Revolution Beats Disruption

Disruption has had a good run.

Since Clayton Christensen coined the term 'disruptive innovation' during the dotcom era it has gotten a lot of play as one of the most significant factors driving productive change, particularly in the technology universe which has come to encompass almost all aspects of human endeavor.

But as a civilization we still face an awful lot of challenges. Technology has not eliminated poverty or violence or many other human ills. It may have increased opportunity for many, but the pace of change is slow. Which is why tech leaders like Twitter's Jack Dorsey are advocating revolution. Not, we suspect, in a storm the barricades sense, but as a means of hastening the breakthroughs necessary to create a more just - and - more commercially viable global society. Especially as the two are intertwined in consumer driven economies.

Disruption merely distracts. Revolution offers profound change that can shift the axis of the enterprise and create new opportunities, significant in impact and scale.

How, exactly, to do this remains uncertain. But it is a conversation worth having and an effort worth making. JL

Greg Satell comments in Digital Tonto:

Jack Dorsey, the celebrated founder of Twitter and Square, who is the probably the man most often compared to Steve Jobs in Silicon Valley, urged his audience to seek not disruption, but revolution.

More specifically, he said that “Revolution has value, revolution has purpose — a direction and leaders… We don’t want ‘disruption,’ where we just move things around. We want a direction. We want a purpose.”

What Does Healthier Mean?

Words matter.

Organic food is the fastest growing segment of the food market.

The reasons are varied but are essentially based on the belief that organic foods are healthier because they are exposed to and contain fewer chemicals harmful to humans. The world has many developed, affluent societies with aging populations for whom longevity has become a prominent issue. In developing countries, especially China, food safety is quite literally a matter of life and death. Organics appeal to both sets of concerns.

So when researchers at Stanford University issued a study suggesting the additional health value derived from organics was illusory and quite possibly contrived, it caused quite a stir.

A few years ago, organic advocates would probably have been devastated by the criticism from one of the world's most prestigious universities. Not any more.

Critics of the study challenged the researchers' methodology while other commentators, such as the one below, raised pertinent questions about the vocabulary employed to communicate what may well have been a bias or predisposition inherent in the study.

Either way, notice has been served. Prominent academics and 'experts' no longer get a free pass when it comes to matters of popular concern. The internet has democratized knowledge and communications. And we are all healthier for that. JL

Curtis Brainard comments in the Columbia Journalism Review:

“Healthier” is a word the media often use without enough care, and that shortcoming was on full display during last week’s coverage of a study examining the nutritional value and presence of contaminants in organic versus conventional foods.

Should YouTube Censor the Anti-Muslim Video Sparking World-wide Violence?

YouTube and its parent, Google, are faced with a difficult choice.

Their policy has always been quite publicly defined. Nothing will be censored unless it contains hate speech, advocates violence against others or is the subject of a local law banning specific content.

The video "Innocence of Muslims" is subject to none of those conditions. But it has sparked rioting and violence around the world that have left four American diplomats dead as well as rioters and security personnel in a growing list of countries.

The dilemma is whether to moderate its own policy in the face of the physical dangers to human beings the video has sparked - or whether to stand firm in honor of the best traditions of free speech, civil liberties and civilized discourse.

Most of the commentary on the 'net has castigated YouTube for taking the video off in Egypt and Libya where the violence began. The critics' claim is that YouTube and its parent company, Google, have already violated their principles by caving in to extremists' cynical manipulation of popular will in those nations. But then it is easy to be critical when you are sitting in the air-conditioned comfort of your handsome, comfortable office or home in the placid safety of New York or San Francisco.

Others believe that extraordinary circumstances require extraordinary action. You take the video off the net as a matter of public safety in a volatile world. And then, of course, there are many Muslims who claim to be genuinely offended by a deliberate attempt to insult the holiest evocation of their faith.

The challenge is that in a world of global communications, certain messages may seem obnoxious but tolerable in some parts of the world but terminally offensive in others. This controversy is exacerbated by the fact that some of the protest is now and has been in the past (such as the cartoon controversy in Denmark a few years back), manipulated by elements intent on using it to further their political, ideological and military ends.

The free speech advocates are right to be concerned about the longer term implications of censorship. Is every image or statement offensive to one group automatic grounds for deletion? And is it utterly self-serving? Will Muslim groups support the deletion of images offensive to Judaism? We already know the answer to that question is a caustic no.

The problem is that many governments are using the riots as a way of currying sympathy with the mob. They claim, wink-wink, that they'll move their security forces in when things have calmed a bit. The manipulation of public opinion against 'the other,' any other is as old as history. It has had its most recent, horrific uses in Germany, Bosnia and Rwanda, among others.

YouTube is not the UN. But it has derived much of its success from its globalism. In the world of modern, instantaneous communication but ancient cultures and beliefs, it may have to consider revisiting its standards to reflect its arguably unwanted but undeniable power. JL

Ari Melber comments in The Nation:

The protests against the now infamous YouTube video disparaging the Prophet Mohammad have thrust YouTube, and its parent company Google, into a tough situation.

While the company says it values free speech and usually only removes videos that violate its policies, it is experimenting with a deliberately inconsistent approach to the crisis surrounding the video, “Innocence of Muslims.”

You Are What You Retweet: Twitter Presents New Targeting Method for Advertisers

You are the key to you. And to others you know.

This is the essence of the new targeting capability Twitter is providing advertisers. Whether by interest or device or a host of other factors, advertisers, whether commercial or political, can target the audience most likely to be susceptible to their message.

The targeting is based on the preferences of the individual user and those in his or her network. Those preferences may also permit the advertiser to know whether Android, iPhone or Blackberry users are more or less likely to vote or buy what's being sold.

No consent is required - yet. Privacy advocates are, once again, raising concerns about the implications for misuse or abuse of the data. But consumers have steadfastly ignored all previous entreaties in this regard. Given the choice between a discounted latte and protecting personal information, that'll be half-caff soy milk, thanks.

Twitter is rather late to this party. Google, Facebook and others have already taken the leap, with mixed results. But it is clear that the trade of information for service is considered a fair one by consumers, so far. And that both the targeting and the sale of that information will only escalate. JL

Steve Friess reports in Politico:

Twitter is finally joining its competitors in making money off of what it knows about its users.

The booming microblog quietly rolled out to advertisers earlier this month a new targeting method, one that helps campaigns and companies reach people based on what users they follow and what they retweet

Twilight of the Elites? America After Meritocracy

Has America been failed by its elites?

Or more to the point, has it been failed by the system that has produced them for the past three quarters of a century?

That system emerged to replace historical reliance on caste and privilege. It was formulated to promote a feature of American life which appeared to be the fairest, most democratic and meritocratic: education. The presumption was that education favored no one who did not have talent, intelligence and the willingness to work to achieve excellence against a common set of standards.

The problem, as Professor Marshall Meyer of the Wharton School noted, is that 'metrics begin to degrade the moment they are announced because everyone affected begins to game them.'

And how.

Universal education may still be available, but there are circles within circles. Private schools, private tutors, legacy admissions to 'need-blind' competitive institutions, cultural biases in nationally-administered standardized tests. And that's just to get to the starting line. To be considered for the elite professions in finance, law, medicine, commerce and yes, even government. Beyond that, the benefits of distinguished lineage have been supplanted by the web of relationships based on school ties, friendships and common experiences.

The sense of entitlement may be all the more entrenched because those so annointed believe that their achievements were merited, not the random luck of bloodlines. As has become clear the system has been gamed and those who have the money or connections prevail.

The bigger problem, however, is the result. That nation is riven by factions who truly despise each other. The economy is faltering, the country's standing in the world has receded and faith in the future is at a low ebb. Cheating and self-dealing are rampant. Investors flee the equity markets because they are so notoriously tilted to favor insiders. Whatever leaders the system was supposed to have produced either did not heed the lessons taught or emerged due to factors other than ability.

So the question is what the post-meritocratic world will look like. Despite their evident disdain for each other, both the Tea Party and the Occupy Wall Street factions agree that the elite are out only for themselves. And the French, Chinese, Russians, British, et al, have done no better.

What we can say with some assurance, however, is that whatever new system may replace the old - and that is not even certain - a new elite will emerge. What we can hope is that, at least for a time, before they begin to favor their own kith and kin, that they take to heart the lessons from this experience and try to build a more inclusive and effective system than the one they will try to replace. JL

The Samuel Goldman comments in The American Conservative:

“Elite” wasn’t always a dirty word. Before the 19th century, the term described someone chosen for office. Because this typically occurred in the church, the word possessed distinctly ecclesiastical connotations. The pre-Victorians transformed a word imputing religious status to individual persons into a collective noun with class implications. By the 1830s, “elite” referred to the highest ranks of the nobility.

Those meanings are no longer primary.

How Apple's and Google's Digital Mapping May Be Mapping Us

Privacy is no longer the issue.

We conceded on that one eons ago - or whatever measure is relevant in digital time.

But questions are being raised about whether the ubiquity of mapping technology and our dependence on it is changing the way we view the world economically, politically, militarily, diplomatically and, well, personally. In other words, are the assumptions that go into presenting maps and the data included with them - or left out - somehow altering how we think about the world around us?

It is probably too soon to answer the question. And this is not to suggest that either Apple or Google or any of their competitors (with the possible exception of Amazon...) have a conspiratorial master plan for global domination. But it is not clear that we want their assumptions to be our assumptions. Especially for those who live outside the United States and work outside the world of large corporations. Because the concern is that that is precisely the world view being communicated, however subtle and understated the presentation may be.

Whether this rises to the level of generalized, popular and, eventually, organized expressions of discontent remains to be seen. The likelihood is not great, given society's acquiescence to most other trends that enhance convenience. But it will be interesting to see whether the questions being raised are being heard - and that companies involved, given their focus on solving problems in order to expand market opportunities - may actually pay attention. JL

Oliver Burkeman reports in the Guardian:

Digital maps on smartphones are brilliantly useful tools, but what sort of information do they gather about us – and how do they shape the way we look at the world?

What Is This Money Thing Anyway?

It's all about the Benjamins.

Or at least it was until their value and that of their brethren in euros, renminbi, yen and a host of other currencies began to raise questions about substance.

To the extent that the financial crisis and recession have generated discussion about Meaning, it has come not from anguished calls to fairness, but from the fact that creditors could not count on being paid what they were owed. A system that had relied upon Gentlemen's Agreements (backed up by the turgid prose of legal documentation)suddenly discovered that its assumptions might no longer be valid.

In addition, the dramatic rise of the internet and with it, technological interfaces controlling credit, debit, transactions wealth transfers and the like became increasingly dominant. Even military experts were stumped by the question of how to protect the wealth of nations whose physical presence had largely morphed into bits and bytes.

Even cash is becoming obsolete as mobile phones become wallets.

So, as the following article attempts to explain, money is about rules of engagement. About the very human need for organization and systemic regularity. Chaos and uncertainty are more expensive than the alternative. Which, come to think of it, may be why money tends to support government rather than not. JL

So questions about the purpose of money

Sell on News reports in Macrobusiness via Naked Capitalism:

One of the consequences of economics pretending to be a science, when it is not, is the tendency to attempt to explain financial behaviour from its base constituent parts, rather as a physicist might build up a picture of a compound from its molecules. This repeatedly results in observations that are either banal or based on circular arguments. And once those observations are generalised, taken beyond their thought experiment circularity, they become consistently misleading.

Financially Squeezed Workers Impede Economy's Growth

It's perfect for one of those 'you know you're in trouble when...' jokes that stand-up comics often use.

So here's one for all the economists gathered at the annual Federal Reserve confab in Jackson Hole, with a special shout-out to all the austerity fans in the audience: You know you're in trouble when 70% of your economy is driven by consumer spending but employee compensation as a share of gross domestic income is the lowest it's been in 52 years. Baddabing...

Too bad it's not a joke.

The harsh reality is that the US and Europe continue to flounder precisely because they dismissed the importance of the consumer. As we try to adapt to what we thought was going to be the relative ease of the post-industrial economy (no nasty and dangerous factories, no physically demanding tasks, ample pay for stimulating and satisfying work), we continue to exemplify Winston Churchill's line about choices: "Americans can always be counted on to do the right thing...after they have exhausted all the other possibilities."

Selling real estate to each other? Ask Ireland, Spain, the UK and the US about that strategy. The internet changes everything? Um, yeah, but maybe not the way you meant it. Financialize everything so we can all trade securities with each other without ever having to connect with the economy that produces actual results represented by the pieces of paper being traded? Yup, that worked really well - for SOME bankers.

The problem is that by driving compensation to the lowest levels in two generations, we have starved the economy of the demand it requires. A few people made lots of money and with it they were able to buy the compliance of politicians and regulators. But the system was inherently unsustainable precisely because so many were denied so much.

It is somewhat startling that this has even risen to the level of a story in the Wall Street Journal, the leading megaphone for financialization. The evidence has been in for a long time. Years, in fact. But perhaps this is good news. Because it may signal that even those who have benefited from the financial economy are starting to feel the pinch. And that may, finally, stimulate the change necessary to get the economy moving again. JL

Justin Lahart reports in the Wall Street Journal:

U.S. workers' immediate problem is that the U.S. economy isn't expanding fast enough. Over the longer haul the bigger problem is that they aren't seeing as much of the economy turn up in their paychecks as they used to.

Is Wall Street Waging War on Government? Bondholders vs Everyone Else

One of the great Broadway musicals of all time was called 'Oklahoma!'

It was a grand spectacle about the settlement of the American west. But it had several subplots based on themes of great antiquity, one of which was the competition for land between grazers and settlers. The song that symbolized that conflict was entitled "The Farmer and the Cowboy Should be Friends." But they werent. And they couldnt be because they both wanted the same thing.

Which brings us to 2012. The fire this time is between bondholders and public employees: fire fighters, police, teachers, road repair crews, solid waste disposers, clerks, registrars and the full panoply of service providers who maintain our civilization.

The bondholders appear to be afraid of the future. They do not see enough reasons to believe there will be sufficient growth to continue to give them reasonable returns on the debt securities that make up a substantial portion of their investment portfolios. That outlook may change, in fact, probably will change, but arguably not in the next few years.

The implication is that those in competition with bondholders for the cash flow from public funds: public service, employees and the pensions they have earned, are under attack. Teachers, never noted for living a lifestyle of the rich and famous are accused of being overpaid. Pensions earned over a lifetime by fire fighters and police are called untenable - even though their growth has been planned for. Library hours are cut back and in some cases eliminated. Public parks and beaches are closed. Infrastructure is allowed to deteriorate, affecting public safety. Support for higher education funding and scholarships is challenged while even support for public education is questioned.

The harsh reality appears to be that those who can afford to pay for these out of their own pockets no longer believe in the promise of a better tomorrow for all, once a solid foundation of the American Dream (and the Greek, Irish, English, French...). And this at a time when the income and wealth gap are as stark as at any time in history.

But the fight is a classic human conflict: the proverbial battle over the water hole in an arid landscape. Limited resources and lots of claimants for them. Whether the holders of capital will ultimately prevail is not clear. There seems to be a demand for basic services that even the most ardent deficit fighter can not eliminate. The bondholders, however, have already changed the framework of the debate: that all of these services and goods once considered the glory of democratic society are now being questioned is a sign of that and of the limits to their future growth. JL

Michael Hudson comments in Naked Capitalism:

The pace of Wall Street’s war against the 99% is quickening in preparation for the kill. Having demonized public employees for being scheduled to receive pensions on their lifetime employment service, bondholders are insisting on getting the money instead.

It is the same austerity philosophy that has been forced on Greece and Spain – and the same that is prompting President Obama and Mitt Romney to urge scaling back Social Security and Medicare.

No More Naked Body Scans? TSA Seeks New Airport Sensors

DARPA invented the internet so it should be able to figure out whether you're hiding a gun in your underpants.

At least that's the theory.

The US Transportation Security Administration (TSA) those folks who scan your luggage and you at airports has a secret. And the secret is that those scanners you wait in line for and that some people thought gave the security folks a chance to see you naked are not always capable of providing the prurient thrills so many were worried or titillated about.

The problem is that the current generation of supposedly infallible scanners tend to make some booboos. They are prone to either over or under-reporting the presence of dangerous substances - aside from those...well, you get the idea.

So TSA has contracted with DARPA - the legendary Defense Advanced Research Projects Agency, the Pentagon's supersmart, supersecret unit charged with developing cutting edge, unspeakably cool stuff. This assignment is perfect for DARPA: figure out a way to effectively, quickly and accurately screen millions of resentful people every day, many of whom are trying to smuggle Cuban cigars, fake silk scarves, cocktails nuts of dubious provenance and even the occasional explosive device.

And do this in what may be the one corner of the economy where people actually express concerns about privacy. On the internet, they'll give their entire life story, complete with passwords, to perfect strangers they cant even see. At the airport, they dont even like taking off their shoes to avoid exposing their socks (and maybe being blown up).

Whatever. It sounds like we will soon have a new technology to complain about. But maybe it will have Wifi. JL

Lorenzo Francheschi-Bicchierai reports in Wired:

Two years ago, the Department of Homeland Security stepped up its campaign to install controversial body scanners at airports nationwide. At the time, the agency claimed the machines could spot all sorts of hidden weapons and contraband.

Today, more than 700 of the imagers are in place at 180 airports. But the so-called “naked” scanners may not be quite as all-seeing as they were originally billed to be.

Insurers Facing Largest Loss: Not from Hurricane, but From Summer Drought

As one part of the country prepares to lose millions getting soaked by a hurricane, another is losing billions from a drought.

The 2012 summer drought is so bad that insurers face the largest agricultural losses in US history. Because agriculture has become a big, nay huge, business, farmers, like executives in other industries hedge potential risks by taking out insurance. And they have every intention of collecting.

The good news, if it can be called that, is that the government will pick up much of that tab. The reason is that it offers crop reinsurance programs and farm issues tend to dominate the economies of a number of states. In an election year, there will be no quibbling about the cost, even from self-styled deficit hawks.

Four years after the worst financial crisis in 80 years, the nation now faces the worst agricultural crisis in the same period. Images of the Joad family and other desperate 'Okies' from John Steinbeck's acclaimed 1939 novel,'The Grapes of Wrath,' may come to mind, but farmers today are executives, futures traders, environmental experts, supply chain managers and sophisticated financiers. The insurance companies, having weathered the financial crisis thanks to government bailouts, now face another challenge as the drought wipes out their farm state business partners.

The only upside may be that now that the financial services industry is once again threatened, the primary cause - climate change - may actually receive more respect from those whose finances are most at risk. It takes a village, indeed. JL

Javier Blas and Alistair Gray report in the Financial Times:

The insurance industry faces its biggest ever loss in agriculture as the worst drought to hit the US in more than half a century devastates the country's multibillion-dollar corn and soybean crops, triggering large claims.

The Past Decade Was the Worst in US Middle Class History

Never is one of those words you want to use REALLY carefully.

It is not just absolute, it is absolutely negative. And most Americans, most westerners and, in fact, most connected global citizens live in a relatively positive culture. The glass tends to be half full rather than half empty. The future usually looks bright. Hope is held out, for whatever reason.

But we officially have a 'never' here. It underscores the severity of the economic situation and illuminates why the political atmosphere is so toxic.

Since the Second World War, the US middle class has never had a worse decade than that through which they suffered in the 2000s.

The middle class, the bedrock of the US economy, has lost 10% of its population. From 61% to 51% last year. And make no mistake, 10% is a big number. The word 'decimate' is derived from the loss of 10%. It's root is ancient, 'deci' referring in Latin to ten. The usually invincible Roman legions determined through experience that when a unit lost 10% of its numbers as casualties, it was decimated, meaning that it had been rendered unfit for further combat.

So, the loss of 10% of the middle class may well be contributing to the economy's stagnation. In a consumer driven economy, like that of the US, the loss of 10% of middle class purchasing power and leadership and entrepreneurial activity may have rendered the economy ineffectual. On top of the job losses, the financial insecurities and the increasing concentration of wealth among the top 1%.

In addition, people between the ages of 55-64 have been especially hard hit. These are the pre and early retirees, people who have saved and often prospered, but are now generally past their peak earning years.

This matters because people tend to vote in proportion to their age (approximately 21% of 21 year olds, approximately 55% of 55 year olds...). And this is a Presidential election year. People are angry. At declining incomes, declining net worth, declining standards of living. And given their ages, they are not in a position to make up the losses. Whatever their experience and tacit knowledge, companies, like athletic teams, tend to go with younger candidates. Even if they are willing and able, older people often dont have the technical skills now required.

Interestingly, the report on which this information is based notes that blame is placed on Congress, banks and large corporations. George W. Bush is held more responsible for this state of affairs by those surveyed than any other national leader.

Which may or may not be a political portent for 2012. But that knowledge could be a sign of why business is fighting so hard to elect one candidate rather than another. JL

Anna Fifield reports in the Financial Times:

America’s middle class suffered its worst decade in modern history during the 2000s as net worth and wages declined, according to a report from the Pew Research Center

The Crisis of CEO Credibility

It used to be that the buck stopped here.

Now it seems to stop everywhere but.

Reset options. Plausible deniability. The always upward compensation ratchet. Golden parachutes. Indictment-free 'missteps' thanks to cowed regulators. There appears to be no downside once you get those three letters beside your name. The worst that can happen? An eight figure payout - at the very least.

But there is an impact, however subtle it is for now and how ever long it may take to become apparent. Polls and surveys, among them the Edelman Trust Barometer conducted in conjunction with the World Economic Forum, show that CEOs have lost credibility. Their opinions are suspect and their role as leaders is diminished.

Ironically, some of the reasons for the reputation decline are due to actions of their own making: chronic staff cuts in order to pay for senior compensation increases have reduced the numbers of people who can double check for internal problems; short-termism in managing and reporting - in part to satisfy financial analysts - has led to decision-making not based on long term economic health of the enterprise; a culture of what might politely be called moral agnosticism has emerged from an 'ends justify the means' obsession; and a 'blame the regulators or politicians for everything' mindset has shifted responsibility and obligation in every direction but home.

The reality is that the CEO position has gotten more difficult and more complex. But CEOs themselves have helped make it so. Globalism has expanded the scale of the enterprise. The cultural and organizational complexity have increased exponentially. The amount of information the CEO is expected to master has risen accordingly. All of which suggests that contemporary leaders need to self-actualize that hoariest of management cliches: there is no i in team. Operational decision-making and leadership example setting need to reflect that if credibility is to be restored. JL

Knowledge@Wharton reports:

Seemingly endless bank scandal have made people start to question the credibility of CEOs everywhere.

Religion, Reputation and the Rule of Law: The Implications of Russia's 'Pussy Riot' Trial

By traditional Russian standards, the outcome was lenient: the defendants, a three-woman political rock band collective known as Pussy Riot who had performed without permission in an Orthodox cathedral, were not beaten, shot or sent to Siberia - yet.

But to those who dwell in the civilized world, even those parts where repression is common, the event had all the staged markings of a Stalinist show trial. The guilty verdict was preordained and only the severity of the sentence was in question. Two years in prison was the outcome. There will be legal appeals (fat chance) and even Kremlin supporters are suggesting (with more hope than knowledge, one surmises)that President Putin will urge/decree a shorter term.

The larger issue lies is the global context. Times of change are disorienting and frightening. In Russia, the US, China, Europe - and almost everywhere else on the planet, the verities of the post WWII era are crumbling in the face of faster and freer communications. Try as they might, authorities simply can not keep up with the power of the technologies driving this trend. Ethnicity, gender, race - and religion have all been affected by the tumultuous stirrings.

Religious leaders feel especially vulnerable - and empowered. Islam and evangelical Christianity have both seized on the uncertainty of their believers to demand political changes consistent with their ambitions. The Russian Orthodox church, having been suppressed for most of the 20th century has enjoyed its new-found position as a favored ally of the political class. The Kremlin has used it to legitimize its continued grip on power in the face of Communism's fall. And the Church has reciprocated.

So the protests against President Putin in 2011 were something of a shock to the system. Who would dare do such a thing under the Tsars or the Communist hegemons? The Pussy Riot protest event in 2012, held purposely in a cathedral, was a direct challenge to the political role of the country's historic religion - and a new attack on the alliance. As such, the Kremlin evidently believed the protesters had to be made an example of.

But in so doing they erred. Because they elevated what was otherwise an obscure act of political theater that would hardly have earned a press mention in most western societies into a global cause celebre. And they have raised questions about the proper places and uses of religion both in Russia and in the world at large.

When embraced voluntarily, religion's role is secure. But when used as an agent of repression - either overtly as in the Pussy Riot case - or less obviously as in attempts to thwart freedom of speech and other civil liberties in the US - negative reactions eventually outweigh the potential short term power gained.

Research has demonstrated that economic success is strongly correlated with the rule of law. In a competitive global society, Russia and other countries must compete for investment. As in any competition, when those considering the odds believe them to be uneven, they will take their chances elsewhere. JL

Miriam Elder reports in The Guardian:

A storm of criticism broke in Russia following the harsh two-year prison sentences given to three members of the feminist punk band Pussy Riot for protesting against the government in a Moscow cathedral. Those openly critical of the jail terms included some who are close to Vladimir Putin and others with strong links to the church, increasing pressure on the authorities to treat the trio more leniently.

Where Free Speech Goes to Die: The Workplace

Say what you will...and it could cost you your job.

Most Americans believe that their right to free speech is unfettered. And, by and large, it is. You can make truly hateful, hurtful statements; advocate radical and even bizarre theories; express how you really feel about almost anything and anyone. All without legal consequences.

The only downside is that employers are not required to continue your employment if they disagree with or disapprove of what you say. And they have the right to terminate your job if they want to do so.

This knowledge frequently comes as a shock, especially when the person affected has just been informed that his or her services are no longer required. Without wandering too deeply into the thickets of constitutional law, the basic theory is that speech is protected, but unless contractually protected, the right to employment is not. This will be particularly interesting in a Presidential election year in which much of the business establishment has lined up in support of one candidate over the other. The degree to which employees may feel that their right to say what they want, however valuable, is simply not worth losing a job in a lousy economy.

The broader question is whether companies suffer from such intolerance. Not so much for political speech, but because outspoken staff members often have good ideas about productivity, cost saving and sales opportunities. Be that as it may, the reality is that many, if not most, employees are retained 'at will,' which means the boss has the right to hire and fire without legal consequences. The market may ultimately dispose of those who are consistently immune to good advice or the loss of talented, if in-artfully vocal staff. But in the interim, free speech, like so many other 'free' assets, may actually have a price. JL

Michael Dolgow reports in Bloomberg BusinessWeek:

In America you can say pretty much whatever you want, wherever you want to say it. Unless, that is, you’re at work. Simply put, there is no First Amendment right to “free speech” in the workplace

Are You Poor If You Own a Flatscreen TV?

Does technology define our standard of living?

Western images of poverty are often rooted in the past or in locales outside inhabitants own experience. Americans tend to think of unpainted Appalachian shacks without running water let alone electricity. Globally, the slums of Mumbai or Nairobi, or the favelas of Sao Paolo provide the most searing reminders of what it means to be poor.

But as the global economy remains stalled and incomes decline, standards become relative. The rise in demand for public assistance in some of America's wealthiest zip codes has become stratospheric. The housing crisis remains a daily reality for millions in the US and parts of Europe. And yet, thanks to decades of public policy that eliminated many of the most glaring examples of desperate public indigence, standards of what constitutes being poor has changed.

Some political ideologues point to the ubiquity of cell phones and flatscreen TVs as 'evidence' that standards of living have risen and that income inequality is, relatively, a myth. But that argument relies on selective marshaling of the facts and ignores a host of other costs. the reality appears to be more nuanced.

Global economic growth, particularly in developing nations has raised the price of basic commodities like food and fuel. Flat incomes, falling housing prices, increasing educational costs, declining access to loans and reductions in government programs have all put downward pressure on average family and individual wealth.

Meanwhile, technology costs have plummeted. Mobile phone and television prices have declined in real and relative terms as manufacturers and service providers both compete - and recognize that the broader the availability, the more profit is to be derived from advertising and services. Layaway plans and easy credit terms are designed to make such purchases available even to the least affluent segments of society.

So, ownership of a flatscreen TV may imply that the characteristics of socio-economic status have changed, but not necessarily that daily health and life has improved for those who may own one. JL

Tami Luhby reports in CNN:

Can you really be poor if you own a flat-screen TV ... or two? Depends on whom you ask.

With income inequality at the center of the national political debate this year, it should be no surprise that conservatives and liberals are coming down on opposite sides of the tracks.

Why Are Companies Like Chick-fil-A and Amazon Taking Stands on Controversial Social Issues?

For years, opponents of corporate 'socially-responsible' investments have claimed that such initiatives were a misuse of assets. But maybe they were wrong.

There has been public outrage - and chest-thumping support - regarding Chick fil-A, a large fast food chain, whose owner, a devout Christian whose stores are closed on Sundays, expressed his opposition to gay marriage. On the other side of the battle, the founder of Amazon, the world's largest web retailer, made the largest financial contribution ever to a gay-related cause.

Why would they bother getting so publicly involved in this issue and embroiling their businesses in controversies that ostensibly have little to do with what they sell?

The answer may lie in the evolution of post-industrial business and the marketing thereof. Historically, price has been the primary driver of consumer purchase decisions. But starting in the 1970s, when in wealthy North American and European societies most of Maslow's hierarchy of basic human needs were being comfortably met for the majority of the populace, attitudes about what mattered to the consumer began to undergo a shift. This meant that merchants had to find other ways of connecting with their customers.

Research began to demonstrate that values mattered to consumers. The brand - and the product it represented - were emblematic of the purchaser's status, convictions and self-image. Jeans and shoes and kitchen ranges and pasta and cars and now, even shopping bags, became a statement. Tattooing brands on one's arms or back, once unthinkable, became unremarkable.

So businesses began to embrace causes to show that they were at one with their public. They tried to make these as inoffensive to as many as possible: who could criticize you for being against litter, or child safety?

But as the global economy became more competitive and consumers' middle class lifestyles became less tenable, an edge crept into the debate. To break through the clutter, taking stronger stands on more divisive issues became necessary. At the same time, income inequality cushioned many wealth business people from the potential backlash associated with political stands. They were already billionaires, so who cares what a few thousand - or even tens of thousands - people think?

The active involvement of these billionaires in the political process has further fueled this trend. They think themselves to be financially insulated from the consequences of their stands and believe, perhaps accurately, that the political benefits far outweigh the commercial costs.

There are cycles in both politics and economics. The divisiveness evident today echos that of the mid-19th century and the early 20th century. It may fade as other issues become preeminent. But for the moment, business leaders believe that having the courage to take these stands is an expression of their status in society, will have few negative consequences - may even bind them closer to their core customers. JL

Kayla Webley reports in Time:

Billionaire Amazon founder Jeff Bezos and his wife MacKenzie pledged $2.5 million to help pass a referendum on same-sex marriage in Washington State. With the donation, the Bezoses became the largest public financial backers of gay rights in the country — and the liberal answer to Chick-fil-A president Dan Cathy, who made waves when he affirmed his company’s opposition to gay marriage.

But in terms of what they sell, neither Amazon nor Chick-fil-A has anything to do with gay marriage, so why did Bezos and Cathy each enter the political arena by making a statement on a divisive social issue?

Financial Cannibalism: Money Managers Turn on Banks in Post-Libor Tussle for Earnings

The Law of the Jungle is that only the strong survive.

It's business corollary may be that when profits are limited, everyone is a potential meal.

The banks and investment managers have worked hand-in-hand to create tremendous wealth and power for themselves, some of which has trickled down to their clients. But as the world continues to tighten regulations in the wake of the financial crisis, investors remain wary of markets they sense are rigged to others' advantage and business growth is stymied by the fallout from the inefficient distribution of market returns, the excess profits that fueled financial services growth are diminishing. That, in itself, has led to layoffs and consolidations.

But as the details of the Libor-fixing scandal become better understood, the largest institutional investors are beginning to analyze to what degree their own returns - and those of their clients - may have suffered as a result. And they are not contemplating turning the other cheek.

Cutting to the chase, legal action will probably produce either a settlement or a trial which is likely to result in some sort of partial victory for both sides. The issues are simply on their face but whether that can be turned into a victory in court is less certain. The upshot may well be that bank capital is further depleted, in some cases causing violations of the Basel III accords which mandated specific levels. Ultimately, this will create a further squeeze on the financial institutions.

Governments and legislatures may not have had the guts to take firm action on their own, but the markets themselves are not going to leave cash on the proverbial table. JL

Christoper Condon and Alexis Leonidis report in Bloomberg:

BlackRock Inc. (BLK), Fidelity Investments and Vanguard Group Inc., firms that collectively manage more than $7 trillion, are gauging how their clients have been hurt by Libor manipulation and whether to take legal action as at least a dozen banks are being investigated for rate-rigging.

The money managers can take cues from Charles Schwab Corp. (SCHW) and the city of Baltimore, which in lawsuits predating the record fine levied on London-based Barclays Plc (BARC) last month, sued lenders for artificially suppressing, Libor, or the London interbank offered rate.

Government Invented the Internet. Deal with It.

It has become popular among those of a certain ideological bent to claim that the government, or governments, can not do anything right.

To support their claim they leap avidly on any evidence of mishap or mistake. But that, lately, has proved insufficient. Despite frequent problems, people keep demanding government services like fire and police protection, good roads, better schools and naval aircraft carriers. Meanwhile, the private sector, though often a provider of myriad useful goods and services, does unhelpfully continue to impose usurious bank card fees, long telephone wait times for customer service, financial crises and the like.

So the debate has moved to a new level: denial. Recent evidence of this tactic involves the internet. Though its popularity and impact are sometimes questioned, its ubiquity and utility are not. Neither, until recently, had been its origins. Pretty much everyone with a third grade education or more understands that the US government agency called DARPA (Defense Advanced Research Projects Agency) or, for those who may quibble, a similarly named predecessor, provided the funding, inspiration and demand for what we now know as the internet.

This is understandably upsetting to those whose primary goal in life is to deny that government is needed for anything. Especially since the internet is the most universal application of technology since fire. Or maybe the wheel. We feel their pain. But facts are facts. You can look it up on the internet. JL

Damon Poeter comments in PC Magazine:

Al Gore was once routinely mocked for supposedly claiming to have "invented the Internet." He didn't really say that but that didn't do much to stop the joke from spreading.

Now, in similarly fact-challenged fashion, Wall Street Journal columnist L. Gordon Crovitz has attempted to extend the idea and claim that government itself didn't really have much to do with the Internet's creation.

Is Water the New Gold?

People and water.

People need water to survive. And there are going to be approximately 3 billion more of them by the end of the next generation (@30 years). That is an almost 50 percent increase in population.

The amount of available water on the planet is not expanding at that rate. Or any rate. It is, in all likelihood contracting. Both because more people are using it - and because they are polluting existing stocks at the same time.

An additional factor is the increase in usage. Americans use water the way they use gasoline - with heedless abandon. The average American drinks, flushes, sprays, showers and wastes about 150 gallons a day.

The average Chinese? About 23 gallons a day. But as in so many other things, they are catching up - and determined to do so. Which is nice for them, not so nice for the environment or for future availability.

Markets, however, may provide a partial solution, though not one that will be acceptable to many. Because the markets have begun to notice, as the following article explains, that there is going to be a shortage. And where there is a shortage, there is often opportunity. But the opportunity does not come from altruistic impulses to solve the world's problem. It comes from the chance to find or convert more water (from sea water or polluted water, for instance)and then to charge people or their governments for it.

Given what we have seen in other realms of corporate behavior, there will be ethical issues tied to distribution and pricing. Some may be resolved through negotiation, but some, no doubt, if things get ugly enough, through expropriation. Whatever the final outcome may be, demand is not going to lessen. And neither is the opportunity or the threat. JL

Paul Farrell comments in MarketWatch:

“Is water the gold of the 21st century?." Answer: Yes, water is the New Gold for investors this century.

In 2010 global water generated over a half trillion dollars of revenue. Global world population will explode from 7 billion today to 10 billion by 2050, predicts the United Nations.