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What I Learned from Lee Kwan Yew
By Shlomo Maital
Singapore’s legendary founding leader, Lee Kwan Yew, has passed away; he was 91.
I personally learned a great many things from this wise and courageous man, who led Singapore to independence in 1965 and like the founding leader of my country, David Ben Gurion, knew the odds were strongly against survival. He shaped a prosperous country with per capita GDP of over $60,000, double that of my country Israel.
I recall two things vividly. First, in the early days of Singapore, he appealed to the mothers of Singapore, to “urge your children to study math”. Why? So they could study engineering in college. Why? So Singapore could build its wealth on knowledge, having no resources or land. And it worked. They did, they did, and it did.
Second – he explained why America leads the world. China has 1.4 billion people. Among them are geniuses. America has only some 340 million. But America is a magnet. It attracts talent from the whole world – its talent pool is 7 billion, not 340 million. That is a huge advantage. My own parents migrated to Canada as immigrants from Bessarabia, now Moldova, worked hard, and passed their aspirations on to me. Canada, I think, benefited.
Recently, Harvard Professor Joseph Nye wrote a book, with the title asking a question, is the American excellence and domination over? His answer was, no. But I’m not sure. Because many Americans (especially the Republican party) are anti-immigrant, and I personally have waited hours and hours and hours to have my visa approved (in Toronto), just so I could go to Boston to teach a course FOR FREE. (Babson insisted I enter on a visa, rather than as a Canadian visitor). Amusingly, I had to show my Princeton diploma to the immigration official; it was in Latin! That took another few hours.
I know Singapore well, having taught there. I got to know a very senior civil servant, a man of enormous wisdom. I often wished my own country could have civil servants of such quality – and leadership like Lee Kwan Yew. Very few countries do. He will be missed.
What I Learned in China
By Shlomo Maital
I try to write a blog almost every day – knowing this keeps me ever alert for new ideas to share. In this sense, blogs are as much for the benefit of the writer as for the reader.
I’ve been in Shantou China, for a week, teaching entrepreneurship to 43 eager young undergraduate business majors at Shantou University. Shantou is in the northern part of Guangdong Province, north of the provincial capital Guangzhou, close to the coast, and two hours by fast train from Shenzhen, which is opposite Hong Kong, on the mainland. My university, Technion, has a joint venture with Shantou Univ., to establish GTIIT – Guangdong Technion Israel Institute of Technology, now headed by Technion Nobel Laureate Dan Shechtman. The initiative arose from a generous grant by Li Ka Shing and his Third Son Foundation; Li Ka Shing, a Hong Kong billionaire, was born in Shantou and his foundation is active in supporting the city and its university. His investment company has invested profitably in Israeli startups.
Supposedly you cannot teach entrepreneurship to undergraduates because “they are too young and lack experience”. But Babson College does it highly successfully, using the method developed by my late friend Ted Grossman, an action learning approach in which teams of students form a real company, make a real product and learn the tools of business through running their company, under the guidance of mentors like Ted (who first launched a successful software company before joining Babson).
I use the same method in Shantou. And in one intensive week, the young students do amazing work; some of their ideas become reality, though not all. The photograph shows last year’s class.
Wages in China have risen dramatically, from about $100 a month in 2000 to $650 today (this is still only one-fourth the average wage in America, and Chinese productivity is in many cases even higher). But Philippines, for instance, has average wages of only one-sixth that of China. So China in principle should be losing its manufacturing to low-wage countries like Vietnam, Indonesia, and Philippines. And indeed it is, with shoes and textiles, low value added products, moving to those countries.
But China is keeping its high value-added jobs and enhancing them. How? China is the world’s biggest market for production robots, buying 20 per cent of worldwide production. Labor productivity rose by 11 percent yearly (!) on average during 2007-12 (it barely budged in the West). China uses its network of highly efficient suppliers to keep factories in China. China has become the hub of a complex ecosystem, in which Asian countries specialize, make components and ship them to other Asian countries. Asia now accounts for nearly half of all world manufacturing output, compared with 27 percent (about one quarter) in 1990.
Bottom line: China’s strategy is: Made in China 2025 (its official name) – boost productivity to keep competitive. If wages rise by 12 percent year but productivity does too…the cost advantage stays. But at the same time: Created in China. China is working to invent more of the products it makes. Like Xiaomi, the innovative smartphone company. And this is where I come in… teaching innovation to the young undergrads at Shantou University, not even a tiny drop-in-the-bucket in huge China, but – China is all about scale, and good ideas spread with lightning rapidity.
I truly love my annual one-week courses in Shantou; the students are fiercely eager to learn and highly creative once their creativity machines are turned on. These young people are literally eating our (Western nations’) lunch. If we don’t wake up, China’s living standards will continue to grow by 11 or 12 per cent a year, the rate of growth of productivity, and our living standards will simply stagnate (the rate of growth of OUR productivity). We need to save more, invest more, build better infrastructure, educate our young people better, and become more productive. This is what I learned in my classroom from 43 eager young Chinese business-major undergraduates.
Let’s All Celebrate Pi(e) Day
By Shlomo Maital
It’s nearly midnight, March 14, 2015, or 3.1415 – yes, it’s still Pi Day, the day we celebrate pi, that incredible number, the ratio between the circumference of a circle and its diameter… 3.1415927 … and another 3.1415 won’t happen for a whole century, until 2115.
What can we learn from pi and Pi Day? New York Times columnist Manil Suri, a mathematician, observes that an exceptionally simple idea – take the ratio of the circle’s circumference to its diameter — can yield an ‘irrational’ number (that’s what the mathematicians call it, because you cannot express it as a ratio of two whole numbers, like 22/7) that is incredibly complex, one that has been calculated to trillions of digits, and those digits are simply random.
But this is not irrational at all. For many ideas of great beauty, their utter simplicity generates rich complexity and interest. Like Hemingway’s Old Man and the Sea, written in spare simple prose, but with infinite meanings. Or the Bible and its stories.
The simpler your innovation, the more complex its potential uses, because the more ‘stuff’ and ‘wrinkles’ you put on it, the more you limit the users’ imaginations.
So – follow John Maeda. Simplify. Follow Antoine de St. Exupery (author of The Little Prince) who said “perfection is not when nothing more can be added, but when nothing more can be taken away”. And while you’re at it, have a piece of deep-dish apple Pi. Simplicity? Sliced apples (thinly sliced, so they taste better), dab of sugar, cinnamon, and pie crust (I like crumble topping, oatmeal and margarine and brown sugar). There’s nothing better.
Happy Day-After-Pi(e) Day!
And here, just for fun, is pi to one thousand digits. Who knows – you might need it some day! 3.1415926535897932384626433832795028841971693993751058209749445923078164062862089986280348253421170679 8214808651328230664709384460955058223172535940812848111745028410270193852110555964462294895493038196442881097566593344612847564823378678316527120190914564856692346034861045432664821339360726024914127372458700660631558817488152092096282925409171536436
Kids of All Ages (up to 100) Need to Play!
By Shlomo Maital
Hilary G. Conklin, Ph.D., is a fellow with the OpEd Project and an associate professor in the College of Education at DePaul University in Chicago. Writing in TIME magazine’s IDEAS on-line blog, she writes: “Helicopter parents and teachers, stand down. Kids of all ages need time to learn through play in school.” It’s time we got serious about the crucial importance of play. (My wife brought this piece to my attention).
She continues: “In classrooms across the country, the countdown to summer vacation has begun. The winter doldrums have always taken a toll, but in the era of test-dominated schooling and the controversial Common Core, it seems increasingly that it’s not until summer that teenagers have any prospect for having fun any more. One of the casualties of current education reform efforts has been the erosion of play, creativity, and joy from teenagers’ classrooms and lives, with devastating effects. Researchers have documented a rise in mental health problems—such as anxiety and depression—among young people that has paralleled a decline in children’s opportunities to play. And while play has gotten deserved press in recent months for its role in fostering crucial social-emotional and cognitive skills and cultivating creativity and imagination in the early childhood years, a critical group has been largely left out of these important conversations. Adolescents, too—not to mention adults, as shown through Google’s efforts —need time to play, and they need time to play in school Early childhood educators have known about and capitalized on the learning and developmental benefits of play for ages.”
“To be sure,” she continues, “there are times to be serious in school. The complex study of genocide or racism in social studies classrooms, for example, warrant students’ thoughtful, ethical engagement, while crafting an evidence-based argument in support of a public policy calls upon another set of student skills and understandings. As with all good teaching, teachers must be deliberate about their aims. But, given that play allows for particular kinds of valuable learning and development, there should be room in school to cultivate all of these dimensions of adolescent potential. Purposefully infusing play into middle and high school classrooms holds the potential for a more joyful, creative, and educative future for us all—a future in which kids have more interesting.”
Dr. Conklin might have added that adults, too, of all ages, especially us senior citizens, need opportunities to fool around, imagine, create and play. Creative ideas emerge from an ambience of fun, joking and just general fooling around. And most important — play is fun. When life is enjoyed, it is prolonged.
Entrepreneur – Go Work for Government!
By Shlomo Maital
The last place entrepreneurs think about, as an employer, is government. Government is too slow, wasteful, doesn’t work, bureaucratic. Right?
Harvard Business School Senior Lecturer Mitchell B. Weiss disagrees. He is offering a Harvard course on Public Entrepreneurship. He knows what he is talking about. He worked as chief of staff to the late Boston mayor Thomas Menino, a great mayor. He co-founded the Mayor’s Office of New Urban Mechanics, which invented America’s first big-city 311 app, in which citizens alert governments to potholes and graffiti.
Harvard’s on-line magazine Working Knowledge claims that cities around the world have increasingly become laboratories in innovation, partnering with outside businesses and nonprofits to solve thorny public policy problems. State and local governments, too, are trying this.
Weiss says one reason we don’t have innovative people in government is because “we weren’t training them. In public policy schools we were not training young people to be entrepreneurial, and at business schools we were not prepping or prodding people to enter the public sector or even just to invent for the public realm.”
He notes that governments should be naturals at crowdsourcing – who has a bigger crowd than government, essentially, everyone?
Weiss says, “in government we announce something and wait to get it perfect. By using more experimental approaches, some public leaders are achieving success by testing and learning, instead of writing a plan in stone before executing it.”
The Mayor of Jerusalem, Nir Barkat, is a former entrepreneur, founder of a successful starutp BRM that made and sold early anti-virus software. The former Mayor of New York City Michael Bloomberg is a highly successful entrepreneur who founded the company named after him. Both are, and were, highly creative in their terms of office.
Weiss says there is a huge opportunity in public entrepreneurship. Note that this is not social entrepreneurship. It is taking on operational roles in government, and bringing to the job creative ideas to make people’s lives better. Why should creativity live and thrive only in the private sector?
How Legal “Front Running” Rips YOU Off –
Wall Street Strikes Again
By Shlomo Maital
Remember Michael Lewis’ book Liars’ Poker? The book that exposed Wall St. manipulations that eventually destroyed the world? The book that MBA’s bought, massively, so that – they could learn how to make $250k a year for doing nothing, as Lewis did briefly?
Lewis is back with Flash Boys, about another Wall St. ripoff. OK, the book has been out for a whole year, I’m a bit late.
Here is how it works:
“Front-running” is an illegal financial practice. Suppose you order 100,000 shares of IBM. (Some pension funds do). Before the broker executes the ‘buy’ order, he buys 50,000 IBM shares for his own account. Then, buys 100,000 shares for his client. AT A HIGHER PRICE! Because his purchase has raised the demand and the price. The pension fund loses money. Not a lot, but – it adds up. Then – after executing the pension fund order, which raises the price of IBM shares, the broker SELLS the shares HE bought, at a profit. This profit has come directly at the expense of the pension fund. And – THIS PRACTICE IS ILLEGAL. But, very hard to prove, hard to identify, and it’s done all the time.
Now, Michael Lewis has shown us how to do it legally. Buy orders for securities go to stock exchanges via fiber optic cables. These orders travel at the speed of light. But, still, if the cables are long, it takes a few milliseconds. Suppose, you learned about the order to buy a security, ALL securities, and through a computer algorithm, and a SHORT fiberoptic cable, could BUY the security BEFORE the order is executed, 2 milliseconds before. The order to buy would then be executed at a higher price, because…the price has gone up. After the order to buy is executed, you sell the security, and pocket a few cents’ profit. This is called High Frequency Trading, all done with super computers and algorithms, without human intervention. This is front running. AND IT IS LEGAL. It costs pension funds and other funds (OUR money) billions, maybe $10 billion or more. Who pockets the profit? Wall St. high frequency traders.
Who exposed this? A single person, the chief trader for the Royal Bank of Canada, in Toronto, a young man named Brad Katsuyama. Here’s how Wikipedia describes what he did (recounted in Flash Boys):
While at RBC, he noticed that placing a single large order that can be fulfilled only through many different stock exchanges was being taken advantage of by predatory stock scalpers. Scalpers, noticing the order would not be able to be fulfilled by one single exchange, would instead buy the securities on the other exchanges, so that by the time the rest of the large order arrived to those exchanges the scalpers could sell the securities at a higher price. All these events would happen in milliseconds not perceivable to humans but perceivable to computers. He instead led a team that implemented THOR, a securities’ order-management system where large orders are split into many different sub-orders with each sub-order arriving at the same time to all the exchanges through the use of intentional delays.
Katsuyama quit his job at RBC, and launched IEX, a new stock exchange that prevents all such high-frequency scalping. IEX is still very small, but growing. Katsuyama took a huge risk. As chief trader, he made a very high salary. He had a hard time persuading his wife that he had to do this, to start IEX, at huge risk. He has powerful wealthy enemies who are doing everything to scuttle IEX. And the regulators? Basically, they are asleep, or out to lunch.
Wall St. and the banks lost our trust totally in 2008. In theory, they should be working to regain it. Instead, extreme greed has again destroyed whatever molecules of trust was left. Lewis’ new book proves to me that in the battle between regulators and greedy speculators, regulators can never win. Only courageous individuals like Brad Katsuyama, and authors like Michael Lewis, can fight back.
The Truth About Wall Street from Warren Buffett
By Shlomo Maital
Each year, legendary investor Warren Buffett, CEO of Berkshire Hathaway, writes a letter to shareholders, the mostly widely read document of its kind, as it has many pearls of wisdom – and of course, Buffett’s incredible track record gives him credibility. You can easily download and read the whole thing. I recommend it. Here are some snippets, drawn from Andrew Ross Sirkin’s New York Times column on March 4:
On Investment Bankers: “…constantly urge acquirers (of companies) to pay 20 to 50 per cent premiums over market price….they tell the buyers the premium is justified for ‘control value’ …a few years later bankers – bearing straight faces – again appear and just as earnestly urge spinning off the earlier acquisition in order to ‘unlock shareholder value’.” Sorkin comments “there are countless example of the build-it-up-and-tear-it-down phenomenon, like Hewlett Packard.” Of course, investment bankers charge huge fees for this brilliant manipulation.
Any true redeeming social value in all this? Buffett sees none and neither do I.
On Wall St. in general: “Money-shufflers don’t come cheap”. Money shuffling. Any true redeeming social value in this? You won’t find it with an electron microscope.
On private equity: “Equity is a dirty word for many private equity buyers; what they love is debt. And because debt is currently so inexpensive these buyers can frequently pay top dollar. Later the business will be resold, often to another leveraged buyer. In effect, the business becomes a piece of merchandise.”
Sorkin quotes Buffett’s comparison of Berkshire Hathaway (which buys share and companies, and holds them, often forever) and other investment funds: “You can sell it to Berkshire and we’ll put it in the Metropolitan Museum…by itself, it’ll be there forever. Or you can sell it to some porn shop operator, he’ll stick it up in the window and some other guy will come along in a raincoat and he’ll buy it.”
And yes, Buffett believes in real companies that make real stuff, like Heinz ketchup.
An enormous industry is thriving on the cheap money that American and European central banks are printing. That money was supposed to finance real capital formation. Instead it is financing speculative money-shuffling, making big profits for the very people who crashed the world’s economy in 2008.
If you don’t believe me, ask Warren Buffett. Or read his letter.
Is there a Limit to Impatience?
By Shlomo Maital
Ah, the younger generation. The kids. We older people all know, the kids want it NOW! They are impatient and they have very short attention spans. The MTV generation loves super-fast images, that for us seniors are blurry and annoying.
But hey! This time they have gone too far. It’s time to draw a line in the sand.
Today’s New York Times (March 3) reports that John McEnroe and Patrick Rafter, tennis greats of the past, played an exhibition match in Australia. Rafter won. 4-3, 4-1.
Wait. Run that by me again? 4-3, 4-1? Don’t tennis matches go to six sets? Always have, for over a century? And at Wimbledon, they can go to 17 sets, or more?
Well, no. “It’s whatever the crowd wants, what TV wants,” Rafter said. “If this is what the fans want, this is what we should be playing.”
Four-set matches mean a match can be finished in an hour and 45 minutes, ideal for TV. And of course, TV dominates sport, because TV brings the money.
Actually, it’s a great idea. Let’s shorten everything. Let’s shorten prison sentences by half. Let’s cut the 12-month year to 10 months (at the same pay). Uh, let’s shorten life by a decade or so, those last 10 years are a bummer anyway, and the working youth (if there are any) can’t afford to support all those old guys.
The “me” generation is actually the “now” generation. Watch the Australian Fast4 format spread like wildfire to all aspects of life. With the future looking so bleak for so many, why not just live for the moment?
We seniors have an answer. Cultivate patience. Give value to the future because, somehow, the future does arrive, and when it does, it helps if we can work now to make it better, more desirable. “I want it now” is a losing formula. “I want a better future” is a whole lot more appealing. We should try it some day.