Can Digital Technology Bolster US Competitiveness?
The US should take a cue from Israel, India, and France – countries that approach digitization as a national priority, urges Cisco Chairman John Chambers. He argues these countries are better positioned to capitalize on the digital revolution and predicts the emergence of a new startup hub in Europe:
The economic benefits (are) probably $19 trillion and what surprised me is actually we see governments leading in this as opposed to business and France is at the forefront of that. … [The U.S. is] the only country in the world who does not have a digital plan for the country.
This is easier said than done, with Congress mired in partisan gridlock and more business executives viewing Washington as an “unproductive distraction.” That comes from a Washington Post column by Steven Pearlstein, who chronicles a decades-long decline of the “business statesman” and how corporations lost influence in Washington.
How Should We View China’s Excessive Debt?
At $26.6 trillion, China’s debit level – approximately 240% of GDP – rises 15-20% annually. Debt servicing capacity, however, remains at 6.5%, about the rate of GDP growth, observes Michael Pettis at the Guanghua School of Management. Pettis warned about this possibility when he spoke at G100 two years ago. Today, he argues that no amount of banking “reforms” can obscure the reality:
The fact that bad loans overwhelm the capital of the banking system should not blind us to the fact that China’s problem is excessive debt in the economy, and not a banking system that risks collapse because of insolvency. … [The key in China is] how the losses are going to be allocated, and that remains no clearer today than it ever has been.
Australia’s largest investment bank is notably more optimistic. After analyzing asset quality risks and corresponding solutions in the financial sector, a Macquarie white paper expresses confidence in Chinese policymakers and identifies the “burgeoning” opportunities from rebalancing:
The largest beneficiaries in services (local products) in Asia won’t be in high end luxury goods. Rather we prefer middle class goods and services, including food businesses, airports, duty free, hospitals, department stores with tax-rebates, tour guide operators, overseas education providers, cosmetics, hotels and resorts, and lifestyle brands.
Big Data and the Campaign Trail
Detailed reporting from Politico portrays the data analytics department in Hillary Clinton’s presidential campaign as a formidable strength. Quietly leading this elaborate effort is Analytics Director Elan Kriegel, among the highest paid members of Clinton’s brain trust who touches nearly every decision:
Among the pioneering areas Kriegel’s analytics team has studied…is gauging not just whom to talk to, how to talk to them and what to say — but when to say it. … It is a question Obama’s team realized was crucial to mobilizing voters in 2012 but had never been truly analyzed. With a full calendar of competitive primaries, Kriegel and his team had plenty of chances to run rigorous, control-group experiments to ferret out answers to such questions earlier this year.
The clear lesson from this campaign report is relevant to the enterprise: Successful big data initiatives require more than experts to find answers; they need embedded behaviors throughout the organization to ask big questions. This emerges from a recent report that provides a rare look inside Palantir, one of Silicon Valley’s most valued — and secretive — big data companies. The company consciously motivates its employees to think creatively. Some takeaways from the report in The Baffler:
• Palantir encourages the creation of a “cult of improvisation”
• In every interaction, it’s crucial to know your status relative to others and embrace that role.
• The key to unleashing creativity is saying yes and over-accepting.
“Neither Working Nor Seeking Work” – An Emerging Crisis
When he joined us last year at G100, demographic expert Nick Eberstadt called the declining labor participation rates among working-age males “America’s invisible crisis.” This month, The Wall Street Journal previewed his upcoming study that details the problem:
Not even in dysfunctional Greece or “lost generation” Japan has the male flight from work proceeded with such alacrity. The paradox is that Americans—those who do have jobs—are still among the rich world’s hardest-working people. No other developed society puts in such long hours, and at the same time supports such a large share of younger men neither holding jobs nor seeking them.
Back to School Reading
What regions will be first to see technology-based job displacement? Large, wealthy cities, like San Francisco, New York, and London, predicts Ryan Avent of The Economist. His new book, The Wealth of Humans, not only examines how technology shapes the future of work but why universal basic income is not a panacea. An interview with Avent in The Atlantic offers a preview:
For a world to work where a universal basic income accounts for the bulk of the consumer spending for many people, something else needs to account for the social side of work. It is disappointing to think that we’d have to create make-work for people, but it may be the hard truth.