Harvard riches

Speaking of big endowments .... a 23% increase, up to $35 billion ....

Also, the rare world of fund/financial managers ... where $5-10 million a year is a major decrease in compensation ... a compensation that is hard to live on and hard to find 'qualified' candidates for ...

September 12, 2007

Fund Chief at Harvard Will Depart

By GERALDINE FABRIKANT

The manager of Harvard’s endowment fund for almost two years, Mohamed A. El-Erian, announced unexpectedly yesterday that he was leaving to return to the Pacific Investment Management Company, where he had worked for seven years.

In a long, if cryptic, statement, Mr. El-Erian said that he was returning to Southern California at the end of the year to be “closer to our family.” His wife and young daughter moved to Boston with him when he joined Harvard. He declined to comment further yesterday.

At Pimco, Mr. El-Erian, 49, will step into the newly created position of managing director, co-chief executive and co-chief investment officer in January. In that post he will join the founder, William H. Gross, 63, and the chief executive and chief investment officer, William S. Thompson Jr., 62, as a member of the senior management team.

When he left for Harvard, Mr. El-Erian had been managing director and senior portfolio manager, overseeing the $28 billion emerging markets bond fund. He will have broader responsibilities in his new role. But Pimco said in a statement that neither Mr. Gross nor Mr. Thompson planned to step down.

Mr. Gross’s statement was particularly enthusiastic about Mr. El-Erian’s return. “I am ecstatic,” he said. “to have him join Bill Thompson and me.”

Pimco manages more than $690 billion, which includes the $103 billion Pimco Total Return bond fund.

The news surprised Harvard insiders and fund managers alike. Winning the plum job as head of the Harvard Management Company, the nation’s largest university endowment, had been considered a coup for Mr. El-Erian in October 2005. Harvard officials said at the time that he was chosen because his broad views on global economies would be useful in managing a diverse portfolio.

Moreover just last month, Harvard reported its results for fiscal 2007, ended June 30. The endowment had a 23 percent return, which took the fund’s total to $34.9 billion. That was considered a strong performance, particularly because the size of the endowment presents unusual challenges and because Mr. El-Erian had to rebuild much of the fund’s team after the former head, Jack R. Meyer, took several people with him when he left to start a hedge fund, Convexity Capital Management.

Certainly Mr. El-Erian’s abrupt announcement will raise questions about his decision to leave.

At Pimco, Mr. El-Erian made tens of millions, according to several people who know him. Though he was only at Harvard for half of fiscal 2006, he earned $2.3 million. The fiscal 2007 figures are not yet available.

An associate who did not want to be identified because he had not been authorized to discuss the matter said yesterday that Mr. El-Erian’s wife and daughter were not happy in Boston.

Jay O. Light, dean of the Harvard Business School and a board member of the Harvard Management Company, said that he had known of Mr. El-Erian’s plan for several weeks and that “Mohamed has been thinking about this long and hard.”

Mr. Light said that Mr. El-Erian “has done a great job of building the internal and external platforms; I think he has put in place great people.”

Harvard’s performance was crucial in August, a tumultuous month for the markets, because it had an investment in Sowood Capital Management, a hedge fund that lost half its value. Under Mr. Meyer, Harvard had invested $500 million in 2004.

Despite the Sowood loss, which cost Harvard $350 million, the endowment was up marginally in July. A money manager close to Harvard said that some people were concerned that Mr. El-Erian had not seen the Sowood losses coming, especially since it involved bonds, which is his area of expertise. But Mr. Light said, in relation to Mr. El-Erian’s record that “Sowood was a nonevent.”

And Byron Wien, chief investment strategist at Pequot Capital Management and a Harvard alumnus contributor and fund-raiser, said: “In my encounters with Mohamed I was very impressed with his breadth of insight into what was going on in the world and its impact on the financial markets.”

Certainly more instability is not welcome news at Harvard, which faces the challenge of finding another leader for the management company. Mr. Meyer left in 2005 after 15 years, partly out of exasperation over criticism of a compensation program that paid some of his top managers $17 million or more.

Finding a leader with enough experience who is willing to work for less than the huge pay that one can make on Wall Street is not easy. And it could mean restructuring much of the management team again if a newcomer has an approach that differs from Mr. El-Erian’s.

Already yesterday there was speculation about the successor. One name mentioned was Steve Galbraith of Maverick Capital, who was mentioned during the last search. He could not be reached for comment yesterday.

Still Mr. Light sounded positive. “We are in good shape,” he said. ”There is no doubt about it. The numbers are clear.”

The Business of Universities is Business

Look at all the places where they couch business-type terms like 'market' or 'revenue' or 'investment' in this NYTimes article about higher education .... no need to mention that Universities are first and foremost a BUSINESS enterprise ...

You would expect most Universities to be very concerned about costs, revenues and balancing their books ... but the higher, elite institutions ? where they have very deep pockets due to very large endowments endowments and active fund-raising ?

This was a very telling and I would imagine embarrassing quote , in hindsight, for the guy from the California system:

“And because M.B.A.’s can offer tremendous salary boosts down the road, we can charge higher tuitions to students.”

I've heard this is now the case for certain majors at some colleges at the undergrad level ... because the students earn more upon graduation , they are now charging them more for their education .... if this trend holds and becomes a standard then colleges will be a vastly different place in a few short years ... a much more explicit multi-tiered social environment than now ...

Pre-med and pre-law will pay significantly extra for their tuition .... along with some science and engineering majors ... you would think that liberal arts students tuition would then decrease, but nothing ever goes down in price .... the increases may just be proportionally smaller ...


September 12, 2007
Master’s Degrees Abound as Universities and Students See a Windfall
By HANNAH FAIRFIELD
The number of students in the University of Chicago program that bestows a Master of Arts degree in social sciences has quadrupled since 1989, jumping to 160 from 40, and despite a tuition price tag of $37,000, every year more students clamor for admittance.
“It’s an expensive degree, but students have calculated how fast they get their investment back,” said John J. MacAloon, an associate dean at the University of Chicago and director of the program. “And it is beneficial for the university because there is a lot of tuition income to be had.”
More students than ever have started master’s programs this fall, and universities are seeing those programs as potentially lucrative sources of revenue. The number of students earning these degrees around the country has nearly doubled since 1980. Since 1970, the growth is 150 percent, more than twice as fast as bachelor and doctorate programs.
“Master’s programs are the most obvious targets of opportunity,” said George L. Mehaffy, a vice president of the American Association of State Colleges and Universities. “The degrees are in high demand, and this is an optimal time to enter or expand the market.”
For students, the degrees are often expensive; at private universities, many students take out $50,000 in loans for every year of school. And scholarships and fellowships are rare, unlike doctoral programs, which are usually fully financed by universities.
Still, many say the price is worth it. In his two-year master’s program in science technology and environmental policy from the University of Minnesota Craig Nelson had $35,000 in loans. Now, he works in regulatory affairs at the 3M Company.
“Without the degree, I wouldn’t have the job,” he said. “So even though I’ll be paying the loan for 10 years, it was a good move for me.”
Getting into the business of offering these degrees can be a good move for universities, too, with some that have traditionally focused only on undergraduate students now entering the master’s market. The California State University system, for example, has introduced many new applied master’s degrees and is expanding its master’s of business administration programs.
“We are really conscious of the fact that master’s degrees are becoming the coin of the realm,” said Gary W. Reichard, the executive vice chancellor and chief academic officer for the California system. “And because M.B.A.’s can offer tremendous salary boosts down the road, we can charge higher tuitions to students.”
Universities also do not have to provide dormitory rooms and dining halls for master’s candidates, because graduate students typically do not live on campus.
Some university officials say the explosion of these programs has less to do with revenue than it does with the marketplace pressures on students to get higher degrees and credentials.
Thomas Ehrlich, a senior scholar at the Carnegie Foundation for the Advancement of Teaching and a former president of Indiana University, said that although many master’s programs could be good revenue streams for universities, “We’re not in the business of making money.” He added, “We’re in the business of educating students.”
But some schools are in the business of both. The University of Phoenix, a commercial institution with 60 branch campuses and around 200,000 students, awarded 24,788 master’s degrees last year, mostly for work completed online in business and education. That was at least a thousand more than the number of bachelor’s degrees it awarded.
Many university provosts say a graduate education can be more expensive to provide than an undergraduate degree, merely because class sizes are usually smaller in graduate courses. But for universities that already have established doctoral programs, adding paying master’s students to the mix means they get a bump in tuition dollars without a heavy outlay of resources.
“Sometimes there is unused capacity in graduate classrooms,” Mr. Mehaffy said. “If there are 10 people in a graduate course one year and 15 the next, there is a 50 percent growth but no real drain on the institution.”
Universities are also luring master’s students into staying for multiple years by offering dual-degree programs: two master’s degrees at twice the cost. Some programs join international affairs and journalism, science and public policy, business and education. Other schools extend programs; for example, the University of Wisconsin’s two-year master’s degree in anthropology can be lengthened to three years if students want to add a museum studies concentration.
And many students believe that these multiple degrees are highly valuable in today’s competitive job market.
Rey A. Phillips Santos has three graduate degrees gracing his résumé: two master’s and one in law. After completing the master’s of arts program in the social sciences from the University of Chicago, he decided to go on to the Chicago-Kent College of Law, in a joint-degree program in environmental management with the Stuart Graduate School of Business.
“There is a huge demand for credentials in high-level jobs now,” said Mr. Phillips, who is a lawyer for the Chicago city government. “Each of my degrees helped me to get a leg up in the job market, and earn higher salaries than I would have otherwise. They were great investments.”

What is a 'US' firm ?

Interesting side=point in this article concerns the question, 'what is an American company' ? (It is AT LEAST one that pays taxes, or is supposed to have some tax bill depending on write-offs and loopholes, in the US) .

The article states:

Covansys, which was headquartered in the US but had some 7,000 of its 9,000 employees based in low-cost Indian centers, immediately doubled CSC's Indian headcount to 14,000.

If the vast majority of workers are not US-based for many corporations, as is becoming more common, are they still US-based companies ?

And , are there financial or tax incentives for a company to be headquartered in the US but have most of it's employees overseas ?

When and if these incentives cease-to-be, will these companies change their headquarters elsewhere, becoming 'foreign' companies ? What effect will this have on tax revenues in the US and the ability of the various levels of gov't to maintain budgets and services at the same levels?

CSC gets serious about offshore strategy

503 words
10 September 2007
09:48 am GMT
Datamonitor News and Comment
English
(c) 2007 Datamonitor plc. All rights reserved

IT services giant CSC has recently made moves aimed at boosting its offshore presence, the most notable being its $1.3bn acquisition of Covansys earlier this year.

Covansys, which was headquartered in the US but had some 7,000 of its 9,000 employees based in low-cost Indian centers, immediately doubled CSC's Indian headcount to 14,000. This put the company roughly on par with fellow outsourcer EDS in terms of Indian numbers, although still far behind rivals Accenture and IBM.

Last month, CSC announced a new business group called "world sourcing services" to oversee global delivery and expansion into new geographic markets. The company appointed Mary Jo Morris, a longtime CSC manager, to become president of the new unit.

Morris told Computer Business Review that the Covansys deal rounded out CSC's offshore strategy in several ways. First, Covansys had a well defined sales channel to take its Indian services to the market. "We had the capacity to compete with the top Indian competitors, we just needed the front end for sales," Morris said. "Covansys was a perfect fit. We got our direct market channel and doubled our capacity in India with a complement of services and location."

She said Covansys brought with it a strong background in applications development and maintenance, while CSC was not only strong in applications but also in legacy outsourcing engagements. "Covansys had more of an on-demand, project-based environment and they brought testing capabilities and some complementary technology that we didn't really have," said Morris. Plus, its industry focus coincided with CSC's, including financial services, technology and consumer goods, health care, and manufacturing.

JJ Foster, vice president and CTO of world sourcing services for CSC, said that in the applications market, CSC's offshore work started with basic outsourcing services. But over the last two or three years, the company has moved much more advanced work offshore, to the point where it now has high-level architects working in India. He said that Covansys, on the other hand, actually started out with onsite project work and then moved to offshore delivery. Now CSC's offshore portfolio is split evenly between project work and annuity work under longer contracts.

Like most big outsourcers, CSC is moving more of its work to offshore centers. "There's nothing we're not putting offshore if we can," Morris said. "Anything to do with applications, including systems integration work, and anything to do with remote infrastructure. Plus all types of BPO work, especially in financial services. Now Covansys brings us capacity in claims BPO."

But she said a good part of CSC's business simply isn't eligible for offshore delivery, referring to the company's substantial work in the federal, defense, and aerospace industries. "That takes us down to about half of the company's total revenue," she said. "Of that, about 30% is done offshore, and 80% of that amount is applications work."

Standard Economist's view of Jobs and Globalization - maufacturing jobs not lost

Quoting Economists from a Libertarian thinktank and from academia ....

We have not lost manufacturing jobs , the US is just 3 million jobs more efficient in 3 years !!

Even if this ludicrous conclusion was taken at face value, this means that economic output is the same , perhaps higher BUT 3 million people have lost jobs in manufacturing and cannot find equivalent work... perhaps good in a macroeconomic , global sense, but a devastating event to several million families ... and a continuation of this has to lead to significant deleterious economic issues for any society experiencing it.

Three obvious questions:

1) If our exports are thriving , how come our trade inbalance is stuck at historic highs, i.e. our imports have increased at a much greater rate than our exports for the past several years, mostly due to Chinese imports.

2) How much of our exports are big ticket items like Boeing jets, Caterpillar land-movers and Defense dept arms ?

3) And how much of the work at Boeing and Caterpillar and like companies is now actually being done overseas, even if final assembly is done in US ? What is the growth in overseas jobs for these American firms, versus American job growth at these corporations?


Article published Sep 10, 2007
U.S. manufacturing alive and well

September 10, 2007

Donald Lambro - "Reports of the death of U.S. manufacturing have been greatly exaggerated." This is the opening line in a revealing and timely economic analysis aptly titled "Thriving in a Global Economy — The Truth About U.S. Manufacturing and Trade."

At a time when much of the American electorate is sour on trade and wrongly believes America doesn't make much of anything anymore, this report by Daniel Ikenson, a top analyst at the Cato Institute's Center for Trade Policy Studies, comes as breath of fresh air on a subject poisoned by political demagogues, union leaders and uninformed partisans posing as broadcast journalists.

The latter group of course is led by CNN's Lou Dobbs, who each week spreads more disinformation about U.S. manufacturing than a convention of AFL-CIO members. Mr. Dobbs wants us to believe our factories are all moving overseas; U.S. manufacturing is in deep decline; pay and benefits in factory jobs are at record lows; competitors like China are beating us in manufacturing; we are losing our competitive edge; and imports are killing us.

But the facts about U.S. manufacturing tell a much different story in this valuable study that starts off saying 2006 "was a record year for output, revenues, profits, profit rates, and return on investment in the manufacturing sector." (none of these indicators speak to the health of manufacturing jobs) Indeed, "despite all the stories about the erosion of U.S. manufacturing primacy, the United States remains the world's most prolific manufacturer — producing 2½ times more output than those vaunted Chinese factories in 2006," (Chinese workers average $1/hr ... if American workers average $20/hr with benefits, then 2.5 times output pales in a 20-fold cost savings) Mr. Ikenson reports. The unvarnished truth is that we are manufacturing more, selling more and exporting more abroad than at any time in our history. (with significant 'value-add' from foreign off-shoots of US firms) .

True, critics can point to the loss of 3 million manufacturing jobs largely between 2000 and 2003 (and millions more over the last two to three decades). But that downsizing has more to do with our ability to make more with fewer workers as a result of technological advances that have kept us competitive in the global economy. (an astonishing assessment... this would indicate an unbelievable productivity rate, to displace millions of jobs) .

Sad to say, the Lou Dobbs disinformation campaign has been swallowed hook, line and sinker by many politicians on Capitol Hill, where more than a dozen protectionist, trade-related bills are floating around, based on the premise that manufacturing is going down the tubes and free-trade pacts are the principal culprits.

Quite the contrary, says Mr. Ikenson, "The totality of evidence points to a robust manufacturing sector that has thrived on account of greater international trade." We need more, not fewer, free-trade agreements to open more foreign markets to U.S.-made goods and services, he says. (big exporters may be doing well, but this says nothing about manufacturing jobs) .

Mr. Ikenson does not dismiss the decline in manufacturing employment, or the sector's smaller share in U.S. gross domestic product, which he acknowledges "are important statistics which should be considered." But we need to consider them in the context of other relevant data "if informed conclusions are to be reached and bad policy choices avoided."

So he offers these underreported manufacturing facts from 2006 when the United States was experiencing record imports of manufactured products:

c Real U.S. manufacturing output reached an all-time high.

c Real manufacturing revenues reached an all-time high.

c Real manufacturing operating profits reached an all-time high.

c After-tax profit rates for manufacturing corporations reached an all-time high.

c Return on equity for manufacturing corporations reached an all-time high.

c The value of U.S. manufacturing exports reached an all-time high.

c U.S. factories remained the world's most prolific, accounting for more than one-fifth of world manufacturing value added. Free-trade critics never mention any of these statistics, focusing almost entirely on the decline in manufacturing employment and their belief that if we raise the costs of imports through tariff/taxes and other regulations, we can boost factory jobs.

But higher tariffs would raise consumer prices that would especially hurt middle- to lower-income Americans; undermine those sectors in our economy that buy, distribute and sell imported products; and lead to trade retaliation against us abroad. All of which would destroy jobs. (at some point American workers cannot buy bigger ticket items that are imported; at that time foreign middle-classes will have be consume the output of global manufacturing) .

Producing more with fewer workers at less cost is "something to cheer about," because it leads to long-term increases in our living standards. "When manufacturers can produce more output with fewer and less costly inputs, that's called progress," Mr. Ikenson says.

He quotes from Harvard business professor Michael Porter's influential book, "The Competitive Advantage of Nations": "A nation's standard of living in the long term depends on its ability to attain a high and rising level of productivity in the industries in which its firms compete."

Still, the economic myth persists that trade and the global economy is the cause of manufacturing decline, a contention that Mr. Ikenson says "is all but moot. What is perhaps most surprising about the data, given the antitrade rhetoric so popular in Washington, is that [U.S.] export growth was evident for all but one of the 18 [manufacturing industries.]"

Indeed, double-digit export growth "was the case for 16 of 18 industries. Export growth has been an important part of manufacturing's strong revenue and profit growth." In short, there is abundant evidence that U.S. manufacturing is alive and well and prospering in a thriving global economy.

Back to you, Lou Dobbs.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

Intel in China

It's not clear from the article whether the $2.5bln is in addition to the $4 bln mentioned later in the article .... $2.5bln is a VERY large investment for a single plant, considering the currency exchange, dollars-to-yuan ....

Interesting comment from Intel CEO (Barrett) about India's losing out on this semiconductor investment ... sounds like the standard game of playing off one country against the other for a better deal for investing there ... similar to what non-US companies do when setting up plants here, playing one state off another to locate their new plant (e.g. BMW in Alabama), getting tremendous tax breaks, sometimes actually getting paid to relocate, i.e. the state pays for the plant, infrastructure (add'l roads, schools, etc.) and also 'forgives' all taxes for many years ...

Developing local talent ... and already having more than 2 'research and development' sites there ... not low-level work but research ...

I wonder how much investment Intel is making in the US, colleges, or plants ... meanwhile it is one of the loudest voices for opening up H-1B visa programs to bring global 'talent' here (for training and then sending back to run shops overseas? ) ...



UPDATE: Intel Breaks Ground On $2.5 Bln Chip Plant In China

September 09, 2007: 08:46 PM EST

SAN FRANCISCO (Dow Jones) - Intel Corp., the world's largest chipmaker, said Saturday that construction work is underway at its $2.5 billion chip manufacturing plant in China.
The Dalian, China facility will be Intel's first manufacturing plant in Asia, and is expected to be in operation in 2010.
Intel, which has been in a heated battle for market share against rival Advanced Micro Devices Inc. (AMD) , has invested roughly $4 billion in China.
The Santa Clara, Calif.-based company already has two assembly and test plants in Shanghai and Chengdu. It also has research and development centers in Beijing, Shanghai and other areas in China.
Named Fab 68, the plant will "be an integral part of our global manufacturing network while bringing us closer to our customers and partners in China," said Intel Chairman Craig Barrett in a statement.
Barrett this past week said that the company is still interested in building a chip-manufacturing plant in India, though the government "has been a bit slow in coming out with a semiconductor policy and missed the window" on its manufacturing facility "for now."
Intel also said it's working to develop local talent through partnerships with Dalian University of Technology and its establishment of the Semiconductor Technology Institute with the municipal government.

Justice

They always talk about the 2 systems of justice here in the US ... one for the rich and powerful and one for the rest of us ...

I experienced a bit of this recently when I got a parking ticket in D.C. when my father-in-law died in June .... winds up that the CT DMV cooperates with all other states , sharing information , even for parking tickets (!!) ... if I didn't pay the fine then the CT DMV would revoke my license and impound my car (that's cooperation !!) ... anyway, it winds up that the parking law in D.C. specifically exempts the D.C. city council and mayor from having to abide by parking rules or having to pay fines ... this is actually written into the law ....

Interesting how gov't can quickly share information for parking tickets , and act on this information , forcefully , but they can't track illegal aliens or terrorists ... I think we need to hire the DMV database people for Homeland Security or the Immigration service .....

Anyway , in South Korea they are even more blatant about the '2-laws' rule ... too important to go to jail !!

How does this differ from the way they do things in North Korea ? not by very much, at least in this case ...


Hyundai chairman to avoid prison
Three-judge panel decides that 69-year-old head of automaker is too important to Korea's economy to go to jail despite being convicted of embezzlement.
September 6 2007: 6:41 AM EDT

SEOUL, South Korea (AP) -- An appeals court suspended on Thursday a three-year prison term handed to Hyundai Chairman Chung Mong-koo for embezzlement, saying the tycoon is too important to South Korea's economy to go to jail.
A three-judge panel at the Seoul High Court suspended the sentence for five years, meaning that the 69-year-old head of the world's sixth-largest automaker will avoid prison as long as he keeps a clean record during that period.
A lower court had sentenced Chung in February to three years for embezzling more than $100 million in company money to set up a slush fund. Prosecutors say the fund was used to pay lobbyists to gain government favors and for personal use.
Presiding Judge Lee Jae-hong told the packed courtroom that Hyundai Motor has great influence over the nation's economy and Chung, its hands-on leader, is the symbol of the company.
"I am also a citizen of the Republic of Korea," Lee said. "I was unwilling to engage in a gamble that would put the nation's economy at risk."
Chung, free on bail after spending two months in jail for questioning after his arrest in April last year, has been actively running the company, which has ambitions to become the work's fifth-largest automaker by 2010.
Lee said he struggled with the decision, originally set for July 10, and postponed it twice, saying the court needed more time. He said he sought the views of various people, including other judges, prosecutors, lawyers, journalists and "even taxi drivers and restaurant employees."
In his appeal, Chung asked the court to be allowed to avoid prison to devote his energies to South Korea's biggest automaker to contribute to the country's economy.
Prosecutors sought a six-year prison term, the same as their original demand, saying the original decision was not harsh enough for the crime.
It was not immediately clear whether prosecutors planned to appeal to the Supreme Court. A lawyer for Chung said earlier Thursday that the top court only hears cases involving guilt or innocence, suggesting that an appeal regarding the sentencing would be unlikely.
Kim Kyung-soo, a spokesman for the Supreme Public Prosecutors' Office, said Chung remains guilty.
"It's not that he was found innocent," Kim said. "Therefore, it is not appropriate for us to comment on the weight of the sentence."
Chung has pushed Hyundai Motor to expand aggressively overseas, building factories in China, India, Turkey and the United States, with another one currently under construction in the Czech Republic.
Hyundai Motor affiliate Kia has done the same, manufacturing cars in China and Slovakia and building another plant in Georgia, near Hyundai Motor's factory in Alabama.
Last year, Hyundai Motor and Kia Motors accounted for about 72 percent of South Korea's automobile exports. Autos account for 13 percent of the country's total exports.
Chung, one of South Korea's richest people, is known as a micro-manager with a top-down operating style. Hyundai Motor, along with Kia Motors, floundered during his jailing last year, with key decisions related to overseas plants and other issues delayed.
Park Wan-gi, deputy director of civic activist group Citizens' Coalition for Economic Justice, said the ruling could be controversial by encouraging the perception that the rich can avoid jail.
"The suspension of the prison term could have negative implications," Park said, saying crimes committed by South Korea's family-run conglomerates aren't likely to be halted.
In a similar case involving another tycoon, the Seoul High Court in 2005 suspended a three-year prison term for accounting irregularities handed to Chey Tae-won, CEO and chairman of South Korea's leading oil refiner, SK Corp., now known as SK Energy.
Hyundai Motor welcomed the decision.
"We are greatly relieved that this matter is finally over," the company said in a statement. "We can now devote our full energies to addressing the numerous challenges that face us and building a global brand."
The court also ordered Chung to fulfill a promise he made to donate $1.1 billion (1 trillion won) of his personal assets to society.
Chung was also ordered to do community service - giving business organizations lectures about lawful management and contributing articles to magazines and daily newspapers on the same topic.
Chung made the donation pledge last year before his arrest as the slush fund scandal was developing. It came as part of a public apology he issued and was seen as an attempt to earn leniency.
Hyundai Motor shares rose as much as 2.2 percent after the verdict was announced about 10 minutes before the close of trading. They fell back, however, to finish 0.6 percent higher at 71,800 won ($76). The company's share price has risen 6.5 percent this year.

Standard Economist's view of Jobs and Globalization

The vast majority of economists , whether conservative or liberal, are for the globalization of work, so the following is the standard party line ...

Article published Sep 4, 2007
What to study

September 4, 2007

Richard W. Rahn - Students the world over have always asked their elders, what should I study in order to get a good job? In this age of globalization and the Internet, the question involves a whole new dimension. Students in rich countries, such as the United States and Germany, fear their chosen trade or profession might be outsourced to a low-wage country. Students in developing countries, such as Mongolia and Paraguay, understand that globalization and the Internet may give them access to jobs never before available.

Those on both the left and right who can only see dangers and misery from any new technological advance argue that huge quantities of jobs will be transferred to the developing world, resulting in big drops in income in the developed countries. We have seen low-skill, manufacturing jobs, where machines have not yet been created to do the work, migrate to low-wage countries. (This has been a net benefit to both developed and undeveloped countries as I and many others have extensively written about — but that is another topic.) Over time, as technology develops, virtually all manufacturing will be done by machines, so aspiring to be an assembly line worker is probably not a good strategy, in a rich or a poor country.

Low-wage jobs that can easily be served over the Internet or phone, such as "call centers," can also be successfully shifted to low-wage countries, particularly those with many English speakers. One generalization, which is very likely to hold up, is that learning English, wherever you live on the planet, is likely to be an economic plus.

English is rapidly becoming the global language, not only of business and particularly finance, but also of travel, science, and many other professions and fields of interest. That is why countries as diverse as Mongolia and Montenegro are seriously considering making English their second official language. Almost everything is translated into English and most of that is put on the Web. Thus, if you can read, write and speak English, for all intents and purposes, you have access to all of the world's knowledge and have a global competitive advantage.

Despite the fears of some and the hopes of others, there are definite limits to the jobs that can be outsourced to low-wage countries. If one actually looks at the data, it is obvious almost all the highest-paying jobs in the U.S. (and also other developed countries) that do not require a college degree cannot be easily outsourced. (why not?) Most of these jobs are in the construction trades, such as electricians, plumbers and masons, or such jobs as firefighters, policeman or truck drivers.(but cheaper labor can be brought in to take these jobs... illegal aliens do much of construction nowadays) Likewise, few of the highest-paying jobs requiring a two-year degree cannot be outsourced, such as nurses, dental hygienists, technicians and mechanics. (ditto here , due to the 'nurse shortage', they are importing nurses)

For the high-paying jobs that normally require a college degree, such as airline pilots, business managers, engineers, actuaries, accountants, teachers and computer programmers, there is a global market but, still, most of their work does and will continue to require interaction with customers in specific locales.( they have been importing teachers, engineers and programmers, etc ... for many years now) Clearly, some of the product of accountants, engineers and computer programmers can be sent and sold over the Internet, but not all.

Many of the highest-paying jobs that require a graduate degree have the greatest flexibility as to the worker's home country and primary residence. Most physicians and lawyers are tied to a specific geographical area, but not all. Some medical services can be provided over the Internet, and we are seeing, in the age of low-cost air fares, people traveling great distances for low-cost dental services or plastic surgery. For many highly priced specialists and consultants, the ability to travel to meet clients and high-speed Internet access are more important than home country location.

The educational establishment (particularly the highly priced part of it in the U.S.) has reason to fear the new technologies. Much of what one needs to know, but not all, can be taught over the Internet at low cost, so there is a great opportunity for educational entrepreneurs in low-wage countries to teach their own students and also those in more developed countries, if they are price-competitive. ( most degrees and certificates need to be accredited , so people can not just create a school or training program without getting accreditation ... the currently accredited institutions will fight this tooth and nail ... it may eventually happen but not quickly) .

Governments are poor at forecasting future educational needs, but markets are good at doing so. Governments are better at funding than delivering education. Governments have coercive tax powers, but because of their bureaucratic natures are not good at supplying goods and services, which can almost always be provided better and more cheaply by the private sector.

A student with a good grasp of language, particularly English, and a basic understanding and facility with mathematics, can learn much of what he or she needs to know for most jobs anywhere in the world — and, increasingly, much of this additional knowledge can be conveyed over the Internet at very low cost. Governments, through their funding mechanisms, should endeavor to make sure their citizens have these basic skills, rather than try to outguess markets as to what these jobs will be and how these job skills should be taught.

For students both in developed and developing countries, increasing globalization and its attendant global prosperity mean more high-paying jobs for everyone, everywhere. (from what empirical data can such an all-inclusive statement come from --- 'for everyone, everywhere' --- ... sounds more like a hope , which is must be ... he is talking about the future , and no one knows what the future will bring .... except Economists ! ... in this they resemble clergy, who tell us what God wants and what heaven/afterlife awaits us , without an ounce of empirical evidence) .

Richard W. Rahn is the chairman of the Institute for Global Economic Growth.