Tag Archives: Leadership

How the market is betraying advanced economies

The idea that ‘the market’ must be the organizing principle for collective decision-making should be abandoned.
By Diane Coyle – Despite ever-improving conditions for millions of people around the world—documented by entities like the University of Oxford’s Our World in Data and highlighted by scholars like Steven Pinker—popular discontent is on the rise in many places.

The reason is simple: whereas the first trend is being driven by low- and middle-income countries, the second is concentrated in high-income countries.

Throughout the developed world, conditions for many workers are deteriorating, with no recovery in sight. Income inequality is near historic highs, wealth inequality is even higher and economic insecurity is widespread.

As the United Kingdom tears itself apart politically and constitutionally over Brexit, many of its citizens struggle with low-quality jobs, inadequate housing and poverty so severe that they rely on food banks.

France’s yellow-vest protests have been hijacked by violent extremists, but they reflect real grievances about the growing challenge of maintaining living standards.

In the United States, the Economic Report of the President touts the supposed elimination of poverty, but life expectancy does not decline in a prosperous country.

In short, the post-World War II social contract in many of today’s developed economies is breaking down. And even more uncertainty and insecurity are on the way, as new technologies such as artificial intelligence and robotics take root.

Given the depth of the transformation ahead, however, it is not just the policies themselves that must change, but the very framework on which they are based. This means abandoning the idea—which has shaped public policy for more than a generation—that the ‘market’ must be the organizing principle for collective decision-making. more>

How digital technology is destroying our freedom

“We’re being steamrolled by our devices” —Douglas Rushkoff
By Sean Illing – There’s a whole genre of literature called “technological utopianism.” It’s an old idea, but it reemerged in the early days of the internet. The core belief is that the world will become happier and freer as science and technology develops.

The role of the internet and social media in everything from the spread of terrorist propaganda to the rise of authoritarianism has dampened much of the enthusiasm about technology, but the spirit of techno-utopianism lives on, especially in places like Silicon Valley.

Douglas Rushkoff, a media theorist at Queens College in New York, is the latest to push back against the notion that technology is driving social progress. His new book, Team Human, argues that digital technology in particular is eroding human freedom and destroying communities.

We’re social creatures, Rushkoff writes in his book, yet we live in a consumer democracy that restricts human connection and stokes “whatever appetites guarantee the greatest profit.” If we want to reestablish a sense of community in this digital world, he argues, we’ll have to become conscious users of our technology — not “passive objects” as we are now.

But what does that mean in practical terms? Technology is everywhere, and we’re all more or less dependent upon it — so how do we escape the pitfalls? more>

Updates from Chicago Booth

Given an out, people still fall back into debt
Research finds that keeping people out of debt traps isn’t as simple as paying off their loans
By Dee Gill – To the frustration of financial counselors everywhere, millions of people doom themselves to perpetual debt by repeatedly taking out small but expensive short-term loans they can barely afford. In the United States, these typically come from payday or car title lenders and go to financially strapped individuals.

In developing countries, small-scale entrepreneurs rely on daily or weekly loans for working capital. In both cases, borrowers pay exorbitant interest rates and, often, additional fees to extend a loan over and over. Interest payments can quickly add up to more than the loan amount.

Understanding how people get sucked into these debt traps is an important public-policy issue, according to Northwestern’s Dean Karlan, Chicago Booth’s Sendhil Mullainathan, and Harvard’s Benjamin N. Roth.

They conducted a series of experiments with indebted entrepreneurs in India and the Philippines and find that having their short-term loans paid off took the participants out of debt only temporarily. The entrepreneurs in question quickly took out new, profit-sapping loans. more>

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Moral technology

Self-driving cars don’t drink and medical AIs are never overtired. Given our obvious flaws, what can humans still do best?
By Paula Boddington – Artificial intelligence (AI) might have the potential to change how we approach tasks, and what we value. If we are using AI to do our thinking for us, employing AI might atrophy our thinking skills.

The AI we have at the moment is narrow AI – it can perform only selected, specific tasks. And even when an AI can perform as well as, or better than, humans at certain tasks, it does not necessarily achieve these results in the same way that humans do. One thing that AI is very good at is sifting through masses of data at great speed.

Using machine learning, an AI that’s been trained with thousands of images can develop the capacity to recognize a photograph of a cat (an important achievement, given the predominance of pictures of cats on the internet). But humans do this very differently. A small child can often recognize a cat after just one example.

Because AI might ‘think’ differently to how humans think, and because of the general tendency to get swept up in its allure, its use could well change how we approach tasks and make decisions. The seductive allure that tends to surround AI in fact represents one of its dangers. Those working in the field despair that almost every article about AI hypes its powers, and even those about banal uses of AI are illustrated with killer robots.

It’s important to remember that AI can take many forms, and be applied in many different ways, so none of this is to argue that using AI will be ‘good’ or ‘bad’. In some cases, AI might nudge us to improve our approach. But in others, it could reduce or atrophy our approach to important issues. It might even skew how we think about values.

We can get used to technology very swiftly. Change-blindness and fast adaptation to technology can mean we’re not fully aware of such cultural and value shifts. more>

Kavanaugh Ethics Complaints Once Again Dodge Ruling In The 10th Circuit

By Steve Denning – The judicial review of multiple ethics complaints against Justice Kavanaugh continued on its Gilbert-And-Sullivan trajectory with a 6-1 decision by the 10th Circuit last Friday that that court does not have jurisdiction to consider the complaints, even though Chief Justice Roberts explicitly requested the 10th  Circuit to assess them.

Some 83 ethics complaints had been filed against Judge Kavanaugh alleging not only false statements under oath during hearings on his nominations to the U.S. Court of Appeals for the D.C. Circuit in 2004 and 2006, but also, more flagrantly, misconduct at the nomination hearing for the U.S. Supreme Court itself in 2018, including making inappropriate partisan statements and treating senators with disrespect.

The complaints were not made without legal basis. More than 2,400 law professors concluded that during the Senate confirmation hearings, Kavanaugh has “displayed a lack of judicial temperament that would be disqualifying for any court.” Unlike the allegations of lying about events that happened many years ago, there was no question of fact as to whether Kavanaugh’s conduct at the Senate hearings actually took place: it was visible for the whole country to see on national television.

Former Supreme Court Justice John Paul Stevens also stated that Judge Kavanaugh has demonstrated bias and is “not fit for the Supreme Court.” Former Justice Stevens, in remarks to retirees in Boca Raton, Fla, declared that Kavanaugh’s statements on September 27 revealed prejudices that would make it impossible for him to do the court’s work. “They suggest that he has demonstrated a potential bias involving enough potential litigants before the court that he would not be able to perform his full responsibilities.” more>

How Politics Delayed A Boeing Fix And Endangered Public Safety

By Steve Denning – This is an abrupt change for the Trump administration.

Just last night, the Acting Administrator of the FAA, Daniel K. Elwell, had doubled down on keeping the Boeing 737 MAX 8 in the air, stating that his agency’s extensive review of “aggregate safety performance from operators and pilots of the Boeing 737 MAX… shows no systemic performance issues and provides no basis to order grounding the aircraft.” Boeing’s CEO, Dennis Muilenburg, after a call with President Trump, had also declared his complete faith in the plane’s safety.

Trust in a crisis depends on truth-telling—something the current administration is not renowned for, with almost 10,000 false or misleading statements from the president alone.

In this case, the FAA statement last night did not disclose that five pilots had already raised serious concerns about the 737 MAX 8 in the federal database where pilots can voluntarily report about aviation incidents without fear of repercussions.

Instead, the FAA statement said, “Other nations’ civil-aviation authorities had not provided data to us that would warrant action.” Yet Elwell didn’t have to look to foreign civil aviation authorities for such evidence. There was such evidence, right here at home, as reported in the Dallas Morning News.

The FAA statement also did not disclose that Boeing had already issued an emergency airworthiness directive about the Boeing 737 Max 8 in response to the crash of Lion Air Flight 610 in Indonesia. The directive “was prompted by analysis performed by the manufacturer showing that if an erroneously high single angle of attack (AOA) sensor input is received by the flight control system, there is a potential for repeated nose-down trim commands of the horizontal stabilizer.”

Nor did the FAA statement disclose that Boeing and the FAA had been working together for some months to deal with the possibility that the Indonesia crash was caused by a malfunction of its stabilization system.

While it is reassuring the U.S. has finally taken action to ground the Boeing 737 MAX 8 and MAX 9, the sequence of events points to institutional issues in aviation safety generally. more>

Chief executives’ pay: reversing the race to the top

Eye-watering remuneration for chief executives is economically wasteful as well as socially divisive. Non-profits should pioneer compressed wage hierarchies.
By Alex Bird – As Oxfam reports that the top 1 per cent of the world’s population now own more than the other 99 per cent, it’s time to think about how those at the top of the economic tree can secure such eye-watering salaries, which they parlay into wealth.

Whereas in the past individuals became recognized by their status in the community rather than in cash, and for their philanthropy—such as Carnegie building libraries, or business people supporting the local football team—now driven individuals seek recognition through possessing conspicuous wealth.

This recognition drive is reinforced by remuneration committees, which are the method of setting top salaries recommended in the UK by the Financial Reporting Council. They employ specialist consultants to survey what others are paying, adjust for industry and turnover, and so arrive at a ‘market price’. Any executives earning less than this rate get a rise; anyone earning more is left alone, as their contract locks them in to that salary. Industry rivals see this change, redo their own surveys and the upwards-only merry-go-round progresses.

This, naturally, has led to an increasing disparity between the highest and average earnings. more>

Updates from Chicago Booth

Purely evidence-based policy doesn’t exist
By Lars Peter Hansen – Recently, I was reminded of the commonly used slogan “evidence-based policy.”

Except for pure marketing purposes, I find this terminology to be a misnomer, a misleading portrayal of academic discourse and the advancement of understanding. While we want to embrace evidence, the evidence seldom speaks for itself; typically, it requires a modeling or conceptual framework for interpretation.

Put another way, economists—and everyone else—need two things to draw a conclusion: data, and some way of making sense of the data.

That’s where modeling comes in. Modeling is used not only to aid our basic understanding of phenomena, but also to capture how we view any implied trade-offs for social well-being. The latter plays a pivotal role when our aim is to use evidence in policy design.

This is intuitive if you think about the broad range of ideas and recommendations surrounding macroeconomic policy and the spirited, sometimes acrimonious way in which they’re debated.

If everything were truly evidence based, to the extent we can agree on the accuracy of the evidence, why would there be such heterogeneity of opinion? The disagreement stems from the fact that people are using different models or conceptual frameworks, each with its own policy implications.

Each of them might be guided by evidence, but policy conclusions can rarely be drawn directly from the evidence itself. more>

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A new generation of young managers is reshaping how we work

By Stephane Kasriel – No matter where you look, so much rapid change is happening that even how companies manage their talent strategy is shifting. Gone are the days of HR managing workforce planning with an Excel spreadsheet. To remain not only competitive but relevant, more companies are turning to detailed workforce plans, and younger generations of managers are much more likely to be putting these plans in place. As they do, and as they ascend to more senior roles, they’re reshaping the future of work.

More than half of younger generation managers polled see future workforce planning as a “top priority” for their departments–nearly three times more than their baby boomer counterparts, according to my company Upwork’s 2019 Future Workforce Report.

Whereas baby boomers are known for keeping their employees close, millennials, who now make up more than half the U.S. workforce, overwhelmingly desire “flexible and fluid” work settings.

Younger generation managers are also more likely to see it as an individual’s right to work remotely. After all, they’ve grown up in the digital era. They do not understand why someone should be tethered to a desk nine-to-five if modern technology frees them to work anytime, anywhere, and from any connected device.

In fact, many believe they are more productive working remotely than they would be in rigid office environments with all of their distractions. more>

When the monsoon goes away

By Sunil Amrith – More than 70 per cent of total rainfall in South Asia occurs during just three months each year, between June and September. Within that period, rainfall is not consistent: it is compressed into a total of just 100 hours of torrential rain, spread across the summer months. Despite advances in irrigation, 60 per cent of Indian agriculture remains rain-fed, and agriculture employs around 60 per cent of India’s population. No comparable number of human beings anywhere in the world depend on such seasonal rainfall.

Both before and after independence, the imperious power of the monsoon troubled India’s rulers. In the first decade of the 20th century, the finance minister in the imperial government declared that ‘every budget is a gamble on the rains’ – a statement that is still quoted regularly in the Indian media.

In the late 1960s, India’s prime minister Indira Gandhi said: ‘For us in India, scarcity is only a missed monsoon away.’ The foreboding remains.

The scale of the monsoon system exists far beyond human intervention. If technology could intervene, it was on the landscape, in the form of infrastructure. By the early 20th century, engineers around the world were confident that they could neutralize the risk of climatic variability by constructing dams that would fuse water storage, flood control, irrigation and power generation. India was no exception. more>