Tag Archives: Social economy

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>

Updates from McKinsey

The future of payments is frictionless—now more than ever
Amrita Ahuja, the CFO of Square, explains how the company’s payment platform and services have helped small enterprises stay afloat during the COVID-19 crisis.
By Amrita Ahuja – Cash is king when it comes to maintaining corporate liquidity. It is in a somewhat less prestigious position when it comes to fulfilling consumer-to-business transactions. The onset of the COVID-19 crisis and ongoing fears of infection have prompted consumers and businesses to rely more on digital and contactless payment options when buying and selling goods and services.

How have the past few months been, and what’s changed for Square as a result of the crisis?

We’re taking it a day at a time. We serve merchants, who we call sellers, and individual consumers. And we know that this has been an incredibly trying time for everyone, where a lot of people’s livelihoods have been in question. The first thing we did was focus on our employees and their health. We shut down our offices on March 2. We wanted to do right by our communities and do our part to halt the spread of the virus. We took an all-hands-on-deck approach to understand what was happening in our customers’ businesses and what was happening in our own business. Every single day in March and April felt like a year, frankly, in terms of our understanding and how fast things were moving. We ran through scenarios, and asked ourselves, “OK, if the situation resembles a V, or if things look like an L, or if it looks like a U, what does that mean for us and our ability to serve our various stakeholders, employees, customers, and investors?”

We’ve had to be fast and clear with our communications during a time in which there are still so many unknowns. It was important to own up to this uncertainty and yet not downplay the severity of the situation. We met far more frequently with the board than the typical quarterly cadence. We held an update call with [investment bankers and analysts] outside the typical earnings cadence. We suspended our formal guidance to Wall Street, but we actually shared more information about the real-time views that we were seeing in our business across a number of different metrics and geographies. And with employees, we had a far more frequent and transparent mode of communication. We were sending weekly email updates, we built comprehensive and regularly updated FAQs, we set up a Slack channel for questions, and we held biweekly virtual all-hands meetings. We didn’t know everything, but we had a process for learning things over time and communicating them transparently. Ultimately, that has served us well, in terms of motivating our employees, serving our customers, and giving stakeholders a clear understanding of where we are as a business and how we are proceeding. more>

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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 McKinsey

Managing the people side of risk
Companies can create a powerful risk culture without turning the organization upside down.
By Alexis Krivkovich and Cindy Levy – Most executives take managing risk quite seriously, the better to avoid the kinds of crises that can destroy value, ruin reputations, and even bring a company down. Especially in the wake of the global financial crisis, many have strived to put in place more thorough risk-related processes and oversight structures in order to detect and correct fraud, safety breaches, operational errors, and overleveraging long before they become full-blown disasters.

Yet processes and oversight structures, albeit essential, are only part of the story. Some organizations have found that crises can continue to emerge when they neglect to manage the frontline attitudes and behaviors that are their first line of defense against risk. This so-called risk culture is the milieu within which the human decisions that govern the day-to-day activities of every organization are made; even decisions that are small and seemingly innocuous can be critical. Having a strong risk culture does not necessarily mean taking less risk. Companies with the most effective risk cultures might, in fact, take a lot of risk, acquiring new businesses, entering new markets, and investing in organic growth. Those with an ineffective risk culture might be taking too little.

Of course, it is unlikely that any program will completely safeguard a company against unforeseen events or bad actors. But we believe it is possible to create a culture that makes it harder for an outlier, be it an event or an offender, to put the company at risk. In our risk-culture-profiling work with 30 global companies, supported by 20 detailed case studies, we have found that the most effective managers of risk exhibit certain traits—which enable them to respond quickly, whether by avoiding risks or taking advantage of them. We have also observed companies that take concrete steps to begin building an effective risk culture—often starting with data they already have. more>

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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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Do social media algorithms erode our ability to make decisions freely?

Social media algorithms, artificial intelligence, and our own genetics are among the factors influencing us beyond our awareness. This raises an ancient question: do we have control over our own lives? This article is part of The Conversation’s series on the science of free will.
By Lewis Mitchell and James Bagrow – Have you ever watched a video or movie because YouTube or Netflix recommended it to you? Or added a friend on Facebook from the list of “people you may know”?

And how does Twitter decide which tweets to show you at the top of your feed?

These platforms are driven by algorithms, which rank and recommend content for us based on our data.

As Woodrow Hartzog, a professor of law and computer science at Northeastern University, Boston, explains:

If you want to know when social media companies are trying to manipulate you into disclosing information or engaging more, the answer is always.

So if we are making decisions based on what’s shown to us by these algorithms, what does that mean for our ability to make decisions freely?

An algorithm is a digital recipe: a list of rules for achieving an outcome, using a set of ingredients. Usually, for tech companies, that outcome is to make money by convincing us to buy something or keeping us scrolling in order to show us more advertisements.

The ingredients used are the data we provide through our actions online – knowingly or otherwise. Every time you like a post, watch a video, or buy something, you provide data that can be used to make predictions about your next move.

These algorithms can influence us, even if we’re not aware of it. As the New York Times’ Rabbit Hole podcast explores, YouTube’s recommendation algorithms can drive viewers to increasingly extreme content, potentially leading to online radicalization.

Facebook’s News Feed algorithm ranks content to keep us engaged on the platform. It can produce a phenomenon called “emotional contagion”, in which seeing positive posts leads us to write positive posts ourselves, and seeing negative posts means we’re more likely to craft negative posts — though this study was controversial partially because the effect sizes were small.

Also, so-called “dark patterns” are designed to trick us into sharing more, or spending more on websites like Amazon. These are tricks of website design such as hiding the unsubscribe button, or showing how many people are buying the product you’re looking at right now. They subconsciously nudge you towards actions the site would like you to take. more>

Updates from McKinsey

Small capital markets businesses have been insulated against many of the troubles affecting their larger competitors. Now things are getting tougher.
By Fuad Faridi, Jared Moon, Anoop Ravindranath, Roger Rudisuli, Manu Saxena, Matthew Steinert – The capital markets arms of regional and national banks are often seen as smaller versions of the capital markets businesses of the top 10 global firms. However, they are actually quite different. Regional businesses have evolved along their own paths, with distinct client franchises, operating models, and sources of profitability. As a result, they require a strategic agenda that is tailored to their specific needs.

Until recently, the capital markets businesses of regional banks have been insulated against many of the troubles affecting larger global banks, and in some cases have performed better than them. Regional capital markets businesses’ returns on equity (ROE) held up better than those of their larger counterparts and regionals maintained their market share.

Now, however, there are signs that life is getting tougher. Structural shifts such as increasing electronification and falling revenues, and questions about the sustainability and “fit” with their parent organizations, are leading to increased scrutiny of these businesses. This has been especially pronounced in Europe. Temporary revenue upticks from market volatility linked to COVID-19 are seen as providing only temporary relief.

Even seemingly more robust franchises are being forced to answer difficult questions. They have found that after stripping out the impact from internal flows and adjacent client bases, the businesses that remain are often far less profitable. They have also found it challenging to unlock the next phase of growth.

In response, regional players across geographies are focusing on improving productivity end to end. A subset of firms is also trying to identify three to five pockets of opportunity for capturing revenue. more>

3 Keys to Engineering Success

Although success can be defined in different ways by different people, there are three very specific keys to engineering success.

By Jacob Beningo – Every engineer and engineering team wants to be successful. Success can be defined in many different ways whether it is meeting a deadline, making a customer happy, or completing work within the budget. Whatever the definition of success is, there are three keys to successful engineering, and they aren’t necessarily technical.

Success Key #1 – Maintaining Discipline

Related: 50 Top Private Engineering Firms of 2020

The first key to success is that even under the toughest conditions, discipline needs to be maintained. This isn’t a military thing, it’s common sense. I see a lot of teams that when things start to get tough, corners recklessly start getting cut. The loss of discipline creates additional problems that further get in the way of delivering and quickly become a self-feeding doom loop that wastes time and kills budget.

Maintaining discipline for success must be done at more than one level at the company. First, individual developers need to agree that no matter what pressure is put on them, they will follow their processes, perform their due diligence, and not allow themselves to decay into wild west programming. Individual developers form the foundation and if they crack, the whole project is going with them. Second, the collective team needs to agree that they will maintain their discipline no matter what. Everyone working together will help ensure that they are successful. Finally, the company management team needs to be on-board and understand that while there may be a fire today or a critical delivery date, the team has to maintain the discipline to make the delivery successful. All three levels of the business need to be on board.

In my experience, engineering success comes down to much more than technical prowess. It comes down to having and maintain discipline. It requires carefully managing expectations to deliver what is needed when it is needed not by overpromising and under-delivering. Perhaps most importantly, to have long-term success, it requires having fun doing whatever it is that you do and with the people you are doing it with. more>

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>

Here’s how Biden could undo Trump’s deregulation agenda

Biden could use Trump’s playbook to reverse his regulatory moves on pollution, worker safety, health care, and more.
By Sarah Kleiner – Cutting workplace safety inspections. Allowing subpar health insurance plans to be sold to Americans. Permitting tractor-trailer drivers to blow past previous driver-fatigue limits. Waging war on birth control.

These deregulatory actions and others taken by President Donald Trump’s administration have adversely impacted the health and safety of Americans, as revealed in reporting for System Failure, an investigative series produced by the Center for Public Integrity and Vox.

Trump’s actions may not stick. Now that President-elect Joe Biden is set to take office in January, he has a few tools at his disposal to undo some of Trump’s regulatory maneuvers. Some could be more difficult to quickly put to use with a split Congress, however.

If Democrats take control of both houses of Congress, they’ll be able to quickly wipe out regulations pushed through in the last 60 legislative days of Trump’s term, because of the Congressional Review Act, part of the Contract With America that Newt Gingrich and House Republicans campaigned on in 1994.

But, while Democrats maintained control of the House, it’s still unclear which party will hold the majority in the Senate. All eyes will be on Georgia’s runoff for two Senate seats, which will happen in early January. Neither of the Republican incumbents, Sens. David Perdue and Kelly Loeffler, garnered a majority of the votes in last week’s election, forcing a runoff with Democrats Jon Ossoff and Raphael Warnock, respectively.

If Ossoff and Warnock ultimately prevail, it won’t be clear until January when the Congressional Review Act’s 60-day period began — because it all depends on how many days Congress meets between now and January 3, when its current term ends — but experts predict it started sometime during the summer. more>