Tag Archives: Leadership

How democracy can win again

Democratic erosion in Hungary is symptomatic of structural problems afflicting most democracies, even threatening the future of civilization.
By Gergely Karácsony – My political awakening coincided with the systemic changes that unfolded following the collapse of communism in Hungary in 1989. I was both fascinated and overjoyed by my country’s rapid democratization. As a teenager, I persuaded my family to drive me to the Austrian border to see history in the making: the dismantling of the Iron Curtain, which allowed east-German refugees to head for the west. Reading many new publications and attending rallies for newly established democratic political parties, I was swept up by the atmosphere of unbounded hope for our future.

Today, such sentiments seem like childish naivety, or at least the product of an idyllic state of mind. Both democracy and the future of human civilization are now in grave danger, beset by multifaceted and overlapping crises.

Three decades after the fall of communism, we are again forced to confront anti-democratic political forces in Europe. Their actions often resemble those of old-style communists, only now they run on a platform of authoritarian, nativist populism. They still grumble, like the communists of old, about ‘foreign agents’ and ‘enemies of the state’—by which they mean anyone who opposes their values or policy preferences—and they still disparage the west, often using the same terms of abuse we heard during communism. Their political practices have eroded democratic norms and institutions, destroying the public sphere and brainwashing citizens through lies and manipulation.

Nativist populism tends to be geared toward only one purpose—to monopolise state power and all its assets. In my country, the regime of the prime minister, Viktor Orbán, has almost captured the entire state through the deft manipulation of democratic institutions and the corruption of the economy. Next year’s parliamentary election (in which I am challenging Orbán) will show whether Hungary’s state capture can still be reversed. more>

America is still stuck in the world 9/11 built

By Sean Illing – Did 9/11 pave the way for Donald Trump?

That’s a big question, and until I read Spencer Ackerman’s new book, Reign of Terror: How 9/11 Destabilized America and Produced Trump, I hadn’t really thought about it. Ackerman is a longtime national security journalist who’s covered the “war on terror” since its inception roughly two decades ago.

Ackerman’s answer to the above question is yes, but his thesis is even more pointed: The war on terror — and the panoply of excesses it unleashed — eroded the institutional armor of American democracy and left the country defenseless against its own pathologies. And those pathologies, which Ackerman lays out with meticulous attention, prepared the ground for a figure like Trump.

Reading Ackerman’s book was a bit of a whirlwind. I was 19 years old when the Twin Towers fell. I’ll never forget watching the planes hit the wall. I’ll never forget how confused and angry I was. And I’ll never forget the thoughts running through my mind as I realized I was heading to boot camp in just four months. more>

Zero tolerance for hate teaching is not negotiable

By David Lega, Lukas Mandl and Miriam Lexmann – The June 2021 publication of an overdue review of Palestinian textbooks by Germany’s Georg Eckert Institute (GEI) was meant to bring peace of mind to those who have long suspected that the Palestinian Authority (PA) curriculum does not meet UNESCO standards.

With concerns expressed that the curriculum perpetuates conflict by promoting hatred and violence, alongside employing antisemitic and militaristic tropes, €225,000 was invested by the EU to fund an ostensibly comprehensive review.

The findings and their presentation should be as concerning as the textbooks themselves. Among these were a myriad of examples that teach hatred, encourage violence and reject peace. Within the report’s pages one finds an array of alarming and harmful content, from the glorification of gruesome terrorist activities, such as the 1978 Coastal Road massacre, to the negation of Israel as a legitimate entity, expressed through maps and nomenclature. Examples are not limited to the teaching of history or civics, with a cursory glance of maths and science textbooks finding examples of violence and death used to teach the subject, alongside the evocation of classic antisemitic tropes and conspiracies, such as treachery and greed. more>

Why Managers Fear a Remote-Work Future

Like it or not, the way we work has already evolved.
By Ed Zitron – In 2019, Steven Spielberg called for a ban on Oscar eligibility for streaming films, claiming that “movie theaters need to be around forever” and that audiences had to be given “the motion picture theatrical experience” for a movie to be a movie. Spielberg’s fury was about not only the threat that streaming posed to the in-person viewing experience but the ways in which the streaming giant Netflix reported theatrical grosses and budgets, despite these not being the ways in which one evaluates whether a movie is good or not. Netflix held firm, saying that it stood for “everyone, everywhere [enjoying] releases at the same time,” and for “giving filmmakers more ways to share art.” Ultimately, Spielberg balked, and last month his company even signed a deal with Netflix, likely because he now sees the writing on the wall: Modern audiences enjoy watching movies at home.

In key ways, this fight resembles the current remote-work debate in industries such as technology and finance. Since the onset of the coronavirus pandemic, this has often been cast as a battle between the old guard and its assumed necessities and a new guard that has found a better way to get things done. But the narrative is not that tidy. Netflix’s co-founder and CEO, Reed Hastings, one of the great “disruptors” of our age, deemed remote work “a pure negative” last fall. The 60-year-old Hastings is at the forefront of an existential crisis in the world of work, demanding that people return to the office despite not having an office himself. His criticism of remote work is that “not being able to get together in person” is bad. more>

Why Elon Musk Isn’t Superman

The Betting Economy vs. The Operating Economy
By Tim O’Reilly – At one point early this year, Elon Musk briefly became the richest person in the world. After a 750% increase in Tesla’s stock market value added over $180 billion to his fortune, he briefly had a net worth of over $200 billion. It’s now back down to “only” $155 billion.

Understanding how our economy produced a result like this—what is good about it and what is dangerous—is crucial to any effort to address the wild inequality that threatens to tear our society apart.

In response to the news of Musk’s surging fortune, Bernie Sanders tweeted:

Bernie was right that a $7.25 minimum wage is an outrage to human decency. If the minimum wage had kept up with increases in productivity since 1979, it would be over $24 by now, putting a two-worker family into the middle class. But Bernie was wrong to imply that Musk’s wealth increase was at the expense of Tesla’s workers. The median Tesla worker makes considerably more than the median American worker.

Elon Musk’s wealth doesn’t come from him hoarding Tesla’s extractive profits, like a robber baron of old. For most of its existence, Tesla had no profits at all. It became profitable only last year. But even in 2020, Tesla’s profits of $721 million on $31.5 billion in revenue were small—only slightly more than 2% of sales, a bit less than those of the average grocery chain, the least profitable major industry segment in America.

No, Musk won the lottery, or more precisely, the stock market beauty contest. In theory, the price of a stock reflects a company’s value as an ongoing source of profit and cash flow. In practice, it is subject to wild booms and busts that are unrelated to the underlying economics of the businesses that shares of stock are meant to represent. more>

Germany is the freest country in Europe; Norway, Lithuania, and Finland are the worst on the 2021 Nanny State Index

By Christopher Snowdon – Today sees the publication of the Nanny State Index, now in its fourth edition. Launched in 2016, it looks at the over-regulation of food, soft drinks, vaping, tobacco and alcohol in thirty European countries. Since the last edition was published in 2019, the COVID-19 pandemic has led governments around the world to impose coercive controls on an almost unprecedented scale.

The index does not include anti-Covid policies that are expected to be a genuinely temporary response to the pandemic, but the outlook is bleak nonetheless. Almost without exception, governments across Europe are adopting higher sin taxes and more prohibitions.

Norway tops the league table, although that could change once it legalises e-cigarettes. Lithuania, with its heavy temperance legislation, is again in second place while Finland drops to third. The top of the table is dominated by Scandinavia and Eastern Europe. Greece is the only country from southern Europe in the top half, largely thanks to its very high sin taxes on alcohol and tobacco. At the more liberal end of the table, the best countries are a mixed bag. Germany has performed the extraordinary feat of having the lowest score in all four categories of the index. more>

Idea sharing for a new sense of purpose

By Francisco Jaime Quesado – Diogo Vasconcelos, the Portuguese politician who focused his work on innovation and on the fundamental role of ICT and next-generation broadband and who died a decade ago, was a very innovative entrepreneur and social innovator. He believed that society must have the ambition to push for a better future that would be based on the concept of excellence.

Vasconcelos’ message focused on the idea of rethinking and renewing the concept of an open society in which it would transform into a strategic idea that different civilizations, religions and ideas into direct contact with one another.

This agenda of sharing ideas is the point of departure and the point of arrival of a new way for citizens and institutions to create a new contract of trust, as sharing ideas creates a new sense of purpose.

Society will face a new reality post-pandemic, and public policy figures will have to decide on the most suitable strategy for the development of a new agenda for growth. At a time of uncertainty and uncontrolled global financial crisis as a result of the COVID-19 outbreak, an agenda of idea-sharing must focus its attention on launching an agenda of collective intelligence that is centered on effective value creation and citizenship engagement. more>

New UN climate report is a ‘Code Red for Humanity’

By Reynard Loki – In a grim report released on August 9, the Intergovernmental Panel on Climate Change (IPCC) says that climate change was “unequivocally” caused by human activity, and that within two decades, rising temperatures will cause the planet to reach a significant turning point in global warming. The report’s authors—a group of the world’s top climate scientists convened by the United Nations (UN)—predict that by 2040, average global temperatures will be warmer than 1.5 degrees Celsius above pre-industrial levels, causing more frequent and intense heat waves, droughts and extreme weather events. UN Secretary-General António Guterres called the bleak findings a “code red for humanity.”

The report found global warming increasing at a faster rate than earlier predictions estimated. “It is unequivocal that human influence has warmed the atmosphere, ocean and land… [and] at a rate that is unprecedented in at least the last 2,000 years,” the report says. “Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred.” Even if the world’s nations enacted sharp and stringent reductions in the emissions of greenhouse gases today, overall global warming is still estimated to rise around 1.5 degrees Celsius within the next 20 years. That means that the hotter, more dangerous future that scientists and the Paris climate agreement sought to avoid is now unavoidable.

Linda Mearns, a senior climate scientist at the US National Center for Atmospheric Research and one of the report’s co-authors, offered a stern warning: “It’s just guaranteed that it’s going to get worse,” she said, adding that there is “[n]owhere to run, nowhere to hide.” In an interview with the Hill, Kim Cobb, the lead author of the report’s first chapter, said, “We’re already reeling, clearly, from so many of these impacts that the report highlights, especially in the category of extremes that are gripping these headlines and causing so much damage, but of course the 1.5 degree C world is notably and discernibly worse.” more>

Updates from Chicago Booth

The cycle behind sovereign debt disasters
By Michael Maiello – In theory, sovereign debt can be a healthy part of a growing economy. Governments can borrow from creditors to fund trade deficits, importing goods from other countries so their citizens can buy the products and enjoy the benefits.

While that may be the idea, the results of such borrowing are generally disastrous, warns research by Stanford’s Peter M. DeMarzo, Chicago Booth’s Zhiguo He, and Copenhagen Business School’s Fabrice Tourre. There is no default plan for a sovereign borrower the way there is for, say, a corporate one—and borrower countries have proven unable or unwilling to commit to anything like one. Without the disciplining force of covenants, which are common in private-sector borrowing, the system doesn’t wholly account for the risks associated with economic booms and busts, which works against strategic, responsible borrowing.

The trio’s work on sovereign debt risks rests on a foundation of work by DeMarzo and He on private-sector debt, in which they describe the tendencies of corporations to borrow without restraint when they do not pledge collateral to specific lenders. As uncollateralized borrowers tend to issue debt in good times and bad, lenders demand ever-higher borrowing costs over time, erasing the benefits to the borrower company and increasing default risk. Collateral adds discipline to the process. In another study, DeMarzo argues that sovereign borrowers should pledge assets to creditors as collateral in the event of default. This latest research, with He and Tourre, suggests that such collateralization could crystallize the consequences of default and break the debt cycle that is so costly to so many citizens. more>

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Updates from McKinsey

Post-close excellence in large-deal M&A
The most successful large-deal transactions follow four key practices during integration execution.
By Brian Dinneen, Christine Johnson, and Alex Liu – You cannot judge a deal by the market’s response to its announcement. Neither can you predict its success based on investor reaction at closing. It is only after the first 12 to 18 months of integration and after companies have reported the performance of their first year that the markets can reliably predict the success of the deal.

This finding is based on our recent review of 248 large deals over the last ten years. We found that 79 percent of those whose total return to shareholders outperformed their market index in the first 18 months were still above the index three years after close.

What did CEOs do differently in those successful deals? To better understand what made those deals successful, we surveyed experienced integration practitioners at the twice-annual Merger Integration Conference, and we also surveyed a broader population of 305 public company leaders, conducted in-depth reviews of investor transcripts and public financials in 29 of the Global 2000’s 1 large deals, and spoke with individuals who led some of those deals. We observed that companies going through successful large deals follow four key practices that help their total returns to shareholders (TRS) outpace the market index, their synergy achievement to exceed public commitments, and organic growth to continue unabated (Exhibit 1). In this article, we detail these practices.

Protect business momentum

While integration creates value from synergies, this should not come at the cost of disruption to the existing business. Successful acquirers are able to keep growing revenue on a pro forma basis within the first year, whereas unsuccessful deals see a decline or “dip” in revenue. 2 This dip is almost always due to a failure to protect the business momentum. more>