“Drowning in Debt”

By Shlomo Maital

debt drown

   A new report from McKinsey Global Research, “Global Debt: Challenges and Opportunities”, sounds the alarm, from a rather unlikely source – a consulting company that makes its living on optimism and activism.

   Here is what McKinsey says, worth heeding!

   ”The world is deep in a flood tide of debt. Do we care and what do we do about it?

….More than 8 years since the 2008 global financial crisis started the world seems to be drowning in debt. Global economic growth remains anemic..some economists attribute it to the high level of debt (govt., businesses, households have been devoting significant resources to debt servicing instead of productive activities).   …Global debt has been growing faster than the economy… as of mid 2015 it stood at 294 % of global gross domestic product, up 25 percee end of 2007 and 48 percentage points since the end of 2000. In many countries debt has increased to levels not normally seen during peacetime in advanced economies.”

     The world has painted itself into a corner.   Advanced economies desperately need major investments in infrastructure and human capital. Instead they are either a) slashing public spending, to try to control the high level of debt, or b) recycling huge debts, borrowing new money just to pay off old money, because slow growth has put the brakes on tax revenues and increased deficits.

       I see little sign of creative thinking to solve the problem.   Central Bankers recently meet at Jackson’s Hole, Wyoming, took off their ties and formal dress…. And heard Janet Yellen, head of the US Fed, speak about how she plans, maybe, perhaps, to raise interest rates a bit this year. In Europe the central bank continues to push negative interest rates, after everyone knows for sure that you cannot get out of the painted corner solely by adding to the already huge mountain of money.

     Does anyone have a creative idea? Our central bankers are completely out to lunch… literally.

Melanoma: Outsmarting the Devilish Cancer Cell

By Shlomo Maital

Carmit Levy

Dr. Carmit Levy

     Despite countless billions of dollars in research funds, cancer continues to take its toll. The principle therapy continues to be chemotherapy, which by brute force poisons cancer cells and barely leaves other cells mostly unharmed.   Is it time to rethink?

       Tel Aviv University researcher Dr. Carmit Levy, together with an international team of researchers, including those from Germany’s Heidelberg Univ., have come up with breakthrough findings for skin cancer (melanoma) which kills one person every 52 seconds in the world, or some 90,000 people annually. Their findings are to be published in a leading scientific journal. Levy has just returned to Israel after a stay at Harvard.

         The team found that cancer cells begin in the epidermis, the outer layer of the skin, which has no blood vessels. Without blood and the nourishment it brings the cancer cannot spread (metastasize). So – it needs to penetrate the dermis, the skin layer below the epidermis, which does have blood vessels. But the dermis has immune cells that kill the cancer. How can the cancer cell invade enemy territory and survive?

     Simple. It sends out tiny nano-bubbles, with genetic material, that alter cells in the dermis and make them friendly for invasion. (Perhaps, like the Vichy France government that welcomed the Nazis in World War II). The melanoma, with its new blood supply, is now set to spread through the body and in many cases, kill the body itself.

   This discovery may make it possible to neutralize those tiny nano-bubbles, and keep them from preparing a friendly invasion site.   If melanoma can be stopped from metastasizing, the localized cancer can be removed in simple surgery. This is now the goal of the Levy team.

     It continues to amaze me, how evolution has enabled cancer cells to adapt, creating incredible complex mechanisms to defeat the body’s immune system, which itself has evolved and is exceptionally powerful and sophisticated. This is an endless war of escalation, in which cancer so far has had the upper hand. Thanks to Dr. Levy, perhaps we can gain some ground.

      

What We Don’t Know…Is Hurting Us!

By Shlomo Maital

dunce

“What you don’t know can’t hurt you!” I wonder if anyone ever said anything dumber. What you don’t know will hurt you and always does. And what is worse, what you don’t know that you don’t know, THAT will do you in for sure.

I am an economist. We pretend that we understand how the world’s economy works. Do we really? Didn’t the 2008 global crisis, and aftermath, prove anything? That we did not know enough to predict it, and worse, did not know enough to know how to dig the world out of the mess it was in (the ‘austerity’ camp fought the ‘spend/spend’ camp, confusing the world totally).

   So the first step in dealing with this problem, is to try to KNOW and define what we don’t know. Here is a partial list:

   *  Globalization: Globalization is the process in which nations of the world together moved toward freer movement of goods and services, people, information, technology and capital across borders.   It has generated unprecedented wealth for those individuals, businesses and nations clever enough to become globally competitive and join the globalized ecosystem — $150 trillion worth, according to McKinsey Global Institute.   This is mainly true of Asia, including China but not solely.   It also left left out individuals, businesses and nations not able or willing to become part of the global system.   Some have thrived in the globalized world; many have suffered.    Economists say opaquely, it’s “Pareto-optimal” (winners can compensate losers, with lots left over).   I say, economic borders are being restored because those losers are finally revolting, after being ignored and neglected.

   In the era of Trump and his Wall and anti-globalization backlash:   How can the benefits of globalization be distributed more fairly and how can the inevitable losers to globalization be compensated, without ruining the energy and freedom that drive globalization and without seriously disrupting its benefits?  

* Global aging:   Large parts of the world are aging demographically. Yet the issue of how to set aside adequate resources for the retired and elderly has barely begun to be addressed.   How can we ensure that the retired and the elderly live in dignity without imposing an unfair or unbearable economic burden on working people and the young, and prevent a war between the generations?

*   Global Capitalism:   History shows that socialism, based on state ownership of key assets, has failed.   But it also shows that capitalism, the system of free open markets, has not fully succeeded and continues to endanger our fragile global ecosystem. The fundamental causes of the 2008 financial crisis and ensuing recession have not been remedied.     What new, basic economic architecture can create a system that is good at both generating new wealth and ensuring its distribution is fair and equitable, within a system that is not prone to repeated, frequent collapse?

   *   Global Social capital:   Social capital is the summed present value of the bonds of love and friendship among family, friends, neighbors and communities, that generate mutual support and security. Financial capital is tracked to the last dollar; social capital is hugely important, gigantic in size, yet is not measured, tracked or fostered. Growing urbanization has begun to diminish social capital and hamper its formation.     How can we reverse the decline of social capital, measure it and expand it, in a world where urbanization and the anonymity it creates are destroying the crucial social bonds that once enhanced lives everywhere?

*   Global Search for Meaning:   How can better-off individuals, businesses and nations the world over find new meaning and purpose in life, other than acquiring more and more goods and services — proven to be ultimately disappointing, unable to bring true happiness? How can we rebalance present-future choice and make the future what it once was, without crashing the borrow-and-spend system?

     Economists and politicians lack viable answers. They’re hopeless. Can social entrepreneurs can come up with some initial answers and find ways to try them out? At the least, we will know what we don’t know, before it kills us. Let entrepreneurs everywhere work on these global life-or-death dilemmas, rather than invent another app that will show how far we’ve jogged.

Burquini – How It Happened

By Shlomo Maital

burquini

   The burquini, or burkini (a combination of the word ‘burqa’, the garment that covers religious Muslim women head to toe, and bikini, which does the precise opposite) is a two-piece swimsuit. Its invention is a story of innovation based on an entrepreneur who needed something for a loved one…and create something for thousands of others. It is also an innovation story based on X+Y:   combining two things others never thought to combine, a burqa and a bikini.

     According to Adam Taylor, writing in the Washington Post, Ahida Zanetti, who moved from Lebanon to Bankstown, an ethnically mixed suburb of Sydney, Australia, saw a clear and obvious need, one many others saw but never acted to satisfy:

   “It was a game of netball that first inspired Zanetti to make sportswear, she says, speaking over the phone from her home on Wednesday. She had been watching her young niece play her first game of netball but was dismayed to see her have to play with her team uniform worn on top of more traditional Islamic attire. “When I looked at her, she looked like a tomato,” Zanetti says.   Though Zanetti didn’t wear the Islamic veil herself (she has since started), her niece’s predicament angered her. She looked for a garment that was both modest and suitable for sports. She couldn’t find one, so she decided to take matters into her own hands.

Zanetti says the move to create the burkini was inspired by an article she read that contained a description of Muslim women wading into the water wearing burqas. She decided to look up the definition of the burqa in the dictionary, which described it as a garment that covers the head and the body.   She then looked up the meaning of “bikini.” It was described as a small two-piece bathing suit. Zanetti decided there was no reason not to combine the burqa and the bikini. “It’s just a name that I invented. It doesn’t mean anything,” she says of the burkini. “It’s really an Islamic two-piece bikini, but that sounds stupid.”

   Zanetti has trademarked the words burquini and burkini, and her business is thriving. She has gained invaluable PR from France’s Prime Minister, who supports French municipalities that ban the burquini from their beaches, on the grounds it is a religious statement. I think this is simply wrong. The burquini is an article of clothing that enables religious Muslim women to bathe in the water, more or less comfortably. This is their right.   It is interesting that it took one woman in Australia, Ahida Zanetti, to satisfy a need that was clear, evident and widespread – but ignored by men for decades.

 

Innovation – by Marcel Proust

By Shlomo Maital

Proust

Marcel Proust

   Valentin Louis Georges Eugène Marcel Proust was born on July 10 1871 and he died on the 18th of November 1922. He was a very eccentric French novelist, best known for his monumental novel In Search of Lost Time, better known as Remembrance of Things Past, published in seven parts between 1913 and 1927. His novel is not easy to read, but is highly innovative, on a par with Joyce’s Ulysses in its creative structure.

     My wife and I visited the lovely Descano Gardens, in Pasadena, California, today, saw the amazing California Redwoods (they are so stately, so wise and dignified, it is really hard not to hug them —   tree huggers, I understand you!!) ….   and in the art gallery in the gardens, saw this quote by Proust:

   The real voyage of discovery consists not in seeking new landscapes –

             But in having new eyes.

     Entrepreneurs and innovators simply see things others do not. But how do we acquire new eyes?   By really REALLY looking at things. By asking questions about what we are seeing. By asking dumb basic questions. Why? How come? How? When?   By taking the time to pause the reflect on what we see.  

     Let’s all get new eyes. Or, train the old ones to see new and wonderful things.   Let’s try to see each other more clearly, and see new ways to help others with new ideas.   If we all did that, or even if a few of us did it, the world would be more Proust-like.

 

Hard Work – from Melissa Mayer

By Shlomo Maital

Mayer

   In our Coursera on-line MOOC (course), “Innovation Lessons from a Master”, my friend David (Dadi) Perlmutter offers 10 life lessons on innovation, based on his 34 years as a leading innovator at Intel, ending with his job as Executive Vice President, with 50,000 people reporting to him.

     His last lesson in the course: The theme is “work hard”.   Sometimes, perhaps, we do not sufficiently explain and emphasize how hard it is to launch and build a startup, and how long the hours are.

     Here is what Melissa Mayer explains – she was a Google founder, and now is CEO of Yahoo, guiding the company through difficult times:

   “The Yahoo CEO reminisces about her crazy work schedule in Google’s early days and where she sees herself in five years (everyone’s favorite interview question).

     Something that gets overlooked in the Google story, she says, is the importance of hard work. “The actual experience was more like, ‘Could you work 130 hours in a week?’ The answer is yes, if you’re strategic about when you sleep, when you shower, and how often you go to the bathroom.

   The nap rooms at Google were there because it was safer to stay in the office than walk to your car at 3 a.m. For my first five years, I did at least one all-nighter a week, except when I was on vacation—and the vacations were few and far between.”

If you’re not truly prepared mentally, to do all-nighters, or if your significant others may resent it deeply, or if you haven’t prepared your loved ones and family for such absences…   perhaps you should reconsider.

 

True Grit – What Our Kids Need

By Shlomo Maital

Grit

   Angela Duckworth, PhD, is a 2013 MacArthur Fellow and professor of psychology at the University of Pennsylvania. She’s an expert in non-I.Q. competencies, she has advised the White House, the World Bank, NBA and NFL teams, and Fortune 500 CEOs.   Her latest book is: Grit: The Power of Passion and Perseverance. In her book she studied high performers.  

   Here is her core message:

     “what distinguished high performers was largely how they processed feelings of frustration, disappointment, or even boredom. Whereas others took these as signals to cut their losses and turn to some easier task, high performers did not – as if they had been conditioned to believe that struggle was not a signal for alarm.”

   Duckworth used her Grit Scale to try to predict which West Point cadets would drop out.   She found:  for 1,218 new cadets at West Point, those 71 cadets who quit scored well on every other test, but very low on her Grit Scale, which used statements like:      “ I finish what I begin”   “Setbacks don’t discourage me”.    

     According to Duckworth, you CAN change people’s beliefs about how success happens… and this may change their behavior.   Success happens when ordinary people simply persist!   Through trials and failures and crises.   Grit is learned behavior.

   I think we should teach this to our kids. It’s as important as math and science and English.  

Guatemala: Poor…and Happy. Why?

They Count Their Blessings

By Shlomo Maital

Guatemala

   I am very troubled by the paradox of increasing wealth and income and stagnant or even decreasing (self-measured) happiness. If we THINK we are unhappy, or less happy, then of course we are.

   An unlikely source, Al Jazeera, sent to me by a friend, Einar Tangen, tells about Guatemala, a poor country riddled with problems – with happy RESILIENT people.   Here is an excerpt:

   Why is Guatemala one of the world’s happiest countries? Despite high rates of violence and poverty, Guatemala is consistently in the top 10 of happiest countries globally. For millions of people around the world, physical and social isolation are causing chronic loneliness.   As a result, many researchers today fear solitude could be the next big public health issue, cutting years off people’s lives . Perhaps people like Silvia Pablo have something to share with the world – and teach it.

     The 21-year-old Guatemalan in no stranger to loneliness. She was born with spina bifida and was shut inside her mother’s house for 10 years after her father left them. But Pablo says her faith kept her going and helped her overcome her daily struggles. Today she has own wheelchair and works at a factory.

   “I think my happiness comes from God,” she says. “Yes, there are difficult times. But with God’s help, we can overcome any obstacle or sad situation. We need to live the lives we’re born into … and try to be happy through our faith.”

And Pablo is not alone.   Despite high rates of violent crime, poverty and corruption, Guatemala is consistently in the top 10 of happiest countries in the world.   “Guatemala is often found near the top of the global list for inequality and violence; more than 50 per cent of the population lives in poverty and around 13 people are murdered every day,” Al Jazeera’s David Mercer said from Antigua.

“Yet some international polls report that people here are some of the happiest in the world.”   Psychologist Andres Pinto says that in addition to faith and family, resilience is key to helping people in the country fight off loneliness, anxiety and depression.   “Many Guatemalans have suffered a lot, and don’t have much to lose,” he says. “When they encounter problems they know they have to work hard to overcome them. Of course we’re not all like this, but resilient people can teach us a lot.”

But Pablo likes to put it a different way. Happy people are not those who have the most, she says, but those who are most grateful for what they have.

Remember that popular song? “When I’m worried and I can’t sleep, I count my blessings instead of sheep..and then I fall asleep, counting my blessings.”     Living in wealthy countries, most of us have a lot. Do we appreciate it? Or do we just want more and more and more….   When is “enough”?   And can we learn from Guatemala, and emulate Silvia Pablo?

 

Didi 10 Uber 0: Why?

By Shlomo Maital

Didi

Uber, the global ride-share company, has sold its China business to Didi, its Chinese counterpart. This, after Apple announced a major investment in Didi.

   Uber’s failure in China (it never had more than a 10% market share, compared with Didi’s 80 %) reminds me of eBay and its massive defeat by Alibaba, despite a huge $150 m. investment of eBay in its China operation.    Alibaba, by the way, along with Tencent, is a major owner of Didi.  

   We can learn a lot from the Uber-Didi battle. The head of Uber China, and of Didi, are cousins. Their uncle was a founder of Lenovo. Didi has been adding 400,000 drivers a day! It has been innovative, offering innovations like bus service and car pooling. Business in China is based on relationships, and the two cousins’ close relationship smoothed the deal.

     I am writing this blog in Pittsburgh, where I’m visiting my sister. Decades ago, I visited her and went to see the steel mills, in Braddock and along the rivers. They’re all gone. And the jobs have migrated (though not the same steelworker people) to health care. U. of Pittsburgh Medical Center, Montefiore Hospital and others now are the major employers, in Pittsburgh, and the city has undergone an amazing revival. This is not, however, true of other rust-belt cities like Gary Indiana and Cleveland, Ohio.

     China has a new program, or policy, Innovation Plus. The idea: Migrate steel jobs toward services, like Didi. America never did have any such plan. The free market is supposed to do the job. But it did it very very poorly or not at all. China’s government is actively encouraging Internet service businesses, like Alibaba’s Taobao villages which do e-commerce.

     I have written a case study of Alibaba, including how it triumphed over eBay, available to anyone who sends me an email: smaital@tx.technion.ac.il

 

Europe’s REAL Problem: Innovation!

By Shlomo Maital

EU Innovation

Innovation: Only the Dark Green is “Innovation leader”

The EU has a lot of headaches – more than an ocean-full of Tylenol can assuage. Brexit, and copycat exit movements (including Austria, Catalonia, parts of France, eastern Europe); Greek debts that can neither be paid off nor written off (owing to stubborn German banks); a banking system that has an EU central bank but fragmented country-level banks, that can neither be integrated nor freed and opened; and many more.

   Some of these headaches are being (badly) addressed. But one key issue is utterly ignored, as the Washing Post recently noted. *   In an EU report, EU Regional Innovation Scoreboard 2016, it is claimed that:

   The continent’s most creative and productive regions are in Germany, France, Britain and the Nordic countries. Southern England, northern Denmark, southern Germany and Paris are particularly successful — whereas Romania, Poland and Spain have disproportionately more regions that lack innovation. But as a political and economic union, all of Europe should be worried. Europe is becoming less innovative overall.

   Why is this worrisome?   One of the main points of a single market is that by creating a huge market, the world’s 2nd biggest economy, you open huge opportunities for entrepreneurs, whose path-breaking ideas can now reach 510 million people (EU), $20 trillion economy (2nd in the world) and per capita GDP of $37,000.   But the opposite has occurred. Europe is becoming less innovative, as the report shows.  

     In Belgium, Greece, Ireland, the Netherlands and Romania, performance declined in all regions,” the report’s authors note. Germany — often considered the economic powerhouse of the continent — was also unable to improve performance.

         I taught in France for many years.   France has some of the world’s most talented creative engineers. But they don’t start businesses! Why? There are a hundred reasons. Risk, bureaucracy, lack of finance, rigid labor markets…

           You can’t solve a problem until you face it. Europe is preoccupied with other problems, and is not even beginning to face its innovation problem.  Alas.

* Rick Noack “Where Europe is most and least innovative, in 6 maps,” Washington Post. 2016.

Blog entries written by Prof. Shlomo Maital

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