Thursday, December 10, 2009

Some evening linx

This is a kind of old Clay Shirky essay that focuses on the decline of bookstores, but there’s a nifty little digression—right here—that focuses on the future of urban areas (and has a lot of truth to it):
Street level commerce seems to be undergoing some of the same changes urban warehouses and lofts went through in the 1960s and waterfront property went through in the 1990s, where the muscular old jobs of making, storing, and transporting goods receded, leaving those spaces open for colonization as dwellings.

In the current case, the spread of electronic commerce for everything from music to groceries is part of the increase in empty store fronts on shopping streets, leaving a series of Citi branches, ATT outlets, and Starbucks that repeat at regular intervals, like scenery in a Hanna-Barbera cartoon. Even when the current recession ends, it’s hard to imagine vibrant re-population of most of the empty commercial spaces, and it’s easy to imagine scenarios in which commercial districts suffer more: consolidation among pharmacy chains, an uptick in electronic banking, the end of our love affair with frozen yogurt, any of these could keep many street level spaces empty, whatever happens to the larger economy.

I think this remark of Steny Hoyer’s adequately sums up our political situation:
Newt Gingrich was of course the chief proponent of that policy [to kill ClintonCare], and he and Bob Michel, who was leader of the Republicans, disagreed. And Gingrich eventually succeeded in pushing Michel out. Michel’s view was you sit down, offer your input, and move forward. The theory was that the American people elected the legislative body to make policy and so you make policy. Gingrich’s proposition, and maybe accurately, was that as long as you, Bob Michel, and our party cooperate with Democrats and get 20 or 30 percent of what we want and they get to say they solved the problem and had a bipartisan bill, there's no incentive for the American people to change leadership. You have to confront, delay, and undermine and impose failure in order to move the public. To some degree, he was proven right in 1994.

What’s interesting is that both have a point; if Republicans (as they seem to believe) think that health care really does represent creeping socialism, etc., etc., then just why should they cooperate? Particularly when noncooperation offers such good rewards? (For the shoe on the other foot, substitute say, the PATRIOT ACT or something). On the other hand, the American system of government really just doesn’t work, particularly in the Senate, if there isn’t bipartisanship, as Hoyer notes later:
This is a United States Senate that has had more cloture votes in one year than in the '60s and '70s combined. They had three cloture votes on whether to extend unemployment benefits, and that bill passed 97-0!

To put some perspective on the issue, there were some really, really contentious issues on the table in the sixties and seventies—stuff like civil rights, Medicare, Vietnam, etc., etc. What happened then was that we had a culture that fit the institutions; the culture no longer does. Something to think about.

I see my friend Christian Tom has noted that the new Goldman Sachs “stocks-at-risk” scheme only reaches 30 of 30k employees. To be fair to Goldman, it is the 30 guys at the top, the ones who (presumably) are in charge, so it may have a disproportionate effect. That said, I still don’t think it’s a good idea. It’s about as well-executed as these schemes are: they vest over the course of three years, and they can only be sold after five, and the stock can be taken away if it’s determined that the executives put the firm unnecessarily at risk. But let’s take an example from the most recent recession: let’s say you get your Goldman stock in 2001 and sell it in 2006. Well, you helped inflate the bubble, but have few to no consequences. So it’s far from foolproof in that aspect. But the biggest problem is this: I’m also suspicious of who, exactly, is deciding to take away stock from executives. These people are among the most highly influential, powerful people in American business. Who’s going to have the power to say, ah, you know what buddy, I’m going to want those millions of dollars in stock back? The cojones, the courage? And it’s not an automatic, as it shouldn’t be: it’s only in the event that the executive didn’t adequately assess the risk. So it’s a judgment call. Who’s going to make that call, and then who’s going to try to repossess the stock? Tough to see that ever happening. Compensation is an issue, and it’s a big one, but really—the only way to reform this is size, so that whatever the banker’s compensation, their perverse incentives don’t take down the rest of the economy with it.

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