Between our finances, fitness, beauty, working — even our souls. We can spend thousands of dollars on making ourselves better. The self-help business is booming: from personal trainers to plastic surgery, how are we spending money to help ourselves? This is the question that radio host Tom Hudson and I discuss tonight on Miami’s WLRN “Sunshine Economy”…
Co-Authored with Theresa Hamacher
The new leaders of the Chinese Communist party recently announced that the market would play an expanded and “decisive” role in allocating China’s resources. Yet the same announcement reaffirmed the continued “vitality” of the state-owned enterprises that dominate the country’s economy.
While these two goals appear to be in conflict, they could both be advanced by allocating substantial blocks of shares of such enterprises to the National Social Security Fund, a Chinese manager of pension assets. This approach would have the added virtue of strengthening the pension system by increasing pre-funding of retirement benefits.
In China, a small group of state-owned enterprises hold a near monopoly of power in key sectors – such as banking, energy and transportation – and pay little or no dividends. If China’s economy is to become more productive, they must become more responsive to market forces, with lower customer prices and lower operational costs than competitors. As a result, China has begun negotiations with Europe and the US on investment treaties, which would allow foreign companies to compete in some of the sectors dominated by state-owned businesses.
Chinese leaders should also adopt another strategy to make them more responsive to market forces: establishing a large institutional shareholder that could put pressure on the state-owned enterprises to run more efficiently and pay more dividends. Although most of the large examples have sold shares to public investors, these investors are widely dispersed throughout the world, and have little influence on the corporate strategies of state-owned businesses or their dividend policies.
Read the complete article at FT.com…
While the problems of Detroit have highlighted the large deficits in municipal pension plans, less attention has been given to the even larger unfunded obligations of cities to pay the health care benefits of their retired employees — called retiree health care plans, or RH plans.
Most recently, in 2011 Boston reported an unfunded deficit of $3 billion for its RH plan, an ostensible decrease from $4 billion in 2009. In fact, if Boston had not raised by two full percentage points its assumed expected returns on current and future plan assets, its unfunded RH plan deficit would have increased from $4 billion in 2009 to approximately $5 billion in 2011.
That change in assumptions is particularly dubious because Boston’s RH plan in 2011 held assets of only $111 million. To pay billions in health care obligations as they become due, Boston will have to rely mainly on future tax revenues.
Did you make a resolution to be more productive in 2014? Attend my course, “Maximizing Your Productivity,” at MIT Sloan this Spring! Check out more about the course at http://executive.mit.edu/openenrollment/program/maximizing_your_personal_productivity/61.
Are obsolete ideas about productivity holding back investment professionals? The modern investment industry is a knowledge-based business operating with an industrial-era mentality about time management, according to Harvard economist (and Future of Finance adviser) Robert Pozen. In the November/December issue of CFA Institute Magazine, he explains why professional investors who want to excel “must totally change their mindset” about productivity.
Read the complete article online here.
As a follow-up to his book “Extreme Productivity,” Professor Bob Pozen reveals his secrets to workplace productivity and high performance in this video excerpt published by HBS. The antidote to boring meetings and email backlogs, these excerpts demonstrate how busy professionals can achieve their goals by making a critical shift in mindset: from hours worked to results produced.
Co-Authored with Theresa Hamacher
While shareholders of public companies in the UK and US have been voting on advisory (non-binding) resolutions about executive compensation, those in the Netherlands, Norway and Sweden have been voting on binding resolutions.
This might change. The UK government has proposed moving from advisory to compulsory resolutions on executive pay and, recently, the Swiss approved a referendum directing its parliament to require public companies to hold binding shareholder resolutions over pay.
Based on the available data, however, we do not support a general requirement for all public companies to hold a binding shareholder vote on executive compensation. But if less than a majority of the shares voted at one annual meeting favour a company’s executive compensation plan, then at the next annual meeting, the shareholder vote on that company’s executive compensation plan should be binding…
While many commentators have expressed concerns about the large deficits of public pension plans, few have rung the alarm about the large deficits of retiree healthcare plans (RHPs) of local governments. In fact, the funding gaps for RHPs are usually at least 20% higher than those for public pensions. For example, the Mass Taxpayers Foundation has recently reported that Massachusetts local governments – cities and towns ( not the State ) – are saddled with $15 billion in pension deficits as compared to $30 billion in RHP deficits.
RHP deficits are larger than pension deficits of local governments for two main reasons. First, until 2004, no local government was required to include RHP deficits on their balance sheets. Even now, local governments are generally allowed to calculate these deficits on the basis of whatever they believe is the expected return on assets – as opposed to the actual return. Second, local governments have never been required to pre-fund RHP liabilities, in contrast to the pre-funding requirements for most pension plans that have been in place for two or three decades. In Massachusetts for instance, the funded ratio of assets to liabilities is 57% for local government pensions, but less than 1% for their RHPs…