Digest: 21 July 2013

Abstract

The pay gap between CEOs and company employees is thought to be around 273 to 1 or 202 to 1 depending on the method of measurement employed, but no one knows because companies are not offering up the information. – Entrepreneurialism can refer to a wide range of business start-up activities, but the lack of a focused understanding of the term can lead to less than ideal policy decisions. Large banks have been taking advantage of relaxed federal regulations to buy up huge swaths of commodities infrastructure, and have been abusing the privilege. — Distant powerful earthquakes have been triggering earthquakes in regions subject to fracking, making the gas extraction method even more controversial. –  The pricing of natural resources allows them to be factored into company business plans, a method highly profitable both for business and for protection of resources. –  The Obama Administration is cracking down on national security leaks, prosecuting twice as many cases as all previous administrations combined. –  Large multinational companies have been hiding enormous profits through the sophisticated use of “tax havens”, a politically sensitive ability that the G-20 is now looking to impede. – Deep rooted behaviour patterns are now understood to be reversible, while previously it was thought they were fixed and permanent.

Economics

In Overpaid? Or Worth Every Penny?, the Editorial Board of The New York Times discusses the increasing pay gap between CEOs and company employees. The gap is thought to be around 273 to 1 or 202 to 1 depending on the method of measurement employed.  However, these are only estimates – despite the fact that the Dodd-Frank Act (which requires disclosure of the gap) was enacted into law three years ago, the rules required to put the requirement into effect have not yet been proposed by the SEC, and companies are certainly not offering up the information on their own.

In Crazy Diamonds, Schumpeter at The Economist discusses entrepreneurship, specifically the indefinite meaning of the term, and what is required for the successful development of entrepreneurial communities.  While “entrepreneurialism” can refer to a wide range of business start-up activities, the lack of a focused understanding of the term can lead to less than ideal policy decisions.  Ultimately certain traits make for a successful entrepreneur, including the self confidence to defy conventional wisdom.

In A Shuffle of Aluminum, but to Banks, Pure Gold, David Kocieniewski (for The New York Times) discusses how large banks have been taking advantage of relaxed federal regulations to buy up huge swaths of commodities infrastructure.  Goldman Sachs, through artificially lengthening storage times of aluminium in warehouses they own, are able to increase the price of the metal on exchanges – this small amount, a fraction of a penny per soda can, when multiplied 10s of billions of times for the amount of soda cans consumed everyday in the US has cost consumers as much as $5 billion in the last three years – and produced a handsome profit for Goldman Sachs. Meanwhile, JP Morgan has been accused along with other banks of rigging electricity prices.

Environmental

In Study Raises New Concern About Earthquakes and Fracking Fluids, Sharon Begley (for Reuters) discusses the recent discovery that distant powerful earthquakes have the capacity to trigger more minor earthquakes in regions that have been subject to fracking.  These response quakes can themselves be followed by earthquakes powerful enough to topple buildings.  The study, which is likely to cause further controversy around the new method of extracting gas, was published by the journal Science, and coincides with a US EPA study of the effects of fracking.

In Nature’s Banker, The Economist discusses the book Nature’s Fortune: How Business and Society Thrive by Investing in Nature.  The book is co-written by Mark Tercek of The Nature Conservancy, a former investment banker.  He discusses a new form of environmentalism – efforts to put a price on natural resources so that they can be factored into company business plans.  The book acts of as a digest of examples of situations in which natural resources have been valued, and demonstrates that this method can be highly profitable both for business, and for protection of resources.

Political

In IISS: 2012 Strategic Survey, the International Institute of Strategic Studies presents events and themes of central importance to world affairs and policy concerns.  The Survey includes chapters on Strategic Policy Issues, The Americas, Europe, Russia and Eurasia, Middle East, Africa, South Asia and Afghanistan, Asia-Pacific, Prospectives, and Strategic Geography.

In Math Behind Leak Crackdown, Sharon LeFraniere (for The New York Times) discusses the Obama Administration’s crackdown on national security related leaks.  Over the four years prior to 2009, despite 153 leak cases being reported to the Justice Department no indictments were made.  This is quickly changing – since 2009, the Justice Department has prosecuted twice as many cases as all previous administrations combined, including a current investigation into a former Vice-Chairman of the Joint Chiefs of Staff.  While the need to maintain state secrets hardly needs to be emphasized, controversy has surrounded the crackdown on journalists through whom the leaks were made.

In G-20 Backs Plan to Curb Tax Avoidance by Large Companies, Andrew E. Kramer and Floyd Norris (for The New York Times) discuss measures being set in place to capture more of the income that large multinational companies are able to hide away through the sophisticated use of “tax havens”. Political pressure has been rising for a crackdown on this lost tax income, especially in response to examples such as those of Starbucks and Apple, which have each managed to avoid huge tax burdens.  The ability to use avoid the payment of taxes through international subsidiaries puts large multinationals at an advantage over domestic businesses and individuals.  These measures will no doubt be rigorously fought against by the companies that profit from the status quo.

Social

In Can You Rewire Your Brain to Change Bad Habits, Thoughts, and Feelings?, Bruce Ecker, Robin Ticic, and Laurel Hulley (for Psychotherapy Networker, via AlterNet) discuss the developing neurological and psychological research that shows that it is possible to rewire the brains response mechanisms.  Essentially, while for long it was considered to be the case that deep rooted behaviour patterns were set in place and unable to be fundamentally affected, recent research shows that to in a certain respect this may not be the case after all.  Deep rooted experience logs in the memory both as a narrative, and as an emotional response.  When triggering events take place, they can cause a resurgence of emotional response in ways that are unnecessary or debilitating.  By focusing in on the experience that brought about the original response, and by engaging a new emotional reaction, researchers have found that they are able to, as it were, rewire the brain.  This has been found to be effective in circumstances including heroin addition and sexual dysfunction.