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I’m not a macroeconomics guy – never have been, never will be. I don’t watch CNBC, Bloomberg, CNN, or even Fox News. When I was on the board of several public companies, I used to hit refresh on my My.Yahoo home page about 371 times a day – I no longer have a My.Yahoo home page (or any public company board seats – never again.)
I’ve learned that the day to day macro stuff doesn’t impact what I do. It’s just noise. And I have more than enough things that I chose to focus on, so I do my best to consciously filter out the noise.
Unfortunately, I made the mistake of listening to CNBC (or Bloomberg – how’s that – I’m not even sure which one it was) while I squeezed in a run on a treadmill before dinner tonight in Boston. Here’s the great insight that I heard from an "interest rate expert economist dude."
"I was expecting the 0.75% rate cut next week at the FOMC meeting. It’s great that the Fed stepped up and did the emergency rate cut today. Now we need to see what next week brings. I think the market has already priced in another 0.25% to 0.50% rate cut next week at the FOMC meeting."
So what’s he’s really saying is "thanks Mr. Fed – can you now give me some more crack next week when the crack you just gave me gets used up?"
My friend Ben Casnocha recently wrote a paper for school – he’s got an adapted version up on his website titled Analysis: H-1B Visa Issue in America. He dug up a deliciously moronic quote and summary from a CRS Report for Congress titled Immigration Reform: Brief Synthesis of Issue.
"Those opposing increases in temporary workers assert that there is no compelling evidence of labor shortages." Norman Matloff of UC Davis, a forceful critic of H-1B expansion, says that U.S. companies do not import foreign workers to fill a labor shortage. If there were truly a shortage, starting salaries for grads with bachelor’s degrees in computer science or engineering would be rising (they are not), and technology companies wouldn’t hire only 2% of their job applicants as they wouldn’t have the luxury to be so picky. And they don’t want more foreign workers in hopes of recruiting the best and brightest, according to Matloff. The average H-1B visa employee earns in the $65,000/yr range, far below what top talent commands. Rather, they want more foreign workers because they can pay them less to do the tasks currently done by domestic workers. (The law requiring employers to pay the "prevailing wage" is largely ignored in the industry.) In short, an increase in cheap H-1B talent would probably displace the American IT worker.
Aha – I’ve got it. Let’s make sure we only hire American’s and keep everyone else out of the country. And technology companies – stop being so damn picky with your hiring. If you’d just hire people that weren’t as smart, you wouldn’t need non-Americans.
And – if you need more for your inner cynic, how about the article in today’s Rocky Mountain News titled Clouds hover in ethanol sky. E85 (assuming you can find it) apparently costs 78% less than regular unleaded gas but gets 71% less per gallon. Since it’s 85% ethanol, it presumably is less polluting (assuming that the total ethanol lifecycle consumes less energy than gasoline) but doesn’t save the consumer any short term money.
My partner Seth Levine has a good post up titled 1980’s all over again with a link to a very interesting Merrill Lynch report titled 1980’s Redux. I was in high school in Dallas, Texas for the first third of the 1980’s and then college in Cambridge, Massachusetts for the rest of it. I started my first company in 1987 – on the heals of the Massachusetts Miracle and the beginning of the late 1980’s recession which was painful for Massachusetts, but I was too young and naive to notice.
In college in 1984, I remember arguing with my future business partner Dave Jilk about Texas real estate. At the time people were minting money buying up land in Texas (especially Dallas – where I had come from) and the development activity was endless. If you know anything about the Texas real estate crash (which was tightly linked to the S&L crisis) you know that I was wrong – very wrong – when I told Dave stupid things like “Dallas real estate will go up in value forever.” Dave was a few years old than me and had the appropriate response – he just laughed at me and told me I was wrong.
Of course, the 1980’s, were followed by the 1990’s, which by 1992 were starting out on a rocking good economic time that didn’t end until the early 2000’s. But – everything’s a cycle, and the real winners in a cycle understand how to play the first derivative of the curve.
Then again, I’m not a macro guy and have no clue about any of this stuff. But I liked Seth’s 1980’s hair cut.
Atlas Shrugged is one of my favorite books of all time (right up there with Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values.) While I’m not a hard core mega-Objectivist, Atlas Shrugged and The Fountainhead both spoke loudly to me at critical points in my life and have had a hand in shaping the way I think about the world.
Atlas Shrugged just turned 50 and I expect there will be plenty of chatter about it. There’s an update on the continued effort to make a movie about it and an excellent op-ed in the Wall Street Journal by Brian Doherty titled Rand and the Right. It’s short, pointed, and ends strong:
“Why does she matter to modern politics? It’s not like she is around for conservatives to seek her endorsement. But it is worthwhile for political activists to remember that Ayn Rand was utterly uncompromising on how government needed to respect the inalienable right of Americans to live their own lives, and of American business to grow, thrive, innovate and improve our lives without niggling interference.
Her message of political freedom was enthusiastic, and optimistic, and immensely popular. No major American political party has embraced her message in full. But millions of Americans have voted for her with their pocket books, and hundreds of thousands continue to do so every year.
On the 50th anniversary of her greatest novel, her advocacy of the still “unknown ideal” of truly free market capitalism is something that America, and the conservative movement, needs to reconsider.”
If you’ve either never read Atlas Shrugged or haven’t read it in a long time, you might give it a shot before the next election cycle gets into full swing.
My long time friend and first business partner Dave Jilk sent me an email with the quote of the week in it – “The Plural of Anecdote is Not Data.” Perfect – brilliant. After responding that it would find the light of day in a future blog post, he responded that he tracked the attribution down to a guy named Frank Kotsonis (a pharmacologist), apparently in The Clinical Evaluation of a Food Additive: Assessment of Aspartame of which Kotsonis was an editor.
A little time poking around on Google uncovered a much more complex attribution issue summarized in the post The Matthew Effect. I didn’t end up with a definitive attribution, but I increased my affection for this quote.