On the one hand, making it in today's France consists of: an undistinguished job for life, with lengthy vacations and no overtime, and mostly undifferentiated access to good education, healthcare and pension. On the other, failing the American Dream will not only make one's net worth so much less than Bill Gates' or a regular partner's in your typical i-bank, but most likely affect one's education, healthcare and pension. Thus one may conclude, once again, that the French are risk-adverse while the Americans are gain-seekers.
A $14 billion bet on the global stock market. Berkshire sold a form of insurance to buyers who wanted protection from a drop in "four major equity indexes" over the next 15 to 20 years. Instead of buying the individual shares, Buffett is wagering the indexes, three of which are outside the United States, will not fall and force Berkshire to pay a claim. The stock-index contracts - derivatives that function like put options - increase Berkshire's risks from market losses. A 30 percent decline in each of the indexes last year would have led to a $900 million pretax loss for the company, according to the March 7 SEC filing. Berkshire's "maximum exposure" was about $14 billion at the end of last year,
the filing said. (Source: IHT)
I picked up from a NYTimes blog the following two comments:
Without necessarily aiming at being Solomonic, aren't they both right?
What can a lowly non-investor (and non-economist) add to the cogent commentary on this ground-breaking event. As one of the planet's wealthiest is embarking on a yet another exotic plan to add zeros to his bottom line, the usual sycophants (the true economic zeroes) are predictably lining up to butter his fanny. The oh-so-small-and-meaningless amongst us seem to feel that by debating the continuing efforts of a classic robber-baron that they are somehow involved in the process. Much as cows feeling empowered by the economic vagaries of the meat-packing adistributionion industry. In a time of incredible usurpation of human rights and the uttdiminutionion of learning, intellectual pursuit and the arts, maybe it is time for the expression of righteous disgust at not just the robber-barons but the worshippers of the golden idols.
Comment by big gee
[...] big gee, while I can't speak for anyone else, there are 2 reasons beyond syncophancy to follow Mr. Buffet: one, he is remarkably prescient and two, he is the Michael Jordan of money. Watching him play the game just leaves us normal people awestruck.
Not that I would want to be him, or that I admire him personally, necessarily. After 120 years, he too will learn the Wisdom of Koheles.
Comment by Steve
According to a press release by Cisco, the sponsor of the study, the key findings of the study include:
- Economic growth is expected to remain robust over the next 15 years with the United States, China and India accounting for more than 50 percent of all new growth. Overall, global gross domestic product (GDP) will grow at an annualized rate of 3.5 percent.
- The U.S., which will account for 16 percent of the world's economic growth, will continue to outpace other major developed economies between now and 2020. U.S. growth will be driven by its ability to continue to add knowledge workers to its workforce that are strong in skills such as collaboration, communication, decision-making and leadership. In addition, the U.S. will benefit from interaction-based productivity from continued investment and use of information technologies.
- By 2020, China's economy measured at purchasing power parity (PPP) exchange rates will be on par with the United States and Asia's overall share of the global economy will rise to 43 percent from 35 percent currently. During this growth period, China is set to have the second largest consumer market and will have the largest tech sector.
- 471 million net new workers will enter the global workforce, with India accounting for a remarkable 30 percent (142.4 million). China will account for 65 million, with the United States the third-largest contributor with 12.5 million new workers. The EU will experience a growth of 8.4 million workers. The overwhelming majority of new U.S. and EU jobs will be in the service industry.
- While price and quality will continue to matter, more than 90 percent of those surveyed believe the importance of the personalization of services will increase dramatically as interactions and customization become vital components of both customer service and worker behavior.
- As automation of process becomes more prevalent, companies will increasingly seek competitive advantage by enhancing the productivity and growth of knowledge workers. Among survey respondents, the greatest area for productivity gains is knowledge management. Technology spending will shift to enable knowledge workers to do their jobs better.
- The nature of the workforce will continue to change. Two-thirds of executives expect flatter organizations in which independent decision-making and collaborative environments will be the norm. These changes will require a new approach to organizational management and human relations. Customers and suppliers will become more involved in product development, cross-functional and cross border teams will work together more frequently and partnerships with other organizations will proliferate.
- While its income per head will lag behind, by 2020 China will be on par with the United States as the leading consumer market. China's share of global consumer spending will nearly triple in the next 15 years. Asia overall will be the largest consumer region. For example, by 2020 Asia is projected to account for 38 percent of all car sales, nearly double current levels.
When a new communication medium comes up, especially a publicly subsidized one, not only ever hopeful scholars and politicians, but also business leaders hail it as a new means towards more democracy. The internet, in the US at least, made no exception.
Here's a question for you: How can one determine the degree of democratization brought about by the internet, and how much more democratic has the US become since the advent of the internet?
Earlier Americans, when defining themselves, kept up the British tradition of being different from the (continental) Europeans. Consequently, we still use the Imperial measurement system, despite the more rational metric system. I should add that the number of places not using the metric system is shrinking rapidly.
Here's the second question: Since we introduced 100 subdivisions for some main units, why not (OR when will we) go all the way with the metric system?
Chances are that you've read books with end notes. To the extent you find the idea of end-notes useful, do you ever stop checking them due to the annoyance of going back and forth through the book?
The third and last question for this round: Why not and how can we, the thorough readers, convince book publishers to do foot-notes instead of end-notes?
- At country level, the US and China are neither enemies nor exactly friends--they need each other for debt-financing and know how transfer, respectively, while wary of each other military;
- At company level, China is viewed in the US both as source of cheap labor and as (future) market.
What is one to think of information-economy type of companies, US based and conducting business in China, that stifle people's needs for individual freedom, or, worse, lead to people imprisonment? How far can the analysis be extended outside information-economy type of companies?
There are not easy answers since members of the US Congress invited some of these companies to Washington; the companies did not make it to Washington, but asked the Congress to push itself for whatever democratic outcome it desires from China. One may call this posturing, I just say this is the new nature of the beast. Thus, a new framework is necessary, yet its makers have not been called to action yet. However necessary this framework is, it won't emerge until a real crisis sets in. To define "real" is to guess anybody's threshold.
On the other hand, it is hard to ask the Chinese people to answer themselves to these questions. It is assumed that a different social contract is at work in China whereby the personal freedom takes a back seat to economic prosperity. And that may well be true, however, due to fear or cynicism, who will dare risk their freedom, for the sake of democracy in China, from inside an Yahoo or Google email account?
P.S. The irony of fate has it that the parents of Messrs. Yang and Brin (founders of Yahoo! and Google, respectively) might have come to the US on individual liberty grounds.
Fast forward to now. Five years after Optiva was acquired by Philips, Elite, scion of the old Sonicare, is becoming a global status icon. Elite is just one of the oral-care products a team of 4,500 workers of two dozen nationalities, at 12 locations and in five time zones, manufactures - this is indeed a global team. From Der Spiegel, here's the first half of the global journey of the Elite toothbrush, from spare parts to the assembly line:
The toothbrush is essentially comprised of 38 components. The parts for the energy cell, a rechargeable nickel-cadmium battery, are supplied by Japan, France and China. The circuit board, its electronic heart, comes pre-etched from Zhuhai in the Pearl River delta of southeastern China. The copper coils originate from the Chinese industrial city of Shenzhen, not far from Zhuhai. They are wound by armies of women with bandaged fingers. Globalization is largely a female phenomenon.And here's one of the current driving forces:
The 49 components on the board - transistors and resistors the size of match heads - hail from Malaysia. They are soldered and tested in Manila. Then they are flown to Snoqualmie on the West Coast of the U.S., the site of the parent plant. Meanwhile, back in Europe, the more complicated plastic parts are trucked from Klagenfurt in Austria to Bremerhaven in Germany. Klagenfurt also supplies blades made of special steel produced in Sandviken, Sweden. A freighter from Bremerhaven takes the half-finished brushes across the Atlantic to Port Elizabeth, New Jersey. From there they cross the continental United States by train. And in Snoqualmie, a 40 minute drive from Seattle, the final product is assembled and packaged.
By this time the components have traveled a full 27,880 kilometers, two thirds of the Earth's circumference.
A worker in the US assembly team earns between $9 and $14 an hour, depending upon her position on the assembly line. A Chinese worker brings home about 1,000 renminbi a month - i.e. $120, or roughly $0.75 an hour. Just over 5 percent.Conclusions:
- Such redistribution of labor could explain the low inflation in the US - by keeping wages in check;
- The US workforce will likely find more redress from education than from labor unions;
- And... Today's future is in transportation.
Science Grads, Where Are You?Despite similar calls coming from other leaders in the industry, not much has happened to show greater corporate involvement into tuning up the educational system to the industry needs. To date, only IBM has announced a program whereby its elder employees, with advanced degrees in science, could opt in for early retirement on the condition they go and serve as high-school teachers. Are these initiatives enough to bring about change? Are they meant to persuade lawmakers, students and parents, or directly effect the desired change? How realistic is it to expect a solution and how that solution may look like? N.B. Industry leaders are aware of the amount of time it would take to turn things 180o in education if we started doing things right today (~20 years).
[...] But their achievements do not tell the whole story about the American education system. The Intel STS finalists are the exception, not the rule. In fact, American K-12 students are consistently outperformed by their foreign counterparts on international math and science assessments.
ERODING RESOURCE. We also have a graduation gap: While the number of jobs requiring technical skills is increasing, fewer American students are entering -- and graduating from -- degree programs in science, math, and engineering.
Why does this matter? Science and technology are the engines of economic growth and national security in the U.S., and we are no longer producing enough qualified graduates to keep up with the demand. These graduates -- like the Intel STS students -- represent a resource vital to American competitiveness that is eroding at home while being produced more rapidly and efficiently abroad.
For the past three decades, about one-third of U.S. bachelor's degrees have been granted in science and engineering. Asian nations far outstrip that figure, with China at 59% in 2001, South Korea at 46% in 2000, and Japan at 66% in 2001.
LOSING GROUND. Of those degrees, the number awarded in engineering also varied greatly: In China engineering accounted for 65% of all science and engineering degrees; in South Korea for 58%; and in Japan for 29%. In the U.S. that figure is less than 5%.
How did we get here? A report released earlier this year by Achieve, a nonprofit organization that helps states raise academic standards, contends that we have institutionalized low performance through low expectations. Our high schools expect only a small number of students to take the advanced math and science courses such as algebra and geometry.
Another Achieve study showed that much of the math content on state high school exit exams is basic at best -- similar to material covered by foreign students in the eighth grade.
GET INVOLVED. America's economic future lies with its next generation of workers and their ability to develop new technologies and products. This means we must strengthen math and science education in the U.S.
We must increase the number of students who can compete on a global level by, for example, adopting the goal of doubling the number of engineering graduates each year from some 50,000 to 100,000 or more. This requires the support of elected officials, but changes of this scale cannot occur without action from the business community. [...]
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