In 2011, world financial markets and elected leaders more or less avoided the U.S. debt ceiling cliff. At the end of the 2012 calendar year, the so-called fiscal cliff awaits, subject to a short-term or long-term detour created by a seemingly less-than-creative U.S. Congress. Yet, it seems another cliff is appearing on the horizon, a cliff receiving little or no attention like the iceberg that sank the Titanic.
During the last five decades of my observing the U.S. electorate, hopefully filtered through increasingly critical thinking and emotional intelligence, it seems that two foundational elements of the U.S. system of governance are eroding. Historically, the keys to effective U.S. governance have been an informed and educated electorate. These two crucial characteristics depend on a free press and an effective public education system, two factors that seem increasingly ineffective.
Test scores and other indicators of comparative educational performance show the U.S. collective student body continuing a long decline compared to their colleagues in other countries. This decline appears systemic and may point to a simultaneous decline in the absolute performance of U.S. students and improved test scores by their counterparts elsewhere in the world. Teachers and their unions may be too easy a target for blame. Ineffective teachers need to improve or seek new careers, but many teachers in the U.S. lack lack appropriate and necessary instructional resources and parental support to meet societal expectations.
This morning Fareed Sakaria noted the need to view the words of politicians as being politically motivated and within a political context. When a politician speaks, we need to consider the intended audience and remember the political context. Susan Rice, U.S. Ambassador to the United Nations, interviewed by CNN’s Candy Crowley, and others observed that this week’s anti-West and anti-U.S. actions, resulting in destruction of U.S. property and the death of the U.S. Ambassador to Libya, three other Americans, and uncounted others in more than 20 countries, was the act of a large group of people, who collectively represented a small minority of the residents of those countries.
The violent acts are troubling, disappointing, even enraging, but to respond against those nations as if the nations have attacked the U.S. would be as misguided, even ignorant, as the apparent inciting of the violence by a rumored anti-Islam film as being representative of and endorsed by the U.S. and the West collectively. The West, and particularly the U.S., needs to respond, but that response must have focus, on the perpetrators and their leaders not the general population. The identity of the perpetrators may be difficult to ascertain.
Michael Grunwald (2012) discussed Solyndra within the context of the appropriateness of government investment in innovation. Conceptually, government support for innovation has a lengthy precedent. What few pundits discuss is that the Solyndra loan under the stimulus plan represented 97.7% of all loans under the program made within the state of California, $535 million directly to Solyndra and $284 million to Rudolph & Sletten, a prominent green energy general contractor, as a subcontractor to Solyndra. The balance of the loans in California went to government agencies and Native American entities.
Under the stimulus plan, California-based entities received more than 12,000 grants, most seemingly for infrastructure, research, or education projects. The sheer scale of the stimulus program would seem to make the prospects for a “where are they now?” type of report. Nearly three years after the receipt of many of these awards, an accounting of the taxpayers’ investments would be interesting and appropriate, even if an overwhelming undertaking.
Government support of innovation seems generally connected to new or newly emphasized policies. In the Solyndra example, the policy was to support green energy in general and solar in particular. Grunwald (2012) observed that the solar industry has grown dramatically since 2009. The Solyndra example would seem, then, to have been a bad investment in an otherwise good industry for investment.
In the August 27, 2012 issue of Time, Rana Foroohar (2012) wrote about globalization. Foroohar asserted that globalization was originally all about creating a lop-sided benefit for companies and workers in the United States. On the surface, this is a rather parochial, if not absurd, concept. Foroohar, in effect, proposed that globalization’s purpose was economic colonialism, overcoming boundaries, borders, and barriers.
The Levin Institute (2012) noted that international trade both causes and results from globalization. The proliferation and distribution of products from the United States is an example of globalization as is the availability of goods and services from Japan, South Korea, China, Germany, France, Italy, and Mexico. Trade negotiations effectively negated the consequences of any intended one-sided, eco-colonialism.
Trade negotiations did not seem to reduce either exports or imports. Despite the economic downturn that struck most of the world’s economies in 2008, imports and exports since the beginning of globalization continue their upwards march, albeit with a noticeable dip in both imports and exports in 2008 and 2009. The assertion by Foroohar (2012) that globalization harmed the wages and upward mobility of workers in the U.S. would not seem to be related to a reduction of exports, as measured in dollars. Globalization seems to have increased exports and imports.
The August 13, 2012 issue of Time examined the financial implications of the 2012 presidential campaign. Letters to Time’s editor printed in the August 20, 2012 issue noted, among other things, that the money spent on presidential campaigns, particularly the 2012 edition but possibly generalizable to other elections, could have been used to create jobs. It might be argued that different spending creates different kinds of jobs in different locations, but it seems that most spending on most elections directly or indirectly employs somebody somewhere. With all the conversation about jobs moving offshore, it might also be interesting to see how much election-oriented spending stays in the United States to employ residents of the U.S. rather than employing residents of other countries.
During this election cycle and the previous one in the U.S., pundits frequently expressed the desire to end the U.S. military’s involvement in Iraq and Afghanistan and, almost in the next breath, proclaimed the need to fix unemployment. Some pundits added the need to reduce government spending and to make government agencies more efficient. Reducing the number of service members deployed would seem to eventually reduce the number of people serving in the military and reducing government spending would seem to rather quickly result in fewer government workers; in both cases, wouldn’t unemployment probably rise as a result of both actions?
Yesterday, July 4, the San Diego County Fair, a combination of fried food feast, cabinetmaker creations, mind-numbing merchandise marketing, and carnival, ended its 2012 run. That is one sense of fair.
Time’s Joel Stein, one of my favorite journalists, in part because of his irreverent tendencies, made a point about what is fair in his essay on solving the European economic instability (Stein, 2012). Stein proclaimed that fairness “is the rallying cry of idiots” (p. 62) and, while that may be a tad harsh, in the context of the essay, a functional definition of fairness seems elusive. Even if we could agree on definitions of fair and fairness, such agreement might not have utility beyond some moral keel rather than a rudder.
Stein (2012) offered examples that seem to suggest that people who cry out for fairness are frequently those who do not have something that they want somebody else to provide. People in some of Europe’s southern countries want their counterparts in the north to be fair. This, of course, is not always the case. As a professor, students seem inclined to ask for, or demand, fairness in grading; rare indeed is they outcry for justice in grading. As a consultant, clients want fair valuations for their companies and for services rendered; again, justice is, at best, an implication.
Joseph Stiglitz, a Nobel Prize-winning economist, offered a rather narrow view of opportunity in a recent interview (Luscombe, 2012). Stiglitz seemed to propose that opportunity can only be measured by what people actually do with opportunity, by whether people improve their lot in life at all economic layers in the United States. Stiglitz proposed that other countries have surpassed the United States as the so-called land of opportunity; while this may be the case, as measured by upward mobility, is this truly a reflection of lack of opportunity or does it more accurately reflect comparatively lower levels of motivation or execution resulting in capitalization on those opportunities?
Stiglitz raised a key factor in economic growth, which seems otherwise ignored, or at least under-considered, in the overall harm done to the economy if society either takes steps to restrict access to opportunities by economically disadvantaged people or does not consciously provide mechanisms to improve that access. Stiglitz asserted a artificial yet de facto restriction of access to the potential of people at or near the bottom of the economic ladder. I have long supported the premise that a key to sustainable improvement in business performance or the greater economy is to take strategic and tactical steps to raise the performance of those currently performing below their capabilities and capacities. On this point, I seemingly can agree with Stiglitz; however, even the best leaders cannot force people to do what they consciously or unconsciously elect not to do.
The discussion of Bain Capital provides an interesting backdrop to the first topic for this course. Bain Capital (2012) began in 1984 as the investment arm of management consulting firm Bain & Company. In 1984, I completed my MBA studies at Rutgers University’s Graduate School of Management and joined a management consulting firm to help that firm, not Bain, transition from their traditional expertise of scientific management and productivity improvement to process and quality improvement based on the principles of Deming, Juran, and numerous disciples. Consulting firms and their clients interested in improving operational and financial performance had one primary tool in their toolkit, productivity improvement leading to staff layoffs of, typically, 20-30%.
It seems easy to complain about companies buying companies or parts of companies and then reducing costs, often through labor reductions, in order to realize a profit on their investments. Investment firms have an obligation to their investors to produce a positive return on their investments. For many of the firms that Bain and others purchased, the alternative was closure; companies like Bain may not have been able to save every job but some organizations were able to survive as the result of significant changes in operations. In some cases, however, the seller to the investment firm made out much better than the investment firm or the purchased company’s employees.
A fascinating read providing some insight into causes, or possible effects, of division in the United States. http://online.wsj.com/article/SB10001424052970204301404577170733817181646.html?mod=WSJ_WSJ_US_News_10_1
I’m not sure whether this article identifies causes or effects, but it seems clear that people who profess a religion, delay children until after marriage, stay married, and finish high school, if not college fare better economically than people who profess no faith or religion, have children outside of marriage, get divorced, and do not, at least, finish high school. The article does not examine whether the more “traditional” lifestyle leads to more economic success or whether people who are more economically successful gravitate toward a more “traditional” lifestyle. The presented facts are food for thought.
The demographic differences seem to suggest that, as the middle class experienced division since 1960, during a time of broad cultural change in the United States and elsewhere, two seemingly distinct cultures emerged. These distinctions may help account for the increasing sense of division in U.S. society and among our elected officials, along with the increasing sense of polarization in general. Whether these are causes or effects, what is the vision of leaders for addressing the causes and the effects?