Posts tagged with: Business/Finance

Blog author: jballor
Wednesday, May 15, 2013
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2009-07 wpy 28Over at Think Christian today, I lend some broader perspective concerning the link between money and happiness occasioned by a piece on The Atlantic on some research that challenged some of the accepted scholarly wisdom on the subject.

The Bible is our best resource for getting the connection between material and spiritual goods right. I conclude in the TC piece, “As Jesus put it, ‘life does not consist in an abundance of possessions.'” Or to put it another way, we live on bread but not bread alone.

And so money is a good, but not a terminal good. It isn’t an end in itself, but rather is a means to pursuing other good ends. The Heidelberg Catechism teaches us, for example, that we work “faithfully” so that we might “share with those in need.”

Another piece just out today argues that money, when used rightly, can be a means to make us happy. But significantly, the findings of Elizabeth Dunn and Michael Norton show that such uses of money often correspond to ways not motivated directly by our own pursuit of happiness. Thus, among the “five key principles” they find that helps “turn cash into contentment” is one that resonates directly with the wisdom of the catechism noted above: “Invest in Others.” This means recognizing that “spending money on other people makes us happier than spending it on ourselves.”

Check out the work of Elizabeth Dunn and Michael Norton in their new book, Happy Money: The Science of Smarter Spending.

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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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.

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.

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…)

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.

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…)