Are Stagnating Living Standards in the US the Worst Thing in the World?

9 02 2017

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It is rare moment when I disagree with the great economic historian Adam Tooze, the author of such magisterial works as Wages of Destruction: The Making and Breaking of the Nazi Economy. Any academic who critiques such a formidable intellectual is skating on thin ice. However, I really need to dissent from something he has just said. In a thoughtful blog post on some newly published data on inequality in the United States, Adam Tooze opined that

The fact that pre-tax incomes for the least favored half of American’s citizens have not risen, but have fallen slightly over the last forty years ought to be a show stopper. Literally, all other policy discourse should surely cease.

Tooze is right to argue that the accumulating evidence that the living standard of the median American is stagnating, or at least growing at a much slower rate than it did in the long boom following 1945. He is also probably correct to link this phenomenon to rising inequality and to the post-1980 decoupling of median incomes and productivity growth (see image below, which is taken from the June 2015 issue of the HBR). I agree with Tooze that figuring out how to start increasing median living standards in the US and other advanced economies is a central challenge facing our generation.

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I do not, however, agree that stagnating US living standards is a policy issue of such overwhelming importance that all other US policy discussions– ranging for marijuana legalization to police brutality towards Blacks to climate change to refugee policy should stop. Even during the Second World War, when Britain faced an existential threat, discussions of non-war policy questions continued– the famous Butler Act was passed in 1944, reshaping the education system. Is it really the case that stagnating living standards are such an emergency issue that all other policy questions should be put on the backburner until it is resolved by the leadership of the US? It is indeed unfortunate that the growth of living standards has, by many metrics, slowed down.  However, I would reject the view that it is a show-stopper that requires us to stop talking about all other issues.  Particularly when viewed from the standpoint of cosmopolitan prioritarianism, it is easy to see that stagnating median living standards in the US aren’t the worst problem in the world. I would say that malnutrition in sub-Saharan Africa is actually a worse problem.





Brexit Terminology: a New Language?

9 02 2017

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How Business-Historical Research Can be Useful in Thinking About the Future of the AoM in the Age of Trump

7 02 2017
I’m a member of the Academy of Management,   a US-based organization that has been convulsed in the last week by an emotional debate about how the organization ought to respond to President Trump’s travel ban and the turn of events in the US (namely that an administration that is highly antagonistic to Muslim, Mexico, China, the European Union, etc). Since about half of the dues-paying members of the AoM work at non-US universities and some academics are talking about boycotting conferences in Trump’s United States, this issue is clearly important.
AoM members have been engaged in a lengthy debate about these matters on social media and on the AoM list-servs. Some members believe that the AoM’s upcoming conference, which is currently scheduled to take place in Atlanta, should be moved to Canada. Others think that the headquarters should be moved to Canada as well.
Here is my contribution to this list-serv debate. As you can see, I show how the research of my fellow business historians is useful in evaluating the view that the AoM’s interests would be best served by shifting its headquarters and events from the United States to a more neutral or at least welcoming country.  This email was written in response to a message from Prof. Andrew Maxwell, who works at a university in the Toronto area. (The AoM’s President is also based in Toronto).
Dear Professor Maxwell:

You make some interesting points about Toronto and Canada.

I see from social media that some people think that the AoM should relocate either its conference and/or its headquarters to Canada to hide the fact it is American.  Speaking as a historian of international business, I don’t know if that strategy would work. During and between the two world wars, some German firms incorporated in Switzerland and other neutral countries in an attempt to present themselves as non-German firms. This strategy worked for some but not all of these organizations.  In some cases, Western government officials saw through the ruse of incorporating in Zurich or Macau, as did some customers in those nations. (Consumers in that era were typically low information people).   I suspect that the many Middle Eastern and Chinese academics who currently pay to attend the AoM won’t be fooled if the mailing address is suddenly changed from Briarcliff Manor to Toronto.  They will realise that the AoM remains an essentially US organization, even if they membership fees are now billed in Canadian dollars and the website has a Canadian IP address. Whether that knowledge would change their willingness to pay to attend the AoM is something I don’t know. I suppose it depends on the extent to which they feel that the attitudes of the current US administration towards Muslims, Mexicans, China, etc reflect those of the US population.

The following pieces of business-historical scholarship may or may not provide useful lessons for the AoM leadership at this time.

Casson, M., & da Silva Lopes, T. (2013). Foreign direct investment in high-risk environments: an historical perspective. Business History, 55(3), 375-404.

Jones, G., & Lubinski, C. (2012). Managing Political Risk in Global Business: Beiersdorf 1914–1990. Enterprise and Society, 13(01), 85-119.

Smith, A. (2016). A LBV perspective on political risk management in a multinational bank during the First World War. Multinational Business Review, 24(1), 25-46.
Andrew

Regards,

Andrew Smith

 




Junk Social Science, Junk History, and the Quebec Mosque Shooting

5 02 2017

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Image of Quebec City by Martin St-Amant.

Canadians were stunned by the news that a gunman with far-right sympathies had gone into a Quebec City mosque and murdered six worshipers. Ever since then, pundits have been trying to make sense of the tragedy. In a few cases, they have blamed Quebec nationalism, which is represented as ethno-nationalist and chauvinist. Overlooking the fact that Quebec nationalism comes in both a narrow ethnic variant and a more inclusive “civic nationalist” one, they have created a narrative arc that links the killer to the recently proposedCharte des valeurs québécoises, to Parizeau’s “money and the ethnic vote”, and all the way back to the right-wing clerico-nationalism popular with Lionel Groulx and certain other Quebec intellectuals in the 1930s and 1940s. English-speaking Canadians love talking about that dark moment in Quebec history, which is one of the reasons they were so receptive to Esther Delisle’s controversial 1992 book The Traitor and the Jew.

J.J. McCullough of Vancouver presented this line of reasoning in a piece about the shooting in the Washington Post, where he spoke of Quebec’s dark history of anti-Semitism, religious bigotry and pro-fascist sentiment, facts which are rarely included in otherwise self-flagellating official narratives of Canadian history. They complain about the exaggerated deference the province gets from Ottawa as a “distinct society” and “nation-within-a-nation,” and its various French-supremacist language and assimilation laws, which they blame for creating a place that’s inhospitable, arrogant and, yes, noticeably more racist than the Canadian norm. Writing for a domestic Canadian audience on the CBC website, Amina Moustaqim-Barrette declared that Québécois nationalism has always been an ethnic, as opposed to civic, nationalism — based in an ethno-cultural identity exclusive to descendants of French colonial settlers.

 

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Alexie Labelle and Florence Vallée-Dubois have published, in English, a very useful corrective to this view in Policy Options. I am glad that these two PhD students have challenged the junk social science that has surfaced during this dark time. Their piece is well worth reading and in congruent with the mounting evidence that the shooter was inspired by a foreign leader rather than by any Quebec or Canadian political leader. His classmates say that he adored Trump and Marine Le Pen.  Radio-Canada reports that on the eve of the attack, the killer was discussing Donald Trump’s anti-Muslim travel ban on Facebook. He wasn’t discussing Pauline Marois or the Charter of Quebec Values or Lionel Groulx or any other French Canadian individual or institution.

 





Larry Summers on Trump

4 02 2017

Larry Summers had joined the chorus of establishment figures who are ringing alarm bells about the current direction of travel in the United States. (Last week, David Frum, a former Bush speechwriter and lifelong Republican (!), published an essay in which he charged that Donald Trump is taking the United States in the direction of becoming an authoritarian ‘managed democracy’ along the lines of Erdogan’s Turkey or Putin’s Russia).  Larry Summers, erstwhile Secretary of the Treasury and President of Harvard, is calling on business leaders to resist Trump. I struck/shocked by the historical analogy that was used in the Harvard Business Review’s interview with Summers.

Interviewer:  You’ve mentioned, a couple times, parallels with 1930s Europe. How far would you take the parallel at this point?

Summers: If history teaches us anything, it is that authoritarianism is best combated at early stages rather than late stages. I’m not saying that I think that American democracy is somehow lost…But the resilience of American institutions isn’t something that happens automatically. It’s something that happens because people see dangers and take steps. So I think one can learn from the most extreme instances about the kinds of moral ideas that are important…

Note that Summers is carefully distancing himself from the more hysterical online voices that are talking about Reichstag Fires and possible coups. However, he isn’t dismissing out of hand the suggestion that there are  parallels between Trump’s election and the rise of dictators in the interwar period.

In the days immediately after Trump’s inauguration, Summers was using a very different historical analogy, the election of Herbert Hoover in 1928. You can see Summers using this historical analogy in an interview uploaded to YouTube on 30 January. Hoover’s election was followed by a “sugar rush” surge in share prices that was unsupported by the developments in the real economy. By using this analogy, Summers was lending credence to both the idea that Trump will be a bungler who ruins the economy and to Robert Shiller’s view the recent increase in share prices is not justified by the fundamentals.

In the HBC interview, Summers and his interlocutor are using a far darker historical analogy. Instead of comparing Trump to Hoover the bungler, Summers is comparing him to a dictator. Other centre-left and centre-right commentators in the US have used similar language to describe Trump.

To my mind, the most interesting thing said by Summers is about the impact of “short-termism” on the willingness of US CEOs to speak truth to power by joining the resistance to Trump. A great deal has been written about short-termism and quarterly capitalism, the tendency of the current generation of business leaders to have limited time horizons that contrast with the longer-term orientation that was likely common in US business a generation or two ago. (In my view, the long-term orientation of many US CEOs in the 1950s and 1960s was due to the influence of the philosophy of corporate governance promoted by Berle and Means in an influential book published in 1933–see here for a more detailed explanation).

Summers: But if you’re going to talk about your civic responsibility, as many business leaders do, if you’re going to talk about long-termism, as almost all business leaders do these days, what could be a more important long-term issue for American business than American leadership in the world? And I haven’t seen business leaders speaking out against protectionism in public. It’s very clear that, in private, many of them are deeply troubled by the signs that we’re moving in a protectionist direction.

Summers is right that there has been a lot of rhetoric from business leaders recently about the need to escaped from the curse of short-term thinking. Yes, business leaders in Davos and elsewhere have given renewed attention to the social, geopolitical, and cultural foundations of the business ecosystems in which they operate.  However, I’m not convinced that there has been a genuine shift in thinking towards the long-term, civic orientation that Summers favours. It is true that some business leaders have heroically spoken out against Trump. There may be a larger number of CEOs who are willing to say, in private, the Trump’s actions threaten the business ecosystem in which they have prospered. I suspect that  most business leaders will be like the CEO of Uber— they won’t distance themselves from Trump until their real-time data analytics suggest that consumers are starting to boycott their products. (This CEO resigned from Trump’s economic council after the #DeleteUber protest started getting rolling).

Bottom line: I’m not convinced US CEOs will stand up to Trump and unless they are prompted to by consumer pressure. Historically, CEOs have behaved generally adopted an unheroic stance during takeovers of democratic regimes. Only one or two of the oligarchs in Russia protested Putin’s efforts to construct an autocracy there. Ditto for Italy in the 1920s.  Moreover, the short-term orientation of my most US  CEOs means that they are especially unlikely to speak publicly against Trump, regardless of what they might say to Larry Summers in private. Impatient capital and the US system of corporate governance means that the CEOs of public companies aren’t really free to speak up in defence of Statue of Liberty values.





Location, Location, Location

2 02 2017

I’m sometimes a bit frustrated by my fellow business and economic historians. There is tremendous pent-up demand for our services from private industry: CEOs and other decision-makers recognize the value of our research in understanding such complex phenomena as political risk. However, whenever there is a crisis that illustrates the limitations of research methods of the more successful academic disciplines (by successful, I mean capable to capturing societal resources), we historians squander the opportunity to take advantage of a brief window of opportunity. In 2008-9, there was a lot of talk about business historians displacing the economists, getting our research in the limelight by showing its relevance.  A few business historians, most notable the excellent Bloomberg columnist Stephen Mihm have risen to the occasion but most have not been able to engage with decision-makers and the general public.

Sometimes something as simple as a poor location decision can get in the way of allowing smart academics to speak to smart people in the private sector. Here is a case in point. The British Academy of Management (BAM) is organizing an event called Managing political risk and uncertainty from historical perspective. They have some great speakers and the event is timely for all sorts of geopolitical reasons.

Where is this wonderful event taking place? Will it be held in BAM’s offices on Euston Road in London, which are a few underground stops from the financial district? Is it instead being held a prestigious business school whose alumni network includes people who make firm strategy? It is being held in the evening to allow busy business people to attend after the workday? No, instead it will be held in the city of Coventry in a facility that is a 25-minute walk from the railway station and which is surrounded by a vast, windswept carpark. Coventry University’s London campus, which is in the financial district, would have been a far, far better choice. There simply aren’t a lot of business decision-makers in Coventry.

Anyway, here is a description of the event. Full details are available via BAM.

I wish the organizers of this event the best of luck, but the location is wrong, wrong, wrong!

We are delighted to announce the upcoming Joint BAM SIG Event Managing political risk and uncertainty from historical perspective, taking place on the 27th February 2017 from 10.00 to 17.00 at Coventry University Technology Park.

Description:

In a climate of increased political volatility, this workshop will examine organisational responses to political risk and uncertainty over time. It will explore the development of theoretical and methodological approaches to analysing non-market strategy and the management of political risk, specifically focusing on how history has been used. The workshop aims to generate discussion around the contribution to be made by history to the scholarship in this field.

Invited Speakers

Prof Steven McGuire, School of Business, Management and Economics, University of Sussex

Prof Thomas Lawton, Open University Business School

Prof Emeritus Michael Moran, School of Government, University of Manchester

Prof Neil Rollings, Economic and Social History, University of Glasgow





Never Let a Crisis Go to Waste

1 02 2017

Readers who work in business schools will likely be aware that the (American) Academy of Management is in something of a crisis because of Trump’s famous travel restrictions. I see from social media that many non-US academics, including some big names with tonnes of citations in Google Scholar, have announced their intention to boycott the 2017 meeting in Atlanta.

In this context, I was interested/amused to see how a Canadian organization of business school professors has been trying to leverage the situation to attract people to its own, less-prestigious conference. I am reposting an email I got a few minutes ago with the key sentence in bold.

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The International Business (IB) division of the of the Administrative Sciences Association of Canada (ASAC) invites you to submit a contribution for its 45th annual conference held by HEC Montreal on May 29 – June 1, 2017
 
The conference theme: “Digital Economies and Cities” highlights the growing importance of technology and information exchanges between community stakeholders including governments, enterprises, and citizens. ASAC’s IB division welcomes submissions on this theme or on any other topic relevant to the division.
 
The submission deadline is 12:00 noon Eastern Standard Time on February 17, 2017.
 
Confirmed Division Speakers includes Professor Henry Mintzberg (http://www.mintzberg.org/). 
 
Montréal’s 375th anniversary presents an excellent opportunity to create a unique atmosphere for the 2017 ASAC Conference. Montréal is a fascinating city, a bold and complex mix of contrasts built on a legacy of heritage and culture with a European flair. Montréal is a cultural metropolis with over 20 classic museums, many theatres and countless performance halls to suit every taste, from fine arts to history to humor and sport enthusiasts. 
 
2017 also sees Canada celebrate its 150th anniversary. There are many celebrations and festivities across the country including free admission to Parks Canada throughout 2017. Canada is also named the Best Travel Destination for 2017 by Lonely Planet. On top of this, Canada is multicultural society and believes “diversity is Canada’s strength”. #WelcomeToCanada
 
 
For the complete CfP for all divisions, please refer to http://www.asac.ca/asac2017confcallforpapers
 
If you have any question regarding to the CfP, please feel free to contact any of the IB Division officers:
 
Editor:             Sophie Veilleux (sophie.veilleux@fsa.ulaval.ca)  Université Laval (Canada)
Coordinator:   Gui Azevedo (gazevedo@audencia.com) Audencia Business School (France)           
Chair:              Pao T. Kao (pao.kao@fek.uu.se) Uppsala University (Sweden) )