Business & Economics: December 2006 Archives
Clayton Cramer has fallen victim to the same New York camera scammers that stole my credit card information earlier this year.
Don't buy anything over the internet from New York-based companies!
My research indicates that these shops are mob-connected, so I'd stay as far away as possible.
Anyone who has been paying attention to the news for the past few years has heard of Blackwater USA, a private security company -- mercenaries -- who work as guards, law enforcement officers, and in other paramilitary roles all around the world, often in conjunction with American military forces. A curious phenomenon, so let's learn a little more about them.
Here's a six-part series about the company: "Blackwater: Inside America's Private Army". The articles cover their training programs, their work in Iraq, and their role in the Katrina recovery. Exhaustive and fascinating.
A reporter for Popular Mechanics tags along with Blackwater contractors who ferry VIPs from Baghdad's airport to the Green Zone.
Here's a paranoid sort of conspiracy page about the hundreds of millions of dollars Blackwater is paid by the US government to provide security for diplomats.
Finally, here's the Wikipedia entry for Blackwater USA that contains information on some of their training facilities and business divisions.
I'd like to join TigerHawk in thanking the giant corporations that make my life so good.
The pharmaceutical companies deliver extraordinary value to their customers, yet there is apparently great political advantage in bashing them. It is not obvious why this is so. Yes, we all wish the pharmaceutical industry would do certain things differently (I, for one, could easily go the rest of my life without hearing about "a strong, lasting erection" during prime time), but that is true of all industries. If I had to venture a guess, I would say that people resent paying money for drugs, no matter how much value they confer, because they feel they have no choice in the expenditure. Their doctor tells them that they need a prescription and they do not know enough to challenge the doctor's judgment. They have not budgeted for the expense because people do a bad job of planning even for known unknowns, so they also resent spending the money. The drug is not perceived as having value (even if it alleviates pain, calms the nerves, stems multiple sclerosis, thins the blood, lowers cholesterol, or ensures a strong, lasting erection), it is the thing that suddenly prevents you from paying for some less necessary thing. Never mind that the drug saved your life, or made your life worth living. ...The bashing of the pharmaceutical companies matches the popular dislike of the integrated oil companies. Me, I have nothing but admiration for big oil companies. I find it amazing that we can drill a hole somewhere in West Africa or the Arctic Sea or the jungles of Indonesia, pump out petroleum, ship it across the ocean, refine it into gasoline, and deliver it to my corner gas station, and pay everybody in between an adequate profit, for even $5 per gallon, much less the $2 or so that prevails at the pump as I write this. If you give the oil industry even a moment's thought, the complexity of its operations and the courage of at least some of its employees is simply astonishing. Yet politicians, who have a nose for the popular, love to bash oil companies, especially when prices are rising. Again, I think it is because people do not plan for volatility in gasoline prices, so when they have to pay more at the pump they do not acknowledge to themselves that gasoline remains such an extraordinary value that they will not do even the simplest things to use less of it.
Big oil, big pharma, and Wal-Mart. It is apparently in our nature to attack the businesses that have done the most for our standard of living.
I'm also thankful for Microsoft and Google, E*Trade and Citibank, the aerospace and defense industry, the car companies, and probably many others if I took time to think about it. Of course I don't have to send them love letters... the beauty of capitalism is that I can thank them merely by buying their products. It's win-win.
(HT: Instapundit.)
An article by the Financial Times about wealth distribution completely misses a fundamental economic principle: opportunities have value.
Debt is also low in poor countries because financial institutions do not exist to allow people to borrow.In contrast, the authors say "many people in high-income countries have negative net worth and, somewhat paradoxically, are among the poorest people in the world in terms of household wealth."
Just like an unscratched lottery ticket is worth one-trillionth of the jackpot, an American with a mortgage is far richer than a peasant in China, despite his debt. From that perspective, wealth is even more "unevenly distributed" than the article claims, because the richest nations are also the most free. However, the solution isn't to redistribute money from one group to another, it's to help those enslaved by tyrants to gain their freedom. Where there's opportunity, wealth will quickly follow.
One of my friends passed along a link to this article about retirement plan rip-offs and how most corporate 401(k) plans have unnecessarily high fees that cut into growth.
Roughly 40 million Americans, or two-thirds of the private-sector workforce participating in a retirement plan, have only a 401(k). In 1980 that was the case for only a fifth of workers. Some big companies get competitive bids for their 401(k) business, landing low-cost funds from Fidelity, Vanguard and other vendors. But subpar offerings are a common problem at small companies, where fees often gobble up 2% to 3% of assets each year. For a worker investing in a conservative blend of stocks and bonds, a 2.5% cost wipes out a significant fraction--perhaps half--of the real return that can be expected. "Costs in this industry are way out of line," says Gregory Carpenter, chief executive of Employee Fiduciary, a firm that runs 401(k) plans at a fraction of the usual cost (see box, p. 138).Small businesses sponsor the majority of the nation's 650,000 401(k) plans; 97% of such plans have assets of less than $10 million. Because of high fees the returns on this country's $2.9 trillion of defined contribution assets lag behind returns on traditional pension plans by one percentage point a year, estimates the Center for Retirement Research at Boston College. That one-point difference equates to $29 billion a year in fees that otherwise might have gone toward retirement savings.
Why don't employers shop around for better deals? Partly because their own money is not at stake. The company may pick up some recordkeeping costs, but the fees on the underlying funds are almost always borne by the workers. "Employers have a legal duty to oversee 401(k)s with the same care they do traditional pensions, but the incentive isn't there because employees bear the brunt of the costs," says Jerome Schlichter, whose firm, Schlichter, Bogard & Denton of St. Louis, is pushing the spate of recent suits.
So be sure to look at the fine print and check out the fees on your retirement funds. Just because they're offered through your company doesn't mean that anyone is looking out for your interests other than yourself.
