Adeline1006G备考日志~不迁怒，不贰过

AdelineShenUID：2630498

issue 中有不少关于individualism的      
175"It is always an individual who is the impetus for innovation; the details may be worked out by a team, but true innovation results from the enterprise and unique perception of an individual."
199"Truly innovative ideas do not arise from groups of people, but from individuals. When groups try to be creative, the members force each other to compromise and, as a result, creative ideas tend to be weakened and made more conventional. Most original ideas arise from individuals working alone."
171"People who pursue their own intellectual interests for purely personal reasons are more likely to benefit the rest of the world than are people who try to act for the public good."
113"It is primarily through our identification with social groups that we define ourselves."
93"The concept of 'individual responsibility' is a necessary fiction. Although societies must hold individuals accountable for their own actions, people's behavior is largely determined by forces not of their own making."
77"People today are too individualistic. Instead of pursuing self-centered, separate goals, people need to understand that satisfaction comes from working for the greater good of the family, the community, or society as a whole."

AdelineShenUID：2630498

A special report on China and America

A wary respect

Oct 22nd 2009 From The Economist print edition


America and China need each other, but they are a long way from trusting each other, says James Miles.

“OUR future history will be more determined by our position on the Pacific facing China than by our position on the Atlantic facing Europe,” said the American president as he contemplated the extraordinary commercial opportunities that were opening up in Asia. More than a hundred years after Theodore Roosevelt made this prediction, American leaders are again looking across the Pacific to determine their own country’s future, and that of the rest of the world. Rather later than Roosevelt expected, China has become an inescapable part of it.
(China has become part of the determine element of the development of America.)

Back in 1905, America was the rising power. Britain, then ruler of the waves, was worrying about losing its supremacy to the upstart. Now it is America that looks uneasily on the rise of a potential challenger. A shared cultural and political heritage helped America to eclipse British power without bloodshed(good expression), but the rise of Germany and Japan precipitated global wars. President Barack Obama faces a China that is growing richer and stronger while remaining tenaciously(persistent) authoritarian. Its rise will be far more nettlesome(irritating) than that of his own country a century ago.
(America is facing a rising China)

With America’s economy in tatters and China’s still growing fast (albeit not as fast as before last year’s financial crisis), many politicians and intellectuals in both China and America feel that the balance of power is shifting more rapidly in China’s favour. Few expect the turning point to be as imminent as it was for America in 1905. But recent talk of a “G2” hints at a remarkable shift in the two countries’ relative strengths: they are now seen as near-equals whose co-operation is vital to solving the world’s problems, from finance to climate change and nuclear proliferation.
(America and China are now seen as near-equals whose co-operation is vital to solving the world's problems.)

Choose your weapons

Next month Mr Obama will make his first ever visit to China. He and his Chinese counterpart Hu Jintao (pictured above) stress the need for co-operation and avoid playing up their simmering(ferment) trade disputes, fearful of what failure to co-operate could mean. On October 1st China offered a stunning display of the hard edge of its rising power as it paraded its fast-growing military arsenal through Beijing.

The financial crisis has sharpened fears of what Americans often see as another potential threat. China has become the world’s biggest lender to America through its purchase of American Treasury securities, which in theory would allow it to wreck the American economy. These fears ignore the value-destroying (and, for China’s leaders, politically hugely embarrassing) effect that a sell-off of American debt would have on China’s dollar reserves. This special report will explain why China will continue to lend to America, and why the yuan is unlikely to become a reserve currency soon.(TS)

When Lawrence Summers was president of Harvard University (he is now Mr Obama’s chief economic adviser), he once referred to a “balance of financial terror” between America and its foreign creditors, principally(good expression) China and Japan. That was in 2004, when Japan’s holdings were more than four times the size of China’s. By September 2008 China had taken the lead. China Daily, an official English-language newspaper, said in July that China’s massive holdings of US Treasuries meant it could break the dollar’s reserve-currency status any time. But it also noted that in effect this was a “foreign-exchange version of the cold-war stalemate based on ‘mutually assured destruction’”.

China is exploring the rubble of the global economy in hopes of accelerating its own rise. Some Chinese commentators point to the example of the Soviet Union, which exploited Western economic disarray during the Depression to acquire industrial technology from desperate Western sellers. China has long chafed at controls imposed by America on high-technology exports that could be used for military purposes. It sees America’s plight as a cue to push for the lifting of such barriers and for Chinese companies to look actively for buying opportunities among America’s high-technology industries.
(China sees America's plight as an opportunity to buy America's high-tech industries, just as the Soviet Union during the Depression)

The economic crisis briefly slowed the rapid growth, from a small base, of China’s outbound direct investment. Stephen Green of Standard Chartered predicts that this year it could reach about the same level as in 2008 (nearly $56 billion, which was more than twice as much as the year before). Some Americans worry about China’s FDI, just as they once mistakenly did about Japan’s buying sprees, but many will welcome the stability and employment that it provides.

China may have growing financial muscle, but it still lags far behind as a technological innovator and creator of global brands. This special report will argue that the United States may have to get used to a bigger Chinese presence on its own soil, including some of its most hallowed turf, such as the car industry. A Chinese man may even get to the moon before another American. But talk of a G2 is highly misleading. By any measure, China’s power is still dwarfed by America’s.
(The talk of G2 is highly misleading and China's power is still dwarfed by America's.)


Authoritarian though China remains, the two countries’ economic philosophies are much closer than they used to be. As Yan Xuetong of Tsinghua University puts it, socialism with Chinese characteristics (as the Chinese call their brand of communism) is looking increasingly like capitalism with American characteristics. In Mr Yan’s view, China’s and America’s common interest in dealing with the financial crisis will draw them closer together strategically too. Global economic integration, he argues with a hint of resentment, has made China “more willing than before to accept America’s dominance”.
(Global economic integration had made China and America draw closer together strategically.)

The China that many American business and political leaders see is one that appears to support the status quo and is keen to engage peacefully with the outside world. But there is another side to the country. Nationalism is a powerful, growing and potentially disruptive force. Many Chinese—even among those who were educated in America—are suspicious of American intentions and resentful of American power. They are easily persuaded that the West, led by the United States, wants to block China’s rise.
(Nationalism is powerful and many Chinese believe that America wants to block China's rise.)

This year marks(good expression) the 30th anniversary of the restoration of diplomatic ties between America and China, which proved a dramatic turning point in the cold war. Between the communist victory in 1949 and President Richard Nixon’s historic visit to China in 1972 there had been as little contact between the two countries as there is between America and North Korea today. But the eventual disappearance of the two countries’ common enemy, the Soviet Union, raised new questions in both countries about why these two ideological rivals should be friends. Mutual economic benefit emerged as a winning answer. More recently, both sides have been trying to reinforce the relationship by stressing that they have a host of new common enemies, from global epidemics to terrorism.
(China and America should bind each other to beat the common enemies.)

But it is a relationship fraught with(good expression) contradictions. A senior American official says that some of his country’s dealings with China are like those with the European Union; others resemble those with the old Soviet Union, “depending on what part of the bureaucracy you are dealing with”.

Cold-war parallels are most obvious in the military arena. China’s military build-up in the past decade has been as spectacular as its economic growth, catalysed by the ever problematic issue of Taiwan, the biggest thorn in the Sino-American relationship. There are growing worries in Washington, DC, that China’s military power could challenge America’s wider military dominance in the region. China insists there is nothing to worry about. But even if its leadership has no plans to displace American power in Asia, this special report will say that America is right to fret that this could change.
(America is worrying about China's military power.)

Politically, China is heading for a particularly unsettled period as preparations gather pace for sweeping leadership changes in 2012 and 2013. Mr Hu and the prime minister, Wen Jiabao, will be among many senior politicians due to retire. As America moves towards its own presidential elections in 2012, its domestic politics will complicate matters. Taiwan too will hold presidential polls in 2012 in which China-sceptic politicians will fight to regain power.
(The politic will be more complicated heading for 2012)

Triple hazard

This political uncertainty in all three countries simultaneously will be a big challenge for the relationship between China and America. All three will still be grappling with the aftermath of the global financial crisis. Urban Chinese may be feeling relaxed right now, but there could be trouble ahead. Yu Yongding, a former adviser to China’s central bank, says wasteful spending on things like unnecessary infrastructure projects (which is not uncommon in China) could eventually drain the country’s fiscal strength and leave it with “no more drivers for growth”. In recent weeks even Chinese leaders have begun to sound the occasional note of caution about the stability of China’s recovery.

This special report will argue that the next few years could be troubled ones for the bilateral relationship. China, far more than an economically challenged America, is roiled by social tensions. Protests are on the rise, corruption is rampant, crime is surging. The leadership is fearful of its own citizens. Mr Obama is dealing with a China that is at risk of overestimating its strength relative to America’s. Its frailties—social, political and economic—could eventually imperil both its own stability and its dealings with the outside world.

AdelineShenUID：2630498

Since the economic crisis, China is seen as a stronger and stronger country because of its large holding of Amrican securities. Apart from the rapid economic growth, Ameica is also  worrying about the military power of China and sees China as a threat for them.

待续。。。有事情先闪一下啊。。

AdelineShenUID：2630498

Since the economic crisis, China is seen as a stronger and stronger country because of its large holding of Amrican securities. Apart from the rapid economic growth, Ameica is also  worrying about the military power of China and sees China as a threat for them. But is it true that China will be a threat for America?

Chinese people are always searching for world peace and trying our best to develope not only our own country but also other developing countries whose people are suffering from poverty. China is a great country and should actually take its responsible for the world problems such as epidemics and terrorism. But at the same time, China is still a deveoping country with a lot of problems difficult to solve. Taiwan is still seperated from the mainland.  Corruption is rampant. There is a great gap between the poor and the wealth, which is even greater than America. Millions of poor children in the west of the country don't have the chance to go to school. Chinese government has taken its responsibility to save the economic crisis result from the economic system of America. But who will save those children who are suffering from poverty and is unable to go to school just as we do? Who will help China develop into low-carbon economy which needs a lot of new technologies and financial support?

It is true that China's economy is developing faster and faster, but it is not true that China is a threat of America. Nowadays China and America should bind each other and cooperate to solve the world problems, although it is a long way to go.~

AdelineShenUID：2630498

America's health-care bill

Nearer and nearer

Dec 21st 2009 From Economist.com

A procedural vote in America's Senate brings Barack Obama's health-care reforms closer


IT NOW looks certain that Barack Obama will get what he wanted for Christmas—a health-care reform bill passed out of the Senate, probably just a few hours before Santa begins his rounds. Republicans, who have been fighting tooth-and-nail to block passage of the bill seem to have given up the fight, and have given warning instead that this will be a wish that he comes to regret.

Shortly after 1am on Monday December 21st, the health bill cleared the first, and the most difficult, of the procedural hurdles it has to leap in order to secure passage through the Senate(参议院）. Technically only a motion to end debate on a “manager's amendment” put together by the Senate's majority leader, Harry Reid, what the vote really represented was a crucial exercise in nose-counting. The result was a vote on precisely partisan lines, with all 40 Republicans opposed, and all 58 Democrats plus the two independents who are grouped with them voting in favour. Since 60 votes is the precise number needed to avoid a filibuster, there was no room for error whatsoever, the reason why the procedural motion had taken so long. But with all 60 members of the “Democratic caucus” now signed up, the final vote, on Christmas Eve, looks like a formality.
（The health bill cleared the most difficult hurdles.)

From the point of view of the Democrats, this victory has come at a high price. The health bill has been stripped of something very dear to many of then: a “public option” of a government-backed insurance scheme that would compete with private insurers in order, supposedly, to keep costs down and guarantee access. The version of the bill already passed by the House of Representatives does contain just such a public option, one of several reasons why final passage of a reconciled bill is still a way off. Some Democrats hope, however, that a public option can be added later on, after the initial bill has gone into effect.

Still, the Senate version does tick most Democratic boxes; it obliges everyone to have health-insurance, and sets out a generous system of subsides to help the uninsured obtain coverage, along with a system of government-regulated exchanges that should encourage competition among private insurers. It fines employers who do not offer health cover to their workers. And it makes it illegal for insurers(保险公司） to refuse people coverage on the basis of pre-existing medical conditions, as well as putting strict limits on the way that premiums（保险费） are allowed to increase with age. The hope is that tens of million of Americans currently without coverage will now be able to get it, and many tens of millions more, who have insurance but fear losing it through redundancy or ill-health, will have those worries lifted from their shoulders.
（The aim and measures of the Senate version)

Republicans, however, hate the bill, mostly on the ground of cost. The advertised price-tag of the Senate bill is a bit under $900 billion over the next ten years, but Republicans contend that the numbers will be much higher than that, as the cost of subsidies has been underestimated and predicted savings will not materialise(使具体化）. Even at the stated number, this is a large bill at a time when America is running huge deficits that it urgently needs to tackle. The Senate bill is "paid for", but only in the sense that it provides for large charges on the most expensive private insurance policies, and because it factors in deep cuts to Medicare the health-insurance scheme for the elderly. Republicans say these will never be enacted. Past history provides them with evidence to back up that claim.
（Republicans hate the bill because of the high cost.)

Less politically involved observers also note that it is unprecedented for such a substantive and expensive bill to have been forced through Congress on such a narrow vote. The bill passed the House on a margin of just five votes, and in the Senate it has no safety margin. With no bipartisan support at all, Democrats will be held solely responsible if the reform turns out to be a disappointment. Some studies have suggested that private insurance premiums could rise substantially in response to the new burdens being placed on insurers.
(Less politically involved observers also note that it's unprecedented for such a substantive and expensive bill to have been forced through Congress on such a narrow vote.)

Completion of work on the bill is by no means a formality, though it does now look more or less certain that the Senate will vote the bill out before Christmas. The next difficulty will come in producing a single “reconciled” version from the very different bills that the Senate and House have produced; that reconciled bill then has to go back for final clearance by both chambers(会议厅，议所）. The public option is one big stumbling block（绊脚石）. It is clear that the Senate cannot pass any version of a bill that contains a public option, so the House will have to give ground, which is going to require a lot of presidential arm-twisting in January. And the two bills are funded in very different ways, one with a tax on the rich, the other with an insurance-policy surcharge. As of today though, health-care reform, expensive and imperfect though it is, is looking a lot more likely.

AdelineShenUID：2630498

Public option is proposed healthcare reform that would give individuals and employers a choice between government-provided healthcare--in a system run similarly to Medicare--or private healthcare. It is a kind of hybrid system between single-payer, or universal, healthcare and the current system serviced primarily by private insurance companies.  

The White House reports that the current system of healthcare ran a tab of $2.2 trillion in 2007, coming out to about $7500 per person, which is nearly twice the amount spent in other developing nations.

Proponents of public option health care see long-term benefits of keeping alive competition and incentives for medical innovation by ensuring that the government is not the sole provider of healthcare for the country's 300+ million citizens.  They fear inefficiencies and lowering of quality of medical care by having a wholly government-run healthcare system.

AdelineShenUID：2630498

The debate on the US government's health-care reform is a hot spot in 2009. Now the health-care bill is nearer and nearer. The Democrats and Republicans hold defferent views. Most Democrats support the health-care bill, which is good for the coverage of insurance in elder and less healthy people. Most Republicans hate the bill because of its high cost. Now the bill is passed on Congress in a narrow vote, and the public option is a big stumbling block.

Public option is proposed health care reform that would give individuals and employers a choice between government-provided healthcare or private healthcare. It is a kind of hybrid system between single-player, or universal, healthcare and the current system serviced primarily by private insurance companies.

In my point of view, public option is a must in the healthcare system of US in the future. It is a reconsiled system between the government and the private insurrance company. Government could provide healthcare insurrance for those who fear losing the insurrance through redundancy or ill-health because of the private company's strategy. For those well-off people who want to get better healthcare insurrance, private inssurance company might be a better choice for them.

Some is worrying that the private companies will not have the ability to compete with the government health-care system and the economy of America will get in more trouble. Others are worried about the huge bill of the new health-care system which is under-estimated by the government. Since pure govenment or private healthcare system is not suitable for America, public option is a good choice for American people.

AdelineShenUID：2630498

Executive pay

This house believes that on the whole, senior executives are worth what they are paid


About this debate

Over the past few decades executive pay has risen dramatically. Bosses who were once paid ten times as much as shopfloor workers are now sometimes paid as much as 300 times as much. This trend was never popular, even during good times. But today it is becoming radioactive, as governments step in to rescue failing companies and ordinary people are forced to tighten their belts.

Is the anger justified? Some argue that executive pay is a long-standing disgrace(耻辱）. Pay is often not tethered to（用绳子栓住） performance. Huge rewards for the few demotivate the rest of the workforce. Others are more sanguine. Successful executives, such as Jack Welch, former CEO of General Electric, can add hugely to a firm's profitability, benefiting workers, managers and shareholders alike. The growing pay of executives has to be balanced against the growing difficulty of their jobs, particularly as turnover in the boardroom increases.

Opening statements

Defending the motion

Steven N. Kaplan Neubauer Family Prof. of Entrepreneurship & Finance, University of Chicago Booth School of Business

In the United States, the United Kingdom and elsewhere, CEOs are routinely criticised for being overpaid.

Against the motion

Nell  Minow Editor and Co-founder, The Corporate Library

Excessive executive compensation of the past decade is both a symptom and a cause of the current economic mess.

The moderator's opening remarks

Oct 20th 2009 |   Adrian  Wooldridge

Oneof the few things that anti-globalisation campaigners and stockmarketinvestors agree upon is that executive pay is out of control.
Itis not hard to understand this shared outrage: executive pay hasexploded since the 1980s. For most of the postwar era executives earneda few multiples of the median pay. But thereafter, starting in Americaand slowly spreading to the rest of the world, the multiples increased exponentially. Today many American workers earn in a year what theirboss takes home in an evening.
Isn't this a disgrace? Critics ofexecutive pay worry that even mediocre bosses are given outsizedrewards. Robert Nardelli received a $20m pay-off when he left HomeDepot even though the share price had fallen during his six-yeartenure. Carly Fiorina was $180m better off when she leftHewlett-Packard despite a lacklustre tenure. Defenders of executive payargue that great bosses such as Louis Gerstner, the former boss of IBM,and Jack Welch, the former boss of General Electric, are worth everypenny because they create huge amounts of wealth for both shareholdersand employees.
The debate about executive pay, though never cool,is particularly hot at the moment. Workers have been squeezed by therecession. Unemployment is approaching 10% in the United States andmuch higher numbers in many other countries. Numerous governments areplanning to deal with their rising deficits by freezing public-sectorpay. And yet many bosses and bankers continue to make out likebandits—or so lots of people think.
We are lucky to have two ofthe best people in the business to debate this subject. Steven Kaplan,who proposes the motion, teaches at the University of Chicago's BoothSchool of Business. Nell Minow, who opposes it, is a long-timeshareholder activist and chairwoman of the Corporate Library, aresearch company. (For people who want to know more about her she isalso the subject of a profile in a recent issue of the New Yorker.)
MrKaplan starts off by making two fundamental points. CEO pay has notgone up in recent years; indeed, it has been dropping since 2000,particularly in relation to other well-paid groups, such as hedge fundmanagers, lawyers, consultants and professional athletes. Nor is CEOpay unrelated to performance. Boards are increasingly willing to fireCEOs for poor performance.
Ms Minow focuses heavily on therelationship between pay and the recent credit crunch. She points outthat executive pay helped to create the mess in the first place:Countrywide's CEO, Angelo Mozillo, made more than $550m during his timein office. She also points out that the fact that many companies thatwere bailed out by the government continue to pay their CEOs hugesalaries and bonuses is damaging the credibility of the system.
Suchbold opening statements raise questions galore. Is Mr Kaplan justifiedin starting his account in 2000 rather than 1980, when executive payexploded. And is Ms Minow right to concentrate so heavily on thefinancial sector? These are only a couple of the questions that we needto thrash out in the coming days.


The proposer's opening remarks
Oct 20th 2009 |   Steven N. Kaplan

In the United States, the United Kingdom and elsewhere, CEOs are routinelycriticised for being overpaid. Critics argue that boards do not respondto market forces, but, instead, are dominated by or are over-generousto their CEOs. Boards are criticised for not tying CEOs' pay toperformance. These criticisms have been exacerbated by the financialcrisis and the desire to find scapegoats（替罪羊）.
I argue below that thecritics are wrong and that there are many misperceptions of CEO pay.While CEO pay practices are not perfect, they are driven by marketforces and performance. Contrary to public perception, CEO pay has notgone up in recent years. In fact, the average CEO pay (adjusted forinflation) has dropped since 2000, while the pay of other groups hasincreased substantially. Similarly, the view that CEOs are not paid forperformance is wrong. In fact, the opposite is true and boardsincreasingly fire them for poor performance. And, most recently,consistent with market forces driving pay, the US and UK governmentseach hired a new CEO (of AIG and the Royal Bank of Scotland) for payexceeding that of the median large company CEO.
It is useful tounderstand how CEO pay is measured. It includes three components:salary, bonus and stock-based pay. It is usually measured in two ways.The first is the sum of salary, bonus, restricted stock and theexpected value of stock options. I call this expected pay. Expected paymeasures what boards believe they awarded the CEO. This is the bestmeasure of what a CEO is paid each year. Note that the CEO does notactually walk away with this money. The second measure replacesexpected stock option values with values actually realized and realisedpay measures what CEOs walk away with.
The first graph shows average and median expected CEO pay forS&P 500 CEOs since 1994 (adjusted for inflation). It shows thatmedian CEO pay has been stable since 2001; it has not increased. Andaverage pay has declined substantially. In fact, average CEO pay in2008 is below the average in 1998.


Whileaverage CEO pay has declined, the pay of other highly paid groups hasincreased. The second graph shows S&P 500 CEO pay relative to theincome of the top 1% of US taxpayers. Relative to those other groups,CEOs are no better off in 2008 than in 1994. Strikingly, relative CEOpay is a half of what it was in 2001, a huge decline.


Whichare those groups that have earned increasingly high compensation? Hedgefund, private equity and venture capital investors have increased theirassets and fees substantially, translating into high pay. By oneestimate, the top three hedge fund managers earned more in 2007 thanall 500 S&P 500 CEOs combined. Professional athletes, investmentbankers, consultants and lawyers also have benefited greatly. Forexample, from 2004 to 2008, the inflation-adjusted pay of partners atthe top 20 law firms increased by 12% while that of S&P 500 CEOsdropped 12%. Those law firms had over 3,000 partners making an averageof $2.4m each.
One can look at the Obama administration for otherexamples. Larry Summers made $8m (more than the median S&P 500 CEO)giving speeches and working part-time for a hedge fund. Eric Holdermade $3.5m as a law partner.
So, while CEOs earn a lot, they arenot unique. The pay of people in the other groups has undoubtedly beendriven by market forces; all are compensated in arm's-length markets,not by cronies. Technology, globalisation and scale appear to haveincreased the market value of these groups. CEOs have not done betterand, by some measures, have done worse. Those who argue CEOs areoverpaid have to explain how CEOs can be overpaid and not subject tomarket forces, when the other groups are paid at least as well and aresubject to market forces.
Why is the pay of these other groupsrelevant for CEOs? Top executives regularly leave to work for privateequity firms and hedge funds. Law partners and consultants leave towork for public companies as general counsels and executives. Relativepay matters and all these groups are paid according to market demand.Markets are the driving force for senior executives in all theseindustries and talented people jump across industries, based on marketperceptions of their worth.
Critics also argue that CEO pay isnot tied to stock performance. Again, that is not true. Looking at whatCEOs actually receive—realised pay—Josh Rauh and I found that firmswith CEOs in the top decile of realised pay earned stock returns 90%above those of other firms in their industries over the previous fiveyears. Firms with CEOs in the bottom decile of realised payunderperformed by almost 40%. The typical CEO is paid for performance.
Thiswas reinforced in 2008, when average realised CEO pay declined by 25%(according to S&P's Execucomp). And Equilar, another provider ofCEO pay data, estimated that the typical CEO experienced a net worthdecline of over 40%.
The final myth to bust is that CEOs controltheir boards and earn high pay through this control and notperformance. In fact, CEO tenure has declined, from ten years in the1970s to six years today, and boards have got tougher on theirexecutives when they do not perform.
In sum, market forces governCEO compensation. CEOs are paid what they are worth. Talentedindividuals, who are perceived to be valuable, can move betweenindustries to be compensated well. The clearest example of this is thateven governments have to pay highly for talented executives. Recently,the Royal Bank of Scotland (under UK government control) hired a CEOwith a package worth up to $16m; AIG (under US government control)hired a CEO with a package worth up to $10.5m. For these critical jobs,both of these executives received compensation exceeding the pay of themedian S&P 500 CEO.


The opposition's opening remarks
Oct 20th 2009 | Nell  Minow

Excessiveexecutive compensation of the past decade is both a symptom and a causeof the current economic mess. And the post-meltdown awards are all butguaranteed to continue to create perverse incentives that will rewardmanagement and further damage the interests of shareholders and everyother participant in the economy.
Incentive compensation rewarded executives for the quantity of transactions rather than the quality of transactions. It inevitably led to failures like the subprime disaster(次代危机） and the dominoes（多米诺骨牌） it toppled as it took the economy down with it. Worstof all, the avalanche of post-bailout bonuses and departure packageslike the $53m Ken Lewis got from Bank of America have severely damagedthe credibility of Wall Street and the American financial markets as awhole. The billions of dollars of losses do not come close to thereputational hit to American capitalism, which will increase the costof capital for all US companies.
Panglossian observers willalways be able to find some metric to justify any level of pay. But theresults speak for themselves. The decisions that led to the meltdownwere made by executives who knew that they would be paid tens, evenhundreds of millions of dollars no matter how successful theconsequences of those decisions.
Let us look at ground zero ofthe subprime mess, Countrywide, where Angelo Mozilo made more than$550m during his time as CEO. When the compensation committee tried toobject to his pay levels, he hired another compensation consultant,paid for by the shareholders, to push them into giving him more. Healso pushed for, and was given, shareholder subsidies, not just for hiswife's travel on the corporate jet but for the taxes on the imputedincome from that travel. Instead of telling Mr Mozilo that he had nobusiness asking the shareholders to subsidise his taxes, the boardmeekly signed off on it, making it clear to everyone in the executivesuite that the pay-performance link was not a priority.
By theend of 2007, when Countrywide finally revealed the losses it hadpreviously obscured, shareholders lost more than 78% of theirinvestment value. Meanwhile, in early 2007 Mr Mozilo sold over $127m inexercised stock options before July 24th 2007, when he announced a$388m write-down on profits. Before the bailout, Countrywide narrowlyavoided bankruptcy by taking out an emergency loan of $11 billion froma group of banks. Mr Mozilo continued to sell off shares, and by theend of 2007 he had sold an additional $30m in exercised stock options.There is the definition of outrageously excessive compensation.
Countrywideresponded to a shareholder proposal that year asking for a non-bindingadvisory vote on its pay plan by urging shareholders to oppose itbecause "Countrywide has been an outstanding performer" and because"The Board's Compensation Committee has access to the best informationon compensation practices and has a thorough process in place todetermine appropriate executive pay." They could hardly have doneworse. And it is likely that some market feedback on the structure ofthe pay plan could have given compensation committee members Harley W.Snyder (chair), Robert J. Donato, Michael E. Dougherty and Oscar P.Robertson worthwhile guidance.
Michelle Leder of theindispensable Footnoted.org website discovered that Frank A. Keating,Charles T. Maxwell and Frederick B. Whittemore, the compensationcommittee at Chesapeake Energy, not only paid the CEO, AubreyMcClendon, $100m, a 500% increase as the stock dropped 60% and theprofits went down 50%, they spent $4.6m of the shareholders' money tosponsor a basketball team of which Mr McClendon owns a 19% stake, theypurchased catering services from a restaurant which he owns just undera half of, and they took his collection of antique maps off his handsfor $12.1m of the shareholders' money, based on a valuation from theconsultant who advised Mr McClendon on assembling the collection. Theboard justified this by referring to Mr McClendon's having to sell morethan $1 billion worth of stock due to margin calls, his havingconcluded four important deals and the benefit to employee morale fromhaving the maps on display in the office. A market-based response wouldbe: (1) that was his risk and it is inappropriate to the point ofmisappropriation to force the other shareholders, already substantiallyout of pocket with their own losses due to his poor leadership of theorganisation, make up for his losses (2) if the deals are good ones, hewill be adequately rewarded when the benefit of those deals isreflected in the stock price; and (3) you have got to be kidding. Ifthis is pay for performance, what exactly is the performance we arepaying for?
These may be anecdotes, but they are illuminatingones. The numbers and details may be at the extreme, but the underlyingapproaches are representative. Even as outliers, they still demonstratethe failure of the system to ensure a vigorous, arm's-length system fordetermining pay and the inability of the system to require an effectiveincentive programme with a genuine downside as well as an upside.
Inmy comments, I will discuss the seven deadliest sins of executivecompensation, the two key elements that are essential for any plan thatmerits support from investors and the only metric that matters inlooking at pay.

cjluUID：2448066

抢个楼哈~Ade不要怪我^^
超级无敌赞Ade！！！

AdelineShenUID：2630498

I am against the opinion of this house and  I will argue in the following passenge that  senior executives are not worth what they are paid in the recent years.

Over the past few years executive pay has been risen dramatically, which is a shock to everyone compared to the dropping economy because of the economic crisis.  Some argue that their pay is actually dropping if we take the expasion into account and it is lower compaired with the other high-paid jobs such as lawyers and conculsants, whose pay is rising much faster and still in a highest level. Now I will explain why this statement is totally wrong.

First, Bosses who were once paid ten times as much as shopfloor workers are now sometimes paid as much as 300 times as much. This trend was never popular, even during good times. But today it is becoming radioactive. 300 times or more compaired with ten times! Who can say this is not a dramatic rise in pay?

Second, it is unfair to argue that the pay of CEOs should be high because other well-paid groups get much higher pay.  Lawyers get high salary because they help the court make decisions and thus make the world peacful. Consultants get high salary because they help each company work well. Professional athletes  get high salary because they win honors for their country. But why should the CEOs get high salary when the economy is dropping so fast? Now the economy is in crisis because of their bad performance.

AdelineShenUID：2630498

Art.view
Back to the future
Dec 19th 2009
From Economist.com
The taste for clutter and realism is curiously buoyant
WHILE the contemporary art market constantly seeks the new—new names, new imagery, new media or simply new novelty—another curious corner of the art market has remained steadfastly old-fashioned, cluttered and sentimental. With bad weather coming, much of London may have been preparing to shut down early for Christmas last week. But Christie’s sale of Victorian and British Impressionist pictures on December 16th and Sotheby’s sale of Victorian and Edwardian paintings the next day were surprisingly busy.

Sotheby's

Of the two auctions, Sotheby’s was by far more successful, fetching £4.4m ($7.1m) for works by some of the best-known names of the period, including Sir Lawrence Alma-Tadema, Sir Alfred Munnings, Dame Laura Knight and Charles Spencelayh. The cover lot, Spencelayh’s “The Old Dealer”, sold for a record price for the artist at auction. The buyer was David Mason, a London dealer who joined his father’s firm, MacConnal-Mason, when he was just 17. Mr Mason, who has seen recessions come and go in the 53 year he has been in the business, said afterwards: “Prices today reflect what is happening out there. People are discounting the coming inflation and buying quality. They know that inflation has always been the art dealer’s friend.”

Buyers in every sector of the art market, from Chinese porcelain to Old Masters, now seem to follow a pattern. They are happy to pay over the odds for top-ranking pictures, but leave the rest untouched. Nearly 40% of the lots in Sotheby’s sale were bought in. Its success lay in the high prices achieved for those that sold, half of which were bid up beyond their high estimate. Some pieces went for as much as four times what the auction house had predicted.

John Atkinson Grimshaw is a painter who celebrated industry, commerce and conspicuous wealth during Queen Victoria’s reign, dying in 1893. His works are often dark social commentaries featuring streets and portsides, full of ships’ rigging and lamplight that seems visually interchangeable with moonlight. Eight years ago Mr Mason sold an 1881 Grimshaw entitled “Prince’s Dock, Hull” to an American collector for £130,000. Consigning the picture to Sotheby’s, that same American saw his Grimshaw sell to an anonymous bidder for £397,250 (including commission and taxes), the third highest price achieved for the artist at auction.

Spencelayh, the son of an iron and brass founder, rose to be a prolific member of the Royal Academy of Arts and a favourite of Queen Mary. His work is, if anything, even more unfashionable-looking than Grimshaw’s. Spencelayh, who died in 1928, liked to paint fussy interiors. The most sought after are realistic pictures of men, often gathered around a table in a room full of clutter, with glazed jugs, books, umbrellas and pieces of velvet jumbled together. There is usually a pipe or two on the table, and there is nearly always a clock hanging on the wall.

A Manchester cotton merchant named Levy supported Spencelayh from the early 1920s. He offered the artist and his wife a house to live in and bought a number of his paintings. When Levy's widow, Rosie, auctioned his collection in 1946, the picture that fetched the highest sum was “The Old Dealer”, which Spencelayh had painted in 1925. It was sold again in 1973, where it was bought by Richard Green, a London dealer, on behalf of an American collector for about £30,000.

Consigned last week to Sotheby’s by this same collector, it sold for more than ten times that (£337,250 including commission and taxes) to Mr Mason. Mr Green, an earlier owner, was the underbidder. “It has everything you could want: the old man, the clock, the knickknacks,” Mr Mason said afterwards. “It is quite simply the best example of a Spencelayh I have ever seen.” Mr Mason said he bought the picture for stock, with no particular collector in mind.



“On the Cliffs” (pictured above) is one of a series of pictures that Laura Knight painted of women sitting high above the water on the Cornish coast. In one of the earliest examples, “Daughter of the Sun”, the women were naked. That picture did not sell when Knight exhibited it at the Royal Academy in 1912, and Knight later cut it up and sold the pieces after it had become damaged. She continued to be inspired by the Cornish theme in the years before the end of the first world war, after she and her husband moved to London. In “On the Cliffs” one woman is sewing while the other may be threading a needle. Both are strong, calm figures. Behind them the sea, silvery, shimmering and full of light, has the same idyllic quality of water painted at the time by the Scottish Colourists. But there are no men in any of Knight’s pictures of this period, reminding viewers that war was close at hand.

“On the Cliffs” sold to an anonymous bidder for £646,050, nearly twice the top estimate. Even at that price, many regard the painting as a bargain. In July, Galen Weston, a Canadian billionaire whose family owns Fortnum & Mason, bought the companion picture, “Wind and Sun”. It cost him £914,850.

Comments

It seems that this article is not quite suitable for making up new ideas and giving comments here~

Well, let me talk something about art. By researching for the art section on economist, I found another aspect of art. That is, the commercial side. Paintings are auctioned and sold in the art market like Sotheby's. People are talking about the famous artists and collecters are searching for fashion.

I am not quite famaliar with the commercial side of art. What I am always focusing on is the beauty and meanings inside the art, the strong feeling it can arise from people, and the life of the artists. Issues about art can be devided into several themes: art and the government, artists and their works. Should government support art? I always try to say yes. Arts have spiritual value. Artists express their thoughts of the world through their works. Some works are perfect reflection of the realism and can make people think deeply. Art is also a good way of culture exchange, which can make people know more about the culture of other countries and know each other better. But how much should the government support art? Since the governments should focus more on other issues such as health-care, poverty, education and so on, art seems to be the last government should care about. I think government can try to support art in other ways, wich will not only flourish the development of art,but also need little financial support from the government. Art market might be a goog option. But there are other problems coming from the commercilization of art. Artists might try their best to cater to the taste of their customers. They might no longer create their works for their inner feeling and deep thought, but for the surface value of their work. This trend might damage the development of true art.

I just have some pieces of ideas and collect them together. Anyway, more details and supports about each idea are needed.

AdelineShenUID：2630498

John Atkinson Grimshaw is a painter who celebrated industry, commerce and conspicuous wealth during Queen Victoria’s reign, dying in 1893. His works are often dark social commentaries featuring streets and portsides, full of ships’ rigging and lamplight that seems visually interchangeable with moonlight.

The explaination of "celebrate" in M-W is as follows:
transitive verb
1 : to perform (a sacrament or solemn ceremony) publicly and with appropriate rites <celebrate the mass>
2 a : to honor (as a holiday) especially by solemn ceremonies or by refraining from ordinary business b : to mark (as an anniversary) by festivities or other deviation from routine
3 : to hold up or play up for public notice <her poetry celebrates the glory of nature>

I think this "celebrate" here is quite fit for the third explaination: to hold up or play up for public notice. John's works show the industry, commerce and conspicuous wealth during Queen Victoria's reign, which make the public think deeply about the dark society that time.

AdelineShenUID：2630498

A special report on entrepreneurship

Global heroes

Mar 12th 2009 From The Economist print edition

Despite the downturn, entrepreneurs are enjoying a renaissance the world over, says Adrian Wooldridge
IN DECEMBER last year, three weeks after the terrorist attacks in Mumbai and in the midst of the worst global recession since the 1930s, 1,700 bright-eyed Indians gathered in a hotel in Bangalore for a conference on entrepreneurship. They mobbed business heroes such as Azim Premji, who transformed Wipro from a vegetable-oil company into a software giant, and Nandan Nilekani, one of the founders of Infosys, another software giant. They also engaged in a frenzy of networking. The conference was so popular that the organisers had to erect a huge tent to take the overflow. The aspiring entrepreneurs did not just want to strike it rich; they wanted to play their part in forging a new India. Speaker after speaker praised entrepreneurship as a powerful force for doing good as well as doing well.
Back in 1942 Joseph Schumpeter gave warning that the bureaucratisation of capitalism was killing the spirit of entrepreneurship. Instead of risking the turmoil of “creative destruction”, Keynesian economists, working hand in glove with big business and big government, claimed to be able to provide orderly prosperity. But perspectives have changed in the intervening decades, and Schumpeter’s entrepreneurs are once again roaming(to range or wander over) the globe.
(The economic concept of creative destruction was first introduced by the Austrian School economist Joseph Schumpeter.
In Capitalism, Socialism and Democracy, Schumpeter popularized and used the term to describe the process of transformation that accompanies radical innovation.[1] In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.)

Since the Reagan-Thatcher revolution of the 1980s, governments of almost every ideological stripe have embraced entrepreneurship. The European Union, the United Nations and the World Bank have also become evangelistsan(enthusiastic advocate). Indeed, the trend is now so well established that it has become the object of satire. Listen to me, says the leading character in one of the best novels of 2008, Aravind Adiga’s “The White Tiger”, and “you will know everything there is to know about how entrepreneurship is born, nurtured, and developed in this, the glorious 21st century of man.”
This special report will argue that the entrepreneurial idea has gone mainstream, supported by political leaders on the left as well as on the right, championed by powerful pressure groups, reinforced by a growing infrastructure of universities and venture capitalists and embodied by wildly popular business heroes such as Oprah Winfrey, Richard Branson and India’s software kings. The report will also contend that entrepreneurialism needs to be rethought: in almost all instances it involves not creative destruction but creative creation.
The world’s greatest producer of entrepreneurs continues to be America. The lights may have gone out on Wall Street, but Silicon Valley continues to burn bright. High-flyers from around the world still flock to America’s universities and clamour to work for Google and Microsoft. And many of them then return home and spread the gospel.
The company that arranged the oversubscribed conference in Bangalore, The Indus Entrepreneurs (TiE), is an example of America’s pervasive influence abroad. TiE was founded in Silicon Valley in 1992 by a group of Indian transplants who wanted to promote entrepreneurship through mentoring, networking and education. Today the network has 12,000 members and operates in 53 cities in 12 countries, but it continues to be anchored in the Valley. Two of the leading lights at the meeting, Gururaj Deshpande and Suren Dutia, live, respectively, in Massachusetts and California. The star speaker, Wipro’s Mr Premji, was educated at Stanford; one of the most popular gurus, Raj Jaswa, is the president of TiE’s Silicon Valley chapter.
The globalisation of entrepreneurship is raising the competitive stakes for everyone, particularly in the rich world. Entrepreneurs can now come from almost anywhere, including once-closed economies such as India and China. And many of them can reach global markets from the day they open their doors, thanks to the falling cost of communications.
For most people the term “entrepreneur” simply means anybody who starts a business, be it a corner shop or a high-tech start up. This special report will use the word in a narrower sense to mean somebody who offers an innovative solution to a (frequently unrecognised) problem. The defining characteristic of entrepreneurship, then, is not the size of the company but the act of innovation.
A disproportionate number of entrepreneurial companies are, indeed, small start-ups. The best way to break into a business is to offer new products or processes. But by no means all start-ups are innovative: most new corner shops do much the same as old corner shops. And not all entrepreneurial companies are either new or small. Google is constantly innovating despite being, in Silicon Valley terms, something of a long-beard.
This narrower definition of entrepreneurship has an impressive intellectual pedigree going right back to Schumpeter. Peter Drucker, a distinguished management guru, defined the entrepreneur as somebody who “upsets and disorganises”. “Entrepreneurs innovate,” he said. “Innovation is the specific instrument of entrepreneurship.” William Baumol, one of the leading economists in this field, describes the entrepreneur as “the bold and imaginative deviator from established business patterns and practices”. Howard Stevenson, the man who did more than anybody else to champion the study of entrepreneurship at the Harvard Business School, defined entrepreneurship as “the pursuit of opportunity beyond the resources you currently control”. The Ewing Marion Kauffman Foundation, arguably the world’s leading think-tank on entrepreneurship, makes a fundamental distinction between “replicative” and “innovative” entrepreneurship.
(The definition of entrepreneurship.)
Five myths
Innovative entrepreneurs are not only more interesting than the replicative sort, they also carry more economic weight because they generate many more jobs. A small number of innovative start-ups account for a disproportionately large number of new jobs. But entrepreneurs can be found anywhere, not just in small businesses. There are plenty of misconceptions about entrepreneurship, five of which are particularly persistent. The first is that entrepreneurs are “orphans and outcasts”, to borrow the phrase of George Gilder, an American intellectual: lonely Atlases battling a hostile world or anti-social geeks inventing world-changing gizmos in their garrets. In fact, entrepreneurship, like all business, is a social activity. Entrepreneurs may be more independent than the usual suits who merely follow the rules, but they almost always need business partners and social networks to succeed.
The history of high-tech start-ups reads like a roll-call of business partnerships: Steve Jobs and Steve Wozniak (Apple), Bill Gates and Paul Allen (Microsoft), Sergey Brin and Larry Page (Google), Mark Zuckerberg, Dustin Moskovitz and Chris Hughes (Facebook). Ben and Jerry’s was formed when two childhood friends, Ben Cohen and Jerry Greenfield, got together to start an ice-cream business (they wanted to go into the bagel business but could not raise the cash). Richard Branson (Virgin) relied heavily on his cousin, Simon Draper, as well as other partners. Ramana Nanda, of Harvard Business School (HBS), and Jesper Sorensen, of Stanford Business School, have demonstrated that rates of entrepreneurship are significantly higher in organisations where a large number of employees are former entrepreneurs.
Entrepreneurship also flourishes in clusters. A third of American venture capital flows into two places, Silicon Valley and Boston, and two-thirds into just six places, New York, Los Angeles, San Diego and Austin as well as the Valley and Boston. This is partly because entrepreneurship in such places is a way of life—coffee houses in Silicon Valley are full of young people loudly talking about their business plans—and partly because the infrastructure is already in place, which radically reduces the cost of starting a business.
The second myth is that most entrepreneurs are just out of short trousers. Some of today’s most celebrated figures were indeed astonishingly young when they got going: Bill Gates, Steve Jobs and Michael Dell all dropped out of college to start their businesses, and the founders of Google and Facebook were still students when they launched theirs. Ben Casnocha started his first company when he was 12, was named entrepreneur of the year by Inc magazine at 17 and published a guide to running start-ups at 19.
But not all successful entrepreneurs are kids. Harland Sanders started franchising Kentucky Fried Chicken when he was 65. Gary Burrell was 52 when he left Allied Signal to help start Garmin, a GPS giant. Herb Kelleher was 40 when he founded Southwest Airlines, a business that pioneered no-frills discount flying in America. The Kauffman Foundation examined 652 American-born bosses of technology companies set up in 1995-2005 and found that the average boss was 39 when he or she started. The number of founders over 50 was twice as large as that under 25.
The third myth is that entrepreneurship is driven mainly by venture capital. This certainly matters in capital-intensive industries such as high-tech and biotechnology; it can also help start-ups to grow very rapidly. And venture capitalists provide entrepreneurs with advice, contacts and management skills as well as money.
But most venture capital goes into just a narrow sliver of business: computer hardware and software, semiconductors, telecommunications and biotechnology. Venture capitalists fund only a small fraction of start-ups. The money for the vast majority comes from personal debt or from the “three fs”—friends, fools and families. Google is often quoted as a triumph of the venture-capital industry, but Messrs Brin and Page founded the company without any money at all and launched it with about $1m raised from friends and connections.
Monitor, a management consultancy that has recently conducted an extensive survey of entrepreneurs, emphasises the importance of “angel” investors, who operate somewhere in the middle ground between venture capitalists and family and friends. They usually have some personal connection with their chosen entrepreneur and are more likely than venture capitalists to invest in a business when it is little more than a budding idea.
The fourth myth is that to succeed, entrepreneurs must produce some world-changing new product. Sir Ronald Cohen, the founder of Apax Partners, one of Europe’s most successful venture-capital companies, points out that some of the most successful entrepreneurs concentrate on processes rather than products. Richard Branson made flying less tedious by providing his customers with entertainment. Fred Smith built a billion-dollar business by improving the delivery of packages. Oprah Winfrey has become America’s richest self-made woman through successful brand management.
The fifth myth is that entrepreneurship cannot flourish in big companies. Many entrepreneurs are sworn enemies of large corporations, and many policymakers measure entrepreneurship by the number of small-business start-ups. This makes some sense. Start-ups are often more innovative than established companies because their incentives are sharper: they need to break into the market, and owner-entrepreneurs can do much better than even the most innovative company man.
Big can be beautiful too
But many big companies work hard to keep their people on their entrepreneurial toes. Johnson & Johnson operates like a holding company that provides financial muscle and marketing skills to internal entrepreneurs. Jack Welch tried to transform General Electric from a Goliath into a collection of entrepreneurial Davids. Jorma Ollila transformed Nokia, a long-established Finnish firm, from a maker of rubber boots and cables into a mobile-phone giant; his successor as boss of the company, Olli-Pekka Kallasvuo, is now talking about turning it into an internet company. Such men belong firmly in the pantheon of entrepreneurs.
Just as importantly, big firms often provide start-ups with their bread and butter. In many industries, especially pharmaceuticals and telecoms, the giants contract out innovation to smaller companies. Procter & Gamble tries to get half of its innovations from outside its own labs. Microsoft works closely with a network of 750,000 small companies around the world. Some 3,500 companies have grown up in Nokia’s shadow.
But how is the new enthusiasm for entrepreneurship standing up to the worldwide economic downturn? Entrepreneurs are being presented with huge practical problems. Customers are harder to find. Suppliers are becoming less accommodating. Capital is harder to raise. In America venture-capital investment in the fourth quarter of 2008 was down to $5.4 billion, 33% lower than a year earlier. Risk, the lifeblood of the entrepreneurial economy, is becoming something to be avoided.
Misfortune and fortune
The downturn is also confronting supporters of entrepreneurial capitalism with some awkward questions. Why have so many once-celebrated entrepreneurs turned out to be crooks? And why has the free-wheeling culture of Wall Street produced such disastrous results?
For many the change in public mood is equally worrying. Back in 2002, in the wake of the scandal over Enron, a dubious energy-trading company, Congress made life more difficult for start-ups with the Sarbanes-Oxley legislation on corporate governance. Now it is busy propping up failed companies such as General Motors and throwing huge sums of money at the public sector. Newt Gingrich, a Republican former speaker of America’s House of Representatives, worries that potential entrepreneurs may now be asking themselves: “Why not get a nice, safe government job instead?”
(The Enron scandal, revealed in October 2001, involved the energy company Enron and the accounting, auditing, and consultancy partnership of Arthur Andersen. The corporate scandal eventually led to Enron's downfall, resulting in the largest bankruptcy in American history at the time. Arthur Andersen, which was one of the five largest accounting firms in the world, was dissolved.
Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that, through the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives were able to mislead Enron's board of directors and audit committee of high-risk accounting issues as well as pressure Andersen to ignore the issues.
Enron's stock price, which hit a high of US$90 per share in mid-2000, caused shareholders to lose nearly $11 billion when it plummeted to less than a $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and Dynegy offered to purchase the company at a fire sale price. When the deal fell through, Enron filed for bankruptcy on December 2, 2001 under Chapter 11 of the United States Bankruptcy Code, and with assets of $63.4 billion, it was the largest corporate bankruptcy in U.S. history until WorldCom's 2002 bankruptcy.[1]
Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron's auditor, Arthur Andersen, was found guilty in a state court, but by the time the ruling was overturned at the U.S. Supreme Court, the firm had lost the majority of its customers and had shut down. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were enacted to expand the reliability of financial reporting for public companies.[2] One piece of legislation, the Sarbanes-Oxley Act, expanded repercussions for destroying, altering, or fabricating records in federal investigations or for attempting to defraud shareholders.[3] The act also increased the accountability of auditing firms to remain objective and independent of their clients.[2])

Yet the threat to entrepreneurship, both practical and ideological, can be exaggerated. The downturn has advantages as well as drawbacks. Talented staff are easier to find and office space is cheaper to rent. Harder times will eliminate the also-rans and, in the long run, could make it easier for the survivors to grow. As Schumpeter pointed out, downturns can act as a “good cold shower for the economic system”, releasing capital and labour from dying sectors and allowing newcomers to recombine in imaginative new ways.
Schumpeter also said that all established businesses are “standing on ground that is crumbling beneath their feet”. Today the ground is far less solid than it was in his day, so the opportunities for entrepreneurs are correspondingly more numerous. The information age is making it ever easier for ordinary people to start businesses and harder for incumbents to defend their territory. Back in 1960 the composition of the Fortune 500 was so stable that it took 20 years for a third of the constitutent companies to change. Now it takes only four years. (good example!)
There are many reasons for this. First, the information revolution has helped to unbundle existing companies. In 1937 Ronald Coase argued, in his path-breaking article on “The Nature of the Firm”, that companies make economic sense when the bureaucratic cost of performing transactions under one roof is less than the cost of doing the same thing through the market. Second, economic growth is being driven by industries such as computing and telecommunications where innovation is particularly important. Third, advanced economies are characterised by a shift from manufacturing to services. Service firms are usually smaller than manufacturing firms and there are fewer barriers to entry.
Microsoft, Genentech, Gap and The Limited were all founded during recessions. (good example!)Hewlett-Packard, Geophysical Service (now Texas Instruments), United Technologies, Polaroid and Revlon started in the Depression. Opinion polls suggest that entrepreneurs see a good as well as a bad side to the recession. In a survey carried out in eight emerging markets last November for Endeavor, a pressure group, 85% of the entrepreneurs questioned said they had already felt the impact of the crisis and 88% thought that worse was yet to come. But they also predicted, on average, that their businesses would grow by 31% and their workforces by 12% this year. Half of them thought they would be able to hire better people and 39% said there would be less competition.

AdelineShenUID：2630498

good expressions:
a frenzy of
intervening decades
roam the globe
evangelistsan:enthusiastic advocate
Silicon Valley
break into a business
a budding idea
out of short trousers

more information

1.
economic concept of creative destruction was first introduced by the Austrian School economist Joseph Schumpeter.
In Capitalism, Socialism and Democracy, Schumpeter popularized and used the term to describe the process of transformation that accompanies radical innovation.[1] In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.)

2.
The Enron scandal, revealed in October 2001, involved the energy company Enron and the accounting, auditing, and consultancy partnership of Arthur Andersen. The corporate scandal eventually led to Enron's downfall, resulting in the largest bankruptcy in American history at the time. Arthur Andersen, which was one of the five largest accounting firms in the world, was dissolved.
Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that, through the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives were able to mislead Enron's board of directors and audit committee of high-risk accounting issues as well as pressure Andersen to ignore the issues.
Enron's stock price, which hit a high of US$90 per share in mid-2000, caused shareholders to lose nearly $11 billion when it plummeted to less than a $1 by the end of November 2001. The U.S. Securities and Exchange Commission (SEC) began an investigation, and Dynegy offered to purchase the company at a fire sale price. When the deal fell through, Enron filed for bankruptcy on December 2, 2001 under Chapter 11 of the United States Bankruptcy Code, and with assets of $63.4 billion, it was the largest corporate bankruptcy in U.S. history until WorldCom's 2002 bankruptcy.[1]
Many executives at Enron were indicted for a variety of charges and were later sentenced to prison. Enron's auditor, Arthur Andersen, was found guilty in a state court, but by the time the ruling was overturned at the U.S. Supreme Court, the firm had lost the majority of its customers and had shut down. Employees and shareholders received limited returns in lawsuits, despite losing billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were enacted to expand the reliability of financial reporting for public companies.[2] One piece of legislation, the Sarbanes-Oxley Act, expanded repercussions for destroying, altering, or fabricating records in federal investigations or for attempting to defraud shareholders.[3] The act also increased the accountability of auditing firms to remain objective and independent of their clients.[2])