Position, Skill, and Ability

Mark Thoma comments on a debate of whether a specialized Education provides a real Income differential. I doubt the spectacular nature of Income generation when it comes to Education, knowing it takes much more than simple Skills to rise to higher Income. The greatest necessity for large Income increase is Innovation, but Innovation that is discrete, can be separated and controlled; whose access can be constrained with a Monetary charge placed upon its availability. Any focus inside Oneself limits the Income to basic Wages, and cheaper Labor can always be found with the Skill levels necessary. Those who wish great Wealth must always concentrate upon the Product; a serious provision of better Product for Consumers will get the great aggregation of Wealth. The current financial crisis is a good Case in Point, where Investment bankers forgot the first axiom of operation, which is that the Investors must make money to be successful. Failure to provide the Profits led to the downfall of the entire industry.

I ran across this article from Bloomberg, and asked myself if improved performance generated the residual Price; something which I doubt. It can be admitted these tranches were probably valued too low, due to the uncertainty of the Crisis. It is a fact, though, that the only improvement in performance of these things is longevity; they have not failed as yet. Investors might imagine that continuation of the tranches suppresses their failure rate, but only under Conditions that the terms of these agreements are being met; the Kicker here being that payment schedules are not being maintained, and therefore, the Risk remains as great. I am not attempting to rain upon their Parade, but Mutual Fund and Hedge operators might remember the old magical trick of a Coin disappearing in the Hand. They have to get major funds invested, yet they must still consider the quality of Investment, else find themselves the Guest of Honor at a Roast–One without a happy humorous ending.

I have always enjoyed Mish’s comments, though this Post may be a little too directional. The Boston Globe has a multitude of problems, of which the Unions are only One, and possibly not the worst of the lot. Their Paper Costs are too high, their Advertising rates are too low, their Subscription rates are too cheap, and they show a reluctance to invade Waiting Rooms and Reception areas–a definite lack of pursuit of alternate venues of Subscription. The Advertisers who have abandoned the Globe were always going to abandon the Paper, the Remaining Advertisers would pay a higher frame Cost for the speciality Advertising they need. It is not up to the Globe to support inefficient Paper production, and the Paper should pursue the cheapest route. Management and Investor should not insist on high Returns, while asking for Wage Cuts for everyone else, and there should be serious effort expended on acquiring a long-term Mortgage to absorb all Debt with a more reasonable Repayment schedule. One must meet the Times, or be slammed by them (Pun intended). lgl