Economic Growth: All Articles and Books

Free Traitors

Articles — Wed, 08 Oct 2008 13:02:00 -0400

Jagdish Bhagwati is a humble man. He will tell you so himself. Describing the effect of his book In Defense of Globalization during a speech at the John Hopkins School of Advanced International Studies (SAIS) last fall, the Columbia economist politely refused credit for single-handedly dampening growing concerns about the fallout from free trade. Fears of trade are "low-key," he said. "I won't say it's because of my book. I have colleagues who would say that. ... People believe I have a large claim to fame, so I don't have to do it myself."

But, for all his bluster, Bhagwati was in something of a defensive crouch. His talk was… more

Mailing Our Way to Solvency

Articles — Mon, 06 Oct 2008 08:38:00 -0400

America's financial landscape is changing before our eyes. The absorption of major Wall Street investment banks by commercial banks threatens to create colossal universal banks that are too big to fail and might need to be bailed out in the future. Meanwhile, the structure of public and private finance in the United States chronically fails to address four problems: the almost 10 percent of Americans without a bank account; the concerns of all Americans about the security of their savings; the growing indebtedness of the country to foreign governments and financial institutions; and underinvestment in public assets like sewer systems and bridges.

These four problems may seem unrelated. But… more

Is There a Better Way Forward and a Better Way to Persuade the Public, Fear Itself Having Failed?

Articles — Mon, 29 Sep 2008 12:13:00 -0400

A better way forward is a different way forward. The Axis of Arrogance--the Wall Street-Washington bipartisan alliance--seems determined simply to bludgeon the American people into supporting the bailout. President Bush was at it again, just this morning in the White House, bludgeoning away once again. What’s that old adage? If at first you don’t succeed, try, try, banging your head against the wall even again.

It’s a rare time in history that the elites are actively badmouthing the economy in order to win a policy dispute. But wait, it’s not just a policy dispute; it’s a battle over $700 billion, and that’s worth fighting for. What well-connected fatcat wouldn’t… more

The Financial Crisis: What Drucker Would Have Said

Articles — Fri, 26 Sep 2008 09:09:00 -0400

Peter Drucker didn't have a whole lot of nice things to say about those on Wall Street, at one point likening them to "Balkan peasants stealing each other's sheep."

Given the magnitude of the latest crisis to grip Fannie Mae, Freddie Mac, American International Group, Lehman Brothers, and their friends, one can only imagine what kind of acid analogy he might have used today.

Or perhaps he would have simply said, "I told you so." After all, so much of the trouble that has befallen these giants of the investment banking, mortgage, and insurance sectors--and that threatens to "undermine the financial security of all," as President George… more

The Joneses and the Joads

Articles — Tue, 16 Sep 2008 09:24:00 -0400

After storms ravaged Iowa last summer, devastation wasn't the only thing that people found amid the flood waters. Scores of out-of-work electricians from Michigan, hard hit by auto industry cutbacks, spied opportunity. Trekking hundreds of miles from home, where the unemployment rate of 8.5% is the highest in the U.S., they were eager to scoop up jobs rewiring Cedar Rapids -- even if it meant sleeping in a tent for weeks on end.

To some observers, the desperate scene evoked an unmistakable image. "The Joads leaving Oklahoma is exactly what we are seeing coming out of Detroit now," UC Berkeley labor expert Harley Shaiken told reporters. Nearly… more

Put a Cap on CEO Pay

Articles — Fri, 12 Sep 2008 10:09:00 -0400

For a guy whose astute counsel helped to make so many CEOs rich, Peter Drucker had an intense loathing of exorbitant executive salaries.

He hated high CEO pay on every level: what it said about the individual as a leader, how it undermined the smooth functioning of the organization, and the way it tore at the fabric of society as a whole.

Drucker's strong feelings on the subject—he once termed sky-high CEO compensation "a serious disaster"—are well worth revisiting in light of the news that the men who sat atop Fannie Mae and Freddie Mac (BusinessWeek, 9/10/08) could be eligible for as much as $24 million… more

These Are the New Middle Ages, Not a New Order

Articles — Fri, 12 Sep 2008 06:29:00 -0400

We are entering -- for those keeping track -- the new new, new new world order. President George Bush Snr's world order of multilateral cooperation was embarrassed by Somalia, Rwanda and Bosnia. Pax Americana, rebranded as globalisation under Bill Clinton, was shattered by 9/11. For the past seven years we've been living under the "war on terror" world order paradigm, creating more cleavages than it has healed.

But this time the conditions are very different. The world has stopped waiting for the US - and its next president -- to declare its roadmap for the future. Instead, the other 96% of the planet has decided to move on… more

Renewing America's 'Contract With the Middle Class'

Articles — Mon, 01 Sep 2008 08:28:00 -0400

Not all that long ago, America's prominent business and government leaders widely believed that our nation's prosperity depended on a strong middle class growing from the bottom up. Workers were rewarded for their hard work with fair wages, benefits and advancement opportunities -- and our economy and our national security were much stronger for it. Henry Ford certainly knew this, and often said that his company would prosper only if his workers earned enough to buy the Fords they produced. And in 1953, when General Motors' president told the Senate that "what was good for the country was good for General Motors and vice versa," he… more

Covered Bonds Can Rebuild America

Articles — Mon, 28 Jul 2008 09:58:00 -0400

Monday's embrace of covered bonds by U.S. Treasury Secretary Henry Paulson and senior representatives of the Fed, the Federal Deposit Insurance Corp. and the country's largest banks to help thaw the U.S. mortgage market is a laudable step, appealing to market proponents and skeptics alike. Introducing covered bonds to the U.S. is a great idea. In fact, covered bonds can help more than just the mortgage market. At its most basic, a covered bond is a bond issued by a bank and backed by a dedicated group of loans kept on the issuing bank's balance sheet. While the introduction of covered bonds in the U.S. is… more

When 2008 Feels Like 1968

Articles — Thu, 17 Jul 2008 14:36:00 -0400

It's been a bummer of a summer, hasn't it?

At the gas station the other night, I found myself staring in disbelief—as I have for weeks—while the numbers on the pump kept spiraling higher and higher. The total: $67.83 to fill my Passat. I hopped back in my car and flipped on the radio, figuring a little music might take my mind off the lightness of my wallet, but the news came on instead: Fannie Mae (FNM) and Freddie Mac (FRE) were reeling. Nervous depositors had stormed IndyMac Bancorp, looking to pull their money. General Motors (GM) was poised for another round of cuts.

Sigh. You… more

Don't Pick On Sovereign Wealth

Articles — Thu, 17 Jul 2008 09:16:00 -0400

Under pressure from the U.S., Europe and the IMF, representatives of 25 sovereign wealth funds managing about $3 trillion in assets met last week in Singapore to discuss how to allay fears about their investments. These large pools of government-controlled wealth are investing in everything from Barclays and Citigroup to New York's Chrysler Building. As they transcend traditional boundaries between foreign policy, financial markets and national security, it is natural that Western capitals are worried.

However, shining the spotlight too brightly on sovereign wealth funds (SWFs) may divert attention from the more fundamental foreign-policy issue that these funds have come to represent -- the rise of "state capitalism." The… more

Which Way, Latin America?

Articles — Sun, 13 Jul 2008 23:43:00 -0400

Angelo Rivero Santos, the deputy chief of mission of the Embassy of the Bolivarian Republic of Venezuela, and Andrés Martinez, senior fellow at the New America Foundation, discuss recent political and economic trends in South America: Are Latin American nations moving toward neo-liberal free markets or a 21st century form of Bolivarian socialism? Why are relations between Venezuela and the U.S. perceived as being so bad? How might U.S. relations with South and Central American nations change after Barack Obama or John McCain takes over as president in January 2009?

Chavez Doesn't Provide a Good Model

Point: Andrés Martinez

Dear Angelo, I think… more

Leveraging the Strengths Of the Disabled

Ron Tang — Thu, 03 Jul 2008 07:30:00 -0400

When the House passed legislation in late June that expanded protections for disabled people, it marked an important step forward on an important issue. But what the workplace needs, even more than a new law, is an old insight -- one first offered by Peter Drucker more than 40 years ago.

"To make strength productive is the unique purpose of organization," Drucker wrote in his 1967 classic, The Effective Executive. "It cannot, of course, overcome the weaknesses with which each of us is abundantly endowed. But it can make them irrelevant."

This holds true for everyone, of course. As Drucker noted, "Strong… more

Drucker's Take On Making Mistakes

Ron Tang — Thu, 19 Jun 2008 11:29:00 -0400

Lyndon Johnson occupied the White House when KeyCorp first began raising its dividend. The Beatles topped the pop charts. Martin Luther King Jr. led tens of thousands of civil rights marchers through Alabama.

For 43 straight years, the company's annual payout climbed, "a record we were extremely proud of," in the words of KeyCorp Chief Executive Henry Meyer. That is, until earlier this month. The Cleveland bank, slammed by the weak housing market and an adverse tax ruling, announced that it would halve its dividend to 75 cents in a bid to save $200 million a year. It also said it… more

The Seven-Year Rich

Ron Tang — Mon, 02 Jun 2008 09:12:00 -0400

After the brutal bust of 2001, we didn’t expect new masses of multimillionaires to reappear around here quite so fast. But they did -- and this time, no recession will send them packing. A 2008 field guide to a new, super-driven kind of upper class -- whose motives and morés, like it or not, are now part of our DNA.

I. The Penthouse View

On a recent Friday morning, at the end of a week in which the dollar has continued to sink, stocks have fallen deeper into negative territory, and a widely watched measure of leading economic indicators has slipped, I… more

Conditioning the Corporate Athlete

Ron Tang — Thu, 22 May 2008 11:47:00 -0400

Thirty-five years ago, in his classic Management: Tasks, Responsibilities, Practices, Peter Drucker declared that the means by which most people had long run their organizations -- through a mix of perks and punishment, rewards and reprimands -- was all but dead.

"The basic fact," Drucker wrote, "is that the traditional... approach to managing, that is the carrot-and-stick way, no longer works."

It was striking, then, to read a few weeks ago of Whirlpool's decision to suspend 39 workers who had claimed to be nonsmokers -- apparently in an attempt to avoid paying a $500 surcharge on their health insurance -- but then… more

Exxon Mobil Needs a Longer View

Ron Tang — Fri, 09 May 2008 07:18:00 -0400

John D. Rockefeller has been described in many different ways: as greedy and cutthroat, as munificent and caring, as "solitary, taciturn, remote, and ascetic," in the words of author Daniel Yergin. But as a manager, perhaps Rockefeller's most indispensable quality was this: He was uncompromisingly forward-looking.

It was Rockefeller, more than any single figure, who helped revolutionize the way people in the 19th century illuminated their homes, hastening the shift from costly whale oil to kerosene -- a fuel that was, as he put it, "cheap and good."

Rockefeller's heirs recently evoked that history, as they went public with their criticism of… more

Throw Out the Tax Code

Ron Tang — Sun, 20 Apr 2008 07:25:00 -0400

Politicians don't like to talk about taxes except to brag about cutting them. But with California's widening budget deficit threatening deep cuts in education and other public services, it's difficult to avoid discussions about raising taxes.

Unfortunately, what's likely to be lost in the upcoming partisan melee over whether new taxes are needed to close the $16-billion gap is an equally important tax issue -- California's aging and often unfair tax system needs to be overhauled.

The goal of tax reform should be twofold. One is to generate a more reliable revenue stream. The other is to make the tax… more

Don't Spend Your Tax Rebate!

Ron Tang — Tue, 15 Apr 2008 04:41:00 -0400

The IRS was so confident in the legendary observation of Oliver Wendell Holmes, Jr. that “taxes are the price we pay for a civilized society” they chiseled it above the entrance to their Washington D.C. headquarters. Still each year Tax Day makes incumbent politicians uneasy -- especially at times when recession fears mount and fall elections loom. This year this perilous combination spurred them on to take prompt and bipartisan action. Who wants to be accused of sending families their tax bill as economic growth slows and hardship spreads?

The bipartisan prescription to jumpstart the economy was to deliver over $100… more

Peter Drucker's Winning Team

Ron Tang — Thu, 10 Apr 2008 12:23:00 -0400

In the summer of 1985, an executive named Peter Bavasi pored over a Harvard Business Review article by Peter Drucker in which the great management thinker described the "widow maker" -- a job so inherently impossible that it was apt to defeat even the best and brightest.

Drucker's warning, "Any job that ordinarily competent people cannot perform is a job that cannot be staffed," was especially ominous for Bavasi. He had, you see, just become president of the Cleveland Indians, a sports franchise to which the word "hapless" seemed inextricably tied.

So Bavasi called Drucker to seek his counsel, and there began… more