Book Review: The Support Economy

The Support Economy: Why Corporations Are Failing Individuals and The Next Episode of Capitalism

By Shoshana Zuboff and James Maxmin

This husband-and-wife team Zuboff's a Harvard professor and author of In the Age of the Smart Machine, and Maxmin's the former CEO of Volvo and Laura Ashley give socialist utopians of yesteryear stiff competition with their manifesto for a more personalized capitalism. They strive for the pop socioeconomics of a David Brooks or a Malcolm Gladwell, but their heavy academic style may disenchant some readers before their thesis's more radical parts kick in.

Over the last two centuries, they argue, an increasingly efficient economy, coupled with a rise in democratic thinking and growing access to information, has opened up life's possibilities to increasing numbers of people. Because participation in the consumption-based economy is unavoidable, the general public looks to markets to provide "deep support" in their quest for individualization, but "are routinely punished for being complex psychological individuals in a world still fitted out for the old mass order." This macroeconomic structure treats people as either employees or consumers and inevitably hurts their feelings. Zuboff and Maxmin would eliminate the "little murders" of customer service interaction by replacing the current transaction-based model with a form of "distributed capitalism" based on a customer-supplier relationship, so semi-anonymous customer service reps will be replaced by "advocates" fully emotionally involved in their clients' needs.

It's not clear how society will make its way to the authors' dream of a fully automated lifestyle, or what life will be like for blue-collar workers and manual laborers. Pundits who celebrated the Internet's potential to thoroughly revolutionize the economy, however, will no doubt rally behind these impractical visions.

Credit: Publisher's Weekly

Retirement Matters: Is Your 401(k) Working For You?

Eighty percent of our retirement income will come from our savings in retirement plans and other after tax savings accounts. The bulk of this money will come directly or indirectly from employer sponsored 401 (k) accounts. However, most Americans pay little attention to this most important portion of savings. Many of us are guilty of spending very little time analyzing our 401 (k) investment allocations and fund selections, very few people actually review the plan costs with their sponsors and some do not even attempt to maximize their contributions to the plan. As participants in any retirement plan, you have the right to have quality investment selections in nearly every asset class at a reasonable cost.

Your 401(k) can be one of the best investments you will ever make. And if your employer is matching, it is a real “no brainer” When an employer offers 401k matching, they are guaranteeing that they will match a certain percentage of your contributions. A common match is 50 cents on the dollar. That means if you put one dollar into your 401k plan, they will match your contribution by putting 50 cents in. You just made 50% on your investment!

Now you see why it is important to maximize your contributions. The 2007 maximum contribution is $15,500 and if you are age 50 or older, you can make an additional catch up contribution of $5,000. Perhaps one of the biggest mistakes investors make is to pull back on their 401 (k) contributions because the market or their portfolio is doing poorly. However, every time the investor puts money into their 401(k), they are making a guaranteed profit up front. Besides, when the market goes down, most investors benefit because you begin buying assets at a lower cost!

I must disclose one important detail about this wonderful investment: Some companies do not have quality investment selections, while others do not have the appropriate asset classes covered. As an example, Fidelity 401(k)s are limited to mediocre funds (most have new managers) in a single fund family. And there are some plans and investment vehicles that charge very expensive fees to participate. If you fall under any of these, talk to your Plan Administrator and ask them to look into new plan options. They have a fiduciary requirement to provide you with quality plan investments at a reasonable price.

1st Portfolio, Inc. offers a retirement plan consulting service designed to bring professional, unbiased plan consulting combined with competent objective investment advice to the trustees and the participants of the plan.