Month: August 2015

Must-Read: Vox Voxsplains Vox.com

Posted on by Brad DeLong

Must-Read: Vox Voxsplains Vox.com: What http://www.vox.com has had to say about what it thinks it is doing:

On explainer journalism: Vox: Nine Questions About Vox: “The media is excellent at reporting the news and pretty good at adding commentary…

…What’s lacking is an organization genuinely dedicated to explaining the news. That is to say, our end goal isn’t telling you what just happened, or how we feel about what just happened, it’s making sure you understand what just happened. We’re going to deliver a lot of contextual information that traditional news stories aren’t designed to carry, and we’re hiring journalists who really know the topics they cover. There’s no way we’ll be able to help readers understand issues if we haven’t done the work to understand them ourselves…. This article is an example. It tries to identify the main questions you might have about Vox and answer them in a clear, logically structured way. At the beginning is the most obvious, most important thing people might want to know about Vox rather than the latest scoop. This article contains news–we’re announcing our name, Vox…. But the new information isn’t the point. The point is to leave you with a better understanding of what we’re trying to do with Vox.

On the persistent stock: Matthew Yglesias: Refreshing the Evergreen: “No one even seemed to notice that we were flooding the site with previously published content…

…Articles were enthusiastically shared by people who had shared them the first time around, too…. Which is great!… If we can use our archives as a way to deliver more great pieces to today’s audiences, then that’s a huge win…. Lots of important things are… longstanding patterns, structures, or systems…. We think well-executed evergreen journalism is often the very best kind of journalism there is. We want to be doing it regularly, and we also want to be doing it better than traditional formats have allowed…. We’ve asked our whole staff to do at least one refresh per week, and we’re looking forward to seeing how it goes…. Hopefully we’ll get a bit closer to building and surfacing the persistent news resource we’re working towards.

On iteration: Ezra Klein, Melissa Bell, and Matt Yglesias: Welcome to Vox: A Work in Progress: “Today marks phase two…. At the core of this phase are the Vox Cards…

…inspired by the highlighters and index cards that some of us used in school to remember important information. You’ll find them attached to articles, where they add crucial context; behind highlighted words, where they allow us to offer deeper explanations of key concepts; and in their stacks…. But we’re just starting to learn how to use them. We have been employees of Vox Media for less than 65 days…. We’re launching this fast for one simple reason: there is no better way to figure out the best way to do explanatory journalism on the web than to do explanatory journalism on the web. We have some exciting ideas about how to do a better job explaining the news. But right now, those ideas are untested…. And that’s the only test that matters…. The quicker we can launch, the quicker we can start learning–and start improving.

On aggregation: Ezra Klein: How Vox Aggregates: “[When] I started… everything I wrote… in the hopes that someone else…

…would take it and try to use it… with a link back… a positive-sum endeavor…. [At the] Washington Post… I helped to create Know More… a big ‘Know More’ button that would lead people back to the original source to, well, learn more…. While aggregation has always been a clear service to readers, it can be enormously frustrating to writers…. But aggregation, when done correctly, offers value to the original source…. If you ever feel Vox isn’t using your work in the way you’d want, email me at ezra@vox.com and let me know. Our intention is always to do things in a way that is positive-sum, and if you ever feel we’re failing that ideal, we want to know, and we’ll work with you to change it…

On the homepage: Melissa Bell: Vox’s New Homepage, Explained: “If the slots look unusually…

…they’re designed not for one headline, but for many…. We’re able to offer both our newest story on the topic, but also the stories leading up to today…. I have no idea if this is going to work. It’ll require a different type of curation and we need to build a robust taxonomy…. There’s a basic latest news display…. There are some new permanent doorways into content we know you like to find… favorite writers… latest videos…. The layout algorithmically generates each time and the system may run through up to 1,000 different options to find the best one. (For more on the technical background, we took inspiration from some of the great work happening at Flipboard.)… There’s been a lot of talk of late about whether or not homepages are dead. We’re certainly not seeing that at Vox…

On first-person voices: Eleanor Barkhorn: First Person: “We’ve decided to devote a section…

…to thoughtful, in-depth, provocative personal narratives… First Person…. Here are a few pieces… that exemplify the style and range of pieces…. I’m a black ex-cop, and this is the real truth about race and policing. 9 things I wish I’d known before I became a stay-at-home mom. The internet is full of men who hate feminism. Here’s what they’re like in person. 9 things I wish people understood about anxiety. Confessions of a congressman…

Vox: How We Make Vox:

17 DAYS AGO: Is the media becoming a wire service?: Is the golden age of media innovation over before it’s even begun? http://www.vox.com/2015/7/22/9013911/is-the-media-becoming-a-wire-service

ABOUT 2 MONTHS AGO: First Person, Vox’s new section devoted to narrative essays, explained: What is Vox First Person? And how can I write for it? http://www.vox.com/2015/6/12/8767221/vox-first-person-explained

4 MONTHS AGO: How Vox aggregates: A look into how we aggregate, why we aggregate, and what we’re trying to achieve http://www.vox.com/2015/4/13/8405999/how-vox-aggregates

4 MONTHS AGO: Happy Voxiversary!: One year ago today, we started to put web content online all day, every day. Thank you for joining the ride http://www.vox.com/2015/4/7/8353755/happy-voxiversary

7 MONTHS AGO: Refreshing the evergreen: How and why we’re trying to find a better way to use our past work http://www.vox.com/2015/1/15/7546877/evergreen-experiment

7 MONTHS AGO: Thank you for a great 2014!: It was a busy year. We published over 7,000 articles, almost 100 videos, 30 editorial apps, 150 features, and built over 30 storytelling tools. Here are a few of my favorite http://www.vox.com/2015/1/1/7472345/new-years-resolutions/in/5328445

8 MONTHS AGO: Vox shirts are now available: Now you can have your very own Vox t-shirt or sweatshirt http://www.vox.com/2014/12/9/7353725/vox-shirts-are-now-available/in/5328445

11 MONTHS AGO: How we updated our teen birth rate feature: We want the story to the be best single resource for our readers to explore a complex subject http://www.vox.com/2014/9/22/6401753/birth-rate-feature-update/in/5328445

11 MONTHS AGO: Vox’s new homepage, explained: It’s shiny http://www.vox.com/2014/9/5/6109125/why-we-built-a-homepage/in/5328445

ABOUT 1 YEAR AGO: Explore Vox card stacks: We’re at 81 and counting http://www.vox.com/2014/6/10/5797370/explore-vox-card-stacks/in/5328445

ABOUT 1 YEAR AGO: The homepage is dead! We’re building one anyway: Long live the homepage http://www.vox.com/2014/6/9/5792136/the-homepage-is-dead-we-re-building-one-anyway/in/5328445

ABOUT 1 YEAR AGO: Building Vox 1.0 in nine weeks: Launch fast, tweak often http://www.vox.com/2014/6/6/5787326/building-vox-1-0-in-nine-weeks/in/5328445

OVER 1 YEAR AGO: Three weeks of Vox: Where are the comments? And other site conundrums http://www.vox.com/2014/4/28/5659728/three-weeks-of-vox-tell-us-what-you-think/in/5328445

OVER 1 YEAR AGO: Ezra Klein voxsplains Vox in New York magazine http://www.vox.com/2014/4/11/5604242/ezra-klein-talks-about-vox-to-new-york-magazine/in/5328445

OVER 1 YEAR AGO: Correcting and updating card stacks: Rather than mucking up the cards with lots of annotations, each stack should have an updates card at the end http://www.vox.com/2014/4/8/5596086/correcting-and-updating-cardstacks/in/5328445

OVER 1 YEAR AGO: How come the links in charts don’t work?: We had to choose between mobile-friendly charts and interactive charts, and we decided to prioritize mobile http://www.vox.com/2014/4/8/5593258/how-come-the-links-in-charts-dont-work/in/5328445

OVER 1 YEAR AGO: Welcome to Vox: a work in progress http://www.vox.com/2014/3/30/5555690/welcome-to-vox/in/5328445

OVER 1 YEAR AGO: Nine questions about Vox http://www.vox.com/2014/3/28/5559144/nine-questions-about-vox

Noted for Your Nighttime Procrastination for August 7, 2015

Posted on by Brad DeLong

Must- and Should-Reads:

Plus:

Might Like to Be Aware of:

Weekend reading

Posted on by Nick Bunker

This is a weekly post we publish on Fridays with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth has published this week and the second is work we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

Wage growth still hasn’t picked up yet in the United States.

Some cities may be eager to raise their minimum wages, but will enforcement be a problem?

While its impacts won’t be as large as the housing bubble, it’s worth looking at subprime auto loans.

A new study looks at the distribution of wealth after taxes and finds the tax code is promoting inequality.

A new regulation disclosing CEO pay ratios might not affect policy, but it should give us some interesting new data.

Links from around the web

The matter of segregation by income and race and its resulting consequences are increasing in the public conversation thanks to new research, policy action by the Department of Housing and Urban Development and a Supreme Court case. Thomas Edsall asks “where should a poor family live?” [nyt]

Corporate short-termism has also entered the public debate thanks to a proposal from Hillary Clinton’s campaign. William Galston argues that while you might disagree with her policy response, short-termism is definitely a problem for the U.S. economy. [wsj]

When industries expand, we usually would hope that there will be economies of scale where companies can produce goods or services more cheaply as they get bigger. Unfortunately the historical evidence shows the exact opposite happening in the finance industry, according to Timothy Taylor. [conversable economist]

On average women earn less than men. But in certain industries that’s not true when workers are young; women actually make more than men, on average. But as Ylan Mui writes, that changes as workers age. [wonkblog]

After almost 7 years of zero interest rates and unconventional monetary policy, some economists and policy makers are concerned about the effectiveness of monetary policy. A U.K. politician’s proposal to have the Bank of England directly finance infrastructure investments is drawing ire and Matthew Klein isn’t sure why. [ft alphaville]

Friday figure

080315-wage-growth-slack

Figure from “Wage growth and the health of the U.S. labor market” by Nick Bunker

Low hiring rates do not point to strong U.S. wage growth

Posted on by David Evans

The jobs numbers released today by the U.S. Bureau of Labor Statistics indicate that wage gains in the United States are far below what would be considered healthy wage growth. The vital signs of the labor market in today’s report and in other labor market flows data do not suggest we should be optimistic about sustained wage increases in the near future.

Wages rose in July at just a 2.1 percent rate over the past year, similar to the 2.0 percent annual growth in June. For production and nonsupervisory workers, who comprise about four-fifths of the workforce, the annual rate of wage growth was only 1.8 percent. The U.S. economy did add 215,000 jobs in July, gaining more than 30,000 jobs in each of the retail, health care, and accommodation and food services industries. After prior revisions, the average monthly job gains over the last three months have been about 235,000.

Although this kind of employment growth would be a positive development in a very tight labor market, the current rate of job gains will keep distant the goal of full employment. Even though the overall unemployment rate was 5.3 percent last month, the same as in June, the employed share of the prime-age population, ages 25 to 54, was 77.1 percent last month, basically unchanged from where the rate has been stuck at 77.2 percent for five of the six prior months. This is well below its average of 79.9 percent in 2007 before the start of the Great Recession.

The U.S. economy has not yet generated the robust labor demand that will secure sustainable increases in pay across the wage distribution. Historically, the U.S. labor market has experienced healthy wage growth when the employed share of the prime-age population, ages 25 to 54, has exceeded 79 percent. Weak nominal wage growth (before accounting for inflation) makes it difficult for workers to reduce their debt burdens, which may in turn be slowing the pace of the current recovery by crimping consumption.

Data on labor market flows, not included in today’s report, also show signs that the economy is far from the level of dynamism we expect in a well-functioning labor market. One key indicator is the hiring rate from Job Openings and Labor Turnover Survey, published separately by the Bureau of Labor Statistics. The 215,00 jobs added in July represent net job gains, after accounting for both new hires of workers into jobs and the separations of workers from jobs because they either quit, were laid off, or were fired. The private-sector hiring rate—the number of hires divided by total employment—accelerated in 2014, but now is only at 3.9 percent. Put another way, despite 58 consecutive months of net job creation in the current recovery, the rate of hiring has only recently reached a level about equal to where it bottomed out during the last business cycle between 2001 and 2007. (See Figure 1.)

Figure 1

 

0807-jobs-day

The strength of hiring rates has consequences for the amount of wage growth workers can expect to attain. The last time the U.S. economy experienced nominal pay raises for production workers above 3.5 percent was from 2006 through early 2009. This era of healthy wage growth followed a period from 2004 through early 2007 when the monthly hiring rate was consistently at least 4.2 percent. The hiring rate reached 4.5 percent and higher in 2005 and 2006. To put the current 3.9 percent hiring rate into perspective, in order to reach these prior peak hiring rates, every firm today would have to increase its hiring, on average, by more than 15 percent.

Turning to another source of data on labor market flows, we can look specifically at the rate of job-to-job transitions, the Job-to-Job Flows data produced by the U.S. Census Bureau. Workers are hired either from the pool of the non-employed population or they are hired from another job. These latter, job-to-job hires are important for wage growth because employers are more likely to increase pay when they need to recruit someone away from another job as opposed to hiring an unemployed worker. Quarterly job-to-job hiring rates in the most recent data from the end of 2013 were only 4.9 percent, similar to the low point of 5.0 percent a decade ago in 2003.

Relatively low employment rates, stagnant wages, and low hiring rates are worth considering amid discussions about whether the Federal Reserve should raise interest rates sometime this year. When the Fed raises rates, it will increase the difficulty of firms to expand and hire, and it will reduce consumer purchases of homes and automobiles. Although raising rates soon provides the Fed with the flexibility of lowering interest rates during a future downturn, it is hard to see how the labor market is currently in a position to bear any more downward pressure on employment and wages.

Another Disaster at Political-Economic Policy Analysis by Brad DeLong!

Posted on by Brad DeLong

I had thought we were well-past the interwar watershed in economic policy. The interwar watershed had three parts:

  • The winning of the franchise by the working class.
  • The portfolio rebalancing of the non-entrepreneurial wealthy.
  • And the recognition that the gold standard was not unbreakable.

The last of these robbed the gold standard and its cousins of much if not all of its practical policy virtue. The second of these moved the extremely powerful interest group of accumulated wealth away from the hard-money side, for their wealth was no longer overwhelmingly concentrated in nominal bonds and land let out for long terms at fixed nominal rents. The first brought into a politics a very large group for whom high employment was a great good and high inflation at most a minor substantive injury.

We were thus supposed, after the interwar watershed, to be in John Maynard Keynes’s world: the world of practical and pragmatic demand management in order to balance aggregate demand and assist in structural adjustment. As he put it in his 1924 Tract on Monetary Reform:

Thus inflation is unjust and deflation is inexpedient. Of the two, perhaps deflation is, if we rule out exaggerated inflation as in places such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier. But it is not necessary that we should weigh one evil against the other. It is easier to agree that both are evils to be shunned.

The individualistic capitalism of today, precisely because it entrusts saving to the individual investor and production to the individual employer, resumes a stable measuring rod of value, and cannot be efficient–perhaps cannot survive–without one.

For these great causes the most free ourselves from the deep distrust which exists against allowing the regulation of the standard of value to be the subject of deliberate decision. We can no longer afford to leave it in the category of which distinguishing characteristics are possessed, in different degrees, by the weather, the birth rate, and the Constitution–matters which are settled by natural causes, or are the resultant of the separate action of many individuals acting independently, or require a revolution to change them…

When the Greek crisis hit in 2010, my reaction was that this could well be a great blessing in disguise: Greece was so small that only trivial commitments at the scale of the eurozone in terms of real money would be necessary to resolve its entire debt, and hold the Greek economy harmless–relative to any alternative policy–while adjustment took place.

The obvious alternative was the standard IMF package: A mix of restructuring and write down coupled with substantial depreciation and a loan to keep imports flowing as long as policy reform was taking place successfully.

The absence of exchange rate depreciation was going to make adjustment very hard for the Greek economy. That absence of depreciation was something Greece was giving up in return for the bargain that was the euro. In return, if the euro bargain was to survive, Brussels and Frankfurt had to be willing to offer things of equivalent value. And it seemed very clear in 2010 what those things of equivalent value were: extra transfers over and above those that would follow from a normal IMF program, in order to to offset the extra harm from the lack of depreciation; and extra help in terms of expanding demand for Greek products from northern Europe. That meant that Brussels and Frankford would push the envelope on eurozone inflation, and within the eurozone the bulk of that inflation would be concentrated in northern Europe, where the fundamental cost disequilibrium vis-à-vis Greece was greatest…

I was, once again, very wrong…

CEO pay ratios and a new source of inequality data

Posted on by Nick Bunker

This past Wednesday the U.S. Securities and Exchange Commission approved a rule included in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 that requires public companies to calculate and then disclose the ratio of their chief executive officer’s compensation to the compensation of their median worker. The rule has been five years in the making and has been quite controversial. The regulation passed by a vote of 3 to 2. The future impact of the regulation on the actions of corporations and their pay setting is unknown and up for debate. But what we do know is that it’ll produce a lot of new data.

The fact that a rule that just discloses information about pay has taken five years to pass amid controversy says quite a bit about the potential for future policy action on executive pay. As Neil Irwin argues at The Upshot, the riven opinions on the merits of the rule are indicative of the debates about the reasons for swiftly rising executive compared to what workers at the midpoint of the pay scale at public companies are earning.

One side of the debate argues that rising executive compensation is merely a reflection of market dynamics. CEOs are paid so much more because they are increasingly more important in a globalized world with larger companies. Reduce their pay and they’ll go elsewhere. The other side of the debate claims that executive pay is not entirely determined by executive skill and that in some firms executives can set their own pay. Though in both cases, the question is not whether lower executive pay will cause executives to flee, but rather if firms can pay a lower compensation and get the same level of talent as Dean Baker at the Center for Economic and Policy Research points out.

Jordan Weissmann at Slate is skeptical than increased information about compensation inequality within firms will do anything to reduce executive pay. He’s skeptical that consumers will change their purchasing decisions based on the new information or that investors and board members will care either. On that second front, perhaps the “amoral” investors don’t care because they haven’t seen any indication that inequality within individual firms affects business outcomes in anyway. The new data might be fuel for research that shows whether it does.

Consider research that shows workers are more productive when they know their relative place within a firm’s pay structure. Then again, other research shows no effect. The new data created by the rule could help economists and market analysts evaluate that question.

And then there’s the on-going debate about the relative roles of rising inequality within firms and inequality between firms. This new data on within-firm inequality won’t be able to answer questions about the rise of income inequality in the past. But it may be useful in research detailing the existing state of income inequality and its progression going forward.

Whether or not the simple disclosure of pay ratios will affect executive pay policy in the short term is up for debate. But in the meantime, the disclosure of new widely available data on within-firm pay might help move the debate forward.

Must-Read: Todd van der Werff: 2015 Is the Year the Old Internet Finally Died

Posted on by Brad DeLong

Must-Read: Death of the net! Film at 11…

Todd van der Werff: 2015 Is the Year the Old Internet Finally Died: “A very basic fear–the idea that the internet as we knew it…

…of five or 10 or 20 years ago, is going away…. And none of us… can stop it…. Take a look at your browser tabs if you’re reading this on a computer…. Longform pieces are the pinnacle to which lots and lots of us writers and the websites we work for aspire…. [But] because longform takes time… for writers to produce and readers to read… as both Buzzfeed and Gawker realized early on, well-done longform could be the steak, but it couldn’t be the meal…. The internet has made it clear that the kinds of things that people want to read are sort of an endless collection of what’s cool. And that might be a longform story, or it might be the quick, clicky little things that repackage the best flotsam and jetsam out there…. The theory always went that BuzzFeed couldn’t be all cat GIFs, because it would very quickly wear out its welcome…. [But] social media has, essentially, turned every content provider into a syndicator…. The best syndicators were always those who could take the most crowd-pleasing stuff and get it before as many eyeballs as possible… comic strips… advice columns… ultimately disposable…. If you work in online media, that’s terrifying….

The internet of 10 years ago… was a world… of blogs and sites with strong, central identities… built almost entirely around voice…. Mobile has ultimately downplayed the importance of words…. And the rise of social has flipped the old writer/reader balance… you share an article because… it says something about you, whether that fact is that you’re angry about a political issue, or that you like cute bunnies, or that you love Back to the Future…. The old internet was, ultimately, a world of communities… the idea that if you created a place where people could gather based around shared interests, they ultimately would. It was the ideal of the original internet made real, an actual, virtual web…. Now, however, our articles increasingly seem to be individual insects trapped in someone else’s web…

Relevant:

Must-Read: Hamilton Project: Diane Whitmore Schanzenbach

Posted on by Brad DeLong

Must-Read: Welcome to Diane!

Hamilton Project: Diane Whitmore Schanzenbach: “Diane Whitmore Schanzenbach is the [new] director of The Hamilton Project…

…and a senior fellow at the Brookings Institution…. Diane studies issues related to child poverty, including education policy, child health, and food consumption. She graduated magna cum laude from Wellesley College in 1995 with a bachelor’s degree in economics and religion, and received a doctorate in economics in 2002 from Princeton University…

Must-Read: Olivier Blanchard: Reconstructing Macroeconomics

Posted on by Brad DeLong

Must-Read: In which Olivier Blanchard says that, currently, DSGE models have “much too much in them to be fully understood”. There is a rationale for studying a model that we do not understand–if and only if it makes predictions that fit the world. If one has such a model that makes reliable predictions, studying it is a not-implausible road to understanding the world, because maybe, just maybe, an understanding of the model will carry an understanding of the world along with it as a bonus. And there is a rationale for taking models we understand and seeing where and how they fit the world in order to help us iterate toward a better model that fits better.

But is there a case for investigating models we (a) do not understand that (b) do not fit the world? Even if we were to reach the point of understanding the model and how it works, what would that gain us?

Olivier Blanchard: Reconstructing Macroeconomics: Suppose you are writing two textbooks, one undergrad, one grad…

…In the undergraduate textbook, it seems to me that when teaching the IS-LM, we have the same interest rate on the IS and the same interest rate on the LM. Basically, the policy rate that the central bank chooses by the LM curve goes into the IS curve when corrected for expected inflation. I think what we have learned is that these [two interest rates] can be incredibly different. So I would have an r and an rb, and have a machine in the middle–the banking system which would, depending on its health, determine the spread. It seems to me that if I want to communicate one message, that message is what I would communicate to undergrads. At the graduate… DSGE model… two mechanisms… are central. The first is leverage…. The second is liquidity…. I am hoping that someday we will put it together and have a simple way of thinking about leverage and a simple way of thinking about liquidity…. We are at the stage at which the DSGE models have much too much in them to be fully understood…

Must-Read: Matt Yglesias: Sounds like a lot of money

Posted on by Brad DeLong

Must-Read: Matthew Yglesias puts his finger on a strong antinomy between right-wing economics and right-wing sociology. Right-wing (and some other) sociology puts a great deal of blame on the breakdown of social connections that lead people to act benevolently toward others who are not kin–for example, Banfield’s blaming of southern Italian poverty on “immoral familism”: “a dynamic of low trust, excessive localism, and extreme reliance on family networks”. Right-wing economics requires that in making their economic decisions people and businesses focus only on how they themselves profit. But, as Matt points out, the corporation that is acting immorally if it maximizes anything other than its stock price bears more than a passing similarity to the bureaucrat who regards himself as acting immorally if he does not embezzle and transfer funds to his family.

A market economy is based on human gift-exchange psychology. And is remains, in large part, based on value-for-value gift-exchange rather than on the mutual pursuit of advantage in a network of con games. And wherever it does turn into a con game, it tends to break down:

Matthew Yglesias: Sounds like a lot of money: “Robert ‘Making Democracy Work: Civic Traditions in Modern Italy’ Putnam…

…isn’t a conservative. When I asked Tyler Cowen how he explains Southern Europe he pointed to Edward Banfield’s ‘Moral Basis of a Backward Society’. Francis Fukuyama has also treated the subject well in his recent books ‘The Origins of Political Order’ and ‘Political Order and Political Decay’…. Southern Europeans are stuck in a dynamic of low trust, excessive localism, and extreme reliance on family networks. There is a lack of impartiality in institutions and an ethic that ‘doing what’s right for my family’ rather than ‘following the law’ is the right thing to do. A country that gives you the mafia rather than a correctly functioning legal system and police services is also not going to give you highly effective schools or job training programs. What nobody seems to think is that Greece is poorer than Denmark or Spain is poorer than Germany or Italy is poorer than France because those countries spend more money on their welfare states. It’s convenient that people don’t think that because it’s not true….

The… relevance of Southern Europe to the United States is the current high social prestige enjoyed by the twin ideas that the social responsibility of a corporation is to be profitable and that the primary moral and legal obligation of a corporate manager is to enrich shareholders. These ideas combine to create a toxic moral climate…. In a healthy society, a business leader might invest time and resources in rent-seeking, but he wouldn’t brag about doing so and certainly he might choose to take the honorable path and not do it. But the current paradigm in the implicit US political philosophy is that he has a moral obligation to divert resources away from R&D and toward lobbying… find ways to trick customers into overpaying… violate regulations if the Net Present Value of paying the fines when you are caught exceeds the cost of compliance… [thus] replicat[ing] Banfield’s amoral familism, but with shareholders replacing the nuclear family as the local of ethical thinking. This is all further exacerbated by the ideas of Public-Choice Economics which tend to move from (correctly) asserting that government institutions’ performance is often undermined to some extent by the self-interest of government officials to a kind of perverse fatalism which suggests that wholly selfish and inept behavior is all that is possible from public institutions.