Tag Archives: Government

From an industrial renaissance to an economy of value

By Francisco Jaime Quesado – While having to endure the ongoing era of a global pandemic, we are facing the prospect of an effective industrial renaissance that can change the way our economy works

In the new global economy, in which industry is becoming more important, companies have a new challenge – to redefine its value chain and to integrate the existing global networks with new ideas, new solutions and new proposals of competence. This industrial renaissance will be a contract of trust in this new agenda of change and a new effective vision for the future as it should mobilize those that have a set of effective value creations in the economy.

A post-pandemic industrial renaissance is the point of contact between those that believe in the power of people to create new solutions to more complex problems that are arising in society and those that want innovation and creativity to be the platform for the creation of value in a globally competitive economy. This ‘renaissance’ is, in essence, the confirmation of a process of integration of people into society – an individual’s contribution must be a commitment to the organization of society and its main elements.

The next stage in the process of rebirth must apply to the most critical factors of competence and trust, which includes a focus on innovation and the sharing of positive dynamics. We need society to have a new challenge. Society must be able to be the real platform of a more entrepreneurial society that is centered on new areas of knowledge and sectors of value.

In a modern and active society, the keyword is ‘co-creation’, which is used to promote a dynamic and active creation process that involves each citizen in the next big challenge for society. more>

Public Sees Black People, Women, Gays and Lesbians Gaining Influence in Biden Era

Half of Americans say evangelical Christians will lose influence
pewresearch.org – As Joe Biden navigates the first few weeks of his presidency, Americans have distinctly different views of which groups will gain influence – and which ones will lose influence – in Washington during his administration.

Nearly two-thirds of U.S. adults (65%) say Black people will gain influence in Washington with Joe Biden taking office. Just 14% say Black people will lose influence, while 20% say they will not be affected.

Large shares of adults also expect women (63%) and gay and lesbian people (60%) to gain influence over the next four years. Only about one-in-ten expect each of these groups to lose influence.

Other groups expected to gain influence include younger people (54%), Hispanic people (53%), poor people (50%) and unions (48%). Relatively small shares – no more than about quarter – say any of these groups will lose influence during Biden’s presidency.

By contrast, evangelical Christians are expected to lose influence with Biden as president: 50% say they will lose influence, while just 9% expect them to gain influence; 39% say they will be unaffected.

By sizable margins, more Americans also say business corporations and the military will lose than gain influence, though about a quarter (24%) say corporations will be unaffected and 32% say the same about the military. more>

Was it a coup? No, but siege on US Capitol was the election violence of a fragile democracy

By Clayton Besaw and Matthew Frank – Did the United States just have a coup attempt?

Supporters of President Donald Trump, following his encouragement, stormed the U.S. Capitol building on Jan. 6, disrupting the certification of Joe Biden’s election victory. Waving Trump banners, hundreds of people broke through barricades and smashed windows to enter the building where Congress convenes. One rioter died and several police officers were hospitalized in the clash. Congress went on lockdown.

While violent and shocking, what happened on Jan. 6 wasn’t a coup.

This Trumpist insurrection was election violence, much like the election violence that plagues many fragile democracies.

The uprising at the Capitol building does not meet all three criteria of a coup.

Trump’s rioting supporters targeted a branch of executive authority – Congress – and they did so illegally, through trespassing and property destruction. Categories #2 and #3, check.

As for category #1, the rioters appeared to be civilians operating of their own volition, not state actors. President Trump did incite his followers to march on the Capitol building less than an hour before the crowd invaded the grounds, insisting the election had been stolen and saying “We will not take it anymore.” This comes after months of spreading unfounded electoral lies and conspiracies that created a perception of government malfeasance in the mind of many Trump supporters.

Whether the president’s motivation in inflaming the anger of his supporters was to assault Congress is not clear, and he tepidly told them to go home as the violence escalated. For now it seems the riot in Washington, D.C., was enacted without the approval, aid or active leadership of government actors like the military, police or sympathetic GOP officials. more>

The EU’s credibility is at stake

By Otmar Lahodynsky – In July, after a four-day marathon summit in Brussels, there was agreement on the EU budget for 2021-2027 and a recovery fund for the EU’s 27 members following the COVID-19 crisis.

Together, almost €2 trillion have been reserved for this purpose. The €750 billion corona aid package is intended to help those countries that have been the most affected by the disease, including as Italy, Spain and France, but also the other Member States as they will need to rebuild their economies.

At the EU summit, a typical Brussels-style compromise was reached – each head of government presented themself as a winner at home if they will receive a lot of money for economic recovery. It was then that the so-called “frugal four” – Denmark, the Netherlands, Austria and Sweden (plus Finland) – forced a reduction in the number of grants in exchange for an increase in the share of loans and a cut in their membership fees. The heads of Poland and Hungary also celebrated at home after the successfully de-linked their access to EU funding from their records on the rule of law.

Subsequently, however, the other EU states introduced this clause by a clear majority.

The Poles and Hungarians felt pressured and they vetoed the seven-year EU budget, which requires unanimity despite the fact that they were not bothered that they had previously approved it.

In his explanatory statement, Polish Prime Minister Mateusz Morawiecki railed against an “attack on Polish sovereignty” and adding that the EU was no longer the same as when Poland had joined the bloc in 2004, a generation after the end of Communism. Morawiecki said the Polish economy was so strong that it no longer needed any subsidies from Brussels (more than €12 billion each year). Morawiecki said that Poles were even considering an EU withdrawal along the lines of Brexit.

Hungarian Prime Minister Viktor Orban, Brussels’ bête noire, went even further. In his view, the EU is acting like the Soviet Union once did. It wants to blackmail Hungary and force it to accept Middle Eastern refugees. In the future, Orban added, the European Commission would have the power to meddle in the internal politics of all of the Member States, as it sees fit. Orban also emphasized that the EU’s previous accusations against Hungary were all unfounded and that the concept of the rule of law was not precisely or universally defined.

The reality is that these core concepts of the bloc were long-ago enshrined in the EU treaties and in Europe’s charter of fundamental rights. Conditions for EU accession were already laid down in the 1993 Copenhagen criteria and include the stability of institutions, democracy, the rule of law, respect for human rights and respect and protection of minorities.

The Commission has, for too long, turned a blind eye to the transgressions of the nationalistic populists in Poland, Hungary and other Eastern European countries. The isolated attempts to bring about punitive proceedings under Article 7 of the EU Treaty did not act as a deterrent, because sanctions were not imposed. For this reason, the governments of Hungary and Poland mutually helped each other.

But now the basic principles of the EU, above all the rule of law, are being put to the test. more>

Democracy’s biggest challenge is information integrity

By Laura Thornton – As the world watches the United States’ elections unfold, the intensity of our polarization is on display. This election was not marked by apathy. On the contrary – citizens turned out in record numbers, some standing in lines all day, to exercise their franchise with powerful determination and the conviction of their choice.

What is notable is how diametrically opposed those choices are, the divergence is not only voters’ visions for America but perceptions of the reality of America. It has long been said that Americans, like citizens elsewhere, increasingly live in parallel universes. Why is this? I believe quite simply it boils down to information.

While there are ample exceptions and complexities, in one universe, people consume a smattering of different news sources, perhaps one or two newspapers, some journals, television and radio broadcasts and podcasts. Many of the sources are considered left-leaning. These Americans tend to hold university degrees and vote for Democrats.

The other universe includes those who primarily get their news from one or two sources, like Fox News, and rely on Facebook and perhaps their community, friends, and family for information.  They lean Republican, and many are not university educated — the so-called “education gap” in American politics. The majority of Republicans, in fact, cite Fox for their primary source of news, and those who watch Fox News are overwhelmingly supportive of Republicans and Trump.  Both universes gravitate toward echo chambers of like-minded compatriots, rarely open or empathetic to the views and experiences of others.

There are obvious exceptions and variations. The New York Times-reading, educated Republican holding his nose but counting on a tax break. Or the low-information voter who votes Democratic with her community.

In the two big general universes, sadly the divide is not just about opinions or policy approaches.  They operate with different facts.  As Kellyanne Conway, former Trump advisor, famously put it, “alternative facts.” more>

5 Ways Joe Biden’s Presidency Will Affect Your Money – and How to Act Now

By Farnoosh Torabi – As with any new President, Joe Biden will have his work cut out for him when he takes the oath of office in January. And while his “build back better” plans are already laid out, it’s yet to be seen how much of an impact his administration can actually make on your finances.

The COVID-19 pandemic’s not behind us, so the recovery will be slow, which Biden has been clear about. Not to mention, with a very possible Republican Senate majority, many of the new administration’s initiatives could face serious pushback, if not a total squashing. The outcome will be determined in a couple months when Georgia’s two Senate run-off races happen.

In short, we can’t read far into what Biden is proposing and use it as a playbook for our personal finances today. “I’m not a big fan of people overhauling their finances or making moves on a presumption of something passing, simply because there are just too many unknowns,” Greg McBride, Chief Financial Analyst at Bankrate.com, told me on my podcast.

Here’s a breakdown of some of the major economic initiatives proposed by President-elect Joe Biden and Vice President-elect Kamala Harris, and how to interpret them for the sake of our financial well-being. As always, personal accountability will be just as — if not more — important than matters of policy. more>

Updates from Chicago Booth

There will be more innovation post-COVID. Here’s why.
By Harry L. Davis – Since the COVID-19 pandemic threw our lives into disarray, we’ve had to change how we do anything involving other people. Rather than counting on bumping into colleagues in the hall, we now have to schedule Zoom calls around the competing demands (childcare, a broken water heater) that everyone is dealing with. There isn’t time for the kind of small talk that often, unpredictably, leads to big ideas.

There are unquestionably benefits to handling some tasks over video conference. Last spring, I taught a class in which groups of students take on consulting projects with the guidance of Chicago-based Kearney. Consultants spend countless hours on airplanes to make face-to-face meetings with their clients possible, and it’s a big part of their culture. In past years, regular in-person meetings and schmoozing were built into the syllabus.

Of course, none of that was possible this year. Our students were thrust into a new world where even senior executives were caught off-guard and without webcams. Whiteboard brainstorming sessions became Zoom calls.

Curious about their experiences, we surveyed the students about the impact of remote work throughout the quarter. While pessimistic at first, by the end of the nine-week course, they later felt that their remote situation was actually helping them be more efficient and helped them do do a better job responding to their clients’ needs. I had a similar experience with teaching remotely—although daunted at first, I found that I was able to deliver my classes effectively, even if I was tethered to my desk chair.

Once the pandemic is behind us, we’ll have to choose what to return to and what to keep from our remote way of working. I think Zoom and its ilk will continue to have an important place for those situations where teams are geographically dispersed or there’s some urgent decision that needs to be made. But the type of work that delivers innovation—creative work—will still best be done in person. more>

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Staying Focused on the Big Picture

U.S. election-related uncertainty may persist a while longer, but the relatively optimistic longer-term economic outlook hasn’t changed.
By Lisa Shalet – Now that former Vice President Joseph Biden is President-Elect, much of the election uncertainty has dissipated. Markets have factored in Biden’s win as well as the apparent lack of a Congressional Democratic sweep, but headlines concerning the transition of power could contribute to volatility.

We encourage investors to ignore short-term price swings based on the headlines and stay focused on the bigger picture. We still believe that investors should emphasize global stocks over bonds. Morgan Stanley & Co. strategists forecast that the S&P 500 Index, a broad measure of the U.S. market that is now trading around 3500, may reach 3700 by the middle of next year.

Several key points in our economic outlook are unlikely to change due to election results. Here are three reasons why:

The V-shaped economic recovery is on solid ground. October’s nonfarm payroll data was a solid upside surprise, with the unemployment rate falling and the labor participation rate rising. Consumer sentiment is holding up, and manufacturing and services indicators continue to show expansion. Housing and durable goods orders support the capital spending narrative of the new business cycle. In 2021, U.S. GDP could grow at an annualized pace of 5% to 6%—in part because the recession this year enhances the year-over-year comparison, but also given the midyear return to growth. Such economic expansion could power double-digit increases in corporate profits.

The Federal Reserve remains ultra-dovish. The central bank has stayed firm on holding its key short-term fed funds rate near zero through December, 2023. Low interest rates can stimulate growth by facilitating more borrowing, allowing consumers and businesses to spend more. The Fed has yet to define metrics or time frames for “average inflation targeting,” which will likely allow inflation to trend higher without rate intervention to check its rise. Under a policy known as quantitative easing, the Fed also continues to buy government bonds at a significant pace, a direct injection of liquidity across fixed-income markets that can also contribute to economic growth.

The COVID-19 trajectory is unlikely to lead to national lockdowns. The recent surge in new infections is unfortunate and concerning, however, as was the case in the summer, the U.S. economy remains resilient in the face of localized shutdowns. We believe that public health measures and vaccine availability will drive the pandemic’s economic impact. Hopefully by January, we could be past the peak of new cases and closer to available vaccines. Drug development pipelines remain on track to deliver some scaled vaccine distribution by summer, 2021. more>

America’s Foreign Enemies Mostly Hope for a Joe Biden Win; Allies Are Divided

Neewsweek – Nations around the world are watching the U.S. election with almost the same intensity as Americans at home, and while they can’t vote, they have passionate rooting interests.

During his four years in the White House, President Donald Trump has been accused of having a soft spot for the dictators of America’s enemies. Do those countries return the love? As the 2020 election looms, the leaders and citizens of both America’s allies and rivals are hoping for outcomes that may be surprising.

With the exception of North Korea, most U.S. adversaries such as Cuba, Iran, China and Venezuela are hoping for a Joe Biden win, while America’s allies are split. Germany, Japan and Australia would like to see Biden in the White House; India, Saudi Arabia, Israel and the U.K. hope Trump remains in power.

The former vice president’s chief asset appears to be his predictability: with few exceptions, even the nations hoping for a second Trump term think they can work with a Biden administration. And for some countries, like Russia, the optimal outcome is neither Biden nor Trump, but chaos. more>

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Updates from McKinsey

Reimagining the auto industry’s future: It’s now or never
Disruptions in the auto industry will result in billions lost, with recovery years away. Yet companies that reimagine their operations will perform best in the next normal.
By Thomas Hofstätter, Melanie Krawina, Bernhard Mühlreiter, Stefan Pöhler, and Andreas Tschiesner – Electric mobility, driverless cars, automated factories, and ridesharing—these are just a few of the major disruptions the auto industry faced even before the COVID-19 crisis. Now with travel deeply curtailed by the pandemic, and in the midst of worldwide factory closures, slumping car sales, and massive layoffs, it’s natural to wonder what the “next normal” for the auto sector will look like. Over the past few months, we’ve seen the first indicators of this automotive future becoming visible, with the biggest industry changes yet to come.

Many of the recent developments raise concern. For instance, the COVID-19 crisis has compelled about 95 percent of all German automotive-related companies to put their workforces on short-term work during the shutdown, a scheme whereby employees are temporarily laid off and receive a substantial amount of their pay through the government. Globally, the repercussions of the COVID-19 crisis are immense and unprecedented. In fact, many auto-retail stores have remained closed for a month or more. We estimate that the top 20 OEMs in the global auto sector will see profits decline by approximately $100 billion in 2020, a roughly six-percentage-point decrease from just two years ago. It might take years to recover from this plunge in profitability.

At the operational level, the pandemic has accelerated developments in the automotive industry that began several years ago. Many of these changes are largely positive, such as the growth of online traffic and the greater willingness of OEMs to cooperate with partners—automotive and otherwise—to address challenges. Others, however, can have negative effects, such as the tendency to focus on core activities, rather than exploring new areas. While OEMs may now be concentrating on the core to keep the lights on, the failure to investigate other opportunities could hurt them long term.

As they navigate this crisis, automotive leaders may gain an advantage by reimagining their organizational structures and operations. Five moves can help them during this process: radically focusing on digital channels, shifting to recurring revenue streams, optimizing asset deployment, embracing zero-based budgeting, and building a resilient supply chain. One guiding principle—the need to establish a strong decision-making cadence—will also help. We believe that the window of opportunity for making these changes will permanently close in a few months—and that means the time to act is now or never. more>