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How To Create More Jobs
TechDirt is spotlighting a call by Michael S. Malone, a columnist for ABCNews.com, for letting Silicon Valley create jobs once more. Malone argues that Sarbanes-Oxley and other attempts at accounting reform have done little to prevent fraud, but in fact have managed to kill off an entrepreneurship-venture capital-IPO cycle, centered in Silicon Valley, that has taken 30 years to nourish. Here's TechDirt: "...it's time to roll back SarbOx and other accounting rules that have acted more for theatrical purposes rather than any legitimate reason. Basically, all they've done is create new reporting requirements that do little to nothing to either prevent fraud or clarify a company's actual financial position (its intended purpose). I'm all for radical transparency in financial info, but that's not what has been done. Instead, we've made it burdensome to actually grow a company — and that doesn't help create jobs. It helps kill them."
1: Cancel all H1/L1 programs indefinitely, but with a condition that they return at some point in a more regulated form. 2: Reclassify transplant manufacturers as import manufacturers of that particular nation and tax accordingly. 3: Zero taxes on businesses that would comply with a strengthened "Patriot Business" standard. That is, loopholes would be removed. 4: Domestic preference for education and funding thereof at all levels. 5: Put a moratorium on new fuel taxes or changes that effect an increase of any kind. 6: Revert all of the environmental standards for vehicles to 1980's standards.
I own a small business and have been considering hiring someone part time. Unfortunately I have no idea what paperwork needs to be filled out. What do I need to know as far as taxes, etc? If I could simply say, "I'll give you X dollars for N hours of work." It would be much simpler AND there would be one less out of work programmer.
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should be:
FASB's acc
Given that your home page is http://www.fairsoftware.net/ do you have an association with the company? If you do, can I trust your comment that "the current model of entrepreneurship is broken", or is that what you believe based on your need to see your new company succeed? No, I'm not alleging any nefarious motives on your part. I'm sure you genuinely believe what you wrote and am asking whether your perception has been genuinely distorted due to a vested interest.
Simple as that. The boat sinks when you try to make it float with too much brass on board, and you don't win wars with more officers than soldiers. Likewise, you don't run a business sensibly when most of your workforce is concerned with administration and organisation instead of production. There are productive companies here (Siemens, I'm looking your way) that are already called "banks with a real estate branch, and a production department so they don't have to adhere to banking standards".
Get back to production. Produce something that the economy needs instead of administrating your own demise.
And to do that, I do agree with the original poster. Get rid of worthless "auditing standards" that didn't produce anything but new jobs for more beancounters. The SOX doesn't do anything. It is another standard to fulfill to the barest minimum whenever some auditing goon arrives, who in turn doesn't care jack whether the company's bosses embezzle money but who just wants to check whether the requirements are met. Tell you something: The requirements are pointless. There are already more than enough ways to circumvent them and go ahead with the old fashion ripping off of investors that always existed. Either start really auditing (but then, some companies would get into serious troubles...) or do away with it. What we have now is a band aid that does at best cover up the bleed, but only 'til it's soaked. Then we slap on another band aid and hope nobody notices that the wound does not close and needs surgery. Yes, that's expensive and it could kill the patient, but either is better than having a thousand people bleed for blood donations time and again.
Ok, away with bad analogies. I'm sick of seeing my taxes being poured into companies that should by all means crash and burn. If you want to save them, save them. Pick them up, fire everyone from management (NOT the workers, please, they're the one that MAKE money, management is what BURNS it!) and replace them with people who can do their job. I really don't understand why one would give people who have clearly shown they are incompetent and unable to handle the responsibility even MORE money to sink MORE money. Fire those fuckers, replace them with people who know their job, and you can have my tax money!
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Yes, saving is exactly what we need right now. Everyone should put their money in the bank, and not spend anything. That way, all your neighbours might go broke slightly before you do.
As for a simple flat tax, you realise what effect that would have on small business, don't you? Buy a product from a company that produces products from scratch, and you'll be paying 15% on that; buy a product from a shop that bought it from a manufacturer, who bought the components from another manufacturer, and there's going to be more tax in the price than anything else.
What are you going to suggest next? Perhaps the world could get out of its current predicament if the governments were to print more money.
I mean, all those short-sighted boards focused on the next quarter to pacify greedy shareholders don't seem to be good for innovation or the long term.
Blar.
That's exactly the problem SOX has today, too. I was in the middle of a SOX audit at some large company over here that should remain unnamed to protect the guilty.
Aside of some rather ... fantastic requirements (like, administrators being not allowed to be able to read data but are responsible for its backup), we were doing checklists. Do this, check. Do that, check. Why? Don't ask. Just do it. Yes, it's pointless, yes, we know that (this is not a coworker talking, this is from the auditor), but it's in the book, so do it. We documented features that didn't exist anymore, we documented workflows that are neither relevant to the software nor ever used (or, if used, could be interpreted in any way wrong), and we were delayed by over two months in a project (costing about a manyear of work, for fluff).
The data we produced this way does in no way document the software, neither technically nor as an instruction manual. It does not show what the software does. It does not inform anyone about how values are calculated or why certain flags are being set. It does not give an auditor any relevant information that could enable him to identify something that could be used to "steal" money or hide a leak. It is utterly and completely worthless, but it does adhere to the SOX requirements.
And that's what's wrong about it. Companies don't want SOX to work. The people in the company that deal with SOX view it as a nuisance and something they want out of the way because it cuts into their actual work. Auditing companies only want to check off the requirements because it's the fastest way to get their money for auditing the company.
In short, NOBODY involved actually wants SOX to work.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
There should be a tax on credit transactions. Credit transactions are based on the assumption that if the joker doesn't pay you, you can take him to court. At this point, the gubmint steps in and gives you your cash. If 2 individuals exchange goods or cash for goods, there is no need for any government intervention, and thus no justification for taxing it.
I want to delete my account but Slashdot doesn't allow it.
Don't count on that. The purchase of the Wall Street Journal by Rupert Murdoch was the beginning of the end for reliable business reporting from that newspaper. It's only a matter of time until its reporting is just as insightful and informative as the Fox Business Network.
When you don't tax capital, it moves too quickly, and causes too much boom and bust. That's why western countries have rules against capital flight, and some european countries have a token tax - a fraction of a percent - for every stock transaction to slow people's overreactions.
Personally, I have a somewhat libertarian ideal - eliminate corporations as they are known, and remove the corporate veil of protection for most companies, except for special charters given to insurance companies and other temporary projects - bridge building, mass transit, internet service, etc. There's no reason to grant a corporation special status unless it is doing something beneficial for the community.
I think it would keep companies small and healthy, and keep large, sensible corporations very well regulated. Just require total transparency, and you'll keep the crooks out. But while the crooks are still ruling the White House, the rich are still making the rules.
Malone is a boilerplate "Regulation is bad for business" guy who happens to be focused on the tech world.
He claims SOx has failed, he claims the costs are too high. Perhaps he forgets the cost of NOT having such regulation.
In addition, study after study has found that there are many benefits to becoming SOx-compliant, from risk attenuation to more accurate financial reporting, to streamlining processes via standardization. Googling "Sox benefits" will bring up quite a few, though you might need to wade through some marketing muck from companies whose line of business rests with providing compliance tools.
I can personally attest that Sox compliance has saved a former employer of mine tens of millions... potentially more, if certain practices hadn't been discontinued and happened to be caught by the SEC.
I think the main reason IT professionals hate SOx is that some of their work becomes drudgery. They fail to see the big picture, and from the finance side, I do what I can to make sure they can see how much it helps the company. As for it being an unnecessary burden on companies... tell that to the people who had their retirement savings in Enron stock. Tell that to the people who pinned their ability to put their kids to college on Worldcom stock. It takes a short memory to forget that confidence in large public companies in 2001-2 was similar to the confidence people have in the banking industry now. Would Malone argue that the best thing we can do for the general public now would be to deregulate the banking system further?
I'd also note that the small companies he refers to have a much easier time with SOx compliance, such as a longer period in which to become SOx compliant. Further, it's been demonstrated that the high cost of SOx compliance is in implementation, not in maintenance of compliance. For a start-up, it's easy enough to begin compliant... then you never have to face a huge expense in becoming compliant, since your processes have been compliant all along. Since a lot of the benefits of compliance are "soft" benefits (they are hard to assign an accurate value to), it's difficult to determine whether compliance costs outweigh compliance benefits... but since start-ups do not have to bear the brunt of compliance expense (in converting legacy systems and processes), I feel it's probably beneficial to be compliant.
Of interest, the SEC will be conducting a CBA of SOx compliance for small public companies in 2009. I'm interested to see what their findings are.
Anyway, thanks for doing a mite of research and refuting his cherry-picked data.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Not recently, they don't. For the past decade or more, small companies build the new stuff and either get bigger or get bought by big companies.
"We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
Sarbox kills productivity. I have a customer who won't let me log in to do work because their auditor claims that if they ACTUALLY LET ME WORK, they'll have no control over, nor knowledge of, what I've done -- and Sarbox requires that they have both. It's an evil law and MUST DIE.
Don't piss off The Angry Economist
I would like to know where you are so that I can relocate, around here there are generally 50+ qualified applicants for every real IT/development job advertised. A lot of qualified people with college degrees in CompSci/CompEng are doing first and second line tech support at various call centers in the area because there are so few "real" jobs available...
/Mikael
Greylisting is to SMTP as NAT is to IPv4
How much would you pay for swamp land in Florida? Those homes (and their mortgages) are worth as much as people are willing, or able, to pay. If you've got lots of homes that cost over a million to build, but you only have a few millionaires and most people with far less in assets and income, then only the nicest homes that can actually be sold to the millionaires are worth that much. The rest are only worth as much as people are capable of paying for them. So you can sit on them until inflationary pressures raise incomes to the point where the homes are affordable (and thus lose the value to inflation over time, and pay the property taxes during that time) or you can take the hit now and sell the homes at the price people can afford. At least then you can reinvest your remaining money in a different venture and maybe recoup part of your loss.
Those securities may be worth more than 20% of face value, but they're worth a lot less than 80% or 90%, because the values of the houses they covered was often hyper-inflated due to too easily accessible credit and occasional deliberate over-assessment by some involved in the house purchase cycle (realtors, mortgage brokers, speculators). The house prices those securities depend on are now adjusting to the real value of that real estate in a sane lending environment.
The reason why the mortgage-backed securities are at 20% of face value is that the banks or managing agencies don't want to have to pay the property taxes on empty houses for 10 years and yet there's no qualified buyers to sell to. Renting the properties isn't a solution because market rental prices can't cover the mortgage payments. If the defaulters can't pay the mortgage payment, then they won't be able to pay rent to cover the same so the owners will still take a partial monthly loss even if they managed to rent the place while looking for buyers. The boomers with cash are retiring and they don't want their money tied up for the 20 years it's going to take before those homes can be sold without taking a bath at even half of the last assessed value. Due to deregulation, the banks are over-leveraged, so they can't afford to take the loss over that long a period of time. So the house prices are dropping and they are going to continue to drop (in real terms initially or against inflation longer term) for quite a while and the value of those securities is reflecting that.
That's what you get when you try to treat a durable good as a commodity that people can play speculation games with. When enough speculators decide to leave the inflated market for some reason, market values readjust to their natural state. Have you checked the price of crude oil lately? An inelastic demand curve can account for some of the recent roller-coaster ride in that market, but oil demand isn't so inelastic as to account for >3x price fluctuations on relatively small consumption changes (percentage wise). Speculators who manipulate prices suddenly developing a need for liquidity and pulling out of the market on the other hand...
Laissez lire, et laissez danser; ces deux amusements ne feront jamais de mal au monde. - Voltaire
Well first off, if you're going to capitalize letters, it's SarbOx, not SarBox. Sorry to nitpick, but my OCD-ness was making it hard to read your post without addressing that.
As for acting on SOx reporting, I'm not so sure you're correct. I can think of several companies whose financial statements yielded results from investigation, that probably wouldn't have been caught without SOx (Rockstar Games being the one closest to the Slashdot crowd). And from a company's internal perspective, SOc compliance aligns well with process standardization and optimization... many (most?) companies out there are using internal SOx audits as a tool for improving efficiency and reducing costs.
As for ease of audit and standardization... have you ever done a SOx audit? And I don't mean been subject to one, I mean from the other side... have you ever conducted an audit? SOx makes good auditing far easier than it was before.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
'Creating jobs' isn't necessarily a good thing, no matter how many times people say it.
What really matters is output and a person's time. It's possible that more jobs will output more, whilst also offsetting the disadvantage of the time taken for that new job.
However, ideally, we should be looking to *reduce* jobs, whilst maintaining efficiency/output, or even increasing efficiency. When certain tasks become automated, that happens naturally, and it doesn't become a loss of output, but frees up someone's time. Which is a Good Thing.
In the end, we can use that time for socialising and become explorers, artists, composers, writers, thinkers, recreationists and scientists/researchers (that's not so easy to automate of course).
Leaving the work to robots/computers.
Why OpalCalc is the best Windows calc
Then there's an opportunity for some Silicon Valley co to create great software to simplify the Sarb-ox. reporting so that it's not an impediment.
Table-ized A.I.
Eliminate capital gains taxes. The total revenues raised by capital gains tax is around 117 billion a year, which makes an interesting comparison to the magnitude of bailouts already appropriated.
If cap gains tax was eliminated, there would be an historical market rally. The current strategy of trying to stimulate the economy with ever-larger doses of inflation can't work: see Zimbabwe.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
One of the best things that we could do to promote new job creation, is to bring down the barriers to public equity for small businesses. As things stand today, it's just not realistic to go public until you need at least ten million bucks in funding, just because the regulatory requirements for public trading are so onerous.
If local businesses could sell shares to the public, then a lot of people would invest in their own communities, entrusting their capital to people they actually know and do business with, instead of handing it over to enormous mutual funds. For the small businessman, being able to raise private capital means he doesn't have to get bank funding and pay interest for his operating capital.
The SEC doesn't protect us from the likes of Enron or Bernie Madoff, and it's not at all surprising that they fail at their ostensible mission. The SEC has nothing to lose when they fuck up. No bureaucrat is going to lose his job for ignoring the warnings and red flags they should have acted on. In fact, just like the public schooling cartel, the SEC will probably get more funding because they failed to do their job.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
You don't have to be anti-regulation to be anti-sox. It is entirely possible to simply believe that SOX is excessively expensive and not sufficiently effective while believing that some OTHER form of regulation and transparency would be a good idea.
Remember, SOX has been in effect for several years and did nothing at all to prevent the mass financial irresponsibility (some of which WAS criminal) that has the economy so screwed.
You all are standing in the lobby of a skyscraper that is collapsing, preaching to the screaming people who are frantically running out the doors that 'this is exactly why we should enforce less standards when we build skyscrapers!' Everyone is looking at you like you are the retarded maniac that you probably are.
We are all standing in the lobby of a skyscraper that is collapsing and noting that the required expensive full cataloging of the exact color of each brick in the building did nothing but drive up the cost.
A funny thing happens when you place crazy demands on potential suppliers and partners. The ones with solid products and services tend to say no thanks, leaving the ones with barely adequate products who are just desperate enough for sales to jump through your flaming hoops to get one. You might get lucky and find a good supplier that had a run of bad luck, but probably not.
Either way, all that hoop jumping is expensive. Those costs WILL be passed on to the customer who demanded it. Adding a bunch of non-productive expenses is quite irresponsible!
There may not be any "natural" monopolies, but there are circumstances where allowing competition might create more problems than it actually solves. For instance, utilities.
If you don't have one, government sanctioned, provider alone for things like telephone, water, etc, you will end up with a situation where multiple companies are pursuing leans for right-of-way, criss-crossing private and public property and duplicating infrastructure. While certain services such as telephones and power may be able to get by with multiple companies providing the service over one set of lines, and non-original providers leasing the use of the equipment. However, for obvious reasons, this doesn't exactly work well for water -- you can't packet-switch h20.
If you don't think that SOX is necessary, then you don't understand what it does.
Sarbenes-Oxeley is forcing all public companies to formalize their financial processes. What it is akin to is forcing programmers to document their code, not just comment it, but to create product and design specifications. This is so that it creates transparency so that outsiders, such as investors or auditors, can understand the flow of finances throughout the company. For most large companies, it probably didn't make a huge impact, but where it did make the most impact was for small and medium-sized public companies. It sucks, but it protects investors.
Why did they implement it? Because of the widespread fraud from the dot-com boom/bust. Before some fly-by-the-night startup can go IPO and make billions of dollars, they will need to submit themselves to this formalization of financial processes so that people can understand exactly what is going on. It sucks, it is onerous, but it is necessary.
i've worked at two publicly traded tech companies in the sales department. it is way worse than this article describes. besides the larger trends described, there are opposite effects that drive innovation out of the google type firms the author says are centralizing technology. the revenue recognition requirements on newly innovated technology for a publicly traded firm is so onerous that publicly traded companies simply get out of certain lines of business rather than go through this. for those of us keeping score at home: a small company can't do it for reasons described in the article, and large companies can't do it for reasons i describe. the whole SOX debacle is revenge of the bean counters. THEY were at fault for not calling enron on their bullshit, and now THEY are punishing US to "ensure" it will never happen again. had they been doing their jobs honestly to begin with, enron, et al would never have happened. now bean counters are enriching themselves by being the "expert" that can get ordinary transactions approved by the auditors. forget the complicated stuff. we REALLY need to throw off the yoke of excessive regulation if silicon valley is ever going to take off again.
Personally, I think it's time some of these guys went to jail who are misusing public money. What we need is ENFORCEMENT of the laws already on the books. Not new laws that nobody goes buy.
Personally, if we have to do without startups is that the worst thing? You have to admit some of those businesses were going through cash like it was out of style. I heard something on tv that I think is very true, "bad deals don't get done during the bad times."
I think banks should only be in the business of making loans. Not selling them to other people. The "old fashioned" banks are doing well.