Showing posts with label meritocracy. Show all posts
Showing posts with label meritocracy. Show all posts
Saturday, August 01, 2015
Thursday, October 23, 2014
Saturday, February 15, 2014
Two Tiger Parents Bring The Triple Package To San Francisco
Yesterday I had the distinct privilege of hearing Yale law professors Amy Chua and Jed Rubenfeld discuss their new book Triple Package at the Commonwealth Club. I'll have to get Triple Package at my local library because I'm cheap. Reading the knee-jerk criticisms of this work online are not sufficient to get the whole story. This sort-of sequel to Ms. Chua's Battle Hymn of the Tiger Mother traces valuable connections between culture and the forces that build personal character.
These two geniuses tell it like it is about the profound effect of cultural traits on economic behavior. They mentioned in passing that children immersed in non-judgmental environments often feel profound unhappiness in their later years. The pride from earning a sense of self-worth is a stinging rebuke to the nonsensical childrearing garbage that erupted from "Mr. Rogers' Neighborhood" for decades. I can see why critics unfairly paint Triple Package as racist, because it's a stinging rebuke to feel-good nonsense and lame excuses. It's also a very useful counterpart to The Bell Curve, another misunderstood landmark work about precursors for success. Triple Package finds that IQ isn't enough for success, and that success transcends race.
Jed Rubenfeld mentioned the classic sociological experiment of the Stanford marshmallow experiment to illustrate how self-control correlated very strongly with life success. He also mentioned a follow-up experiment where the controllers broke their promises and every kid responded by immediately grabbing their marshmallow. The point is that a broken social contract induces even a strong character to abandon impulse control. Mr. Rubenfeld hinted at how broken expectations induce dysfunctional behavior in society at large when we witness huge transgressions go unpunished. I've blogged before about the financial sector's egregious transgressions in the 2008 financial crisis and how few top executives have gone to jail. I'm still waiting for Jon Corzine's indictment for destroying MF Global. Critics who cry racism should know that the Triple Package authors offer another warning on how the rule of law is weakening in America. We have common cause here, people.
I'm all about the authors' three main success factors of superiority, insecurity, and impulse control. I've felt pretty darn superior to the neo-Neanderthals who've surrounded me my whole life. I can be insecure about whether some jerk wants to steal from me or some lazy trust fund baby gets handed an advantage denied to me. I'm also pretty good at controlling my impulses; I purchased my first car with cash after saving for years, and I did the same with my second car. Folks, Anthony J. Alfidi is indeed the ultimate triple package. They often substituted "exceptionality" for superiority during their talk but the effect is the same.
They admit that their most important conclusion is how later generations reinterpret the three success factors after experiencing mainstream American culture. Redefining success recognizes other intangibles. I was pleased to hear them value a mature understanding of success that balances money and status with honesty and fidelity. I'm pretty sure that classically educated people like these authors would recognize the wisdom of living a good life that originated with classical philosophers. The ancient words of Marcus Aurelius, Lao-Tsu, and Omar Khayyam showed us the way. The modern words of Khalil Gibran, Lewis H. Lapham, and Leo Buscaglia close the circle.
My readers may wonder why I diverge from business topics to discuss culture, education, and politics. Folks, I'm a financial analyst despite the Web 2.0 mechanics and media reach of the Alfidi Capital brand. Many factors affect the competitiveness of the American economy. Education and parenting shape the personal character of America's future professional classes. More of America's first-generation strivers should thank Ms. Chua and Mr. Rubenfeld for becoming their substitute parents. I first wrote about Ms. Chua's philosophy in 2011 when I was more bullish on China. I changed my mind on China but I haven't changed my mind on the importance of discipline. The new line of thinking on business success should make room for culture.
These two geniuses tell it like it is about the profound effect of cultural traits on economic behavior. They mentioned in passing that children immersed in non-judgmental environments often feel profound unhappiness in their later years. The pride from earning a sense of self-worth is a stinging rebuke to the nonsensical childrearing garbage that erupted from "Mr. Rogers' Neighborhood" for decades. I can see why critics unfairly paint Triple Package as racist, because it's a stinging rebuke to feel-good nonsense and lame excuses. It's also a very useful counterpart to The Bell Curve, another misunderstood landmark work about precursors for success. Triple Package finds that IQ isn't enough for success, and that success transcends race.
Jed Rubenfeld mentioned the classic sociological experiment of the Stanford marshmallow experiment to illustrate how self-control correlated very strongly with life success. He also mentioned a follow-up experiment where the controllers broke their promises and every kid responded by immediately grabbing their marshmallow. The point is that a broken social contract induces even a strong character to abandon impulse control. Mr. Rubenfeld hinted at how broken expectations induce dysfunctional behavior in society at large when we witness huge transgressions go unpunished. I've blogged before about the financial sector's egregious transgressions in the 2008 financial crisis and how few top executives have gone to jail. I'm still waiting for Jon Corzine's indictment for destroying MF Global. Critics who cry racism should know that the Triple Package authors offer another warning on how the rule of law is weakening in America. We have common cause here, people.
I'm all about the authors' three main success factors of superiority, insecurity, and impulse control. I've felt pretty darn superior to the neo-Neanderthals who've surrounded me my whole life. I can be insecure about whether some jerk wants to steal from me or some lazy trust fund baby gets handed an advantage denied to me. I'm also pretty good at controlling my impulses; I purchased my first car with cash after saving for years, and I did the same with my second car. Folks, Anthony J. Alfidi is indeed the ultimate triple package. They often substituted "exceptionality" for superiority during their talk but the effect is the same.
They admit that their most important conclusion is how later generations reinterpret the three success factors after experiencing mainstream American culture. Redefining success recognizes other intangibles. I was pleased to hear them value a mature understanding of success that balances money and status with honesty and fidelity. I'm pretty sure that classically educated people like these authors would recognize the wisdom of living a good life that originated with classical philosophers. The ancient words of Marcus Aurelius, Lao-Tsu, and Omar Khayyam showed us the way. The modern words of Khalil Gibran, Lewis H. Lapham, and Leo Buscaglia close the circle.
My readers may wonder why I diverge from business topics to discuss culture, education, and politics. Folks, I'm a financial analyst despite the Web 2.0 mechanics and media reach of the Alfidi Capital brand. Many factors affect the competitiveness of the American economy. Education and parenting shape the personal character of America's future professional classes. More of America's first-generation strivers should thank Ms. Chua and Mr. Rubenfeld for becoming their substitute parents. I first wrote about Ms. Chua's philosophy in 2011 when I was more bullish on China. I changed my mind on China but I haven't changed my mind on the importance of discipline. The new line of thinking on business success should make room for culture.
Monday, February 03, 2014
Choosing Between Meritocracy And Topocracy
Topocracy is a counterpoint to the meritocratic distribution of rewards within an economic network. This isn't some mere theoretical description of how economies behave as their structures mature. It's a description of reality as plutocratic regimes become entrenched in modern economies.
Contrast the Arrow-Debreau model of supply-demand equilibrium with the Sonnenschein–Mantel–Debreu theorem that individual rationality does not necessarily lead to macroeconomic rationality. This is not intuitive; Kantian reasoning tempts us to believe that rational actors everywhere would construct a rational world even without a deliberate attempt to do so. The lack of rationality in humans, such as with the inability to apply Bayes' Theorem or game theory in thinking, begs theoreticians to construct explanations that account for non-rational economic actions. This leads academics to the study of the tension between topocracy and meritocracy in a world where a perfect Arrow-Debreau equilibrium does not always hold for every commodity.
Serious students of these topics are welcome to peruse "To Each According to its Degree: The Meritocracy and Topocracy of Embedded Markets" from Scientific Reports. One doesn't need an understanding of advanced mathematics to comprehend the study's implications. Social networks have costs, and those costs channel rewards to economic actors favored by "nodes" of connectivity regardless of whether they produce things of value. A plutocratic society skews these reward channels upward through manipulation of the legal and political systems. Increasing income inequality is the result. Economic advantage is locked into the most robust social networks. Members of lower social classes find themselves locked out of opportunities to join social networks that channel excess economic rewards upward to the ruling elite.
The choice between meritocracy and topocracy is never completely mutually exclusive. Economies have always been inseparable from social networks. Only the complete disintermediation of all production, all consumption, and all knowledge from social connections would theoretically eliminate the possibility of topocratic rewards skewed to those of high connections and status. The greatest promise of additive manufacturing (3D printers allowing anyone to design and produce), automation (the possibility of production anywhere, anytime), and MOOCs (free education and knowledge) is the potential to confine topocracy to a very small portion of the economy. The convergence of those three forces can unleash a meritocratic economy that bypasses plutocratic social nodes.
Contrast the Arrow-Debreau model of supply-demand equilibrium with the Sonnenschein–Mantel–Debreu theorem that individual rationality does not necessarily lead to macroeconomic rationality. This is not intuitive; Kantian reasoning tempts us to believe that rational actors everywhere would construct a rational world even without a deliberate attempt to do so. The lack of rationality in humans, such as with the inability to apply Bayes' Theorem or game theory in thinking, begs theoreticians to construct explanations that account for non-rational economic actions. This leads academics to the study of the tension between topocracy and meritocracy in a world where a perfect Arrow-Debreau equilibrium does not always hold for every commodity.
Serious students of these topics are welcome to peruse "To Each According to its Degree: The Meritocracy and Topocracy of Embedded Markets" from Scientific Reports. One doesn't need an understanding of advanced mathematics to comprehend the study's implications. Social networks have costs, and those costs channel rewards to economic actors favored by "nodes" of connectivity regardless of whether they produce things of value. A plutocratic society skews these reward channels upward through manipulation of the legal and political systems. Increasing income inequality is the result. Economic advantage is locked into the most robust social networks. Members of lower social classes find themselves locked out of opportunities to join social networks that channel excess economic rewards upward to the ruling elite.
The choice between meritocracy and topocracy is never completely mutually exclusive. Economies have always been inseparable from social networks. Only the complete disintermediation of all production, all consumption, and all knowledge from social connections would theoretically eliminate the possibility of topocratic rewards skewed to those of high connections and status. The greatest promise of additive manufacturing (3D printers allowing anyone to design and produce), automation (the possibility of production anywhere, anytime), and MOOCs (free education and knowledge) is the potential to confine topocracy to a very small portion of the economy. The convergence of those three forces can unleash a meritocratic economy that bypasses plutocratic social nodes.
Tuesday, December 11, 2012
"Strong" Estate Tax Targets Middle Class And Ignores Super-Rich
Warren Buffett wants a strong estate tax. This has a populist, common sense appeal in light of his advocacy for higher income taxes and generous charitable giving pledge. Uncle Warren's argument is that plutocratic-enabling tax policies harm democracy. Let's consider the circumstances of today's plutocracy to determine whether any changes in tax policy will really weaken their hold on power.
The estate tax plan from United for a Fair Economy, which Mr. Buffett has endorsed, reduces the estate tax exemption threshold from $10M to $4M. This will harm the middle class and those who try to raise their status into the upper middle class more than it will harm billionaires. The ultra-rich who signed up for Mr. Buffett's big giving pledge have already structured their estates to pass into tax-free foundations and giving vehicles they control through trust agreements. George Lucas' designation of the proceeds from Lucasfilm's sale to a charity he favors is a classic example of how the ultra-rich can always avoid estate taxes. Giving your own money to a non-profit you control is a legal way to continue paying your living expenses. The aspirational middle class may not have access to the same kinds of estate-preservation strategies unless they can afford very competent wealth managers and tax attorneys. This is why the proposed policy's endorsement of a strong graduated tax on larger estates is meaningless.
True estate tax reform would begin with the elimination of the tax deductibility of charitable contributions. That won't happen, of course. Non-profit executives who derive their funding from endowed foundations would lobby against it and so would wealthy donors who fund political campaigns.
I'll give you a plan for real, comprehensive tax reform. Have the U.S. Treasury study the history of tax collection in the U.S. and identify the point on the Laffer Curve that maximizes gross revenue. I suspect it's somewhere between 16% and 19%, which means Warren Buffett probably isn't undertaxed at all if he pays 17.4%. Once we've identified that optimal point, make that the flat tax rate for all income with no deductions, exemptions, or carry-overs for any reason. Taxing earned income, unearned income, capital gains, and estates at that one rate will enormously simplify the government's operations. It will also render redundant the hordes of accountants and attorneys who perform little productive work. Tax planners represent as much of an overhead burden for the economy as tax collectors. I know the federal government will never adopt my plan because I can't bundle as many campaign contributions as Warren Buffett.
The estate tax plan from United for a Fair Economy, which Mr. Buffett has endorsed, reduces the estate tax exemption threshold from $10M to $4M. This will harm the middle class and those who try to raise their status into the upper middle class more than it will harm billionaires. The ultra-rich who signed up for Mr. Buffett's big giving pledge have already structured their estates to pass into tax-free foundations and giving vehicles they control through trust agreements. George Lucas' designation of the proceeds from Lucasfilm's sale to a charity he favors is a classic example of how the ultra-rich can always avoid estate taxes. Giving your own money to a non-profit you control is a legal way to continue paying your living expenses. The aspirational middle class may not have access to the same kinds of estate-preservation strategies unless they can afford very competent wealth managers and tax attorneys. This is why the proposed policy's endorsement of a strong graduated tax on larger estates is meaningless.
True estate tax reform would begin with the elimination of the tax deductibility of charitable contributions. That won't happen, of course. Non-profit executives who derive their funding from endowed foundations would lobby against it and so would wealthy donors who fund political campaigns.
I'll give you a plan for real, comprehensive tax reform. Have the U.S. Treasury study the history of tax collection in the U.S. and identify the point on the Laffer Curve that maximizes gross revenue. I suspect it's somewhere between 16% and 19%, which means Warren Buffett probably isn't undertaxed at all if he pays 17.4%. Once we've identified that optimal point, make that the flat tax rate for all income with no deductions, exemptions, or carry-overs for any reason. Taxing earned income, unearned income, capital gains, and estates at that one rate will enormously simplify the government's operations. It will also render redundant the hordes of accountants and attorneys who perform little productive work. Tax planners represent as much of an overhead burden for the economy as tax collectors. I know the federal government will never adopt my plan because I can't bundle as many campaign contributions as Warren Buffett.
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