Additionally, the unemployment numbers show a notable split in the labor pool, with most unemployed workers finding jobs after a relatively short period of time, but a sizable chunk of the labor force unable to find new work even after months or years of searching. This group — comprising generally older workers — has pulled up the average length of time that a current worker has been unemployed to a record high of 33 weeks as of April. The percentage of unemployed people who have been looking for jobs for more than six months is at 45.9 percent, the highest in at least six decades.[...]
Of course, just as there is a structural decline in some industries, others enjoy structural growth (the “creative” part of “creative destruction”). The key is to prepare the group of workers left behind for the growing industry.[...]
“You can bring the jobs back for some of these people, but they won’t be in the same place,” says Thomas Anton Kochan, a professor of management at the Massachusetts Institute of Technology.
I find baffling just how much time and energy we put into trying to save jobs that are becoming obsolete. Employing people is obviously very important, but productivity is what fuels job growth and prosperity in the long run. Employing people by holding back productivity growth is not a viable long-term strategy.
The linked article above has a nice summary of recent research by Richard Florida (of Creative Class fame) on the relationships, by state, between human capital, wages, hours worked, and numbers of immigrants.
Apparently blue-collar workers are right to complain that management doesn't work as hard as they do ;)...
Oh, and the complaints about immigrants deflating wages - FALSE! (at least on average).
I watched four hours of the Goldman Sachs Senate hearings yesterday evening. Mind-boggling to watch them continually skirt the question of fiduciary responsibility based largely on the rationale that 1) nobody knew for sure what would happen in the housing market, so they could not reasonably advise clients on related investments; and 2) as "market-makers" they just faciliate transactions.
I couldn't get my mind off the topic even as I woke up this a.m. Inevitably, I started thinking about what I would have liked to say, especially to the Birnbaum, Sparks, Swenson, and Tourre crew. It goes something like this:
"Gentlemen, the bottom line is that fiduciary responsibility has nothing to do with precognition. No doctor, lawyer, board member, or financial advisor can predict the future. Yet all share a fiduciary responsibility to use their expertise to help clients make decisions that reflect their best interest.
It's clear by your comments that none of you feel that this responsibility pertained to you in your supposed role as market-maker, despite the fact that your increasingly short positions in these deals clearly reveal that the group ultimately held an opinion on the value of the securities and underlying assets. That's a very serious problem by itself - one that led many of your clients to lose immense amounts of money while you gained from betting on the other side. And it does not even begin to bring into consideration the potential manipulation of rating agencies and collusion with institutional clients who were helping you put together these ABS deals."
What would you say?
Relative to my previous post, the "demographic dividend" is the idea that underlies the theory that India's economic expansion has barely begun. Looks like Sub-Saharan Africa also holds major potential, though it surely lags well behind India in terms of governance, health, education, and infrastructure.
I'm reading two fascinating books on India that are making me think again about the country's economic relationship with the West.
The first is "Imagining India" by Nandan Nilekani, CEO of Infosys, and the second is "India's Global Powerhouses" by Nirmalya Kumar at London Business School
The most powerful take-away from these books is that Indians may be the future of the global workforce.
The West and also China, due to its one-child policy, are facing the reality of smaller workforces supporting aged populations. This means lower total output, less saving and investment, and slower economic growth.
The baby boom that fueled decades of prosperity is over in the West and slowly ending in China, while India is in the thick of its own demographic boom, projected to last until about 2050. According to Nilekani's sources, by 2020 India will have an additional 47 million workers, a number equivalent to about 1/3 of the total US labor force and roughly equal to the projected aggregate workforce shortage in the West.
To boot, India is already graduating far more engineers and technical professionals than Western universities, and Indian-owned companies often spend far greater amounts on training than their Western counterparts, in order to keep employees' skills updated.
If that wasn't enough, aided by the scale advantages associated with operating within such a massive domestic economy, and because of the need to serve relatively low-income customers, many Indian companies have developed unique low-cost business and operating models that allow them to be massively profitable on a global stage. Those profits are fueling increasing numbers of large acquisitions of Western firms (see Kumar for more on this). Suddenly, more and more workforces across Europe and the US find themselves working for Indian bosses.
It's easy to get overly bullish on India. There has been a great deal of hype surrounding the country and its economic potential, and slow change has caused many of us to become skeptical. Still, fundamental indicators continue to suggest that India's economic transformation is slowly but surely changing the global stage.
(CLICK THROUGH THE SLIDES ABOVE TO SEE THE PROGRESSION)
Not convinced that people spend more money on telecommunications as incomes increase? Skeptical that the introduction of mobile phones has democratized telecommunications?
The World Bank offers some amazing data visualization technology, powered by Prognoz. This ppt shows screens from a time series that plots real per capita GDP on the x-axis against telecom use (number of fixed line and mobile phone users per 100 people) on the y-axis. Amazing to see the consistently linear relationship up until the early 2000s, when mobile phone use started to become cheaper and more ubiquitous.
The Financial Times is not exactly transparent about how "International Experience" is calculated, though it sounds specific to students and their time during the MBA program.
If these rankings are any reflection of reality, it's amazing to see just how poorly many top US schools and, specifically, Harvard Business School rank. Are we preparing people to lead in an increasingly globalized world?
One of my favorite New Yorker cartoons shows an office worker slumped against the wall, clutching his chest. As worried colleagues rush to aid the stricken employee, he mumbles: “Don’t worry, it was just a fleeting sense of purpose.”
[...]
Here’s an experiment for you. Pull together your company’s latest annual report, its mission statement, and your CEOs last few blog posts. Read through these documents and note the key phrases. Make a list of oft-repeated words. Now do a little content analysis. What are the goals and ideas that get a lot of airtime in your company? It’s probably notions like superiority, advantage, leadership, differentiation, value, focus, discipline, accountability, and efficiency. Nothing wrong with this, but do these goals quicken your pulse? Do they speak to your heart? Are they “good” in any cosmic sense?
Now think about Michelangelo, Galileo, Jefferson, Gandhi, William Wilberforce. Martin Luther King and Mother Theresa. What were the ideals that inspired these individuals to acts of greatness? Was it anything on your list of commercial values? Probably not. Remarkable contributions are typically spawned by a passionate commitment to transcendent values such as beauty, truth, wisdom, justice, charity, fidelity, joy, courage and honor.
I talk to a lot of CEOs, and every one professes a commitment to building a “high performance” organization—but is this really possible if the core values of the corporation are venal rather than venerable? I think not. And that’s why humanizing the language and practice of management is a business imperative (as well as a moral duty).
A noble purpose inspires sacrifice, stimulates innovation and encourages perseverance. In so doing, it transforms great talent into exceptional accomplishment. That’s a fact—and it leaves me wondering: Why are words like “love,” “devotion” and “honor” so seldom heard within the halls of corporate-dom? Why are the ideals that matter most to human beings the ones that are most notably absent in managerial discourse?
[...]
Why is it that managers are so willing to acknowledge the idea of a company dedicated to timeless human values and yet so unwilling to become practical advocates for those values within their own organizations? I have a hunch. I think corporate life is so manifestly inhuman—so mechanical, mundane and materialistic—that any attempt to inject a spiritual note into the overtly secular proceedings just feels wildly out of place—the workplace equivalent of reading a Bible in a brothel.
[...]
Every organization is “values-driven.” The only question is, what values are in the driver’s seat?
[...]
Which brings me back to my worry. Given all this, why is the language of business so sterile, so uninspiring and so relentlessly banal? Is it because business is the province of engineers and economists rather than artists and theologians? Is it because the emphasis on rationality and pragmatism squashes idealism? I’m not sure. But I know this—customers, investors, taxpayers and policymakers believe there’s a hole in the soul of business. The only way for managers to change this fact, and regain the moral high ground, is to embrace what Socrates called the good, the just and the beautiful.
So many fantastic bits of wisdom in this one post. Awesome.
Some similar thoughts in a SocialEarth.org post here.
Source: McKinsey Quarterly
ht: @urbanverse
A nice graphic here from the McKinsey Quarterly showing results of a survey of corporate executives done in both October and December last year. The summary shows that trust in the future of the economy seems to improving. Good news, since trust usually creates a virtuous economic circle.
The Conference Board and others who measure economic indicators usually call this something like "consumer confidence." I have no issue with that terminology, but isn't confidence just trust manifested? Perhaps as in "trust that" (a more abstract form of trust) rather than "trust in" (usually concrete and directed at someone), but trust nonetheless. And since there is such a large body of academic literature on trust and its impact on our lives, terms here seems rather important.
(For more on "trust that" vs. "trust in" see Erin Ann O'Hara's chapter on "Trustworthiness and Contract" in Paul Zak's "Moral Markets".)
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