Skip navigation

Monthly Archives: January 2010

Obama and the myth of job creation is a story designed for debate. The basic argument is that job creation comes from the supplier–the worker–not from government nor from companies.

When we imagine that government – and even companies – “create” jobs, we’re missing half the story: the crucial part. The part that most of us can actually influence, right now.  

It’s a paradox, but job seekers are actually job creators. People (and the politicians that love their votes) tend to focus on how many employers happen to be hiring. But an overlooked tenet of labor economics says that what’s equally vital to creating jobs is the presence of an adequately skilled workforce capable of filling them. 

In other words, when the workers are ready, the jobs appear.

The author goes on to describe the diffferent ways that job-seekers can retrain themselves for a new career. I have sympathy for the argument, but I think the point is overstated, and–like the article says–it is “missing half the story.”

One point that needs to be made, supply-side incentives can also be encouraged through government and business, not only through the extra dedication of the worker. Secondly, retraining and retooling are solutions for an economy suffering from structural unemployment, but not from cyclical or demand-deficient unemployment. There are some structural elements of the unemployment in US and Europe, but I think most would agree that a lack of investment and consumer spending are the biggest problems.

The article closes with, “a few steps to create sustainable job growth.”

  • redefine the idea af a job to include contract work and free agency
  • retool, quickly and regularly
  • redesign unemployment benefits (like Friedman’s Negative Income Tax)
  • welcome free trade
  • recognize immigration for the competitive advantage it is

Any free-market economist would agree that all of these steps would probably be positive, but now it all seems contrary to the earlier part of the article. How do we change these things without government policy? Government needs to play a role, but maybe a different role than we have seen lately.

(Do not forget to visit


This story is about Farmville, something I know about only because some of my old students are playing it on Facebook. I wanted to read the story because I have this suspiscion that this is another one of those computer games that is quite educational.

I was–at first–disappointed.

And with FarmVille, “there’s an appeal that’s just cute, with the amazing ways people take the farms and develop them out as their own.”

In the end, he hopes, “people will see this as a fun little escape.”

“It was completely mindless and just mine,”

Later, the story sounded a bit more like this was something educational, maybe people just don’t recognize that it is.

To John Reifsteck, a corn-and-soybean grower in Champaign County, Ill., there are parallels between virtual and actual farming. “Success at FarmVille requires foresight, persistence and a willingness to help others — just like farming in the real world,” he wrote in an online column last month.

This makes people uncomfortable and people tend to dismiss it, but research consistently suggests that game playing–video games too–stimulates our minds much more than sitting in a classroom.

(Don’t forget to visit

Here is a story about a horribly sad situation. Because of worker blockades protesting threatened lay-offs, beer manufacturers are having trouble receiving supplies and delivering what beer they are still able to make. 

OK. We have a shortage of beer. Prices should go up, right? No mention of that yet, but it turns out there has also been a shift in demand over recent years. Because of changing habits and an aging population, beer consumption has declined by 20% over the last eight years.

Perhaps the lay-offs are justified after all, but you can not blame the workers for trying to keep their jobs.

Then–for some reason–end of the fourth paragraph–there is a link to a video report about beer-bikes in Amsterdam. Not Belgium, but I guess it is about beer, so close enough.

(Do not forget to visit

This story–China’s growth accelerates to 10.7 percent in 4Q–creates some curious reactions in world markets. Asian stock indexes went down, and the US dollar rose to a five-year high. The funny part is that the good news also brought renewed expectations that China would raise interest rates and tighten money supply growth. Inflation is feared, apparantly more than a reduction in the rate of growth.

Strong Chinese growth could help to drive a global recovery by boosting demand for foreign oil, consumer goods and other imports. It also might give Beijing confidence to ease currency controls and allow its yuan to rise against the dollar, which could boost imports by making them cheaper for its consumers. China has kept the yuan steady against the dollar since late 2008 to keep its exporters competitive abroad.

But that progress could be derailed if a burst of inflation saps the spending power of Chinese families and forces the government to clamp down so severely on credit and investment that it slows the creation of new jobs.

So the expected increase in interest rates explains the lower spending expectations in the rest of Asia, but that would normally make the currency stronger against the dollar. Must be that the “confidence to ease currency controls,” is seen as a stronger influence.

Myself? I doubt it. For years China has been able to keep the Yuan relatively low through currency purchases, and still manage inflation domestically. Like mentioned later in the article, most of China is still a developing country.

(Don’t forget to visit

Continuing to check the stories out of Haiti, we came across Haitian Earthquake: Made in the USA. This another great story–and a disturbing story–from Ted Rall. Count on Mr. Rall to bring Americans back to reality, just when many are celebrating the generous aid coming out of the states and much of the world.

Of course he is not actually arguing that the earthquake was somehow created in the states, only the severe poverty that has contributed to the devastation.

Earthquakes are random events. How many people they kill is predetermined. In Haiti this week, don’t blame tectonic plates. Ninety-nine percent of the death toll is attributable to poverty.

So the question is relevant. How’d Haiti become so poor?

The story begins in 1910, when a U.S. State Department-National City Bank of New York (now called Citibank) consortium bought the Banque National d’Haïti–Haiti’s only commercial bank and its national treasury–in effect transferring Haiti’s debts to the Americans. Five years later, President Woodrow Wilson ordered troops to occupy the country in order to keep tabs on “our” investment.

The story continues with more embarassing accounts of CIA and US military control of Haitian politics and trade.

From 1915 to 1934, the U.S. Marines imposed harsh military occupation, murdered Haitians patriots and diverted 40 percent of Haiti’s gross domestic product to U.S. bankers. Haitians were banned from government jobs. Ambitious Haitians were shunted into the puppet military, setting the stage for a half-century of U.S.-backed military dictatorship.

The U.S. kept control of Haiti’s finances until 1947.

Still–why should Haitians complain? Sure, we stole 40 percent of Haiti’s national wealth for 32 years. But we let them keep 60 percent.


Rall’s sarcasm makes the story a strong criticism of US policy, but I wonder if others will take a more serious approach and really create an issue that may be overdue.

(Do not forget to visit

Much of the news lately comes from post-earthquake Haiti. The massive numbers of dead have been estimated at 50,000 to 100, 000. The estimates have not changed and they will not really know for a long time, if ever. One thing that has changed since the first reports came out–journalists are there now, and the photos and video being broadcast are heart-wrenching.

Another thing that has changed is that people have grown hungry and thirsty–and violent in the desperation to get food and water.  Relief efforts have started to materialize, but the infrastructure and situation make delivery a challenge. The airport, for example, is too conjested to allow more landings. Helicopter crews are dropping supplies from the air because there is no place to land.

Reports constantly remind us that Haiti is the poorest country in the western hamisphere. That leaves me wondering why? Why do they want to remind us of their poverty? Just to elicit even more sympathy? Or is there a connection between wealth and the ability to respond to a severe disaster like this?

I am not sure of the answer. Any ideas?

(Don’t forget to visit

Google has brought a new global focus to Internet espionage being practiced in China. The government is operating in the name of national security, but they are strongly suspected of intrusion by sending spyware through email. Google brought the focus with a threat to pull its operations out of China.

… the attack on Google and other recent intrusions relied on hackers sending booby-trapped documents that were stored in Adobe’s Acrobat Reader format, which then infect victims’ computers. This method was seen in a recent wave of attacks on the Dalai Lama’s computers.

When Google first came to China in 2006, they agreed to some censorship that the government made a condition of operating here. Now Google believes the censorship and intrusions are too much to deal with.

Another note to the story, the White House is also challenging China’s Internet intrusion.

“The recent cyberintrusion that Google attributes to China is troubling, and the federal government is looking into it,” said a White House spokesman, Nicholas Shapiro. He said that the president had stated that Internet freedom was a central human rights issue on a recent China trip. He also said that the president had made Internet security a national priority.

That reminds me that the last administration gave the US government the right to spy on people’s Internet activity. Has that changed?

The attacks present a challenge for the Obama administration, which last year debated the role of a federal Internet security adviser. The administration is grappling on how to balance stricter security controls and the freedom of technology companies to innovate.

Debating the role, but rare–maybe impossible–for governments of any kind to give-up that kind of power.

Hopefully, Google’s efforts will at least lead to a reconsideration of China’s policies.

(Do not forget to visit

To jumpstart US job market, turn workers into owners–this is an idea I really like, but I doubt many business owners will turn this direction.

Seldom do the United Steelworkers, the United Nations, and film director Michael Moore express the same idea at the same time. But all have, in their own way, promoted the benefits of cooperative businesses in recent months.

Cooperatives–worker-owned businesses–are not at all a new idea, but I am glad to see it is gaining favor again. It is something I wanted to do with my restaurant some 26 years ago. The article cited here focuses on how cooperatives might help the US economy back to growth and high employment, but the real value of cooperatives is the proper placement of incentives.

Profit is typically the incentive of investors, but if it were also the incentive of workers imagine the potential for a really productive enterprise, with people going about their work because they really care about it.

Time to finally behead the paternalistic monster. That kind of management is not suited for a cooperative (it does not work anyway) and people are perfectly capable of motivating themselves if it is for the right reasons.

Utopian literature often introduces cooperatives as a model for their communities. Some people say it will never work, but I think it depends on the level of cooperation and realistic expectations.

(Don’t forget to visit

Multicultural critical theory–at business school? This is presented as a radical, new idea, first ocurring to Roger Martin about ten years ago. Indeed, the idea does seem to have disappeared from the business landscape over the last quarter century or so, and what a shame that has been.

Mr. Martin,  dean of the Rotman School of Management, refers to his ideas as a liberal arts M.B.A. Sorry Mr. Martin, this is not your idea, nor is it at all original (you know this already) though it is high time someone in the right place started pushing for it.

Older references to these ideas comes from many places–Max Weber occurs to me, and Mark Twain, Sinclair Lewis. A simple Google search will turn-up some interesting statistics on this, like only one third of the top CEO’s in the US have an education focused only on business.

Most successful CEO’s will tell you their studies of history or philosophy or the classics was most important to their work today.

Dear students, Are you hearing this?

(Do not forget to visit

Something I had suspected, but this is the first report I have seen claiming that the US work force is shrinking dramatically.

About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.

The so-called underemployment rate — which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking — rose to 17.3 percent in December from 17.2 percent.

In an ideal world this is not a terrible situation. Discouraged workers might be returning to school or preparing to work for themselves. Of course there are also going to be incentives for work in the black market, including criminal activity.

The participation rate–the percent of population in the workforce–has fallen to 64.6% in the US. That is the lowest rate in 25 years, but I think pretty high for the developed world.

(Don’t forget to visit