For instance, even the relatively simple GVC [global value chain] of Starbuck’s (United States), based on one service (the sale of coffee), requires the management of a value chain that spans all continents; directly employs 150,000 people; sources coffee from thousands of traders, agents and contract farmers across the developing world; manufactures coffee in over 30 plants, mostly in alliance with partner firms, usually close to final market; distributes the coffee to retail outlets through over 50 major central and regional warehouses and distribution centres; and operates some 17,000 retail stores in over 50 countries across the globe. This GVC has to be efficient and profitable, while following strict product/service standards for quality. It is supported by a large array of services, including those connected to supply chain management and human resources management/development, both within the firm itself and in relation to suppliers and other partners. The trade flows involved are immense, including the movement of agricultural goods, manufactured produce, and technical and managerial services.
There was a review in The Wall Street Journal last week of the new book The Bet: Paul Ehrlich, Julian Simon, and Our Gamble Over Earth’s Future, which covers the Simon-Ehrlich wager (you know, the one where population doomsdayer Paul Ehrlich lost to economist Julian Simon regarding the dropping price of commodities). As the WSJ explains,
Mr. Ehrlich was allowed to select the five commodities that would be the yardstick…As they settled on their terms, Mr. Sabin notes, Messrs. Ehrlich, Holdren and Harte “felt confident that they would prevail.” They didn’t. In October 1990, Mr. Ehrlich mailed a check for $576.07 to Simon…Although world population had increased by 800 million during the term of the wager, the prices for the five metals had decreased by more than 50%. And they did so for precisely the reasons Simon predicted—technological innovation and conservation spurred on by the market.
Ehrlich’s reaction to the lost bet is instructive:
Mr. Ehrlich was more than a sore loser. In 1995, he told this paper: “If Simon disappeared from the face of the Earth, that would be great for humanity.” (Simon would die in 1998.) This comment wasn’t out of character. “The Bet” is filled chockablock with Mr. Ehrlich’s outbursts—calling those who disagree with him “idiots,” “fools,” “morons,” “clowns” and worse. His righteous zeal is matched by both his viciousness in disagreement and his utter imperviousness to contrary evidence. For example, he has criticized the scientists behind the historic Green Revolution in agriculture—men like Norman Borlaug, who fed poor people the world over through the creation of scientific farming—as “narrow-minded colleagues who are proposing idiotic panaceas to solve the food problem.”
Mr. Sabin’s portrait of Mr. Ehrlich suggests that he is among the more pernicious figures in the last century of American public life. As Mr. Sabin shows, he pushed an authoritarian vision of America, proposing “luxury taxes” on items such as diapers and bottles and refusing to rule out the use of coercive force in order to prevent Americans from having children. In many ways, Mr. Ehrlich was an early instigator of the worst aspects of America’s culture wars.
When it comes to political disagreements, try a little more evidence and a little less name-calling.
The World Economic Forum recently released their latest Global Competitiveness Report and after years of decline the US finds itself back in the top five at…#5. This time around, America falls behind Germany (#4), Finland (#3), Singapore (#2), and Switzerland (#1). Gains over the Netherlands and Sweden provide reason to hopeful. What stands out, however, are the things that the survey identifies as America’s biggest hindrances to competing in the global economy: tax regulations (the US was #69 in “Paying Taxes” in the World Bank’s Doing Business rankings), tax rates, and inefficient government.
Food for thought.
The 2013 version of The Great Gatsby was recently released on DVD/Blu-ray. I haven’t seen the film yet, given that I’m pretty lukewarm toward Baz Luhrmann. (Moulin Rouge! was enjoyable enough, Romeo + Juliet had its moments, but Australia?) But when I heard a radio advertisement for the DVD last night, I was reminded of a Nick Gillespie article from the April 2013 issue of Reason entitled “The Great Gatsby‘s Creative Destruction.” Gillespie is, according to The Denver Post, “a true intellectual, who can, before finishing his lunch, discuss how “The Great Gatsby” might be written today, switch to a riff on free-market reasons for supporting a value-added tax, reference economic studies that detail the “self-correcting” tax distribution in European countries that have applied a VAT, chart from memory the nation’s deficit spending patterns since the Great Depression, and all while handling a pretend-I’m-interested discussion with a political candidate whose conversation is limited to repeating the phrase, “It’ll be a real dog-fight, in every sense of the word.”” Not bad for #18 on The Daily Beast‘s list “The Right’s Top 25 Journalists.” (He would cringe at being lumped on “the Right” given his strong libertarianism.) The fact that he has a Ph.D. in English literature probably helps with his analysis of The Great Gatsby. And it is an interesting one.
Based on the trailers and ads made available so far, the new movie likely errs in the same fundamental way that the Redford version did. That is, it conceives of Gatsby ultimately as a grand love story between the title character and the object of his obsessive love, Daisy Buchanan. Given the barebones plot of the book, that’s understandable but regrettable, as those two are the least compelling characters in the novel. Despite occasional moments of darkness and depth, Daisy works hard and mostly succeeds at maintaining a superficial lightness. Gatsby, despite the whirl of excitement and mystery about him, is an empty suit. Even the novel’s adulatory narrator confesses that when he’s alone with Gatsby, “I found to my disappointment, that he had nothing to say.”
The reason that Gatsby (the novel, if not the character) still has plenty to say to us is that it captures the precise moment that modern America came into recognizable shape. It is about the move from countryside to metropolis, from unum to pluribus, from hierarchy to heterarchy in all aspects of cultural and economic life. It captures a world in which nothing is fixed in terms of status, fortune, and self-fashioning—and it narrates the anxieties by such freedom.
…Gatsby…is not simply a story about class differences. It’s about the breakdown of class differences in the face of a modern economy based not on status and inherited position but on innovation and an ability to meet ever-changing consumer needs. Ultimately, Gatsby is the great American novel of the ways in which free markets (even, and perhaps especially, black markets) overturn established order and recreate the world through what Joseph Schumpeter called “creative destruction.”
Certainly one of the more novel takes on Gatsby I’ve read. The whole thing is worth reading.
Nearly two years ago, I graduated from UNT with a BBA in Organizational Behavior & Human Resource Management. As part of my curriculum, I did an internship at a unionized freight company. I was required to write a research paper based on my experience and the company itself. Having dealt with grievances, discipline, and other administrative duties, I focused on the effect the union had the company’s operations. I posted an excerpt of that paper at The Slow Hunch (I left out the company specifics and focused on the overall economic effect). Even though I’ve become softer on unions and harder on management over the past couple years (despite the unsavory history of labor unions and their contribution to unemployment), I still think the post is worth a look. If anything, it is a good reminder of a point I’ve made before: true growth comes from capital investment, creation of wealth, technological advances, increased skill and education, and competition.
In 1884, when President Grover Cleveland signed the bill making Labor Day a national holiday on the first Monday in September, he and its sponsors intended it not as a celebration of leisure but as a promotion of the great American work ethic. Work, they believed, was the highest calling in life, and Labor Day was a reminder to get back to it. It was placed at the end of summer to declare an end to the season of indolence, and also to distance it from May Day, the spring event that had become a symbol of the radical labor movement.
The day most of us now spend in happy leisure was created to urge Americans to work more, not less. The holiday’s inventors would have been dismayed to see that Americans today would use it only to float in a pool, play putt-putt golf, or – even worse – to fantasize about a life in which they do nothing but play.
Labor Day, perhaps more than any other holiday, has always embodied a contradiction in American society, the deep gulf between the nation’s self-image and the way its people often behave. And to understand why is to get a clearer look at an important but little-understood piece of our own history: America’s long civil war over fun.
Check out the full piece and read more about this American contradiction.
The picture to the left was the cover of Ruskin on Himself and Things in General, a late 1800s collection of essay extracts by John Ruskin. The white, bearded, thin-faced Ruskin tramples his dark, broad-faced and flat-nosed enemy. In the slain man’s hand is a bag that reads “Wealth of Nations” and “L.S.D.” (not the drug, but the abbreviation for “pounds, shillings, and pence”). Next to him is a book titled “The Dismal Science.” How does the “dismal science” connect with this obvious racism? Most know that economics got its unfortunate nickname from Thomas Carlyle, who coined the phrase based on Malthus’ population doomsdaying. However, this well-known story is simply not true. As economists David Levy and Sandra Peart explain,
[Thomas] Carlyle’s target was not Malthus, but economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor. Carlyle attacked Mill, not for supporting Malthus’s predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact—that economics assumed that people were basically all the same, and thus all entitled to liberty—that led Carlyle to label economics “the dismal science.”
Carlyle was not alone in denouncing economics for making its radical claims about the equality of all men. Others who joined him included Charles Dickens and John Ruskin. The connection was so well known throughout the 19th century, that even cartoonists could refer to it, knowing that their audience would get the reference.
Perhaps capitalism has more to do with emancipation than exploitation.
My latest at The Slow Hunch looks at a little-known anime series that teaches a profound lesson about progress, which can be applied to work, home, and abroad. Doesn’t hurt that the lesson is based on the work of management expert Peter Drucker. Check it out.
The following comes from a new report out of the McKinsey Global Institute (McKinsey & Co.):
As shown above, the report identifies five major catalysts for economic growth:
- Shale-gas and oil production
- US trade competitiveness in knowledge-intensive goods
- Big data analytics as a productivity tool
- Increased investment in infrastructure, with a new emphasis on productivity
- A more effective US system of talent development
Perhaps the US does not need to “get used to slower growth.” Perhaps we just need to know our options.
The following chart comes from the Mercatus Center at George Mason University. It shows the increase in regulations from 1997 to 2008, deflating the claim that “deregulation” led to the financial crisis.
The researchers concluded,
Using the Mercatus Center at George Mason University’s RegData, we find that between 1997 and 2008 the number of financial regulatory restrictions in the Code of Federal Regulations (CFR) rose from approximately 40,286 restrictions to 47,494—an increase of 17.9 percent. Regulatory restrictions in Title 12 of the CFR—which regulates banking—increased 18.2 percent while the number of restrictions in Title 17—which regulates commodity futures and securities markets—increased 17.4 percent.
…Total regulatory restrictions pertaining to the financial services sector grew every year between 1999 and 2008, increasing 23 percent during this time. The Patriot Act, the Sarbanes-Oxley Act, and Regulation NMS all contributed to this growth. The repeal of parts of the Glass-Steagall Act via the Gramm-Leach-Bliley Act did not result in noticeable deregulation of the financial services sector. Nor did the Commodity Futures Modernization Act facilitate overall financial deregulation. Not even the Financial Services Regulatory Relief Act of 2006, legislation intended to decrease regulatory burdens on the financial industry, reversed the ever-growing burden of regulatory restrictions faced by the financial services sector in the years leading up to the financial crisis.
While “deregulation” may be a dirty word among some of the political elite and their supporters, the chart above and video below should cause one to give pause and reconsider the costs of heavy-handed regulations.