Another job automated away

About 50 years ago, I had to call or visit a stock broker to buy or sell stocks. I would place the call.  A few hours later the broker would call me back with the results of the transaction.  The charge could be $50 or more.

About 30 years ago online trading began.  Place an order and some time later the order would be processed.  The charge was about $25 regardless of the size of the order.

About 20 years ago, the time lapse was shorter and the charge was $14.99.

About 15 years ago, many trades were “instantaneous”.  Place the order and it would be filled.  The charges also dropped down to $9.99.

Today, I was informed that the charge would be $6.99 next week.

Consider that many of these trades are untouched by human hands.  Instead of a local broker calling a New York broker who would pass the order to broker on the exchange floor, each buy-sell order goes to a set of computers which fill the orders within seconds, and with only fractions of cents difference in the offer and sale.

Now if we could only automate CEO jobs.  Think of the billions that could be saved across the economy by replacing these over-paid men and women.  The savings could be passed on to the people who do the real work.

Pollution hurts stock returns

"Higher pollution leads to worse returns for stock prices. Specifically, a usual (meaning greater than one standard deviation) increase in fine particulate matter (PM2.5) leads to an 11.9% reduction in the performance of the S&P 500 index. To be clear, this is not an 11.9% drop, but an 11.9% decline in relative returns."

For more, see http://www.aaii.com/journal/article/pollution-hurts-stock-returns.

Quips of the day - boom and hype

Paul Krugman used "prophets of boom" and "hype springs eternal" in his New York Times column of 2002-04-30, "Herd on the Street", also published in "The Great Unraveling", p. 75.

I think Krugman is a master of the English language as well as of economics.  Of the latter, his own Cassandra-like predictions have come true more often than not.  The people in power didn't listen to his warnings, he was right, and they still don't listen.

Place, community, and politics

Ross Douthat is a different breed of conservative, and I almost always read his columns with satisfaction.  He tries to cut through all the political grandstanding of either party to get to some basic truths.  One of these was "When Place is not Enough".

I posted the following as a comment to his article:

We've lived in the same house now for 14 years, and we still don't know the names of all our neighbors. We chat with a few, but we either are inside or out and about. We belong to some various groups and form our relationships within them.

I think stay-at-home moms have contributed to neighborhood or town cohesion, but as kids grow up and interests diverge, more activities outside the neighborhood draw people away from their neighbors and towards others with similar interests all over town.

In Duluth we have three choices for getting around - car, bus, and walking. We use each according to conditions. The car obviously doesn't let us connect to our neighbors other than a friendly wave. The bus is less than a block away and there are few people out to meet. We can walk to several places within a mile and do in nice weather, but we rarely meet anyone regularly. It is the people at these various destinations that we know better than those in our block.

I grew up in Cleveland in mostly lower middle-class neighborhoods. In the 40s and 50s I knew only half the kids and no more than 10 percent of the adults on the same block.  My network was through school, community center, and a church, all within a mile of my house but past dozens of houses whose occupants I knew not.

I do laud the Front Porch Republicans and communitarians for striving to make where we live better places.  If more of us do that maybe we can organize better to put the Masters of the Universe in their place!

I highly recommend at least taking a peek at the About page of the Front Porch Republic.  It looks like a good basis of a new political party.  Or at least for independent candidates to use as an inspiration.

A different idea for capital gains tax

Many don't want capital gains to be taxed any amount, even if a stock was bought and sold in seconds.  But how does such a short term profit make any real contribution to the economy compared to an hourly worker producing a tangible product such as vegetables or automobiles?

We really should tax capital gains on a sliding scale.  Securities held for less than a year should be taxed at the same rate as earnings.  Securities held for more than a year should be taxed at a progressively lower rate until securities held for, say, ten years should be taxed at zero percent.

Of course, we are still rewarding people for luck at throwing darts more than people who show up for work everyday.

I'm probably preaching to the choir on this.  I've been writing for some time on this and you can see how much it's caught on.

See "Let's do away with capital gains taxes, dividend taxes, and estate taxes by…" or do a search for "Irregular Blog" and "Capital Gains".

Short term profits, long term losses

Before I get into the title subject, let me explain that I was led by two items on the Coffee Party Facebook page to two different Forbes Magazine articles. Remember that Forbes is a magazine for business leaders; the current slogan of Forbes.com is "Information for the World's business leaders". Also, the CEO and Editor-in-Chief is Steve Forbes who ran for president in the Republican primaries in 1996 and 2000. Among other "conservative" proposals, he called for a flat tax. For more, see Wikipedia http://en.wikipedia.org/wiki/Steve_Forbes.

The two articles I found are both by Steve Denning, who writes a column called "Radical Management" and wrote a book "The Leader's Guide to Radical Management. The two articles are titled "Retirement Heist: How Firms Plunder Workers' Nest Eggs" and "Lest We Forget: Why We Had A Financial Crisis".

The first is about how many companies take funds out of employee pension plans and use these to bolster returns. Companies have also sought to reduce contributions to pension plans, citing them as a drain on profits. Many of these same executives do not look on their golden parachutes and high-priced pensions, including platinum life-time health care as a drain on profits.
The second is an examination of the causes of the financial crises and the lies to deny these causes. Many say that the Federal Government caused banks to make risky loans. But it wasn't banks that made the risky loans, it was non-bank companies that did. For various reasons, these non-bank companies were not supervised by the government anywhere near the extent banks were supervised. Even then, there were many who prodded Congress to weaken the laws governing financial institutions. "These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders. And behind it all, was the drive for short-term profits."

Maybe we should stop conjoining "pro business" and "pro overpaid executives".

We're sorry, Wall Street???

For a marvelous piece of sarcasm, read, "Dear Wall Street, We're sorry" by David Weidner, MarketWatch, 2010-01-26, subtitled "How the Little Guy Ruined Wall Street".