Archive for August, 2008

But… that was only supposed to hurt rich people….

Friday, August 29th, 2008

An interesting passage from Clayton Cramer’s blog on what happens when the government tries to “stick it to the rich”:

There is one problem driving not just HP, but a lot of other U.S. companies to constantly slashing workers. In 1993, Democrats in Congress showed how much they hated "rich people" by passing a law that prohibited corporations from deducting as business expenses any annual salary exceeding one million dollars–and the salaries of the next four highest paid officers. So large corporations started to compensate officers with stock options instead. This created a strong incentive for officers of the corporation to keep the stock price rising for the next few quarters–even if it destroyed the long-term viability of the company. Note that this didn't actually prevent corporations from compensating their officers quite generously. And in truth, Democrats weren't really trying to prevent that–they were just pretending to be on the side of the little guys, while continuing to cozy up to corporate fat cats. It just created perverse incentives for how to run a large corporation.

A company that is developing complex products will need several years from the start of the process to the point where the product starts to bring in revenue. Think of this as a tunnel: you put money in one end of the tunnel in 2004; it turns into a return on investment in 2008. The products that you start developing in 2005, won't give a return until 2009. Ditto for 2006 to 2010, 2007 to 2011, and 2008 to 2012. If your focus, because of your stock options, is driving up the stock price over the next several quarters, the temptation to go for short-term improvements is very, very strong.

Cutting spending this year may impair profitability in 2012–or maybe it won't. It's hard to tell. But you can almost guarantee that cutting spending on long-term projects this year will drive up the stock price for the next quarter or two. This is why layoffs often lead to higher stock prices. Corporate officers whose primary income is derived from stock options have a strong incentive to cut costs right now. I don't think that stock options are necessarily a bad thing. But it does encourage a short-term view of how to run a company.

On a different note (but from the same blog): Holy Crap. How is this guy a major party nominee?

Public Parasite (Predictably, Pregnant) Portends Perpetrating ‘Plosion

Friday, August 22nd, 2008

Ah, what our wonderful welfare state has wrought.

A New York woman, pregnant with her fourth child, is so sure of her inherent right to demand that others provide for her that she has threatened to blow up her local welfare office after they told her she was ineligible for more benefits.

Deep breath. Repeat after me:

You cannot call something a “right” if someone else has to give it to you.

Holy Implausible Plotlines!

Friday, August 15th, 2008

[***Spoiler Alert*** if you haven’t yet seen The Dark Knight]

Brian writes an interesting piece on the newest Batman movie. For the most part I agree with him; but one statement he makes is, to put it mildly, complete batshit:

The watchword of the current series is plausibility. Everything has to make sense. None of the equipment is over-the-top for the sole sake of being over-the-top.

Okay. So… Bruce is not himself a tech guy. That is almost the entire point of Lucius Fox.

Would you please explain to me the “plausibility” of Bruce wiring up EVERY CELL PHONE IN THE WORLD into a bat-sonar device? Without Lucius having any clue??? Did he take a correspondence course in “Comic Book Tech”? (It’s on the list right next to “VCR Repair”.) Did he wire it up during a lull in his copious spare time? All those monitors alone must have taken hours to hook up — and to what purpose but to look cool for the camera?

(As a sidebar, that particular bit of tech was certainly a tip of the hat to, if not a setup for introducing, the character “Oracle” from the comics.)

Having a gimmicked phone in Hong Kong worked, because he made it specifically for the job. Somehow magically making millions of regular off-the-shelf units do the same thing was complete nonsense.

(Oh, and while we’re on the subject of implausible schemes, can somebody please tell me how Joker managed to load hundreds of drums of gasoline onto the two ferries without anybody noticing? For that matter — if they were evacuating the city via ferry, how did it not occur to anybody to maybe put people down in the massive, supposed-to-be-empty hold?)

The worst part of it to me was that it was totally unnecessary to the plot. If the plot simply didn’t work without it, they should have called for rewrite. As it is, it smells as though some studio exec watched a pre-release version and said “this movie just doesn’t have enough bullshit.”

The movie was excellent, but Nolan really tripped over his cape with that bit….

[Update: Brian Responds]