Notes of Note from John F. Ince

Archive for December, 2010

Income Inequality and the ‘Superstar Effect’ –

Ultimately, the question is this: How much inequality is necessary? It is true that the nation grew quite fast as inequality soared over the last three decades. Since 1980, the country’s gross domestic product per person has increased about 69 percent, even as the share of income accruing to the richest 1 percent of the population jumped to 36 percent from 22 percent. But the economy grew even faster — 83 percent per capita — from 1951 to 1980, when inequality declined when measured as the share of national income going to the very top of the population.

One study concluded that each percentage-point increase in the share of national income channeled to the top 10 percent of Americans since 1960 led to an increase of 0.12 percentage points in the annual rate of economic growth — hardly an enormous boost. The cost for this tonic seems to be a drastic decline in Americans’ economic mobility. Since 1980, the weekly wage of the average worker on the factory floor has increased little more than 3 percent, after inflation.

The United States is the rich country with the most skewed income distribution. According to the Organization for Economic Cooperation and Development, the average earnings of the richest 10 percent of Americans are 16 times those for the 10 percent at the bottom of the pile. That compares with a multiple of 8 in Britain and 5 in Sweden.

Not coincidentally, Americans are less economically mobile than people in other developed countries. There is a 42 percent chance that the son of an American man in the bottom fifth of the income distribution will be stuck in the same economic slot. The equivalent odds for a British man are 30 percent, and 25 percent for a Swede.

NONE of this even begins to account for the damage caused by the superstar dynamics that shape the pay of American bankers.

via Income Inequality and the ‘Superstar Effect’ –

Silicon Valley and “Breakthrough Philanthropy”

In the movie The Social Network, the character of Peter Thiel is played as a slick Master of the Universe, a tech industry king and kingmaker with the savvy to see that a $500,000 investment in Facebook could mint millions later.

Reality is a little more rumpled.

On a recent December night, Thiel walked, slightly stooped, across a San Francisco stage to make a pitch to an invitation-only audience of Silicon Valley luminaries — investors and innovators who had scored sometimes huge fortunes through a mix of skill, vision and risk-taking.

The billionaire PayPal co-founder didn’t tell them about the next big startup. He wanted them to buy into a bigger idea: the future.

A future when computers will communicate directly with the human brain. Seafaring pioneers will found new floating nations in the middle of the ocean. Science will conquer aging, and death will become a curable disease.

If anything can transform these wild dreams into plausible realities, he believes it is the entrepreneurs of Silicon Valley — the minds and money that have conjured the technological marvels that have already altered everyday life.

“Do we try to pursue ideas that are weird and have optimism about the future, or do we give up on all new things and compromise?”

Sitting before him in the audience, among others: Facebook co-founder Dustin Moskovitz, Yelp co-founder and CEO Jeremy Stoppelman and technology publishing guru Tim O’Reilly.

As venture capital in Silicon Valley chases the next big mobile app or group discount service, Thiel was asking for them to fund technological breakthroughs that some believe in fervently and others see as sheer fantasy.

He even has a name for it: Breakthrough philanthropy.

via Facebook, PayPal mogul: Silicon Valley can free future from hurdles _ even death _ to progress –

NBA Ref Accidentally Calls Offsides | The Onion Sports Network

SALT LAKE CITY—With 4.3 seconds left on the clock and the Jazz about to inbound the ball, NBA referee Ed Malloy whistled play dead and accidentally called the visiting Bucks for offsides Monday. “Offsides, number 15, defense,” Malloy said to the confused crowd after throwing a yellow flag he mistakenly put in his pocket before the game and fumbling for a nonexistent microphone transmitter. “Five-yard penalty. Remains first down.” Despite acknowledging his mistake, Malloy proceeded to unwittingly place the basketball five yards down the court under Utah center Al Jefferson and unintentionally make a sweeping circular movement with his arm as if to reset a play clock.

via NBA Ref Accidentally Calls Offsides | The Onion Sports Network.

Andy Borowitz: CIA Forms New Division, Stop Terrorists From Uniting (STFU)

WASHINGTON (The Borowitz Report) — On the heels of forming its new WikiLeaks Task Force (WTF), the CIA said it was establishing a new division called Stop Terrorists From Uniting (STFU).

CIA director Leon Panetta spoke about the agency’s plans for both WTF and STFU at the CIA’s new headquarters, the Langley Operations Location (LOL).

“We are very excited about these new divisions,” Mr. Panetta said. “Here at LOL, the words on everyone’s lips are WTF and STFU.”

via Andy Borowitz: CIA Forms New Division, Stop Terrorists From Uniting (STFU).

Banks Accused of Illegally Breaking Into Homes –

TRUCKEE, Calif. — When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks.  Arriving at her home in Truckee, Calif., Mimi Ash found it had been cleared of her possessions. When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert.The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand.In an era when millions of homes have received foreclosure notices nationwide, lawsuits detailing bank break-ins like the one at Ms. Ash’s house keep surfacing. And in the wake of the scandal involving shoddy, sometimes illegal paperwork that has buffeted the nation’s biggest banks in recent months, critics say these situations reinforce their claims that the foreclosure process is fundamentally flawed.“Every day, smaller wrongs happen to people trying to save their homes: being charged the wrong amount of money, being wrongly denied a loan modification, being asked to hand over documents four or five times,” said Ira Rheingold, executive director of the National Association of Consumer Advocates.

via Banks Accused of Illegally Breaking Into Homes –

Goldman Sachs Pays Huge Bonuses And Gives Junior Bankers A 50% Salary Raise

Goldman Sachs delivered this years bonus news on Tuesday to partners, directors, vice presidents and analysts. Our reporting reveals that it was very welcome news to almost everyone. Partners this week were old that their 2009 bonus will be paid 60% in stock that will vest over 3 years. Several partners we spoke to seemed happy to get Goldman stock instead of cash.”Cash loses value over time, while Goldman stock gains,” one partner said.Junior employees at the investment bank also saw their pay change. Many vice presidents got bonuses that matched or beat the numbers paid in the record year of 2007, people familiar with the matter said. Whats more, some saw their base pay increase by as much as 50%, reflecting a shift away from bonuses toward salary. The huge payday seems to be having its desired effect.”Its made me rethink everything,” a Goldman Sachs employee said last night. She was sipping champagne. “I like the new structure even better. My monthly take home just went way up.”

via Bonus Watch 2010: Goldman Sachs Pays Huge Bonuses And Gives Junior Bankers A 50% Salary Raise.

Google Acquires NFC Startup Zetawire to Usher in Mobile Payments | Android Phone Fans

It’s been uncovered by research firm 451 Group that Google has acquired Zetawire – a Canada-based startup who owns patents to implement NFC-based technology for mobile banking, advertising, and other uses. Their portfolio of patents gives Google a suite of tools for ushering in an era of technology that has yet to be enjoyed by Americans. Asians – particularly those in Korea and Japan – have long been using their phones as forms of payment and identification.

Google had already shown a strong interest in increasing the widespread adaptation and use of near fields communications technology in America by adding native NFC support in Android 2.3 and by embedding an NFC chip inside their new model device set to launch this Thursday, the Nexus S.

Until now, the only initiative we’ve seen has been a “Recommended on Google” promotion originating in Portland, Oregon where businesses have put up NFC-enabled stickers to allow customers to pull information about them into their phones. It will enable you to do things such as watch ads on YouTube, go to the company’s website, and rate their entry on Google Places so that you and your friends can enhance your Hotpot experience.

This also backs up NXP’s word that the NFC chip inside of the Nexus S would soon be getting two-way communication: currently, the chip can only pull information in from other NFC devices. If Google’s planning to implement any of the technologies Zetawire provides, they’ll need that two-way rendezvous at the point of sale.

There are other use cases that could be materialized from today’s acquisition, but we’re sure mobile payments are at the top of Google’s list. Come 2011, we expect a lot more light to be shed on their plans. [via Inorganic Growth]

[Update]: It appears the deal was actually closed this past August. Google’s been thinking about the possibilities of NFC in America longer than we thought. With the upcoming launch of the Nexus S, it’s no wonder the news stayed hidden up until just recently.

via Google Acquires NFC Startup Zetawire to Usher in Mobile Payments | Android Phone Fans.

US Bank Testing Phone Payment Technology | Seer Press

The reality of purchasing goods via a smartphone took a step closer to reality, with Wells Fargo & Co., testing Visa’s ‘payWave’ technology, which has been developed for the credit card company by DeviceFidelity. The idea is that payments are made via ‘contactless’ card payment terminals, where a consumer simply waves their phone at the terminal to make a transaction. All the data for the chip is held inside an inserted data card or protective case.  ’Contactless’ card payment terminals are fairly standard throughout the USA and Europe.

Visa worked with DeviceFidelity for 18 months and trialled the device with financial institutions across Asia, USA, and Europe. Wells Fargo’s pilot study, is the biggest to be undertaken of Visa’s ‘payWave’ technology to date.

Isis, a joint venture by At&T Mobility, T Mobile USA, and Verizon Wireless, was announced last month and is thought to be similar to ‘payWave’. Isis is also to be expanded to include tickets, train passes, and reward cards.

via US Bank Testing Phone Payment Technology | Seer Press.

Money and Life: The Movie Trailer by Alan Rosenblith – Must See

Money & Life documentary trailer from StormCloud Media on Vimeo.

The Decline and Fall of the American Empire | The Nation

A soft landing for America 40 years from now?  Don’t bet on it.  The demise of the United States as the global superpower could come far more quickly than anyone imagines.  If Washington is dreaming of 2040 or 2050 as the end of the American Century, a more realistic assessment of domestic and global trends suggests that in 2025, just 15 years from now, it could all be over except for the shouting.

by Alfred W. McCoy is the J.R.W. Smail Professor of History at the University of Wisconsin-Madison. He is the author of A…

Despite the aura of omnipotence most empires project, a look at their history should remind us that they are fragile organisms. So delicate is their ecology of power that, when things start to go truly bad, empires regularly unravel with unholy speed: just a year for Portugal, two years for the Soviet Union, eight years for France, 11 years for the Ottomans, 17 years for Great Britain, and, in all likelihood, 22 years for the United States, counting from the crucial year 2003.

Future historians are likely to identify the Bush administration’s rash invasion of Iraq in that year as the start of America’s downfall. However, instead of the bloodshed that marked the end of so many past empires, with cities burning and civilians slaughtered, this twenty-first century imperial collapse could come relatively quietly through the invisible tendrils of economic collapse or cyberwarfare.

But have no doubt: when Washington’s global dominion finally ends, there will be painful daily reminders of what such a loss of power means for Americans in every walk of life. As a half-dozen European nations have discovered, imperial decline tends to have a remarkably demoralizing impact on a society, regularly bringing at least a generation of economic privation. As the economy cools, political temperatures rise, often sparking serious domestic unrest.

via The Decline and Fall of the American Empire | The Nation.