The Big Shift

How American Democracy Fails Its Way to Success
By Walter Russell Mead – As Americans struggle to make sense of a series of uncomfortable economic changes and disturbing political developments, a worrying picture emerges: of ineffective politicians, frequent scandals, racial backsliding, polarized and irresponsible news media, populists spouting quack economic remedies, growing suspicion of elites and experts, frightening outbreaks of violence, major job losses, high-profile terrorist attacks, anti-immigrant agitation, declining social mobility, giant corporations dominating the economy, rising inequality, and the appearance of a new class of super-empowered billionaires in finance and technology-heavy industries.

That, of course, is a description of American life in the 35 years after the Civil War.

The United States is passing through something similar today. The information revolution is disrupting the country’s social and economic order as profoundly as the Industrial Revolution did.

The ideologies and policies that fit American society a generation ago are becoming steadily less applicable to the problems it faces today.

It is, in many ways, a stressful and anxious time to be alive.

And that anxiety has prompted a pervasive sense of despair about American democracy—a fear that it has reached a point of dysfunction and decay from which it will never recover. more>

updates from Chicago Booth

Why it’s so hard to simplify the tax code
By Dee Gill – Simplifying the tax code ostensibly has bipartisan backing. Both the Bush and Obama administrations advocated for simplification, in reports, as have House Speaker Paul Ryan (Republican of Wisconsin) and Senator Elizabeth Warren (Democrat of Massachusetts). But when the Senate passed a tax bill this past December, there was no postcard.

What happened? The same thing that always does, suggest researchers. While simplicity is a stated goal, complexity wins the day. Hence companies and individuals will hire accountants to wade through the latest bill, interpret the new rules, offer guidance, and help work through the inevitable corrections and amendments.

And this comes at an economic cost. Research by James Mahon and Chicago Booth’s Eric Zwick, and others, collectively indicates that the complexity leads individuals and companies to fail to take advantage of billions of dollars in offered breaks, many of them presumably intended to stimulate the economy. In this way, complexity undermines what tax incentives are purported to accomplish. more>

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Updates from GE

Going For Great: In A Deal Valued At $6.5 Billion, GE Jet Engines Will Power American’s New Dreamliner Fleet
By Tomas Kellner – American Airlines, which helped launch GE into commercial aviation 45 years ago, said it would power 47 additional new Boeing 787 with GE Aviation’s GEnx-1B engines. The $6.5 billion deal includes a 20-year service agreement. This order follows a previous order for 42 such planes placed several years ago.

Airlines have ordered more than 2,000 GEnx engines since 2004, when Boeing selected the model for its 787 Dreamliner jets. Eager to save weight and improve efficiency, GE engineers took the GE90, the world’s most powerful jet engine developed a decade earlier, and remodeled it.

The GEnx has already entered the record books. In 2011, a GEnx-1B-powered Dreamliner flew halfway around the world on a tank of gas, then finished the job on the next tank. The journey set a weight-class distance record for the 10,337-nautical mile first leg and a record for quickest around-the-world flight at an astonishing 42 hours and 27 minutes.

What’s next? GE engineers could upgrade the engines with space-age materials called ceramic matrix composites, or CMCs. CMCs can handle temperatures as high as 2,400 degrees Fahrenheit and withstand the punishing forces inside the engines. more>

Renewing America’s economic promise through older industrial cities

By Alan Berube and Cecile Murray – Despite a robust national economy, deep regional divides persist with technology hubs in the coastal states pulling away from the nation’s industrial Heartland. This growing regional inequality poses serious economic, social, and political consequences for the nation.

The middling performance of communities with historically strong manufacturing cores is a key feature of America’s uneven economic growth. These so-called older industrial cities, predominantly located in the Midwest and Northeast, have struggled over time to grow jobs in new sectors and to boost employment and income, particularly for their communities of color.

They range from very large cities like Baltimore and Detroit, to smaller communities like Schenectady, New York, and Terre Haute, Indiana.

With increasing interest in local, state, and national policies to revive the fortunes of struggling communities, older industrial cities represent promising regions for strategic investment and critical centers for promoting inclusive economic growth. more>

Trump’s lies corrode democracy

By James Pfiffner – Previous research has demonstrated that most modern presidents have told lies for a variety of reasons, from legitimate lies concerning national security, to trivial misstatements, to shading the truth, to avoiding embarrassment, to serious lies of policy deception. However, when a president continues to insist that his previous false statements are true, the institutions of government become corroded and democracy is undermined.

Of course, many of Trump’s lies are “conventional” lies similar to those that politicians often tell in order to look good or avoid blame. But the number of these types of lies by Trump vastly exceeds the lies of previous presidents. Glen Kessler of the Washington Post compiled a list of more than 2000 misleading or false statements in Trump’s first 355 days in office.

But aside from volume, Trump’s lies differed significantly from those of previous presidents. Some of his most frequent lies are bragging about his achievements in ways that are demonstrably untrue and contrary to well-known and accepted facts.

Trump’s refusal to admit the truth of widely accepted facts corrodes political discourse and is consistent with the practice of many authoritarian leaders. If there are no agreed upon facts, then it becomes impossible for people to make judgments about their government or hold it accountable. more>

How CEOs Best Lead Strategic, Organizational And Operational Processes

By George Bradt – The best CEOs deploy differential delegation based on the strength of their team and complexity of their situation. If you follow the 40-30-20-10 Rule of Time Management, you’ll spend 40% of your time on your No. 1 priority – most likely strategic, 30% of your time on your No. 2 priority – most likely organizational, and 20% of your time on your No. 3 priority – most likely operational. Your level of delegation will be inverse to that with more delegation of operational and less of strategic issues.

Most of us have unbalanced strengths. Make sure you’re building complementary strengths in your organization. If you are relatively weak operationally, you need a strong chief operating officer. If you are relatively weak organizationally, you need a strong chief human resource officer. If you are relatively weak strategically, make sure someone can help you with that, from any position. more>

The Four Industry 4.0 Tipping Points

By Jonathan Wilkins – At the turn of the 20th century, the third industrial revolution was driven by three major tipping points: improvements in agriculture, greater transport possibilities, and an economic boom.

Now we’re on the fourth industrial revolution—Industry 4.0. Many businesses are welcoming economic globalization as an opportunity to spread their divisions worldwide and generate a virtual global factory.

Among the factors underpinning Industry 4.0’s tipping points are the following: connectivity, the smart factory, data, and the customer.

The term “smart factory” describes the manufacturing sector’s vision for the future. It incorporates exceptional machine intelligence, resulting in the ability to self-optimize and make decisions. Machines will be able to interact and communicate with each other to automate entire manufacturing processes.

In the battle to remain competitive, every manufacturing company is taking steps to bring the smart-factory vision into existence. This is helping to fuel the progress of Industry 4.0. more>

Russia, Iran And Turkey Are Building A New Middle East

By Jonathan Wachtel and Albert Wachtel – Washington’s constructive role in the 20th century began in 1905 when President Theodore Roosevelt coaxed Moscow and Tokyo into signing the Treaty of Portsmouth, ending the Russo-Japanese War. A couple of months after Yalta in mid-century, Franklin Roosevelt died, but the Marshall Plan of Harry S. Truman, Roosevelt’s successor, enabled post-war Europe to rebuild, including the creation of a democratic and friendly West Germany.

20th century America led the effort to build a better world, and nations depended on that.

In the 21st century, that crucial role has often been abdicated. Barack Obama tried to sidestep crises, naively dismissing emerging Islamic State militant group (ISIS) terrorists as a “J.V. team.” He threatened to bomb Syrian President Bashar al-Assad’s installations because he used chemical weapons but didn’t follow through. His red lines were pale, and his attempts to lead from behind were pale policy.

Enemies advanced destruction, chaos, and despair, and by the time Donald Trump took office, Iran was asserting itself across the Middle East, not just in Syria and Lebanon, where Hezbollah dominates the national army, but in Iraq and Yemen as well.

Mr. Trump is perplexingly outsourcing American policy in Syria. more>

Tech Upheaval Means a ‘Massacre of the Dilberts’

By Fergal O’Brien and Maciej Onoszko – The Bank of England Governor Mark Carney said there are a lot of “routine cognitive jobs,” at risk, in what he termed a “massacre of the Dilberts” — a reference to the satirical American comic strip about office workers.

Technology and the fourth industrial revolution are having untold impact, he said, and it’s going to take huge efforts to make sure workers ultimately benefit. The effect of automation is just one part of the change and examples of the seismic shift can be seen in finance, where many “unglamorous” data entry jobs have already been transformed.

“Get a grip on the scale of the problem. Assess and address,” he said.

Carney added that part of the solution could require major social change, with workers having to extend or return to education in later life to prepare themselves for the new world of labor. He acknowledged that wouldn’t be simple, when many people will have mortgages and other financial responsibilities, and added that up to now not everyone is getting training right. more>

The Labor Market Basis For Populism

By Carl Melin and Ann-Therése Enarsson – All over the world, populist parties and movements are growing ever more strongly, and established parties appear to lack effective strategies to combat this.

Changes in the labor market will not have the same impact on all groups. Routine tasks are more vulnerable to automation and we can see that many low-skilled men, often in jobs that have had a relatively high status and income, are more vulnerable than others. But traditional working-class jobs are not the only ones affected, as digitization and the emergence of artificial intelligence (AI) are also affecting many white-collar employees.

The trend of increased populism that we have seen over the last decade mirrors what happened during the Great Depression in the 1930s when such movements seized power in countries such as Germany, Italy and Spain, with the disastrous consequences we all know.

The question is: what can be done to counteract a similar trend.

Even if automation may mean that some people lose out, there is no alternative as the new technology is a precondition for old jobs not simply disappearing, but also being replaced by new ones.

What can be done, however, is to reduce people’s anxieties and the personal cost of these changes. On the-job-training and other forms of education are the most important tools, but security in times of change is also about effective unemployment insurance.

Far too many politicians have chosen to respond to populist parties by adopting their world view. Instead of trying to deal with the concerns that are driving people to these kinds of movements, many politicians have often chosen to confirm and reinforce them. more>