What We Read Today 13 July 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary “reading list” which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for “reading list” items are gratefully reviewed, although sometimes space limits the number included.

• An Island, Within a Lake, In a Volcano, In a Lake, On an Island … (Drew Wood, Thrillist) If you want to see the ultimate in nested geographic features, try this.

• America’s Greatest Party Lakes (Lauren Everitt, Thrillist) If you are a “party boater”, here are ten bucket list places. And if party boating is too tame, try The World’s Ten Best Nude Beaches (Gianni Jaccoma, Thrillist)

• What Shapes a Culture’s Cognitive Capabilities? (Roger Erickson, Mike Norman Economics) Roger Erickson contributes to GEI. We would suggest that the following statement is something that all economists should think about. Often.

Contrary to what naive economists believe, existing systems are NOT collections of fully independent, calculating agents. Rather, each is an incomprehensibly tuned syncytium, with incredibly densely engineered and deeply tuned, seemingly endless lists of interdependencies. Everything depends upon everything else.

• Former CEO of CalPERS pleads guilty to fraud, corruption charge (Marc Lifshher, Los Angeles Times) Hat tip to Russell Huntley. Federico R. Buenrostro Jr. pleaded guilty Friday to one federal charge of conspiracy to commit corruption and fraud in funneling deals through his friend, Alfred J.R. Villalobos, for outside firms to manage funds for the California Public Employees’ Retirement System. He was charged with and admitted to accepting more than $200,000 in cash plus other valuable gifts. Villalobos, facing charges in a separate trial (he has pled not guilty) is alleged to have received at least $48 million in fees as a middleman for placement of Calpers investments with Wall Street firms between 2005 and 2009. In comparison, executives at Calpers are modestly compensated: In 2011 CEO Anne Stausboll, who succeeded Buenrostro, was paid a total of $380,138 ($283,500 salary and $96,638 bonus). While it may be tempting to think that Buenrostro’s judgement was clouded because of his “poor” compensation, excessive compensation has produced many ethical issues as well. See the next article and the writing of William K. Black on “accounting control fraud” at GEI Analysis (here and here) and GEI Opinion.

• An American Perspective – Corporate Compensation is an Ethical Issue (Ethics World) Americans are angry. Buffeted by the lash of a painful recession and irate over outsized executive compensation packages at the very Wall Street firms widely blamed for the economic turmoil, they increasingly distrust key institutions and individual leaders. Special ire is directed at the financial services sector, which many believe have rigged the game so that top level executives are rewarded handsomely even when they fail. See also Ethical Leadership and Executive Compensation: Rewarding Integrity in the C-Suite (March 2010) (Ethics Resource Center)

There are 10 articles discussed today ‘behind the wall’.

The final five articles discuss the future of the dollar as the global reserve currency and the possible ascendency of the yuan (Chinese renminbi).

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