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Yearly Archives: 2013

With a Moslem Beat?

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Looking back through history may not seem like a good way to determine our future, but it’s all we have.  We can reasonably guess that if all the trends continue the current Depression will run its course by 2017, give or take a few years or a major meltdown. We can also be pretty sure that this current period of evening out between the developed and developing world will be followed by relatively low growth as working age populations flatten across the planet.

Where this gets tricky is the realization that Western finance, including stocks and bonds and constant price inflation, is not remotely set up for a low-growth world.  Something has to change.  The best recommendation any of us can make is what is working in economies built around sustainability and resilience today as well as strategies that functioned well before the great wave of industrialization.  And that’s where I’m going to start with a few suggestions and predictions as to how finance as we know it could change.

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Growth is … Good?

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Growth is good.  That’s been the mantra of just about every society at every point in human history, at least until recently.  More people means more to work the land and higher productivity.  If it gets a bit out of hand, high growth can create a larger army to go knock off the neighbors and open things up even more.

The pattern held through the industrial era and right up to the point where large undeveloped nations started to have trouble feeding themselves.  There were incidents of mass starvation in some empires, likely even the Mayan, but until the 20th Century growth has always been something that everyone relies on.  Peaceful societies have put growth to work taking care of the vulnerable and generally enjoying the few years we all have on this Earth a bit more.

But what if growth slows down, or even stops?  One of the defining features of the next generation is likely to be dealing with declining growth across the planet.  It’s also one of those issues that no one is ready to talk about.

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A New Generation’s Prospects

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Employment opportunities for those ages 20-24 are worse than the general economy and not improving as rapidly.  So are they going to college instead?  The answer, apparently, is that they are not according to the latest figures.  College enrollment is down slightly – and graduation rates within a 6-year time frame have ebbed to a new low, 59% of those who started in 2006.  Graduation rates are improving at 2-year institutions such as community colleges and tech schools has increased from 21% to 37%, suggesting students are more serious, but are still pitifully low.

The problem for the young is much bigger than reduced employment opportunities today – it also includes reduced achievement in higher education which implies reduced opportunities tomorrow.  This is part of a growing backlash against the “Educational Industrial Complex” that encourages debt but is unable to payoff with job opportunities.  Will that backlash grow into a generational revolt?

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Next Generation, Waiting

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There has been little doubt that employment has been improving in the US.  From the trough three years ago 5M jobs have been created.  That’s not enough to fill the 12M or so that need to be created, but it’s a start – and it’s been steady progress.  But who is being left behind as the situation (very) slowly improves?

The most important group are the young who are looking for their first job.  Those 20-24 have a lifetime of expectations and habits created by the start of their career, and by any measure their outlook is not good.  While the economy transforms itself into whatever will create the next wave of opportunity the young are being left behind.  This is true throughout the developed world, particularly in Greece and Spain, but the problem is also acute here.  Let’s start by defining the problem.

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Leadership as Strategy

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Leadership.  There has been a lot of talk about it lately, or more to the point the lack of it.  In common talk it is defined as “Doing or standing for the things I like” far more often than is useful.  But most people will agree that the inability for our US Government to do something about a large deficit coupled with a lack of support for genuine growth comes down to a lack of leadership.

I argue that this is to be expected, given the horrible lack of leadership everywhere in the developed world right now.  Can anyone name a powerful nation with good leadership?  Perhaps you can name a few businesses that have it, but not many.  How about social leadership? Religious leadership?  Are there more than a few people in rich nations anywhere who have a strong following that is capable of getting done what they want or need to?

Then again, the lack of leadership is hardly surprising.  It is not about a charismatic figure that molds the masses to action – it’s about getting things done.  That requires strategic thinking, and strategy is something horribly under-appreciated.  I might chalk that up to excessive selfishness or a failure of moral character in our world, both of which are issues.  But upon reflection, it seems to come down to a lack of understanding of what Strategy is and why it is important.  And how we got here may well be fascinating.

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