Market jungle survival skills

It's a tough market, the job market, especially nowadays.

But if it was not tough, it would not be a market, would it?

They should teach job market survival skills at school.

The governing dynamics for capital and labour

Is capital nowadays a) migrant b) homeless or c) vagabond?

Thus, in these weird times which thinking is more in line with the general dynamics?
(Thinking) Like a) an immigrant b) a homeless person c) a vagabond?

Where are the philosophers when we need them?

Where are the philosophers and other thinkers to speak in public (USA + Europe) about the values of Humanism and Enlightenment in these new Middle Ages?

These new Middle Ages when solidarity is branded entitlements, when the taxpayer interest is the political premise rather than citizen's?

The new Middle Ages when a mother of 5 is told she should have borne fewer children (instead of government/societal bonus, especially in seriously ageing countries like most of Europe)?

The new Middle Ages when "foreigners", especially economic immigrants, are the scapegoats for the problems in so many countries?

Where are they? In the media? In the social media, eg Twitter? Where are they?

The Achilles Heel of Western Civilisation?

The Ancient Chinese used the motto "may you live in interesting times" as a curse (not a wish).

Modern "Western civlisation" puts and pays a premium for certainty, especially the middle class.

It's its "Achilles Heel".

G7 + G20 = 0

A main dynamic of the era is, alas, not economic cooperation but economic clash between countries, more so than between multinational corporations.

With that in mind, the G7/G8, the G20 and other bodies (including WTO) are of marginal at best real significance.

If one factors into the dynamics and systemics of the era the role of global finance, then that begins to show the chaotic nature of the times.

Plutocrats?

I first wrote these thoughts some 7 to 8 years ago, to show the complex and often oxymoronic nature of the "systemics" that exist in the world today. I kept no copy so this is a reproduction from memory. It is more relevant or if you prefer "current" today, in 2011, than it was in 2003/04.

1) A worker is laid off.

2) A TV viewer complains about the quality of content.

They both blame the "system" or various other alleged culprits.

Yet here's the hitch:

1) The worker has been laid off because his/her employer is under pressure by the financial markets - analysts - financial managers to perform better, by cutting costs. The worker has saved or invested X USD or Euros or Pounds etc either directly, via a bank deposit, or a portfolio or money market or other instrument, maybe an IRA (US or similar instrument) or indirectly, via a pension fund, private, semi-private or state operated, in shares or bonds including those of his/her employer. He/she may be aware of that or not.

So in effect, he/she loses his/her job because of the pressure the managers of his money put on his/her employer to perform better and thus give him/her the max ROI possible!

Of course the marginal gain in ROI from the loss of the job is oprobably much smaller than the loss of salary income.

So, in 2011, when we talk of the plutocrats or "the capitalists", do we really know who we are referring to? Do we forget that most investment, money etc managers compete with each other to attract and maintain the "business" of this worker as saver/investor, directly or indirectly? How many investors, be they in the 1% or 99%, investors of 1000 or 1000000 USD or Euros etc choose Socially Responsible Investments or managers who invest their money in such?

2) The viewer happens to be a business owner. His/her company advertises on TV and/or radio and.or new media and/or print. In their effort to attract the widest audience possible and offer his/her company the best return on their ad spend, many/most media put out lower "quality" content than they otherwise would, thus prompting the reaction of the viewer. Little does he/she know that he/she is partly the culprit of the dynamics that lead to the content he/she does not like!

Complicated times. Not suitable for simple models of causality!

So who have the power? The money-crats or the managers of other people's money? Or everyone and no one? Is it a runaway train?

Food for thought.

Towards a new paradigm for the "West"?

1st draft of a brief working paper

1) The West's dominant paradigm has failed to gain global approval - appeal

2) It has even failed to gain approval - appeal in a large part of Europe and the EU

3-4) It is now being challenged in some its core hubs (UK, USA) while in Germany and North - North-West Europe it is trying to gain appeal via populism and xenophobia

5) Is there a solution? a) To incorporate other existing paradigms frm the rest of the world & from rest of Europe b) to go back 2 its roots

6) Option B: Go back to its roots & rebuild from there. But which are its roots? Renaissance, Rome, The Hellenistic Times, Athens?

7) What would the paradigm today be if Alexander the Great had not died but had lived to further develop his own "globalisation"?

8) Alexander's prepared the Hellenistic Times by respecting Egyptian, Persian & other cultures and merging them w/ the Classical Greek one

9) It was left up to his successors & lasted not long enough. Had it lasted longer, would Rome have emerged the way it did?

10) Option A: Can West's Times respect & incorporate other world cultures the way Alexander incorporated others to the Classical Greek one?

See also: My post "Globalisation, today and in 300 BC" (April 20, 2008)

Not that global, not yet at least!

Whereas it is interesting to read attempts to find a common thread or paradigm to recent social developments around the world (North Africa, Europe, India, USA, etc), I am not yet convinced that such a thread exists at least in the way many suggest. The world is not that "global", at least not yet.

Governing Dynamics: Competition or Cooperation?

Events of the day IMO show that:

a) Countries and their governments have to decide whether the global economy is a competition or a cooperative "game".

b) Markets need to learn to "chillax"

On Wisdom, Markets, Philosopher-Kings and Philosopher-PMs

Time to pause and realise what has been going on in Europe, USA & the world!

Ponder on this: Sure there are socio-econ-policy-political problems in Europe & the world but it's the role of the financial markets to propose/force solutions?

I may or may not believe there is wisdom in the markets but I certainly don't believe in the wisdom of the financial markets!

We do not need philosopher-kings of Markets, we need philosopher-PMs of democratic States!

Euro or the Social Model?

Is the goal of all this jazz

a) to break up the Euro or
b) to dismantle and priivatise the European Social Model?

Seems both.

Contagion is contagious too!

First there are the finance related contagion. Then it spilled over into a contagion of bad ideas (and especially policy related ones). Then to a social contagion.

Analyse this!

After Greece et al, it seems that now it's England's turn to be analysed top to bottom by all sorts of experts, analysts and commentators.

Who will be next?

(Contagion is contagious too)

World Dynamics: The effects of just-in-time and outsourcing

Some years ago (2003) I decided to use my experiences and education (including and MNA and studies in Operations Research - Decisions Science and Transport Systems Analysis - Logistics) and in order to try to get an idea of the fundamental (I can them systemic) causes or factors that "drive" what is going on in our era.

After some time I came to the conclusion that it was not globalisation per se that was "responsible" for the volatile behaviour of the "system", but:

a) The just-in-time process in inventory management, combined with
b) Outsourcing

Two versions (not identical):

1) The vlog version (7 minutes, 38 seconds):



2) The text version:

a) It must now 30 or 40 years since just-in-time started being implemented by companies in order to improve their ROI by reducing the volume of inventory. Part of the reason for that was the then high interest rates and thus opportunity cost of capital. In other words, goods sitting around in inventory waiting for demand to absorb them contained value (capital) that was not being used. By minimising the volume of inventory, that cost was drastically reduced. But to do so, it required fundamental changes in the way companies, especially manufacturing ones operated, as well as their suppliers and clients (whole-sellers, retailers, transporters, etc), ie the who "value chain".

The adoption of just-in-time spread to more and more companies, even at times of lower interest rates, and started to affect all aspects not only of the economy but also society. Eg fast food is a result of the expansion of this process. 24/24, 7/7 news as well. Slowly, the world picked up pace and started to "spin" at a faster rate. At some point, the rate became relentless. We are still in that stage. Until the "engine" bursts.

More and more people, more and more decision makers have less and less time to make decisions, to analyse problems or situations. Or systemics and dynamics. In a way, that was the curse the Ancient Chinese referred to when they said "May you live in interesting times".

b) At some point, companies also decided that instead of keeping many functions internal, it made "more sense" to purchase them from the market. The idea was nor new. Let's not forget that once upon a time many companies had their own advertising department and their own corporate strategy/planning department. Once upon a time cleaning and security personnel were employees of the company not of a sub-contractor. Civil engineering had a long tradition of using sub-contractors. A theoretical backing of outsourcing was that by purchasing these "services" from the market instead of producing them internally, a company was able to expose them to competition thus improve their productivity (and cost to the company). That made things more complex and volatile, including employment. Sub-contractors lost contracts and let people off at once.

c) Then also came the M&As blitz financed by junk binds that put even more performance pressure on companies, on top of the existing pressure on CEOs and boards to show great performance every single quarter (as well as a system of remuneration via stock options). What globalisation did was, via the increasing freedom of trade of mostly manufactured goods, to offer more options not only re suppliers and clients but also sub-contractors. The volume of goods transport skyrocketed. The entry of China into the WTO system (12/2001) provided the world manufacturing industry with a huge new pool of industrial workers and eventually consumers (this is 1.4 billion of the 6.9 billion world population we are talking about!).

It should not have taken the realisation of global warming to realise that the system was overheating! All one had to do was slow done and take a look at the pace the rest of the world was passing him/her by. The average age of managers declined because experience was of less value and ability to think and act on one's feet of more value. So you pock up the phone and call info in the US or the UK and wind up taking to an operator in India or the Philippines pick up. A natural result of outsourcing combined with other systemic factors some of which are described above. Even some of stock trading have been "outsourced" from humans to computers and their algorithms.

During the same time (listen to my analysis here) the real economy was too regulated and suffocating with national and international red tape and thus running out of the ability to yield ROIs that investment houses could propose to their clients in order to get their business (ie manage their money/investments). That led to the search for new opportunities outside the real economy, the new economy. And a bubble, the dotcom one. Then to a real estate bubble or a bubble of investment tools (CDs) "based" on real estate loans (mortgages) to riskier than normally serviced clients (subprime). A "natural" development due to the pressure of the finance world to offer investors better expected and if possible, real returns. The rest is more or less known and the story is still in play. Just turn on your TV or radio or social network today.

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My analysis above tries to explain parts of how we got here.

Solutions?

Oh my! One is to liberalise all factors, instead of keeping some (eg capital) free to move globally or almost free (goods) and others (services and especially work and people in general) virtually fenced into 200+ sections. The other is to limit the mobility of capital and goods. Good luck, in any case.

And finally, as an add-on, a song inspired by the topic:

Waiting for the dawn of ... (Dum spiro spero)

Sunday, August 7, 2011. 10 pm Central European Time.

Today (1) I have the gut feeling the humanity will soon have to stand up for what it really stands for: Humanism

That out of these miserable dynamics, a new Renaissance will soon take place, focusing on humans, all humans.

A new enlightenment.


(1) In the midst of the Eurozone crisis, the USAA+ downgrade, the social contagion in parts of Europe and the events last nigh in north London the demonstrations re cost of living in Israel yesterday, the situation in Syria, while waiting for the Asian markets to open, in the midst of the mediatic gloom, doom and other genres of hype.

World and European dynamics: 20 years later ....

20 years ago today, the WWW was born. The world was still celebrating the winds of change propelled by the fall of the Berlin Wall and the return of freedom in Eastern and South Eastern Europe (and part of Asia).

The Presidency of the Council was in Dutch hands and the leaders of the then 12 members of the then EEC were slowly preparing for the European Summit aka IGC that was scheduled to take place in Maastricht in December 1991. That decided to create the EU out of the EEC et al and decide on a Economic and Monetary Union (that started in 1999, coins and banknotes introduced on 1/1/2002).

The mere suggestion of China membership of the WTO was unthinkable (it happened 10 years later, December 2001).

76 years ago today (August 6, 1945, the nuclear bomb was dropped at Hiroshima (Nagasaki on August 9).

Today, August 6, 2011 the winds of change have long died down. The winds of doom, gloom, xenophobia, etc etc etc are in full force.

December 1990: I was going from Brussels back to Paris by train and reading, in a well known magazine, about the plans for a single European currency while a few pages apart I was reading about the dis-integration of the Soviet Union. Little did I know that less than a year later I was to work in Brussels and dive into EU policies/affairs.

Times for the winds of change to blow again. Time for political union of the EU. Why? Unless you have been living in a cave for the past 20 years, you can understand why. Come to think of it, even if you have, you can still appreciate why.

One reason? Read this and connect the dots. Unless maybe you think that a social medium of 200 or 500 million "inhabitants" is a Polity or a country. You should not because it is not. Please unplug the matrix.

PS. Some 2491 years ago, in August or September 480 BC, the battle of Thermopylae took place.

PPE or PLB? Philosophy plus Politics and Economics or Law and Business?

The following thoughts were prompted during/after reading "Economists, it’s time for the lawyers" by Alan Beattie in The Financial Times, June 17 2011

Since we live in societies where it's the laws that rule (although there tend to be too many laws, conflicting and ovelapping ones, to the point that the statement that a citizen must be aware of all laws is rendered utopian), a law degree is one of the qualifications needed for a CEO or other senior manager or decision maker (and has been for decades, for CEOs, in the US and internationally).

On the other hand, economics, in spite of its fancy math formulae, was and remains a social science, ie it has no "laws", as eg Physics does, so its theories tend to evolve into dogmae, hence explaining the often dogmatic disagreements between economic schools of thought (dogmae).

Maybe it is also time for the MBAs and in general for people who have experience of life, the economics of daily life and of running a biz (even a micro one) or being an executive, to assume jobs in places like the IMF, World Bank, etc.

In the UK, many political leaders etc have the well known "PPE" (Philosophy, Politics, Economics) degree. Maybe a Philosophy, Law and Business degree would be more suited in this era!

PS. One of the issues is to what extent knowledge or even a degree in Finance is needed today not only for the top exec of a place like the IMF, ie does one need to understand bond convexity to be the head of the IMF or even a citizen who can understand the Greek or the Eurozone crisis? IMO, No.

PS2. Which of course begs the question, is Finance a section of Economics or a science of its own? One could also argue whether Economics is (after all, still) a section of Sociology.

PS3. Our times, it could be said, are too financial, in addition to being too "legal", maybe too economic, not philosophical enough, too just-in-time, in other words too complex, too volatile and inter-disciplinary. Thus maybe a university degree programme in "Understanding the multi-facet world we live in and in making Decisions" in it could be the best qualification not only for leaders as well as all kinds of decision makers, even the average citizen (and voter).

EU: political union or economic colonisation by world powers?

Especially in our era, few if any local issues and dynamics are not intertwined with regional (eg EU) or global issues and dynamics. Unless humanity goes back to countries-fortresses.

In our era's volatile global systemics, a country can always build walls ie become a fortress in an effort to preserve its sovereignty and its distinct ID, be that in culture and "values", laws and their underlying philosophy. Opt out of the global trade "game" and preserve the ownership of its key industries, rely on its own "capital", be it monetary or any in any other form. Not have to rely on the views of the global financial community or follow the rules of the WTO or other international bodies. Every country should have and has that right. But how realistic is that? How can it be self-reliant on energy, foods (at least the basic ones), security, economics, capital, etc? And what size (land, population, GDP, internal market) does this option require?

Shared sovereignty (via a real political union USA or FR of Germany style) is a better option than being colonised (economically etc) by one of the world powers, ie China, India, USA, Russia. This IMO applies to the countries of Europe, South and Central America, and other parts of the world. And the EU and UNASUR (in South America) are "vehicles" of such "shared sovereignty" but which has yet to materialise via proper political union.

Everyone is different, But that is a relative term. To a certain extent every country is different and to a certain extent all countries are the same. Which is more feasible eg a political union between eg Ireland and Greece or one between Ireland and eg South Korea? To a certain extent neither is feasible and to a certain extent both are feasible! We do live in "nothing is impossible" times.

Local, national, regional (eg European) and global citizen identities can well co-exist. The issue is at what level, local, national, regional (EU) or global the Polity is formed. Continent-state is an emerging model in terms of having the potential, via shared sovereignty, to provide an adequate level of self-reliance in energy, foods, defence, have a large enough internal market, economies of scale in many utilities and social welfare (eg a Health Service).

People have indeed tended to group around ethnic, geographical and cultural ties. But these are not static over time. Plus melting pot models have always existed (see eg my post "Globalisation, today and in 300 BC"). The US or even just NYC (or London) is a place where nationalities, languages etc can co-exist in a melting pot under a common polity, currency, laws and language spoken at work. Dozens of languages (337 according to Wikipedia) are spoken in US homes or even homes in NYC, one of the key metropoles of the era (138 languages spoken in Queens, NY)

The alternative is colonisation, driven by economics, by one of the real world powers of the era (China, USA and maybe Russia and shortly, India (*)). A balkanised Europe, with a minimal EU and each member "sponsored" by one of those powers.

(*) Could one count the global financial system as one of those powers?

The state of Economics in 2011

Is Economics the modern version of ancient myths and fairy tales?

Let us not forget that in spite fancy mathematic formulae, Economics is a social science. Dangerous when dogmatic, and a tool capable of both good & bad things.

It should be noted that a lot of the dominant economic theories & dogmae have Anglo-American (and in some cases Central Europe eg Austrian) roots and bias thus are not fit for global appeal and application.

On top of that, a lot of the old made in USA & UK liberal, capitalist, free-market economic theories are not popular in the USA & UK of today!

Yes, IMO, Economics as we know it, is in "crisis". Maybe a new version/release, upgraded and suitable for global use and with elements for global appeal is in order!

Global and EU systemics: Major systemic imbalances in urgent need of fixing!

I am not sure how the following model fits with traditional economic models (note: I am an MBA, decision scientist and a policy analyst, not an economist or financial analyst anyway) such as the capital - labour - land or the capital - labour - knowhow ones:

In "my" model, there are 4 factors: capital, goods, services and work. And IMO for a system, be it the EU or the USA or the world (globalisation) to work, these 4 factors must have more or less the same level of freedoms ("4 freedoms").

Also IMO, the current instabilities in the global and EU systemics are due to uneven levels of fredom between these 4 factors.

Capital has a very high level of freedom to move and relocate around the world. Capital movements have, realitively speaking, few restrictions, within the world and within the EU.

Goods have seen their freedom grow exponentially since GATT was founnded after WWII leading to the creation of the WTO in 1994. But still, the level of freedom of goods is nowwhere near "free trade". Many tariffs and quotas, especially the former exist even between the WTO membems (and within WTO rules). Even in the EU Single Market for goods, many problems still exist, especially for small firms.

Services at least the most tradeable ones, have been making progress but their freedom is nowhere similar to that of capital and goods. At WTO and at EU level. Eg in the EU many are in fear of the travelling plumber!

When it comes to work or the freedom of labour, then things are quite sad, especially at WTO/global level and even at the EU level many problems exist. Too many.

My thesis is that unless the level of freedom of all these 4 factors converges upwards, it will soon start to converge downwards (that applies to the global and to the EU "systems"). In goods, the by now admitted failure of the WTO to reach agreement in the Doha agenda, opting for an effort to conclude a lite or extra lite one instead, the backwards pressures can be seen. With a zero or low level of public debt being reconised as a key factor in sovereignty (due to the Euro crisis etc), the concept can easily be expanded to the trade balance and the CA balance. Already certain countries have been accused (by the US) of "exporting too much" (eg Germany and China). Movement of workers, free lancers and people is "near apartheid" level globally and be in for political asylum or so called economic immigration reasons, it is alas getting worse pretty much all over the world.

What is more, the economic globalisation, in the form of the freedoms of capital and trade, needs to be balanced, structurally by a global political and a global social pillar!

Else, it is structuraly unsound.

If there is no global polity (a world parliament and possibly government (eg for the WTO 153)), or at least continental-level polity, I would not exclude de-globalisation and either regionalisation or nationalisation/localisation of capital and goods freedoms (see eg "buy local" initiatives).

Or a system of 4-7 major global players (federal EU, USA, China, India plus Russia, Japan, Brazil (or UNASUR), see my recent relevant post).

It is in the good interest of capital and the finance world to encourage or at least not block the globalisation of the other factors and the creation of global political and social pillars.

That is maybe why, in a way, the financial markets seem to be pushing the EU or at least the Eurozone towards political union!!! Because a single currency and a single market need a single polity as foundation and the financial system may not be always responding to crises in rational ways, but its vision is as good as anyone's. And the prudent financiers IMO know that either the other factors gain more freedom or capital loses much of its own.

Plus, the business world, those who produce and deal in goods and services, have clear vision too. And to the extent that the finance world does not manage to be part of the solution to the imbalances, they will ally with the politicians and societies against them.

Not for the battle for midde earth though! Enough metaphorical headlines or slogans (overdone by media etc in recent months). What is going on is the world today is the ultimate real show, much more interesting and cruel than any fairy tale or show.

The humans will prevail, eventually, they always do. Ask the monarchs, the Romans, the Soviets, etc. The financial system is next, it seems, if, as a system, it does not read the signs of the times and listen to the prudent voices inside it.