I had the opportunity to meet Jeff Bezos a few years back at the first Web 2.0 Conference. Even at that early stage he came across as an amazing visionary. But I’ve only grown more impressed at his ability to innovate beyond online e-commerce, whether it’s launching a hardware device like the Kindle or getting into the cloud computing business with EC2 and AWS. At the rate they are going, I wouldn’t be surprised if Amazon becomes the world’s next dominant (or even monopolist) technology company.
More on this over at GoodScreensMedia.
Today one of the staff at the Clover lunch truck was telling me about the upcoming protest at Dewey Square in front of the Boston Federal Reserve.
I think the financial protests can do a lot of good, but I really hope everyone can focus the message. There are some very easy pickings that could get mainstream support.
Such as the fact that economic growth has flattened while financial compensation has risen. I don’t see how anyone can look at this chart and not be troubled, not only morally but because it shows that something is historically wrong with our economy.
The chart is from David Frum who says “From 1945 until 1980, people in finance did not significantly outearn on average people in other sectors. After 1980, nonfinancial pay flattened, while financial pay accelerated. By 2008, the average employee in finance was earning double the average employee in non-finance.”
There’s a great quote from Naseem Taleeb about why the industry doesn’t self-regulate:
“But the puzzle represents an even bigger elephant. Why does any investment manager buy the stocks of banks that pay out very large portions of their earnings to their employees?
The promise of replicating past returns cannot be the reason, given the inadequacy of those returns. In fact, filtering out stocks in accordance with payouts would have lowered the draw-downs on investment in the financial sector by well over half over the past 20 years, with no loss in returns.
Why do portfolio and pension-fund managers hope to receive impunity from their investors?”
But obviously the self-regulation isn’t occurring, which indicates that both government and popular protest have a role to play in fixing this.
Ever since reading The Great Stagnation, I’ve been wondering where to invest. If the US, Europe, and Japan are possibly headed toward decades of zero to low growth, the emerging markets would seem a better bet.
That inspired me to pick up the memoirs of Lee Kuan Yew, the founder of the modern state of Singapore who ruled through its transition from poor nation to one of the world’s wealthiest.
This was no accident, it was the result of a closely planned economy and very long planning horizons. Even now that they’ve become a rich nation, they are planning for the future in a way that would be unimaginable in the US.
“Sustained growth ensures stability, which encourages investments that create wealth. Because we made the difficult decisions early, we have aestablished a virtuous cycle – low expenditure, high savings; low welfeare, high investments. We have accumulated assets during the last 30 years of strong growth with a relatively youthful workforce.
In the next 20 years, our economic growth will slow down as our population ages. Private savings rates will decline, and health care costs will rise sharply with more old people, just when taxpayers as a percentage of the population will decrease. We can partly meet this problem by taking steps early to ensure the old will have larger Medisave savings; the better answer is to attract educated and skilled immigrants to enlarge our talent pool and increase both GDP and revenue. The government must give increased financial and administrative support to more community welfare projects, as many as there are social volunteers to drive and supervise them.”
From Third World to First by Lee Kuan Yew (p. 107)
While standardized testing, merit pay for teachers, and removing union power all play a role in education reform, these factors pale in comparison to the status of teachers. If teaching is a high status profession, young graduates will flock to it.
In the US, it is not a high status position and our elite college graduates rarely enter the field. Contrast this with Japan, where teachers are considered high ranking members of their community and are even called by the title sensei (also used for doctors).
Here’s the story in Finland (it started with legislation):
The second critical decision came in 1979, when reformers required that every teacher earn a fifth-year master’s degree in theory and practice at one of eight state universities—at state expense. From then on, teachers were effectively granted equal status with doctors and lawyers. Applicants began flooding teaching programs, not because the salaries were so high but because autonomy and respect made the job attractive. In 2010, some 6,600 applicants vied for 660 primary school training slots, according to Sahlberg.
From Smithsonian Magazine
I don’t understand why this story is so rarely covered in the press. It seems to be the most solidly proven factor behind the success of the world’s best education systems.