In yesterday's post I used the term "terrorist tactics" to describe how Republicans engineered the debt ceiling crisis.
A very dear and respected friend reprimanded me with a note that said " That's a very disappointing comment that not only ignores what happened but uses a term that when properly applied conveys horrible physical outcomes for innocent people.... please be more careful with your choice of words than the people you criticize."
What do you think? Does organized and irresponsible behavior have to result in burning buildings, pools of blood and severed limbs before it can be called terrorism? Millions of Americans have already suffered horrible outcomes due to the calamities that began in 2007, reached a crescendo in the autumn of 2008 and still continue. Now, I don't blame this mess we are in solely on the Republicans. There is plenty of blame to apportion to both political parties, to unethical businesses, etc. And I would not use the T-word generally to apply to the actions that contributed to the mess.
But some of the Tea Party legislators were ready to push the country into default to get their way even though they are a minority. Such zealotry, had it been successful, would have dealt a serious blow to the government's ability to meet its obligations not just to its creditors but also to the general citizenry. It would surely would have amplified greatly the suffering so many of our neighbors are already experiencing. Terrorism or not? You be the judge.
Wednesday, September 7, 2011
Tuesday, September 6, 2011
I'm Surprised I Still Have Hair
I began this blog in October 2010 during the Congressional election campaigns. The first few posts dealt with the abysmal quality of political speech in the USA and with the threat that it posed to democracy. I also wrote briefly about the need to consider both limitations on corporate speech and changes in the way state and federal level government was organized.
Over the last three months I have been pulling my hair as Republicans resorted to terrorist tactics on the debt ceiling and President Obama helplessly sulked in thedog White House. I know that many of my friends, Republicans and Democrats alike, suffered from the same political alopecia.
The antics of both parties have left me mad, deeply disappointed with the President's failure to lead and with grave doubts about the future of the country.
If you share this anguish, I highly recommend that you set aside some time and read
"Can the Middle Class Be Saved", Don Peck's thoughtful (and long) analysis of the impoverishment of the middle class in American and of what can be done about it in The Atlantic September issue.
"Goodbye to All That: Reflections of a GOP Operative Who Left the Cult", A shocking diatribe by Mike Lofgren who for thirty years worked on budget and defense issues for Republican Congressmen.
"People Don't Realize How Fragile Democracy Is" James Fallow's blog post commenting on Lofgren's piece and adding more insider testimony.
Over the last three months I have been pulling my hair as Republicans resorted to terrorist tactics on the debt ceiling and President Obama helplessly sulked in the
The antics of both parties have left me mad, deeply disappointed with the President's failure to lead and with grave doubts about the future of the country.
If you share this anguish, I highly recommend that you set aside some time and read
"Can the Middle Class Be Saved", Don Peck's thoughtful (and long) analysis of the impoverishment of the middle class in American and of what can be done about it in The Atlantic September issue.
"Goodbye to All That: Reflections of a GOP Operative Who Left the Cult", A shocking diatribe by Mike Lofgren who for thirty years worked on budget and defense issues for Republican Congressmen.
"People Don't Realize How Fragile Democracy Is" James Fallow's blog post commenting on Lofgren's piece and adding more insider testimony.
Tuesday, August 30, 2011
Back on the Air!
Hello, Friends!
I have been silent for six months. A bad case of writer's block plus a lot of travel--three trips to the US, one to Beijing and one to Qingdao. While we were wandering around the US several of my friends scolded me for going quiet and urged me to get back in business blogging. So here goes....
I'll keep this one short and return with longer essays on the state of the universe in the weeks to come. The topics that I will focus on are
I have been silent for six months. A bad case of writer's block plus a lot of travel--three trips to the US, one to Beijing and one to Qingdao. While we were wandering around the US several of my friends scolded me for going quiet and urged me to get back in business blogging. So here goes....
I'll keep this one short and return with longer essays on the state of the universe in the weeks to come. The topics that I will focus on are
- Economic and political developments in the USA as I see them from my perch in Hong Kong and with input from my friends out in this part of the world.
- Corporate responsibility. I have been teaching in this field for some time but haven't written about it in the blog. A couple of readers have asked that I chime in occasionally on the topic.
- Travelogue. I don't expect to do much traveling to exotic places in the next year but will add photos and commentary when there are opportunities.
- Technology. Infrequently I will provide a suggestion about useful or entertaining websites, software, hardware etc. (See below)
- Miscellany.
Now you can follow the blog by email. Click on "SUBSCRIBE VIA EMAIL" on the right side of the page and enter your address. You will then get an automatic notice whenever any new material is added to the blog. If you can't find where to sign up for email you probably are reading this post in an aggregator such as Google Reader. Clicking on the title should get you to the full website of the blog where you can sign up.
Two new tools for your reading pleasure. At the beginning of the summer Lisa was given an iPad 2. As she is much busier and not as much of a technology addict as I, the iPad has spent a lot more time in my hands. I have added an app, Instapaper, which allows me to effortlessly save articles that I want to read later and then retrieve them on any of my electronic devices (desktop PC, iPod Touch, iPad). There's a free version but you'll probably want to move up to the very reasonably priced paid version. Instapaper has quickly become indispensable for me. Give it a try.
Wednesday, March 16, 2011
Creative Destruction of Creating Shared Value
Dear Reader,
I sincerely hope that you didn't think I was being too tough on Michael Porter in my March 13 posting. I was positively obsequious compared to the Schumpeter columnist in this week's Economist. He thinks that it is "merely a pious hope" that shared value will trigger the next wave of innovation. He accuses Porter of providing a "paucity of evidence" to back his argument and of "play[ing} down the difficult trade-offs that businesses often have to make." And he worries that Porter's theory "risks giving politicians carte blanche to meddle in the private sector."
You can read the complete article at http://www.economist.com/node/18330445
I sincerely hope that you didn't think I was being too tough on Michael Porter in my March 13 posting. I was positively obsequious compared to the Schumpeter columnist in this week's Economist. He thinks that it is "merely a pious hope" that shared value will trigger the next wave of innovation. He accuses Porter of providing a "paucity of evidence" to back his argument and of "play[ing} down the difficult trade-offs that businesses often have to make." And he worries that Porter's theory "risks giving politicians carte blanche to meddle in the private sector."
You can read the complete article at http://www.economist.com/node/18330445
Monday, March 14, 2011
If only it were so easy to reinvent capitalism!
The Harvard Business Review began 2011 with Michael Porter and Mark Kramer inventing jargon and claiming they were reinventing capitalism. This month the Global Managing Director of McKinsey & Co. offers an executive summary course on the same topic. Read my views below and add yours in the comments.
I. Creating Shared Value: A Ripple Not a Wave
In the lead article of the January-February 2011 edition of the Harvard Business Review Harvard[i] strategy guru Michael Porter and his business partner at their consulting firm FSG Social Impact Consultants claim to have reinvented capitalism in a manner that will restore the diminished trust in business which is now viewed by many as a cause of many social, environmental and social problems. Even better, this new recipe will unleash a wave of innovation and growth. Porter and Kramer label their new approach Creating Shared Value (CSV). As the name implies, they call for a refocusing of companies away from short term financial performance and towards community-wide value creation. They write
The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.
The concept rests on the premise that both economic and social progress must be addressed using value principles. Value is defined as benefits relative to costs, not just benefits alone. Value creation is an idea that has long been recognized in business, where profit is revenues earned from customers minus the costs incurred. However, businesses have rarely approached societal issues from a value perspective but have treated them as peripheral matters. This has obscured the connections between economic and social concerns.
Porter and Kramer are right to remind businesses, nonprofits and communities of the benefits that they derive from mutual understanding and closer collaboration. They provide numerous vivid examples of how companies are benefiting from such relationships. But their thesis is not original. Adam Smith recognized the same symbiosis 235 years ago. Such situations have been well known for decades to the business and civic leaders in many places including Houston (oil and gas), San Jose (information technology), Bangalore (software development, call centers), Shenzhen (electronics assembly) and Raleigh Durham (research).
The application of CSV is unlikely to have the transformative benefits claimed. It does not address many of the problems that have created the distrust of business. Furthermore, it does not offer a way for businesses to measure the shared value that their activities may generate nor offer new ways that such value can be incorporated in business decision making.
The diminished trust attributed to the 2007-08 housing crisis and financial meltdown was ultimately caused by agency problems in loan originators, investment banks and rating agencies as well as regulatory capture and old fashioned fraud. The call for CSV does not address any of these issues. Instead, the authors ignore the unglamorous business practices that reinforce ethical conduct and compliance with the law and that reduce or offset externalities. In a blog post on the FSG web site co-author Mark Kramer dismisses the “more traditional CSR activities such as GRI reporting that responsible companies accept as a cost of doing business.” In fact GRI reporting provides valuable nonfinancial information to company directors, to investors (e.g. more than 870 UNEP PRI members who manage ~$25 trillion in assets) and to other stakeholders and improves the reporting companies’ standing in the capital markets. Surely that is shared value.
Businesses seldom respond to exhortations in the Harvard Business Review. Instead they pay attention to signals or information such as customer preferences, prices (of goods, services including labor and capital), taxes and subsidies (negative subsidies), laws, technology and customs and traditions. Each company responds to these signals in its own way, but collectively these responses produce an emergent order that we recognize as a market. The order will not change because someone, even Michael Porter, calls for it to. CSV does not provide a new way for a company to capture more of the shared value. Neither does it produce a new set of information or signals to influence business decisions and thus modify the emergent order. Until then CSV will unleash only a ripple rather than the predicted wave of innovation and growth.
II. Capitalism for the Long Term—The Cliff Notes Version
In the following issue of the HBR[ii] Dominic Barton, Global Managing Director of McKinsey & Company tackles a similar problem: how to restore the weakening social contract between capitalism and the public. Mr. Barton gets neither the cover-page treatment nor the fancy charts and graphics that jazz up the Porter-Kramer article. But his diagnosis of the causes of the crisis of confidence in business is more clear-eyed and his recommended remedies are likely to be more effective than the January recipe.
Mr. Barton calls on business and finance (1) to abandon their short-term orientation and reengineer incentives and structures to focus their companies on the long term, (2) to focus on serving the interests of all major stakeholders rather than just shareholders and (3) to offset the risks of dispersed and disengaged ownership by strengthening boards’ authority and capability to act like owners. All of these recommendations are on target but the article suffers from its brevity; the recommendations are too general and deserve a more elaborate treatment. Furthermore, the author seems unaware of some of the important work already underway to solve some of the problems he identifies. And in a couple of cases he points his finger at groups that may not be responsible for the problems.
For instance, he scolds institutional investors which hold “roughly 35% of the world’s financial assets” for taking the short-term view and thereby leading “capitalism as a whole” down the same path. He seems oblivious to the progress that has been made over the last half decade in propagating as ESG perspective among institutional investors. Refer to the work of the UNEP Principles for Responsible Investment mentioned above. He also is too quick to accuse high frequency traders “who now account for 70% of all U.S. equities trading” of contributing to short-termism. Where is the evidence that these traders’ activities, largely based on arbitrage, influence the business plans of the companies whose stocks they trade?
The problems that Mr. Barton cites do indeed pose existential threats to capitalism and the brief sketches of solutions that he offers point the right direction. His large audience deserves a more complete roadmap. Perhaps he and his McKinsey colleagues are already printing those maps for their fee-paying clients.
[i] ”Creating Shared Value: How to Reinvent Capitalism—and Unleash a Wave of Innovation and Growth” by Michael E. Porter and Mark R. Kramer, Harvard Business Review, January-February 2011. A copy of the article is available at fsg.org. Registration is required.
[ii] “Capitalism for the Long Term” by Dominic Barton, Harvard Business Review, March 2011. On March 11, 2011 a copy of the article was available at http://hbr.org/2011/03/capitalism-for-the-long-term/ar/1
Thursday, January 27, 2011
When China Rules the World (Oh, that's so 1776!)
Anyone who is concerned about the Rise of China apoplexy that is sweeping the USA and, to a lesser extent, Europe should look at Martin Jacques's TED Talk. Jacques is a writer, journalist and public intellectual. The talk is a very concise summary of the main ideas of his 2009 book When China Rules the World: The Rise of the Middle Kingdom and the End of the Western World.
Jacques's economic analysis is nothing special. A new book on China's economic rise is published every week. However, he has original and interesting things to say about China as a 'civilization-state" rather than a "nation-state", about Chinese attitudes toward race and about the relationship of the state to society. Of course, all of these themes are more fully treated in the book than in the 24 minute TED video. One of the more interesting points omitted from the video is that modern China's relations with it's east Asian neighbors may be evolving into a tributary nation system which reached its previous height in the 17th and 18th centuries.
China was arguably the dominant world power in those days. The British empire did not reach its peak until the 19th century and the Spanish was already in decline. The Ottoman empire centered on Constantinople had begun to come apart at the seams.
Here's an interesting chart of the world's largest cities over time. (Source: http://geography.about.com/library/weekly/aa011201a.htm) I have highlighted the Chinese ones.
Jacques's economic analysis is nothing special. A new book on China's economic rise is published every week. However, he has original and interesting things to say about China as a 'civilization-state" rather than a "nation-state", about Chinese attitudes toward race and about the relationship of the state to society. Of course, all of these themes are more fully treated in the book than in the 24 minute TED video. One of the more interesting points omitted from the video is that modern China's relations with it's east Asian neighbors may be evolving into a tributary nation system which reached its previous height in the 17th and 18th centuries.
China was arguably the dominant world power in those days. The British empire did not reach its peak until the 19th century and the Spanish was already in decline. The Ottoman empire centered on Constantinople had begun to come apart at the seams.
Here's an interesting chart of the world's largest cities over time. (Source: http://geography.about.com/library/weekly/aa011201a.htm) I have highlighted the Chinese ones.
| City | Year Became #1 | Population Information |
| Memphis, Egypt | 3100 BCE | Well over 30,000 |
| Akkad, Babylonia (Iraq) | 2240 | |
| Lagash, Babylonia (Iraq) | 2075 | |
| Ur, Babylonia (Iraq) | 2030 | 65,000 |
| Thebes, Egypt | 1980 | |
| Babylon, Babylonia (Iraq) | 1770 | |
| Avaris, Egypt | 1670 | |
| Memphis, Egypt | 1557 | |
| Thebes, Egypt | 1400 | |
| Nineveh, Assyria (Iraq) | 668 | |
| Babylon, Babylonia (Iraq) | 612 | First above 200,000 |
| Alexandria | 320 | |
| Pataliputra (Patna), India | 300 | |
| Changan (Xi'an), China | 195 | 400,000 |
| Rome | 25 | 450,000 (100 CE) |
| Constantinople (Istanbul), Turkey | 340 CE | 400,000 (500) |
| Ctesiphon, Iraq | 570 | |
| Changan (Xi'an), China | 637 | 400,000 (622); 600,000 (800) |
| Baghdad, Iraq | 775 | First over 1 million; 700,000 (800) |
| Cordova, Spain | 935 | |
| Kaifeng, China | 1013 | 400,000 (1000); 442,000 (1100) |
| Constantinople (Istanbul), Turkey | 1127 | |
| Merv (Mary), Turkmenistan | 1145 | 200,000 (1150) |
| Constantinople (Istanbul), Turkey | 1153 | |
| Fez (Fes), Morocco | 1170 | |
| Hangzhou, China | 1180 | 255,000 (1200); 320,000 (1250) |
| Cairo, Egypt | 1315 | |
| Hangzhou, China | 1348 | 432,000 (1350) |
| Nanking, China | 1358 | 487,000 (1400) |
| Beijing, China | 1425 | 600,000 (1450); 672,000 (1500) |
| Constantinople (Istanbul), Turkey | 1650 | 700,000 (1650 & 1700) |
| Beijing, China | 1710 | 900,000 (1750); 1.1 million (1800) |
| London, United Kingdom | 1825 | First over 5 million; 1.35 million (1825); 2.32 million (1850); 4.241 million (1875); 6.480 million (1900) |
| New York | 1925 | First over 10 million; 7.774 million (1925), 12.463 million (1950) |
| Tokyo | 1965 | First over 20 million; 23 million (1975) |
News Flash: Chinese Genetic Engineers Create FrankenBunny!!!
As Chinese President Hu Jintao was checking out a city-center home for sale at 1600 Pennsylvania Avenue his countrymen were preparing for the Lunar New Year celebration in early February. While most Americans are aware of the amazing progress the Chinese have made in manufacturing and international trade, most haven't heard about the amazing leap the country has quietly made in the field of genetic science. That is about to change.
On midnight February 2 the Year of the Tiger ends and the Year of the Rabbit begins. To commemorate the occasion in Beijing Chinese scientists will announce that they have successfully crossed a tiger and a rabbit. Although up to now this research has been a closely guarded secret, photos of the first bunny tigers have begun to leak out and some can be seen here. Please note that the photos give no clue as to whether this critter is tiger-sized or rabbit-sized. It could give a whole new meaning to "hopping down the bunny trail."
Many of you know that I have been involved with tiger conservation since the early 1990s. I have contacted several conservation scientists to get their expert views. They unanimously have very low opinions of previous Chinese efforts to save the tiger from extinction but are intrigued about the prospects for this new initiative.
On midnight February 2 the Year of the Tiger ends and the Year of the Rabbit begins. To commemorate the occasion in Beijing Chinese scientists will announce that they have successfully crossed a tiger and a rabbit. Although up to now this research has been a closely guarded secret, photos of the first bunny tigers have begun to leak out and some can be seen here. Please note that the photos give no clue as to whether this critter is tiger-sized or rabbit-sized. It could give a whole new meaning to "hopping down the bunny trail."
Many of you know that I have been involved with tiger conservation since the early 1990s. I have contacted several conservation scientists to get their expert views. They unanimously have very low opinions of previous Chinese efforts to save the tiger from extinction but are intrigued about the prospects for this new initiative.
All I can say is 祝大家兔年大吉。兔脚为你开财路，兔耳为你撞鸿运，兔背为你驮康寿，让这头兔永远伴你左右，动如脱兔。
Translation: Wishing you great fortune in the Year of the Rabbit. The rabbit’s feet will lead your way to prosperity; rabbit’s ears will bring you great luck; rabbit’s shoulder and back will carry you to longevity; May this rabbit accompany you at your side bouncing forever with energy!
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