The Obama Excuse

By Shlomo Maital

 Obama

President Obama, and the Democratic Party, appear to be headed for a larger-than-usual mid-term election defeat on Nov. 4, with the Republicans gaining control of the Senate and retaining control of the House.   But for America, this may not (believe it or not) be a bad thing.

   Obama and the Democrats have often used the obstructionist Republican-controlled House as the excuse for their lack of achievements. And indeed, the approval rating of Congress is abysmally low, lower than Obama’s! Americans are simply fed up with Washington and with both political parties.   Contrast this with German Chancellor Merkel’s 78 per cent approval rating, one other leaders can only dream about.

   But a chart in the recent issue of The Economist sheds some light on the Obama excuse. President Ronald Reagan faced a Democratic House and Senate in 1986-88, yet as a lame duck president in his last two years, passed a major tax cut bill. President George H.W. Bush faced a hostile House and Senate in 1988-90. Bill Clinton had a Republican House and Senate in 1994-2000, for fully six of his eight years as president, yet got the U.S. economy rolling. George Bush faced a hostile House and Senate in 2006-8….     And Obama had both House and Senate FOR him in 2008-10, controlled by Democrats, and… achieved, well,   achieved…. Uh…..?  

   To be an effective president and leader, in the face of House and Senate opposition, you need to be very skillful at compromise, at dialogue and at collaboration. Some U.S. presidents were. Obama wasn’t. It is not too late. He may yet learn, and may yet leverage the fact that if the Republicans do win control of Congress, and continue to obstruct, they will be severely blamed by the American electorate, and may lose any chance of regaining the Presidency in 2016.

   In President Lyndon Johnson, America had a president with long long experience in the Senate, who knew how to compromise and how to deal. In President Obama, America has an inexperienced President who is just now beginning to understand how to work with Congress. It has been six wasted years.

Ebola — Fact vs Fiction

By Shlomo Maital

ebola

As a would-be journalist, I’ve followed closely how the media report on the Ebola virus epidemic in Africa.   America’s NPR (National Public Radio) is excellent – but even NPR has spread hysteria and has reported very badly on the issue.   There is something about this deadly little virus that kills half the people it afflicts, that frightens people. And the media play into these fears, by amplifying them. Shame on them.

The Economist rides to the rescue. As always it brings us the truth, with the facts well explained.   In the Oct. 18 issue, here is what The Economist explains:

  • The number of infections (in West Africa – mainly Sierra Leone, Guinea and Liberia) is doubling every 2-4 weeks.   Meanwhile, though, Senegal and Nigeria have been declared ebola free. So it is possible to stamp it out.
  • If something doubles every, say, 3 weeks,   then in 10 doublings (30 weeks, or about half a year), it is 1,024 times greater.   So if 10,000 people have Ebola virus today in West Africa, 10 million will have it in half a year. This is why it is so urgent to come to the rescue of these three countries.
  • If the West does wake up and send help, the goal is simple: Get the infectious rate down, in West Africa,  from 1.5 to 2.2 persons per infected person (i.e. every person who has Ebola infects 1.5 to 2.2 other persons, today), to less than 1.   If this ratio, known as Ro, is less than one, then the power of compounding works to our favor.   Soon, Ebola disappears.     You can only get the Ro number down by having more hospitals, more trained health workers, faster medical care, etc.   Get people infected to quarantine quickly.  This is done instantly in the West,  but West Africa does not have the means. 
  • This is not a Western problem YET.   The West has a moral obligation to help West Africa, whose economies have been devastated.   But it WILL be a Western problem, if a half year goes by and the Ro remains at around 2. Then the Ebola will simply not be capable of being stamped out.
  • Why is Ebola so fatal and so dangerous? Because it is fiendishly clever, even though of course it does not have a brain. Ebola virus invades a cell, and makes it produce more viruses instead of the cell’s own DNA. Ebola has sugars on the outside coating of the virus, making it tough for the body’s immune system to attack it (antibodies stick to the glycoprotein instead of to the virus). The immune cells that the virus attacks race to the spleen, liver and lymph nodes and thus carry the infection there. Soon, the body over-reacts, and blood vessel walls become leaky, organs fail and the body goes into shock. President Obama has sent 3,000 U.S. soldiers to help Liberia. Much more is needed. Europe, of course, is sound asleep. And a lot of the money promised to   West Africa remains just that – a promise.   Unless the rich countries wake up, they will find themselves dealing with a problem that is one hundred times harder to solve.

 

  • All this – from a tiny virus!   How did it get so smart? It evolved – nature’s accidents created viruses that survive to procreate.

Find Meaning – Even Kids Seek It

By Shlomo Maital

meaning

Writing in the New York Times’ Sunday magazine (Oct. 19 issue), KONIKA BANERJEE (Yale grad student in psychology) and   PAUL BLOOM (Yale psychology professor) make a powerful, simple point.  It is a basic fundamental human drive, to seek meaning – to find meaning in the events that happen to us, right from early childhood.

   In research to be published in the leading journal Child Development, the scholars found that: “even young children show a bias to believe that life events happen for a reason — to “send a sign” or “to teach a lesson.” This belief exists regardless of how much exposure the children have had to religion at home, and even if they’ve had none at all.”     Other studies confirm that our search for meaning is independent of religious belief.   Atheists, too, need to find meaning.”

   The researchers caution us that this desperate search for meaning – the belief that there is order and purpose in the world, that it is not ‘aleatoric’ (random) – can lead us into error:

   “But it can lead us into error when we overextend it, causing us to infer psychological states even when none exist. This fosters the illusion that the world itself is full of purpose and design.”

   Sometimes, life is indeed random. Take the stock market, for instance. A lot of its movements are random. But ‘experts’ always find an explanation, mostly wrong.

   In his book Man’s Search for Meaning, Victor E. Frankl showed how finding meaning in the most desperate context (in his case, a concentration camp) can keep us alive.   I often quote Apple guru and VC Guy Kawasaki, who counsels entrepreneurs to “Make meaning, not money”.   In other words: Create value in the world, and the money will probably follow.

   People who have serious illnesses, for instance, often seek (and find) meaning in their suffering. They emerge from the illness resilient, strong and hopeful.   Meaning creates hope. And hope creates strength, often beyond what we could previously imagine.

   So, continue to seek meaning. Find meaning in your life, in your relationships, in your startup. And frankly, it doesn’t matter that much if you’re right or wrong about your theory.   And recall the two scholars’ last line — finding meaning does not mean you become passive. The opposite – we MAKE meaning by our actions:

“ … the events of human life unfold in a fair and just manner only when individuals and society work hard to make this happen.” 

Stock Prices Plummet in October

By Shlomo Maital

   market crash

On Sept. 13, in a blog titled “the coming meltdown”, I noted signs that the world economy was weakening.

Now, in this the middle of October, stocks have declined sharply.   For the month, U.S. stocks are down 5 per cent, German stocks are down 9 per cent and French stocks are down 11 per cent.   There are a number of causes.   Believe it or not, Ebola has created a negative mindset. Oil prices are down, slashing profits for many big companies and nations. Demand appears to be weakening in Europe, raising fears of a third recession since 2009. Geopolitics are highly unstable, with problems in Ukraine, the Mideast and elsewhere.

   At the same time, there is a flight to ‘safety’. Bond prices are up, as demand increases, with investors willing and even eager to take low yields in return for safety.

   The bright spot is the U.S. economy. Falling gasoline prices, often below $3 a gallon, have put money into working people’s pockets and they are spending it. This is a natural experiment. It amazes me how economists and policymakers are ignoring this simple evidence — spurring demand helps the economy! America’s economy is doing better than Europe’s as a result.

   October is an awful month for stock prices, for some reason. In October 1987, the market fell 20 per cent on a single day, but that was due to computer trading and a doom loop link between spot and future prices.

   The mindset of global investors continues to be shaky. In the end, it is the confidence, or lack of it, of global investors that drives equity and bond prices. When world headlines are terrible, as they are now, investors run for cover.  

Kansas City Royals (Baseball) Send a Message

By Shlomo Maital

Royals

Most of you readers probably do not follow American major-league baseball. It’s a slow game, complicated, a game can take six hours to complete (the 18-inning game between San Francisco and Washington, longest in post-season history) and there is almost no physical contact (except when players slide into second base or home plate).

   This year, the Kansas City Royals are the team to watch. And as in all aspects of life, there is much to be learned from baseball. For 2014, the Los Angeles Dodgers, a team that plays in a huge ‘media’ market, spent $235 million on its players!   In contrast, the Royals spent less than half that, about $92 million.  They ranked  only 19th in spending.  Yet, the Dodgers were eliminated and the Royals are going to the World Series, winning decisively in four games (out of seven) against the Baltimore Orioles, in the American League finals.  KC could well be the best team in baseball.

   How did they do it? By, as Steve Jobs loved to say,   “think different”.

   KC Royals hit the fewest home runs of any team in major league baseball this year. That alone should eliminate them. But, they stole more bases than any team and got many many singles. What’s the strategy?   Patience.   Winning games one single run at a time. Winning close games with singles. This was the Royals’ manager’s strategy, and he stuck to it, and built the team based on it.   He had to. If you cannot afford to pay the big bucks that home run hitters get, you have to go for less sexy singles hitters, and speedy base runners, many of them young Latin American players.

   Kansas City has not been in a World Series since 1985, almost 30 years. Well, they’re back!   And I’m happy, because they prove that big-time sports are not solely a matter of money and budgets.   And yes, again, the high-spending Yankees failed to make the playoffs. How great is that!

From KC, we learn — patience, creativity, persistence, resilience, and above all, believing in yourself.  They believes — and are on the way to the World Series. 

Strategic Coffee Machines: Creativity Through Chance Conversations

By Shlomo Maital

coffee machine

   The latest issue of Harvard Business Review (October) has an interesting article by Ben Waber, Jennifer Magnolfi and Greg Lindsay, “Workspaces That Move People”.   In it is an idea you can perhaps use. It’s called Strategic Coffee Machines. Here is the story:

   Jon Fredrik Baksaas, CEO of Telenor, a Norwegian telecom company, thinks that the strategic placement of coffee machines helped the company shift from a state-run monopoly to a competitive company with 150 million subscribers.

   How?

     Once, the company had roughly one coffee machine for every six employees. The same people used the same machines every day. Sales people talked to each other. Marketing talked to each other. The coffee was terrible – how can you afford good coffee when you need hundreds of machines?

   The company ripped out the coffee stations and built a few big ones – one for every 120 employees. It also created a big cafeteria for all employees, rather than a series of smaller ones. In the quarter after the coffee-and-cafeteria switch, sales rose by 20 percent, or $200 m.   Pretty good return on investment!

   The basic principle here is simple:   People in companies, or even in cities or in neighborhoods, just don’t talk to one another.   Especially people who don’t normally need to, in the course of their work.   Find ways to get them to rub elbows, and chat, and you can boost creativity.

   I know of a case, told to me by MIT Professor Tom Allen, of a company with four labs, at the four corners of a floor.  Each lab had a small office attached to it for doing paperwork. Simply by moving the offices to the diagonally opposite corners forced people in Lab A to chat with those in Lab B, C and D (they met at the intersections of the floor).

       Can you use the Telenor method? Can you use strategic coffee machines to boost creativity in your organization?

What’s Wrong with the World? Ask Paul Krugman..and Road Runner

By Shlomo Maital

Krugman

  Remember the  Road Runner cartoons?   Wile E. Coyote  continually is duped into running off  very high cliffs by the clever elusive Road Runner.

  Well, I think this captures the advice economists have been giving policymakers worldwide, as the world economy again weakens (according to the IMF).  We keep running off the cliff, like Coyote.  And for evidence, I call to the stand Nobel laureate and New York Times columnist Paul Krugman.   I will quote Krugman’s latest Op-Ed, (Oct. 12),  it is rather lengthy, but provides a clear accurate and fairly concise diagnosis.  It causes me to lose sleep – it may do the same to you too, so…beware, before you read on.  Krugman’s words are in quotation marks.  Again, this analysis is long – but essential, if you want to really understand what in the world is going on:   [If you want to stop here, and seek a one – sentence summary:   We’re being killed by high debt,  we need to forgive it, wipe it out and start fresh – there’s no other way]. 

  • Analysis: Where we stand: “The world economy appears to be stumbling. For a while, things seemed to be looking up, and there was talk about green shoots of recovery. But now growth is stalling, and the specter of deflation looms.”
  • We’re fulfilling Einstein’s definition of insanity: Doing the same thing and expecting different results. “If this story sounds familiar, it should; it has played out repeatedly since 2008. As in previous episodes, the worst news is coming from Europe, but this time there is also a clear slowdown in emerging markets — and there are even warning signs in the United States, despite pretty good job growth at the moment.”
  • But WHY are we in this mess, that began 6 years ago? “Why does this keep happening? After all, the events that brought on the Great Recession — the housing bust, the banking crisis — took place a long time ago. Why can’t we escape their legacy? The proximate answer lies in a series of policy mistakes: Austerity when economies needed stimulus, paranoia about inflation when the real risk is deflation, and so on.”
  •  What is the basic problem? “What, after all, is our fundamental economic problem? A simplified but broadly correct account of what went wrong goes like this: In the years leading up to the Great Recession, we had an explosion of credit (mainly to the private sector). Old notions of prudence, for both lenders and borrowers, were cast aside; debt levels that would once have been considered deeply unsound became the norm. Then the music stopped, the money stopped flowing, and everyone began trying to “deleverage,” to reduce the level of debt. For each individual, this was prudent. But my spending is your income and your spending is my income, so when everyone tries to pay down debt at the same time, you get a depressed economy.”
  • What can be done?   “Historically, the solution to high levels of debt has often involved writing off and forgiving much of that debt. Sometimes this happens explicitly: In the 1930s F.D.R. helped borrowers refinance with much cheaper mortgages, while in this crisis Iceland is outright canceling a significant part of the debt households ran up during the bubble years. More often, debt relief takes place implicitly, through “financial repression”: government policies hold interest rates down, while inflation erodes the real value of debt.   What’s striking about the past few years, however, is how little debt relief has actually taken place. Yes, there’s Iceland — but it’s tiny. Yes, Greek creditors took a significant “haircut” — but Greece is still a small player (and still hopelessly in debt). In major economies, very few debtors have received a break. And far from being inflated away, the burden of debt has been aggravated by falling inflation, which is running well below target in America and near zero in Europe. Why are debtors receiving so little relief? As I said, it’s about righteousness — the sense that any kind of debt forgiveness would involve rewarding bad behavior. In America, the famous Rick Santelli rant that gave birth to the Tea Party wasn’t about taxes or spending — it was a furious denunciation of proposals to help troubled homeowners. In Europe, austerity policies have been driven less by economic analysis than by Germany’s moral indignation over the notion that irresponsible borrowers might not face the full consequences of their actions.   So the policy response to a crisis of excessive debt has, in effect, been a demand that debtors pay off their debts in full. What does history say about that strategy? That’s easy: It doesn’t work. Whatever progress debtors make through suffering and saving is more than offset through depression and deflation. That is, for example, what happened to Britain after World War I, when it tried to pay off its debt with huge budget surpluses while returning to the gold standard: Despite years of sacrifice, it made almost no progress in bringing down the ratio of debt to G.D.P.”
  • So, how do we move ahead? “A recent comprehensive report on debt is titled “Deleveraging, what deleveraging?”; despite private cutbacks and public austerity, debt levels are rising thanks to poor economic performance. And we are arguably no closer to escaping our debt trap than we were five years ago. But it has been very hard to get either the policy elite or the public to understand that sometimes debt relief is in everyone’s interest. Instead, the response to poor economic performance has essentially been that the beatings will continue until morale improves. Maybe, just maybe, bad news — say, a recession in Germany — will finally bring an end to this destructive reign of virtue. But don’t count on it.”

Nobel Prize for Economics: Jean Tirole Takes on the Giants!

By Shlomo Maital

Tirole

Jean Tirole

  The Nobel Committee that selects winners for the Economics Prize has sent a message.  This year (today, actually) they announced the winner is Jean Tirole, a French economist, who teaches at Toulouse, and who studied at MIT.  He is honored for the following (according to the London Guardian):

  “This year’s prize in economic sciences is about taming powerful firms,” Staffan Normark, permanent secretary of the Royal Swedish Academy of Sciences, said as he named Tirole the winner of the 8m kroner (£700,000) prize.

Tirole, 61, began his work on regulation and oligopolies in the 1980s and published an influential book in 1993 with the late Jean-Jacques Laffont on regulation. The judges said Tirole is “one of the most influential economists of our time”.

 They added: “He has made important theoretical research contributions in a number of areas, but most of all he has clarified how to understand and regulate industries with a few powerful firms.”

   The panel said Tirole had shown the “deep and essential differences” between regulating companies in different sectors, such as telecom companies or banks. Imposing caps on prices could reduce the influence of monopolies in some sectors, but not in others, the judges said, pointing to Tirole’s use of game theory and contract theory.

    “In a paper last year, Tirole scrutinised, with Roland Bénabou, the pay and motivation structure  in industries such as banking. They write about a “bonus culture that takes over the workplace, generating distorted decisions and significant efficiency losses, particularly in the long run”.

Tirole did not share the prize but won it alone.   It is the first time since 1999 that an American has not at least shared the Economics Prize.  

   Will policymakers and politicians listen to Tirole?  Yesterday I spoke with a family friend, a lawyer, who is leading a class action suit against a Detroit mortgage bank.  He affirmed that the U.S. Justice Dept. has never prosecuted a single criminal case against Wall St. offenders, who nearly destroyed the world.  They’re just too powerful, he said.   Some groups spend $400,000 A DAY on lobbyists in Washington.  Apparently, it’s a good investment.     I am fantasizing a court case,  criminal case, in which Jean Tirole is called as a witness for the prosecution.

Need Ideas?  Find a “John Lennon”

By Shlomo Maital

Lennon McCartney

    Joshua Wolf Shenk has written a wonderful book titled Powers of Two: Finding the Essence of Innovation in Creative Pairs.     An excerpt is available from the Atlantic Monthly, June 25, 2014 issue.  His point is simple:   Very often,  when two (different) people work together on an idea, the result is far better than when only one works on it.

    I personally experienced this in working with my co-author Arie Ruttenberg on our book Cracking the Creativity Code (SAGE India 2014).   I’m convinced the final product was many times better than if either of us had worked in isolation.

     Shenk goes into detail in discussing the collaboration of Lennon and McCartney These two Beatles created some 180 songs!   Most of them are wonderful, most were recorded by the Beatles.

    Here is what Shenk observes about creative pairs:

     For centuries, the myth of the lone genius has towered over us, its shadow obscuring the way creative work really gets done. The attempts to pick apart the Lennon-McCartney partnership reveal just how misleading that myth can be, because John and Paul were so obviously more creative as a pair than as individuals, even if at times they appeared to work in opposition to each other. The lone-genius myth prevents us from grappling with a series of paradoxes about creative pairs: that distance doesn’t impede intimacy, and is often a crucial ingredient of it; that competition and collaboration are often entwined. Only when we explore this terrain can we grasp how such pairs as Steve Jobs and Steve Wozniak, William and Dorothy Wordsworth, and Martin Luther King Jr. and Ralph Abernathy all managed to do such creative work. The essence of their achievements, it turns out, was relational. If that seems far-fetched, it’s because our cultural obsession with the individual has obscured the power of the creative pair.

   My main ‘take home’ or ‘take away’ from this book?   Find someone to work with. If possible, don’t look for someone just like you.   Find someone DIFFERENT from you, like Steve Jobs and Steve Wozniak, or Lennon and McCartney.

 

Why Not Take One Day…To Change the World?

By Shlomo Maital

Balish

 The young ladies in the picture are from a school in India.  I’ve written about it before.   Dr. Balish Jindal, an Indian family physician, took Prof. Scott Plous’ Social Psychology course on Coursera (MOOC – massive open online course, free),  and as part of it, was asked to spend one day doing something ‘compassionate’ – a Day of Compassion. Dr. Jindal used the day to speak to girls in an Indian school about sexual abuse.  The result changed their lives – and Dr. Jindal’s.  She won the prize, from among the entire registered class of 260,000 (the largest course in all of Coursera), for the most impactful “Day”.  

    According to the BBC:   One day last year a doctor walked into a school near her clinic in a rural area near New Delhi in India and taught 2,000 girls how to protect themselves against sexual abuse.   Dr Balesh Jindal’s talks evolved into being constantly on call at her surgery for girls and their mothers and to teaching boys from impoverished backgrounds how to respect women.  She is paving a new way for women to protect themselves in India, where there has been anger at a number of high-profile rape cases and concern about the availability of sex education.

    I’ve had the privilege of exchanging emails with Dr. Jindal.  She is indeed remarkable, but of course she doesn’t think so. She regarded her “Day” as routine – and it probably was.

    As for Prof. Plous:  He says, “It doesn’t matter who you are, or what you do….You don’t have to be a physician or in education. Anyone can look at what they can do and if they are dedicated enough they can make a difference in just 24 hours,” he adds.   Prof Plous says he asks students to think about the person they were during the 24-hour period and if they preferred that person, to “break down the barriers” between the compassionate and every day version of themselves.

So —  Why don’t all of us, each of us,  take one day, a Day of Compassion, to change the world?  Imagine — what if only one per cent of the world, 70 million people, did this?  The world would never be the same.

You can read more about this at:

http://www.bbc.com/news/business-28882749

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
October 2014
M T W T F S S
« Sep    
 12345
6789101112
13141516171819
20212223242526
2728293031  

Pages

Follow

Get every new post delivered to your Inbox.

Join 103 other followers