The ExhibitioNet (Term by Robert Samuelson)

I like talking about social networking sites. I find online networking different and interesting; although the truth is that I do not participate on those social networking sites. Robert Samuelson writes:

But the ExhibitioNet is more than a marketing tool. The same impulse that inspires people to spill their guts on "Jerry Springer" or to participate in "reality TV" shows (MTV's "The Real World" and its kin) has now found a mass outlet. MySpace aims at an 18-to-34-year-old audience; many of the pages are proudly raunchy. U.S. News & World Report recently described MySpace as "Lake Wobegon gone horribly wrong: a place where all the women are fast [and] the men are hard-drinking."

Thank you Robert. In his column, he explains some of the poses that I spoke of when I posted on the topic in Blogicology. Of course in his column, Samuelson is far better researched, easy to read, and well, frankly, credible.

Two Points about Digg

I am going to try and illustrate two points in one post today with the help of this link to a politically-related article on Digg.

The comments about that article help articulate my ongoing fear of blogging about politics. Simply put, much of the comments on that Digg page don’t really add to the political discourse. On that note, I would like to address one specific comment that stated, “Reason #234555 why you keep losing elections. You guys find the Daily Show and the Daily Kos to be a good place for talking points.”

I just have two minor disagreements with that comment. First, the real reason why Democrats lose elections (otherwise known as, “Blue States Lose”) was already stated here (and is continuously stated every Friday might I add). Second, while using the Daily Kos and the Daily Show for “talking points” may be a bad idea (I’m not weighing in and saying that they are bad or good, just conceding the chance that this person’s comment might be right), that comment still doesn’t add to the political discourse.

I’m guessing most people on Digg might not want to and/or try to write in a different manner because they might get even more flak for a more demure writing style. I.e., “You think you’re better than us?” or “Just because you write it nicely and suggest different points of view doesn’t mean you’re right.” The bottom line is that no matter what you (or I) say and how you say it, people are going to get really angry. As I’ve found out, even when you make fun of yourself to try and illustrate how all the reading you’ve been doing is for a reason, people still find some nasty things (go more towards the bottom) to write in order to “help you.”

My number two point in this post is to simply tell anyone who reads this blog that the reason why I link to Google news is because I personally prefer it’s distribution of news in the sense that you don’t have to deal with a 50-50 battle royal of people yelling at the top of their lungs how the story is wrong or right.

Also, while I admit that I tried to portray a serious tone in this post, I also concede that if you’re looking for some fun, or something to chuckle at, please go and watch everyone duke it out on the comments sections of some of these Digg pages. Obviously, for the best yelling matches, I recommend these two sections at Digg.

Subaru Responds

Subaru responded, and it seems as though they are completely in the clear – literally and figuratively.

Dear Mr. Katsimbris:

Thank you for visiting the Subaru web site and for your message!

The Subaru STI models do not come with window tint from the factory. We do not install a 39% window tint on this model. Only the Subaru B9 Tribeca comes with tinted windows from the factory, and only the rear windows are tinted, not the front side windows.

The STI model, like all other Subaru's. has a very light, UV reduction tint. It may have a faint blue-ish hue to it, but is not usually noticeable. If the vehicle you purchased has a 39% tint on it, it was installed at some point after the production, either by dealer or previous owner.

If you have any other questions, do not hesitate to reply to this email!

Best wishes,

(Name Withheld, although I wish they allowed me to post the name because this person had excellent etiquette)
Subaru of America, Inc.
Customer/Dealer Services Department

I then replied because I just had some further inquiries in his email, but nevertheless, Subaru is in the clear, and with the help of my dealer, so will be my car's windows.

Rock on Subaru.

An Open Letter to Subaru

Greetings, I am the owner of a 2005 Impreza WRX STI. I would like to ask a few questions. First, am I correct in assuming that many of your vehicles (including a 2005 STI) come from the factory with tint on all windows – except the windshield?

Second, as I purchased the vehicle pre-owned (it was a lease turn-in), I had to go to the DMV to have a VIN check performed where they made me take it through inspection knowing that they could fail me for the window tint (apparently, even though only for a VIN check, they have the right to inspect vehicles on call if they’re in the lane). 70% light is required to go through the windows (Delaware State Law) and the Subaru’s tint only allowed 39%. What is Subaru’s official statement on their use of window tint in vehicles? Is there any comment on this situation (or prior similar situations)?

Please know that I am in no way mad at Subaru, or my dealer. Both my vehicle and Matt Slap Subaru are excellent, however I believe I am deserving of some official statement in what is an apparent incongruence between Delaware State Law and one specific manufacturing standard (window tint) of Subaru.

Dana Garrett Comes Through

In the past month and a half that I’ve been reading Dana Garrett, I’ve found someone that really gets the point, and Dana does it again. I was hoping he’d lay out a little more about Dennis Spivack, and thankfully, he’s doing just that.

In politics, transparency is paramount, and it’s up to media outlets (no matter what type) to provide the information that people need to be aware of.

The Penny

Sebastian Mallaby reminded me about the cost of the penny today (my disdain towards carrying cash leads me to not having to see pennies very often).

You can look for yourself as to what tons of people are saying on the topic by searching “zinc lobby” in Google.

Even though Greg Mankiw is blogging with more purpose these days considering that the attention of his class is somewhat drawn to his blog, a caveat to the academic year starting is that we might not get as many of these posts from Greg.

Here is Steven Levitt and Stephen Dubner on the topic. If anyone can provide a link for me to a good argument for keeping the penny, leave it in the comments.

UPDATE: Hey, I think Greg subscribes to Sebastian Mallaby too.

More on Comments

I always talk about commenting. And this time, Greg Mankiw has something to add to the table.

Nice Catch

In case anyone thought that I didn’t notice, I did see Tyler Cowen link to a paper that I have talked about previously.

Whatever happens, don’t tell Tyler that I wrote about the paper first, the man has a reputation to uphold.

Anxiety and Personal Economics

I admittedly get anxious quite easily over any presumed personal threat, whether it comes through a death threat or the simple ill-wishes from another person.

Nevertheless, I realized the other day that if I think about this economically, than many of the decisions I make are making me better off. How, by eliminating my costs (otherwise known as my “worries”). Now, for many people, the personal cost (disutility) of worries is quite insignificant. But for me, I worry a lot.

I’ve seen bloggers get nuts at each other over differences in political ideology. And I’m not just talking about, “Gee Robert Novak, you really can be a pompous douche.” I’m talking about the times when some bloggers call other people “friends of terrorists” or “enemies of America.” So, needless to say, I’m so anxious that even though the internet is the place to be when you want to say and advocate crazy agendas, I would like to never get engulfed in one of those blog to blog arguments.

There is a caveat to the blog v. blog dynamic though. In terms of economics, it can lead to some great debate. Although in politics, I’ve seen it turn to gut-wrenching slander (especially when you read comments of those people who disagree).

Nevertheless, let me show you the trade-offs I make on a daily basis that I hope will make everyone out there realize that they actually make tiny economist decisions everyday.

• Firstly, my car. Bad accidents, random acts of hate (I’ve seen it happen to a girl I knew in college who had NO ENEMIES), and a general public disregard for other people’s property (i.e. dings and dents from people who don’t care about their car, and therefore don’t care if their car and their actions inflict damage onto yours).
  
  Yet, I still chose to buy, keep, and maintain a really cool car in my opinion. Why? Well, this is where being an economist is blurred because the decision is quite irrational. I like the car because I’m such a fan of racing and the discipline behind Formula 1 and the World Rally Championship. It takes a lot of effort to obey the rules and keep all the vehicles in prim and proper condition. It’s just cool to me.
  
  So, even though this is completely irrational, the personal utility to me for keeping the car and being a fan greatly outweighs the risk of having something bad happen. I also take precautions on my vehicle, and divest my own personal time to maintaining the vehicle.

• Second, being in public. Now, I know that Social Anxiety Disorders are real, but I do believe that some of the feelings that I go through are related to my horrible experiences in high school. However, going to the grocery store, going to work, or just taking a day off and going to the mall or to the beach provide me with more than enough incentive to engage in some activities that I see some amount of risk in.

Now I know that my two examples are extreme and borderline crazy, but they’re the simplest forms of personal economics that we all practice everyday. We deal with our personal marginal costs and marginal utilities all the time. I'm just glad I don't have an Obsessive Compulsive Disorder; talk about a whole new line of costs.

The Dangers of Political Blogging

Blogging about politics is dangerous. Anger comes out left and right from the blogosphere from almost any topic imaginable. This is why I link to Glenn Greenwald as often as I do. Here’s someone who uses facts and precedent all the time, and yet still gets grilled.

Nevertheless, in Delaware Watch, Dana Garrett’s post about Dennis Spivack left me, well, wanting more.

I hope (rather, can't wait) to see Dana write about Dennis Spivack's anger with more detail. By simply telling me that he's angry without citing specific examples, I'm not sure how to gauge Spivack's "anger."

I also can't wait to hear some details because I'm just not completely sold on me not voting for a candidate because they are angry or because they might cause embarrassment for Delaware. (What’s really unfortunate is that my out-of-state friends from the University of Delaware say that the most embarrassing thing about Delaware is…Delaware.)

Also, in terms of embarrassment, why not talk about Senator Biden’s plagiarism? Why still allow him to be re-elected every term?

By that logic people might as well not vote on platform grounds. And in fact, that logic would make me wonder how people voted for George W Bush at all.

One other item that sticks in my crawl about political blogging is that I don’t think the people who need to be reached are being reached. If Dennis Spivack is embarrassing and is a horrible mistake, then what about Alaska’s Ted Stevens (“The internet is not a dump truck…it’s a series of tubes”)? With Ted Stevens, we have a man who is both angry and ignorant.

Delaware produces a dangerous dichotomy on its own, that blogging apparently hasn’t brought to the surface. Delaware’s wonderful comfort for businesses to incorporate here brings in a tremendous upper echelon Wilmington area complete with its own socio-economics divisions. But further south, Delaware becomes even more divisive from rural farm landscape to a developing beach shore environment. I reside in between the rural area and the shore, and I can tell you that Dana and his messages aren’t getting down here.

I think reaching only one part of an audience that can vote to make a difference could end up being dangerous. There is a caveat though, those most interested in political discourse and change will apply their searches to the internet and find Dana. So, the danger doesn’t really lie in Garrett’s reaching only one part of the whole, but rather the unfortunate fact that the rest of the whole doesn’t want anything to do with politics.

The SOX Dichotomy

Forgive my lack of updates recently, but I have been trying to put out professional fires left and right.

There is an unfortunate dichotomy that exists in all of business. It’s unfortunate to say this, but it seems as though “the law is the law” is only operable up to a point. Just thinking about it makes me melancholy. You could also apply this dichotomy to other facets of life (politics for example).

Any reader of this blog will know that I love talking about Sarbanes-Oxley and its section 404 for self-compliance. I believe that this quite possibly vague legislation needs to be continuously debated and talked about to further refine it and evaluate its effectiveness.

However, I am a firm believer that “the law is the law is the law.” (I apologize for the repetition, but I believe that to be the adage.) Unless that legislation is changed, it is our corporate duty to follow it to the letter. The paradigm in not following the law most likely would follow as such:

I believe the law to be wrong, therefore I will not follow it, and in doing so hope that later when it is changed I will not be seen as guilty of any crime.

Unfortunately the problem with that paradigm is that it allows the perpetrator to feel self-righteous even though a majority could think the opposite, and in the end the actions might always be illegal. Our current president is in such a battle right now, and despite what your opinion is, shouldn’t we change the law first before we do anything illegal?

Currently, in my professional role, I’m seeing an effort to try to compromise my principals. In fact, I believe it has direct correlation to SOX Section 404 and self compliance. The basis of the legislation demands that all publicly traded companies to regularly check all their safeguards and review if all items are being approved of and processed in the proper fashion. However, just recently I’ve been put under pressure -- implicitly, not directly -- to go against what is a normal procedure.

Here’s what it boils down to (and why I believe the nature of Sarbanes-Oxley is significant): You can’t follow the law one minute, and the next minute change your processes to attain profit. That is how Enron happened; compromises were made in order to attain profitability. And in that same vain, I will not compromise my standards for the sole purpose of profit. The law is the law. For anyone reading this, I hope you know that you have at least one good steward in corporate America.

Also, let me apologize if you do not like the way this post is opinionated, but I had to let off some steam.

Commenting

For me, comments on blogs can be difficult to deal with at times. On the other hand, Scott Adams gains something from them.

What the Sarbanes-Oxley Act Did or Did Not Change

When first passed, I thought the Sarbanes-Oxley Act of 2002 created new roles in enforcement and overseeing, but because these roles were new and there was no previous estimate as to how much all of this new involvement would cost or what it would actually do, I was skeptical from the start.

So, when at work an article written by James Brady Vorhies from the American Institute of Certified Public Accountants (AICPA) is passed around at my workplace like what he’s writing is some sort of revelation; I have to stop and say, “Why?”

I recommend a paper by Lawrence Cunningham. Cunningham goes through the Sarbanes-Oxley Act pointing out that the Act didn’t necessarily change everything, but merely reinforced some requirements that were already there. For example, at the company I work for, we always had to do balance sheet reconciliations.

But another one of my questions lies within why some high ups still listen to the AICPA as much as they do. As Cunningham’s paper states:

Stripped of power to make authoritative auditing standards is the American Institute of Certified Public Accountants (AICPA)

…

It is replaced by a Public Company Accounting Oversight Board (PCAOB) to be funded instead by public companies and led by mostly non-CPAs.

…

The AICPA is a professional organization comprised of CPAs and serves as a trade group for the profession. The POB (Public Oversight Board) was funded by the AICPA, a mix that risked sacrificing its independence and objectivity in promulgating GAAS (Generally Accepted Accounting Standards) and supervising the public auditing industry.

Naturally, the obvious counter would be: why listen to the PCAOB instead of the AICPA? What makes them better at oversight?

First, the PCAOB is a creature of statute, not grace. Second, a majority of its five members will be non-CPAs and its chair cannot have practiced public accounting during the year before becoming chair. Third, it will be funded by public company shareholders, not the AICPA. Fourth, members will be full-time and serve 5year terms (with a two-term limit) and be subject to removal for cause by the SEC.

...

These moves are intended to strengthen the PCAOB’s independence from the profession, a longstanding philosophical and practical conflict between the SEC and the AICPA. Whether they will work is uncertain. But this is a major step, perhaps the silver bullet of the Act.

Of course, the problem is that like any “silver bullet”, it remains to be seen if the PCAOB will be awesome as the American public hopes it will be.

Nevertheless, I hope that managers will rely less on the “flavor of the month” topic from the AICPA and simply stick to filing the reports that need to be filed in a thorough fashion without having to glorify the monotony of the activity. We all understand the merits of the balance sheet reconciliation, and anyone who doesn’t probably shouldn’t be doing it in the first place, especially when you’re doing it to audit the company.

Thanks to James Vorhies for taking the time to write the article, but please managers, if you think it’s necessary to show us the importance of the balance sheet reconciliation, then we still have some big problems in corporate America.

Learning from the Past

Once while a freshman in college, my dorm mates and I were in the halls discussing what books we had read. I felt completely left out not really having ever built a strong fervor for reading (thank God that changed).

Nevertheless, one of the foremost intellectuals in our group said that he had read Gandhi recently to which I replied, “Pshhh, Gandhi.” Now, I had never read Gandhi, but admired -- and still do to this day-- his peaceful legendary civil disobedience from what I learned in world history, and the only reason I made the remark was to try and get into the conversation and sound cool. Almost immediately though, I had realized what I actually said, but it was impossible to take it back. Even though I now realize how much of a douche bag I was for not thinking before speaking, I can’t help but wonder that my comment in the fall of 2000 may have been the re-sparking of neo-conservatism. Nevertheless, even though I know I have nothing to do with modern day neo-conservatism, I still think that was a horrendously thoughtless and stupid comment.

In the end, Gandhi kicked ass without having to physically kick it, and anyone who says otherwise is simply not thinking.

Also, I think this is a good opportunity to mention one of Glenn Greenwald’s latest posts that mentions how the Clinton administration actually did deal with terrorism. I wonder what a poll would show about Americans' attitudes towards combating terrorism. Clintonian counter-attacks, or Bush pre-emptive strike regime changes?

Growth in the 1990s

A recent working paper from Matthew Shapiro and Yuriy Gorodnichenko researches the Fed’s role in the US economy’s growth in the 1990s.

The paper’s most visible message is something that the institutional economics web log has discussed for a while. What Shapiro and Gorodnichenko find is that

Our results suggest that PLT (Price-Level Targeting), either strict or partial, could account for the performance of output and inflation when Alan Greenspan shifted to an optimistic outlook for long-run growth.

…

In summary, we find that PLT can not only match the stylized facts of the late 1990s, but also that undoing past policy mistakes as under PLT is generally a better policy regime than letting bygones be bygones as under IT (Inflation Targeting).

For anyone who argues in absolute terms for inflation targeting, this paper puts a little perspective on both types of monetary regimes. And in respect to Alan Greenspan, the growth of the 90s and the monetary policy that went with it was not a fluke, as the Fed noticed that the economy itself had expanded its “productive capacity.”