Posts tagged with: Business/Finance

Blog author: jballor
posted by on Thursday, May 2, 2013

As Michael Novak observes in The Spirit of Democratic Capitalism, “A successful corporation is frequently based upon the principle of subsidiarity. According to this principle, concrete decisions must be made on the level closest to the concrete reality. Managers and workers need to trust the skills of their colleagues. A corporate strategy which overlooks this principle–and many do–falls prey to all the vices of a command economy, in which all orders come from above.”

According to a study by Melba J. Duncan in the Harvard Business Review, such delegation makes economic sense: “Generally speaking, work should be delegated to the lowest-cost employee who can do it well.”

A recent BusinessWeek article updates the case for executive assistants. Anyone who has had significant contact with corporate settings knows that the EAs are the ones who really get things done. But for such delegation to be effective and efficient, it must be empowering. As Duncan writes, “The most effective executives think deeply about the pieces of their workload that can be taken on—or restructured to be partially taken on—by the assistant.”

Even the “lowest-cost employee” has a stewardship responsibility.

Of course, delegation can go too far, too.

[Note: This is the third entry in a three part series. You can read the introductory post here and part two here.]

The Disadvantages of Bitcoin

For people who are not obsessed with anonymity and are not waiting for the U.S. to return to the gold standard, the reasons for avoiding entering the Bitcoin market are numerous:

1. Convertibility – Whereas other currencies are convertible into other financial instruments (dollars to checks to certificates of deposit, etc.) and through numerous third-party services (e.g., Visa, PayPal, Citibank), commodity currencies like Bitcoin can only be exchanged for fiat currencies—and then only through an online exchange. Indeed, unless your computer is working overtime on Bitcoin mining, the only way to acquire the currency is to buy it from one of the 30 online exchanges.

These exchanges are completely unregulated and are subject to problems that do not affect other financial markets. For instance, in 2011 the largest Bitcoin exchange, MTGox, had a security breach that resulted in the theft of nearly $9 million worth of Bitcoins. The theft caused the value of Bitcoins to crash from $17.50 to one cent before the market was able to recover.

2. Instability – The MTGox breach—and the subsequent market crash—taught Bitcoin owners a harsh lesson about commodity currencies: they can be wildly unstable. Over the 8 month span from October 1 2010 to June 9 2011, the market value of Bitcoins skyrocketed 9667-fold from a value of $0.06 to $29.

The rate had dropped in 2012 and at the end of last year a Bitcoin was worth only $13.51. Last week, though, Bitcoins were trading as high as $266 before plummeting to less than $100. Anyone who had bought $1,000 worth of currency in October 2010 would theoretically have $4.4 million worth of Bitcoins. However, the convertibility problem would make it nearly impossible to extract that money without crashing the market and devaluing the entire currency. A gradual sell-off over an extended period of time would be necessary to take advantage of increase in valuation.

Still, being the seller of the overvalued currency is preferable to being the buyer. The Winklevoss twins, millionaires famous for their legal battle with Facebook, claim to own around one percent of all Bitcoins currently in existence (around 108,000). They began buying the currency in 2012, making some early Bitcoin holders very rich.
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Blog author: sstanley
posted by on Thursday, April 4, 2013

Connecting CommunitiesA recent report by the United Nations states that out of the world’s seven billion people, six billion have a mobile phone, but only 4.5 billion have a modern toilet. In India, there are almost 900 million cell phone users, but nearly 70 percent of the population doesn’t have access to “proper sanitation.” Jan Eliasson, the UN Deputy Secretary General has called this a “‘silent disaster’ that reflects the extreme poverty and huge inequalities in world today.”

Despite the lack of sanitation, most people are able to afford a mobile phone with a wide range available for [$15] or less and the price of calls reducing from [15c] a minute to [3c] a minute in the last decade.

This report focuses on the negative: the lack of sanitation for those in abject poverty, but it fails to note the extraordinary fact that people living in poverty have access to a device that was, until recently, a luxury item for wealthy Americans. Tim Worstall, a contributor on Forbes.com, addresses this report in a recent article:

It’s possible to be a little cynical about this phones versus thrones number though. Actual flush toilets aren’t in fact the problem. What is the provision of water to flush them and a sewage system to flush them into. Both of which are largely government provided. While mobile phone systems are largely private company provided. Whether you want to call it the lust for profit or the greater efficiency of the private sector, it won’t surprise the more right leaning of us that phones do have a greater market reach than toilets.

Andreas Widmer, president of The Carpenter’s Fund in Switzerland, has spoken a great deal about small businesses, aid, and investing in Africa. In an interview with PovertyCure, he explains causes of poverty: (more…)

There is much talk about raising minimum wage, even to the absurd rate of $22 per hour. President Obama has promised an increase to $9 per hour. Some small business owners, feeling the pinch of these raising wages, are turning to technology to solve their economic issues.

Carla Hesseltine, who runs a small bakery, is considering eliminating employees and replacing them with tablets that will take orders:

In order for her Just Cupcakes LLC to remain profitable in the face of higher expected labor costs, Ms. Hesseltine believes the customer-ordering process “would have to be more automated” at the Virginia Beach, Va., chain, which has two strip-mall locations as well as a food van. Thus, she could eliminate the 10 workers who currently ask customers what they would like to eat.

Small business owners can only raise prices so much without damaging sales, in order to cope with increased labor costs. Of course, there are costs involved with the set-up, upkeep and repair of technology, and the intangible cost of the loss of human contact.

Many studies about the effects of higher wages on overall employment tend to be politicized, clashing over whether the benefits of higher paid workers outweigh the costs of having fewer low-wage jobs. To support President Obama’s case for an increase in the minimum wage, the White House cites a 2009 academic study that says any adverse employment effect from such would be of a small and possibly irrelevant magnitude.

The raise in minimum wage to $9 does in fact seem to be minor. However, it is clear from Ms. Hesseltine’s story alone that tinkering with the minimum wage system will have ramifications. One could argue that the loss of minimum wage jobs will be balanced out by sales of technology and the jobs created there. It remains to be seen.

Blog author: jcouretas
posted by on Friday, March 22, 2013

logo1b.aiThe Hitachi Foundation is accepting applications for its 2013 Yoshiyama Young Entrepreneur Award, which identifies up to five young people striving to build “sustainable businesses” in the United States. Each awardee will receive $40,000 over two years, along with the tools and training designed to put a startup on the path to success. Deadline is March 28.

The Hitachi Foundation says its Yoshiyama Young Entrepreneur Program “identifies and highlights leaders who are using the power of business to fight poverty in the United States.” Those whose entrepreneurial efforts are animated by faith principles are encouraged to apply. Eligible entrepreneurs are those “intending to lift low-wealth people out of poverty in the context of their business.” These, the foundation explained, “could range from creating quality jobs, producing new products and services or devising management strategies that propel the business and low-income people forward.”

Hitachi Foundation will also host up to ten finalists in Washington for a “two-day networking event with peers and field leaders.”

Applicants must have started a business that is now between one and five years old and the entrepreneur must have launched the business before reaching age 30. In addition, the business must be generating revenue for at least the last 12 months. The business can be legally structured as a for-profit or nonprofit enterprise, but must be a revenue-generating model and not rely primarily on grants or donations.

Investors Circle, an early-stage network of “angels, venture capitalists, foundations and family offices” that has invested in 269 enterprises, is collaborating with Hitachi Foundation on the award program.

Blog author: jcarter
posted by on Wednesday, March 20, 2013

Increasingly, governments and private parties are arguing that there is only one appropriate view of the relationship between religion and money-making: Exercising religion is fundamentally incompatible with earning profits.

This claim has been presented recently by state governments and private parties in litigation over pharmacy rights of conscience, and by state governments enacting conscience clauses with regard to recognizing same-sex marriages (non-profits are sometimes protected, but never profit-makers). The most prominent and developed form of the argument has been made by the federal government in the HHS mandate litigation, where it is currently arguing the point in at least seventeen different cases against businesses and business owners who cannot comply with the mandate on religious grounds.

Do our religious liberty laws protect profit-making businesses and their owners? Or is the government correct that, to borrow a phrase from the Gospels, you “cannot serve both God and mammon”?

When considered in the light of religious teachings, actual business practices, and the law’s treatment of for-profit businesses in other contexts, it is clear that there is no inherent disconnect between earning profits and exercising religion. For this reason, there is no principled basis for excluding profit-making businesses and their owners from the protection of our religious liberty laws.

Read more . . .

“Is there a religious way to pump gas, sell groceries, or advertise for a craft store?”

In a new paper, “God and the Profits: Is There Religious Liberty for Money-Makers?,” Mark Rienzi asks the question. (HT)

Rienzi, an assistant professor at the Columbus School of Law at The Catholic University of America, writes in direct response to the federal government’s HHS contraception mandate, focusing on the religious liberty challenges faced by for-profit companies. As Rienzi argues, imposing such penalties requires “singling out religion for disfavored treatment in ways forbidden by the Free Exercise Clause and federal law.”

From the abstract:

Litigation over the HHS contraceptive mandate has raised the question whether a for-profit business and its owner can engage in religious exercise under federal law. The federal government has argued, and some courts have found, that the activities of a profit-making business are ineligible for religious freedom protection.

This article offers a comprehensive look at the relationship between profit-making and religious liberty, arguing that the act of earning money does not preclude profit-making businesses and their owners from engaging in protected religious exercise.

Many religions impose, and at least some businesses follow, religious requirements for the conduct of profit-making businesses. Thus businesses can be observed to engage in actions that are obviously motivated by religious beliefs: from preparing food according to ancient Jewish religious laws, to seeking out loans that comply with Islamic legal requirements, to encouraging people to “know Jesus Christ as Lord and Savior.” These actions easily qualify as exercises of religion. (more…)

Blog author: ehilton
posted by on Thursday, February 28, 2013

Too many regulations: that’s the judgement of Fred Deluca, founder of the Subway restaurant chain. In an interview with CNBC, Deluca said he couldn’t start his business in today’s economic climate.

The Subway founder pointed to a number of government regulations that are degrading the business environment for entrepreneurs. Examples include the Affordable Care Act, an increase in the minimum wages and the end of the payroll tax holiday.

The Affordable Care Act, often referred to as “Obamacare,” is “the biggest concern of our franchisees,” Deluca said. “They don’t know what to expect. It’s causing a lot of concern, but that too will be passed on to the consumer.”

Deluca also said payroll taxes are a burden passed on to customers, and sales then decline. He said that if he were to try and start his business in today’s tangle of regulations and burdensome costs, “…Subway would not exist.”

Read “Subway ‘Wouldn’t Exist’ If Started Today Due to Regulations: Founder Deluca” at CNBC.com.

Blog author: dpahman
posted by on Tuesday, February 26, 2013

With the most recent fiscal cliff approaching this Thursday (February 28), it is worth asking, “How did we get into this mess?” My answer: a little leaven works its way through a whole lump of dough….

Touchstone Magazine
(March/April 2013) recently published my article, ”The Yeast We Can Do,” in their “Views” section (subscription required). In it, I explore the metaphor of yeast in the Scriptures—how little things eventually work their way through our whole lives and can lead to big consequences. In some cases, I point out, this is a bad thing. For example, I write,

According to Evagrios the Solitary, one of the early Christian hermits of the Egyptian desert, our spiritual struggle can be summarized quite simply: it is because we have first failed to resist little temptations that we eventually fall to greater ones. Following John the Evangelist’s warnings against succumbing to “the lust of the flesh, the lust of the eyes, and the pride of life” (1 John 2:16), Evagrios identifies three “frontline demons” in particular: gluttony, avarice, and seeking the esteem of others.

Little by little, when we give in to small temptations, they eventually work their way through our whole lives, leaving us vulnerable to bigger, related areas of temptation.

Now, how does this relate to our over $16.5 trillion national debt and annual deficits over $1 trillion for the last four years that brought us to a looming sequestration deadline, with little time to come up with some solution to drastically cut spending to get our finances under control, adversely affecting the lives of millions? Well, as I said, a little leaven works its way through the whole lump of dough. (more…)

Blog author: jballor
posted by on Wednesday, February 13, 2013

Jerk StoreIn “The Moral Meanings of Markets,” in the latest issue of the Journal of Markets & Morality, Ryan Langrill and Virgil Henry Storr argue that markets ought to be understood and defended not simply as amoral, or merely moral, but as robustly moral spaces. In exploring the contention that markets reward virtues besides prudence, Langrill and Storr illustrate how market exchanges tend to promote civility and politeness. “It makes sense for profit-seeking businessmen to invest in goodwill and good customer service,” they write.

A recent piece in the Harvard Business Review, however, underscores the reverse phenomenon, the costs of rudeness. As Christine Porath and Christine Pearson write in “The Price of Incivility,” the virtues required for good business are not merely oriented towards customers. “Rudeness at work is rampant, and it’s on the rise,” they write: “Nearly everybody who experiences workplace incivility responds in a negative way, in some cases overtly retaliating. Employees are less creative when they feel disrespected, and many get fed up and leave. About half deliberately decrease their effort or lower the quality of their work.”

But Porath and Pearson also note that “incivility damages customer relationships. Our research shows that people are less likely to buy from a company with an employee they perceive as rude, whether the rudeness is directed at them or at other employees. Witnessing just a single unpleasant interaction leads customers to generalize about other employees, the organization, and even the brand.”

The costs of rudeness are illustrated even more clearly outside the context of “competitive market settings,” as Langrill and Storr relate. They note John Mueller’s observation that “since enterprises like these cannot ration by price, they are inclined to ration by rudeness.” And even outside the context of “non-price competition,” as we observe in our own experiences everyday, there are costs associated with rudeness. Customers can certainly use rudeness as a rationing mechanism.

How much would it be worth to you to be treated rudely the next time you stop in at a McDonald’s or buy something from the supermarket? How cheap would things have to be for you to shop at the jerk store? Just how good would the lobster bisque have to be for you to buy it from the Soup Nazi?