Saturday, December 11, 2004


A couple of articles from the Economist

From an article in the Dec. 4th issue of the Economist:

"It turns out that neither cash rich, low growth firms nor firms with weak governance shower their executives with unusually generous perks."

A paper by the IMF's cheif economist Raghuram Rajan and Julie Wulf found two explanations for perks that the general public often looks on with disdain.

1. "Firms in the sample with more hierarchical oranisations lavished more perks on their executives than firms with flatter structures. Why? Perks are a cheap way to demonstrate status. Just as the armed forcces ration medals, firms ration the distribution of conspicuous symbols of corporate status.

2. "Parks are a cheap way to boost executive productivity."

Of course the general public doesn't look at these perks as cheap. What the general public often fails to comprehend though is how much executives can be worth to a company. It may have suprised Ben and Jerry that they couldn't get a quality CEO only paying 7 times the average salary of the company's employees, but it is good evidence that people who think that you can get quality executives for less than these "outrageous salaries" that executives can currently get are simply wrong.

The headline of another article in the same issue says it all:

America's one-party state: If you loathe political debate, join the faculty of an American university.

"Academia is simultaneously both the part of America that is most obsessed with diversity, and the least diverse part of the country. On the one hand, colleges bend over backwards to hire minority professors and recruit minority students, aided by an ever-burgeoning bureaucracy of "diversity officers". Yet when it comes to politics, they are not just indifferent to diversity, but downright allergic to it."

"...The current situation makes a mockery of the very legal opinion that underpins the diversity fad. In 1978, Justice Lewis Powell argued that diversity is vital to a university's educational mission, to promote the atmosphere of 'speculation, experiment and creation" that is essential to their identities. The more diverse the body, the more the more robust the exchange of ideas."

Later I hope to be able to finish my review of "The World in 2005" which provides some predictions about the year to come.

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