot this year?  Why or why not?
    • How many times per year do you get sick? What is your personal strategy in dealing with your responsibilities when you are ill? Do you take a pro-active approach? Do you crawl into bed and forget everything?
    • How do others around you react to illness (instructors, bosses, family members, friends)?  How does their reaction to their own illnesses and the illnesses of others affect you and your strategies for dealing with illness?
  • Is it better to buy or rent?

     

    RENT vs BUY CALCULATOR.


    Check out the link above to see if it is better for YOU to rent or buy a home, based on financial information alone. The qualitative issues--such as whether you want to stay in one place, or whether you can "handle" the responsibilities of ownership--are outside the parameters of finance, but may be important to consider.

    Actually dealing with the quantitative factors in decision-making can be a challenge...especially when the qualitative issues can be overwhelming. Nevertheless, a "rent vs. buy" decision--a classic "differential analysis" problem--is important to every person's financial life...since everyone needs a place to live.

    Let me share this, from my personal experience. On my father's side of the family, no one had ever owned property. I researched this for four generations: all renters or indentured servants.

    On my mother's side, there was ownership and loss...never was there enough property to pass to the next generation.

    My husband's family was a different story: sacrifice to own property led to generational increases in property ownership and financial well-being.

    So...we bought property, and bought more property to rent out...etc. We were lucky. Our money was in real estate when the market was going south.

    That said...what advice do we give our children? 

    Rent or buy?

    All I can say is: use the linked calculator and decide for yourself.

    Source: "Is it Better to Buy or Rent?" by David Segal, NYT: The Haggler, January 12, 2013.

    Follow up:

    • Test out the extremes of the rent-vs-buy calculator. What effect does down payment have on your decision?
    • What effect does interest rate have on your decision?  At today's very low (historically) interest rates, what would be the most likely advice to give an investor?
  • National Taxpayer Advocate's Annual Report

     

    The Taxpayer Advocate's Annual Report is out, and there is something in it for everyone to like...and dislike.  What is interesting is that the author, Nina E. Olson, really views the IRS as a business entity, and assesses it in terms of efficiency and opportunities, as a good CEO might.  The Advocate's report reads like a report to stockholders--We The People of the USA--but it is officially addressed to Congress.

    Some of the main points:

    • Tax reform is needed to simplify the Code
    • Compliance with tax provisions is sometime extremely difficult for taxpayers--almost every taxpayer either spends money on a professional or on software just to figure out what they owe.
    • "Tax expenditures" (credits) are not cost effective. A simpler tax structure would produce more revenue.
    • "Zero-based budgeting" techniques should be used to fix the tax code. Decide policy and revenue structure separately, then make them work together.
    • The IRS, while treated like a "cost center" in terms of federal budgeting, is actually a revenue center: every dollar invested in the IRS produces a $214 ROI (return on investment). This should be factored into budgeting decisions.
    • Increased funding would improve customer (taxpayer) service.
    • Tax-related identity theft issues must be addressed.
    • The IRS needs to improve taxpayer service with respect to preparer fraud, adoption credit audits, and foreign bank account reporting.

    Another interesting finding is that people who do not trust government tend to be more likely to cheat and underpay their taxes.  At any rate, it is short and well worth reading.

    Source: "National Taxpayer Advocate's Annual Report" via Taxmama.com, January 11, 2013.

    Follow up:

    • Do you have a suggestion for improving the IRS? Contact the Advocacy Panel by phone or via their website..
    • Read the report. Which of the issues raised do you think are most important? Do any of the suggestions affect you personally?
  • I wanna buy the New York Stock Exchange!


    photo of Jeffrey Sprecher in his offices by Rich Addicks, NYT from article linked below

    How could it be possible for one man running a young company in Atlanta to buy the whole New York Stock Exchange? The answer, according to Nathaniel Popper is:

    The disruptive power of innovation

    Jeffrey Sprecher announced around Christmas that his company, IntercontinentalExchange (ICE) would buy the NYSE for $8.2 billion.  The deal is expected to be finalized sometime in 2013. The purchase is possible for ICE because ICE owns the technology that has processed much of the the super-fast computer trading that has supplanted trading on the NYSE floor.  ICE has also worked closely with Wall Street firms to stay a step ahead of  regulations by setting up safeguards to limit the super-fast trades that have caused problems for other companies. 

    "221 years of Wall Street history will come to an end."

    Source: "Buying the N.Y.S.E. in one Shot" by Nathaniel Popper, NYT Sunday Business, January 20, 2013.

    Follow up:

    • What events in 2000 started the chain of events that led to this purchase announcement?
    • What was Jeffrey Sprecher's career path, beginning in 1970?
  • Loose Ties: one way to keep your options open

     


    image by Paul Adams from wmpoweruser.com

    According to Andrew McAfee, "There is a huge amount of work in sociology, really beautiful work, that shows, especially if you want innovation and novelty, or introductions to other social networks, that your weak ties are a better place to go than your strong ties. Your weak-tie network is an extremely valuable thing for you. The problem is that before the 2.0 era, we had terrible tools for building and maintaining and exploiting a network of weak ties."

    What does this mean? Innovation and progress will NOT come from the comfortable, older, strong ties...but instead from the possibilities presented by our "weak ties," or acquaintances, two or three degrees of separation from our comfort zone.

    For those of you who are looking for a job, or looking to build a new business, or looking to expand your sales territory--it is the "weak ties" that will lead you into the expansion of your horizons.

    Sources: "The Strength of Weak Ties," by Jamie Notter, [blog], February 13, 2012.
    "Mark Granovetter: the Strength of Weak Ties" Wikipedia.
    "Interpersonal ties" Wikipedia.


    Follow up:

    • Has a "friend of a friend" ever helped you get a job or a connection to something you needed? This is a "weak tie." Describe what the relationships involved led to.
    • List all of your "Strong Ties." [i.e.: people you talk to daily or weakly, or are related to]. How can these people help you advance your career? Then list who those people who your "strong ties" might know. Do the possibilities increase? List and describe them.
  • A Mercedes Benz loan nightmare


    image from amazon.com these authors are NOT involved in this article
    however "The Haggler" is a known NYT helping entity.

    Beware trusting those [convenient, seductive] automatic electronic transactions...

    Rosslyn Hooley of Connecticut contacted The Haggler at the New York Times for help in resolving her auto loan nightmare. Here was her situation, summarized:

    • Hooley obtained a loan through Mercedes Benz Financial Services (MBFS) for her dream car in 2011.
    • She set up an automatic EFT (electronic funds transfer) cover the loan payments.
    • In December 2012, she received a check from MBFS for the exact amount of the payment, and it happened again in January. [LOL: I take it she didn't make it a priority to investigate the December puzzling payment...since she was RECEIVING money. Just human nature...]
    • When she looked into it in January, when it occurred again, MBFS told her that the loan had been paid in full in October...and that Hooley's insurance company had called to say the car had been totalled in Hurricane Sandy. This was not accurate, and she tried to clear up the mis-information.
    • 5 days later, a collection agency contacted her about her "late payments" and the additional fees and penalties for being "overdue."
    • Hooley took the time to straighten all of this out...and it worked with respect to MBFS records...
    • HOWEVER...her credit rating got hurt because of all of her "bad behavior."  MBFS refused to help correct the misinformation. This is the problem that Hooley could not resolve and needed The Haggler to fix.

    When The Haggler got involved, MBFS agreed immediately to help. Said Janet Marzett, a MBFS Vice President, after she listened to the complaint call that was recorded "for quality assurance":

    "It’s absolutely unacceptable for us to even allude to the notion that the customer needs to do anything if we make a mistake. I can’t excuse it and I’m not going to defend it. And I can tell you that we dealt with that phone representative immediately.” 

    It is good to know that justice sometimes prevails...but it in unfortunate that it takes a lot of attention and timely follow-up. 

    Source: "The Auto Loan that went Haywire," by David Segal, NYT: The Haggler, January 12, 2013.

    Follow up:

    • Recall how an incident with corporate error played out in your experience. How did you feel? How did you react? How would you characterize the behavior of the corporate perpetrator?
    • Describe your experiences with auto loans. How would your relate your experience to the time described here? How do your parents experience the auto loan process?
  • EatWhatever: the high cost of investment capital


    photo of entrepreneur Jacqui Rosshandler from article linked below

    Does the possibility of having bad breath make you feel self-conscious in business or social situations? This is just the kind of insecurity that creates demand for a new product. The primary product of the 4-year old company EATWHATEVER is a two-step process that works both in the mouth and in the stomach.

    Jacqui Rosshandler is an entrepreneur that had seen a similar product in her native Australia, but saw the unmet need in America. She subcontracted out the development of a different, two-step solution. Then she ran her business out of  her NYC apartment with an initial investment of $60,000. But soon she ran out of cash to increase her production, and was unable to secure a loan from a bank loan.

    Networking connections led her to Alfred Shorin, an investor, who offered an immediate cash infusion of $250,000 in exchange for a 75% stake in her company, with an opportunity to increase her share to 40% if certain goals were met.

    This was a lot of her company to sacrifice for the needed dollars! For this article, several financial advisors were contacted to give their opinions of Shorin's offer, and offer advice to Rosshandler.  The question, in a nutshell, was:

    Is 25% of something better than 100% of nothing?

    What would you decide?

    Source: "Help for a start-up, but at a high price," by John Grossman, NYT, January 2, 2013.

    Follow up:

    • What factors contributed to Rosshandler's inability to get a bank loan?
    • What events contributed to the product's successful introduction?
    • What are the various suggestions made by the financial advisors interviewed for the article? What decision would you make if you were in Rosshandler's position?
  • Informational interviews: a tool for success


    image from comerecommended.com

    "What is your dream job? If you could have the career of any person, who’s would it be? Wouldn’t it be nice to talk to that person, and ask them how they got where they are?... Well, why don’t you?"  This is what my 24-year old daughter, Hannah Bernstein, asked a friend of hers, based on her own experience doing interviews for the Facebook site, "Blue Sky Black Sheep."

    Hannah was talking about a personal interview, done by you to get exactly the information that you need to make a career, educational, or investment move. Hannah's advice:


    "If what you really want to do is own your own business, or run a restaurant--it’s likely that those entrepreneurs  haven’t been professionally interviewed. But you can still ask these people questions about their career. It’s called an 'informational interview'. It’s like a magic word. Pick out exactly who you’d like to talk to. If you’re looking to open up a restaurant in Los Angeles that serves meals at a $20-35 price point, that seats around 50 people, find a restaurant like that and find out who runs it. Then look up their email address (likely available on the company website) and get in touch. Explain that you have aspirations in that field, open with an expression of admiration of that person’s knowledge, and then ask if you can talk to them, either by phone or in person, about how they’ve achieved what they have in their profession."

    "I find that there are different conventions around informational interviews in different fields. When talking to someone in the business world, politics, or an administrative position, 'informational interview' is a thing that they’ll know about. You can directly ask for an informational interview, and they’ll say yes if they can. In less formal fields, like tech or entertainment, the convention is often to offer to buy someone coffee or a meal, so you can 'pick their brain' while you’re doing it."

    "People like to talk about themselves. When you tell someone that they’ve achieved something in their field-- enough so that you look up to them as an inspiration--they’re flattered. The worst that can happen is that they say 'no'."

    The possible positive outcomes are:

    • a larger network for additional connections in a field that you like;
    • the beginning of a mentor relationship that might lead to an internship or more;
    • inside information about the downsides of a business that you hadn't considered;
    • a better understanding about what is involved in a successful career path;
    • a body of information that will help you to interview for jobs in that field, if experience is necessary first
    • improving your business communication skills.

    If you have no experience as the "interviewer," check out the list of possible informational interview questions on About.com. 

    Sources:

    "Informational Interview Questions," About.com.

    "Blue Sky Black Sheep," Facebook.com

    Follow up:

    • Just do it. Interview someone who has a career you want. Take a digital recorder and a notebook, prepare some questions, and have some fun.
  • College degrees that yield the 8 worst ROI


    image from article linked below

    Well, your parents or your high school counselor might sometimes be right: some college majors are more lucrative than others. Recent research posted on Salary.com revealed that these majors produced the worst prospects for high income:

    1. Communications
    2. Psychology
    3. Nutrition
    4. Hospitality/Tourism
    5. Religious Studies/Theology
    6. Education
    7. Fine Arts
    8. Sociology

    Of course, individual experiences might be different, and these degrees may provide excellent critical thinking, writing and research skills that can signal success in graduate schools or in pursuing a self-taught specialty.

    Source: "8 College Degrees that Yield the Worst Return on investment," by Dawn Dugan for Salary.com.

    Follow up:

    • Read through the computational process described in the article. Write out the computation for one of the selected college majors, and compare it with the data quoted in the article. Do they match? Is this a good way to compute ROI?
    • Look at the returns on investment computed for each career. How do these returns compare with the current ROI for money in an Certificate of Deposit?  How do these returns compare to stock market investments?
    • Can you find an article on the Best ROI by college degree? Do you have any thoughts about the validity of this approach to analyzing college majors?

     

  • AIG shareholders sue the US government; the AIG Board declines to join them

    View:http://community.cengage.com/GECResource/themes/gew/utility/ :550:0]
    video from CBC player Lang & O'Leary Exchange, Big

    AIG shareholders (American International Group, an insurance multinational) are suing the US government for not making adequate profits, and for mismanaging AIG assets when the US government bailed out AIG in 2008. The AIG Board of Directors voted this week on whether the company should join the $25 billion lawsuit. (The video precedes the vote.) Although the Board may risk an additional lawsuit from the litigious and greedy AIG shareholders as a result of this week's action, the Board voted not to join the lawsuit.

    The Board was in a "lose-lose" position--if they joined the lawsuit, they may have been viewed as "soulless bloodsuckers" (see the Borowitz link below), but not joining the lawsuit may be viewed as not upholding their fiduciary responsibility to their shareholders to make as much money as possible, no matter what.

    Hank Greenberg, a major player in the 2008 fiscal debacle, is a lead figure in the shareholders' lawsuit.

    Sources:

    "CBC Player: Big 3 stories", January 8, 2013. [video embedded above]

    "Satire: 'A letter from AIG'," by Andy Borowitz, The Borowitz Report via BeforeItsNews.com, January 8, 2013.  "Soulless bloodsuckers" is a quote from this piece.

    "As public fumes, AIG says will not sue U.S. over bailout," by Ben Berkowitz, Chicago Tribune, January 9, 2013.

    Follow up:

    • Comment on the tone of the news broadcast. What American newscasts is it similar to, if any?  Listen to all three of the stories covered before you comment. Does the tone of the newscast enhance your perception of objectivity and accuracy, or detract from it?
    • What do you think about the AIG shareholders' lawsuit?  Do you buy the assertion that joining the lawsuit is "required" as part of the AIG Board's fiduciary responsibility to shareholders? What are the legal responsibilities of the AIG Board of Directors?  What are the ethical responsibilities of the Board of Directors?
    • The satiric piece by Andy Borowitz communicates some of the sentiments elucidated in the CBC broadcast.  Which do you think was more effective and why?
    • Comment on the irony of the message on the AIG homepage, in light of this lawsuit.

  • Match.com parent plans to acquire Tutor.com


    image from tutor.com website

    IAC (InterActiveCorp), the parent company of Match.com plans to acquire Tutor.com.  This acquisition seems to be a very good fit.  Match.com has successfully helped people find love through online dating for several years. Tutor.com has been matching up "nearly 3,000 tutors with students since 1998."

    One difference between the companies is that Tutor.com's business primarily matches tutors with institutions that have students--the contract is with with the university or library--rather than directly with the student. One of the changes proposed by IAC is to improve the web interface and marketing, and sell directly to students.

    It is estimated that IAC paid slightly less that $40 million to acquire Tutor.com.

    Source: "IAC Is Set to Announce Acquisition of Tutor.com" by Amy Chozick, NYT Media Decoder, January 7, 2013.

    Follow up:

    • Read about IAC.  What other companies does it own? How many of these companies are in the "match-up" business of some kind? What is IAC's focus or mission?
    • What does it cost to get a tutor through Tutor.com? How does it work.  How might you go about determining whether these services were worth the money? Compare it with any other tutoring experiences you may have had.

  • The anti-trust ruling and Google's REAL customers: Advertisers


    image from floridaadventureblog.com

    Last week the Federal Trade Commission (FTC) dropped its anti-trust case against Google.  The FTC was investigating whether the algorithms used by Google's search engines created harm to the consumers doing searches.  (By the way, these algorithms change 500+ times per year.) The FTC found that Google's search results actually benefited consumers.This finding was partially based on their review of Google's focus group research regarding travel information. Consumers apparently preferred getting a box at the top with actual flight information over just getting the normal 10 links provided per page. The possibility that Google might have a financial interest in the highlighted companies did not have any effect on the focus groups' preferences for getting the information in this convenient format. The FTC "sided" with the focus-group participants, and Google.

    Critics of the ruling point out that the FTC might have focused on the wrong "customer." They point out that Google's REAL customers are the advertisers "that pay billions each year" to have their link information and ads appear in Google searches.

    The article points out that consumers are rarely aware of the changes that algorithm "tweaks" might make in the search results. The businesses paying Google, however, are very aware that algorithm changes result in a different order within the search results list. In addition, consumers probably have some assumptions underlying their use of search engines. These assumptions were not delineated in this FTC review.

    Source: "Critics of Google Antitrust Ruling Fault the Focus," by Edward Wyatt, New York Times Business Technology, January 6, 2013.

    Follow up:

    • Should the FTC be focusing on "user appreciation" as outlined in the article, or on an objective standard of fairness? List the advantages to both approaches.
    • Regardless of what the focus group participants preferred, what do you think most search engine users really want from their searches? Who do you think should appear first in the list--advertisers? businesses with good reputations?
    • Who do you think are Google's "real" customers? What makes someone a customer?
  • Zipcar sells to Avis


    image from yahoo.com from news article

    If you live in a city that has decent public transportation, you probably wonder occasionally if it is worth it to own a car. Lane Becker and Courtney Scott of San Francisco did a "cost-benefit" analysis or "differential" analysis last year, and decided to give up their car, and use a Zipcar when they needed their own wheels.

    The practical problem they have encountered is that on some weekends, the Zipcar inventory is not sufficient to provide cars for everyone who needs one.  This might change, however, now that AVIS has purchased Zipcar.  The parent company has excess inventory that could possibly be used as a back-up when Zipcar inventories run low. Much of the Avis business is corporate (week-day) and so the merger is complementary in terms of client base.

    Zipcar might also benefit from volume buying and insurance discounts. And Avis might benefit from growth in the "car-sharing" industry.

    The Zipcar clientele does have a concern: they don't want Avis to "screw up" the business model that works so well for them.

    Meanwhile, the stock market seems to support the acquisition: this week, Avis was up 5%; Zipcar was up 48%.

    Source: "Car Sharing Catches on a Zipcar Sells to Avis", by Andrew Martin, NYT Dealbook, January 2, 2013.

    Follow up:

    • What other industries might benefit from a parallel type of merger, where an "old-school" business might merge with a newer, cutting-edge business model?
    • If you do not already understand how car-sharing works, research the options on the Zipcar website.
    • Do you own a car and live in the city? Do a cost-benefit analysis of your own regarding car-sharing instead of ownership. In addition to the financial results of your analysis, what are the pros and cons of each alternative?
    • Explain why the percentages in stock price were so different for Avis and Zipcar. What were the increases for each in terms of dollars?

     

  • Slicing the Pie: the big picture of US spending

    In a recent post about the Fiscal Cliff, I made note of the fact that the actions taken by Congress in resolving the "Fiscal Cliff" were piecemeal. The disjointed solutions did nothing to provide long term security for businesses or individuals trying to manage their financial lives with all the necessary information. Looking at the big picture, however, requires political courage and a willingness to make values-based decisions: "interest-based" bargaining rather than "positional" bargaining.

    In order to bargain in an "interest-based" way, it is necessary to have all of the facts and a good overall understanding of what can be changed and what can't be changed. The overview of spending provided by the pie chart above puts all costs into perspective. But not all of these expenditures are "on the table." Some represent commitments that cannot be changed in the short run.  To clarify the discussion, expenditures in budget discussions are separated into "discretionary" and "mandatory" portions of the Federal budget:

    The above chart breaks out the sections of the budget that are "discretionary," and therefore part of the political discussion and negotiation.  The majority of the federal budget, however--62%--is composed of items that represent contractual, legal and/or practical obligations that cannot be changed in the near term. This is similar to the items, in one's personal budget, that have to be paid "no matter what": rent, monthly car and insurance payments and minimal food and utility allowances.

    Here are the Federal mandatory items broken out:

    Can you see, by looking at the three charts above, that the way information is presented can be a major factor in what the reader perceives is important? Charts--particularly pie charts--can be a powerful communication tool. Not using pie charts also communicates a lack of interest in conveying the "big picture."

    Sources: [Note--each pie chart is originally from the Office of Management and Budget]

    Follow up:

    • Let's take a manageable budget: yours.  Make a pie chart of expenditures for a typical month. If you have annual expenditures that you pay once or twice a year, split them up and include them as part of your monthly budget. Hint: if you can use Excel, you can write out your budget in a column and use a tool to automatically create a pie chart.
    • Does your current budget reflect your personal values? Analyze your own budget, and create a "fantasy" budget for yourself for 5 or 10 years from now. Write down the assumptions about your life circumstances that you use to make the budget  Make a pie chart of the results, and compare it to your current situation. What conclusions can you draw?
    • What are the most important things, to you, that can be provided by the Federal government? How would a pie chart of Federal spending look if it reflected YOUR values?
  • The Fiscal Cliff meets American Incrementalism


    image from press conference linked below
    Press conference video + link at: Obama and Fiscal Cliff

    The President's New Year's Eve update on the fiscal cliff was very much what the commentators expected: The House of Representatives had gone home for the day, and the Senate was coming to terms with the parameters of taxes on individual incomes but little else.  It seems that Congress was going to do as little as possible, one tiny increment at a time, in order to postpone taking responsibility for any major overhaul.  Making the US budget reflect US values over the short and long term was not going to happen at this juncture. 

    By making the conversation about very small, emotionally volatile issues such as "raising taxes" and "hurting seniors", news stories did not frame the material well for the public, and neither did the legislators who may have feared being misunderstood or having their positions taken out of context at some future point. Stories over the next few days will probably delineate the effects on sample taxpayers, further drawing attention to the "trees", rather than the "forest."

    Pie charts come in handy when trying to see "big picture." But I'm saving those for the next post.

    Sources:

    Follow up:

    • Research "American incrementalism" on the Web. What do you see are the benefits and the pitfalls of this type of decision-making.  Consider long- and short-term consequences.
    • Read the NYT editorial linked as a Source. What are some of the details of the plan that is being worked out?  Who "wins"? What are the short and long term benefits and detriments of the plan agreed upon?
    • Research this issue further. What are some of the difficult taxation or spending-cut issues for which details must be worked out over the next several weeks?