Capital Commerce

The Obama administration has claimed that over 600,000 jobs have been created by the stimulus so far through direct grants, and many have argued this is a deceptive argument in light of the "disturbingly high unemployment rate," as Michael Boskin writes today.

The White House is at a bit of a disadvantage in this debate because the method of counting jobs through direct contracts misses out on perhaps the stimulus's greatest successes. The ripple effects created by stimulus spending have consequences that are hard to calculate in the short-term. Nevertheless, we can identify certain winners from these ripple effects.

Take the education industry, for example. Not the schools and the people they employ, but the range of businesses that provide services to educators. At a conference yesterday, I spoke to the CEO of one such business, Dennis Heneger of the Provenio Group based in Austin, Texas. His company sells a piece of software called LEAPS that helps teachers deal with behavioral problems in their classrooms. The software lets teachers evaluate their students' behavior, and then offers resources to fix the problems based on the evaluations. Heneger said he was growing his business throughout the decade, spreading the technology to more and more school districts, but that changed in 2008.

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My story on cities with short commuting times and low auto dependence touched on an interesting debate. As clogged as our highways are, driving is generally a much faster method of commuting than public transportation. Nationwide, the average time for driving alone to work is 24 minutes, while for public transportation, it is 48.3 minutes. Now, this is a bit of an unfair comparison because "public transportation" includes commuter rail, and people riding the train to work often travel over much greater distances than people driving to work. But even if we limit ourselves to just subways and streetcars (which cover much shorter distances than commuter rail), the difference is still stark: 47 minutes is the average commuting time for those systems.

Population alone doesn't explain the difference, either—in Houston, the vast majority of commuters drive. The Washington, D.C. metro area is of comparable size to Houston in terms of population, but has a much greater use of public transportation. But D.C. has a longer average commuting time than Houston.

The political debate enters in because advocates of smart growth, urban living, and mass transit would probably argue that this difference stems from the relative lack of investment in public transportation compared to road and highway infrastructure.

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Some commentators have called the Massachusetts health reform plan adopted a few years ago "Obama-like." But health reform in the Bay State has not meant the end of insurance premium woes for small employers. The Boston Globe reports that small business insurance rates are jumping by the double digits.

At a time when both the state and the nation are struggling to rein in health care costs, many small businesses in Massachusetts say they’re receiving the largest premium increases in years for their Jan. 1 renewals. Insurers in September said they expect to raise premiums an average of 10 percent next year, but some employers are facing increases that are double or triple that - or even higher.

While all of the state’s health insurers have been jacking up rates for small businesses, which lack the negotiating might of larger enterprises with hundreds or thousands of employees, some of the steepest increases have been coming from Blue Cross and Blue Shield of Massachusetts. The Boston insurer, the state’s largest, has in the recent past offered lower base rates than many of its rivals.

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I missed Michael Moore's Capitalism: A Love Story when it was in theatres (and I wasn't alone, apparently, as it did not do nearly as well at the box office as many of his previous films). But I was intrigued by the interviews Moore gave for the film, such as this one with Wolf Blitzer in which Moore declares that we should replace capitalism with "democracy." "You and I should have a say in how this economy is run," he told Blitzer.

Blitzer misses some golden opportunities to ask Moore what he really means by this proposal. How can voters run an economy? Will the ballot box determine what new goods should go on sale? Will there be a referendum whenever we need to figure out the price of a loaf of bread?

As it turns out, there is a way democracy can coherently make economic decisions. But it's not what Moore wants. Many firms—profit-seeking, capitalist ones—around the country and world are implementing "workplace democracy," in which workers are given voting power over certain aspects of how the business is run.

My friend Greg Ferenstein, a researcher on this subject at UC Irvine, recently had a great op-ed in the Christian Science Monitor that explains where Moore gets democracy wrong, and how workplace democracy can actually help capitalists make money.

One example of the change: Harvard Business Review contributor Ricardo Semler saved his manufacturing plant from bankruptcy by replacing middle management with autonomous, employee-run teams.

Teams at his plant, Semco, set their own salaries, schedule their own hours, and are offered finance classes so they can understand Semco's transparent record books. Mr. Semler found that devolving power to employees made them happier — and happier workers were more productive.

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