Last week, the Labor Department announced that the amount of output per hour of work rose by an annual rate of 6.4% in the 2Q while labor costs dropped by 5.8%. According to many economists, this is viewed as a healthy increase in productivity because "it means companies can pay their workers more with the wage increases financed by rising output."
Huh? Obviously, our esteemed economists have learned little from what has happened to the U.S. and Global economies over these past two years. I wonder how anyone could surmise that this "improvement in productivity" means that companies can pay workers more when it clearly states from this Labor Department data that labor costs have dropped by 5.8%.
Looking at the economic environment outside of the banality of the logic of economists, jobs are harder to find, which means that companies don't have to pay as much to hire a worker than as before. With workers having less discretionary income as a function of lower wages, consumers are spending less, which has a negative multiplier impact on the economy. How this can be classified as an environment of rising productivity can only make sense to an economist living in an ivory tower.
Truth be told, productivity will rise when companies manufacture products within a local jurisdiction, enabling a positive multipler effect to occur. Higher wages are offered, consumers have more discretionary income, which means that they go out to dinner more, buy more items, get more haircuts, and so on. This generates wealth and growth within an area that creates real productivity.
It's bad enough that our economists supported this faux definition of productivity in the first place, but what's worse is that we didn't learn from its effect. When will we learn that productivity is derived from more production, not less spending?
Saturday, August 15, 2009
Friday, July 10, 2009
"The Death of Management" book
I'm excited to announce that my new book, "The Death of Management: Restoring Value to the U.S. Economy" is available to the public!
In the non-fiction business genre, it's the only book on the market that correctly identifies that a lack of classical management in business today is the root of our economic ills. While most books on the market today that discuss the U.S. economy have identified the "free market" to be the problem, the "Death of Management" has identified the lack of a proper leader influence over the U.S. Corporation to be the real problem. Today's managers are forced to follow a set of rules that are much different than the rules that applied when "classical management" was enabling terrific growth in the US, with the development of a powerful middle class.
Please tell me what you think of the book. It's based upon a thorough review of the data and history of the relationship between the principles of management and economic growth in the U.S. Further, the data and U.S. history points to a prosperous period for our future if "classical management" principles are re-applied, and we seek to grow manufacturing once again as the cornerstone of our economy.
In the non-fiction business genre, it's the only book on the market that correctly identifies that a lack of classical management in business today is the root of our economic ills. While most books on the market today that discuss the U.S. economy have identified the "free market" to be the problem, the "Death of Management" has identified the lack of a proper leader influence over the U.S. Corporation to be the real problem. Today's managers are forced to follow a set of rules that are much different than the rules that applied when "classical management" was enabling terrific growth in the US, with the development of a powerful middle class.
Please tell me what you think of the book. It's based upon a thorough review of the data and history of the relationship between the principles of management and economic growth in the U.S. Further, the data and U.S. history points to a prosperous period for our future if "classical management" principles are re-applied, and we seek to grow manufacturing once again as the cornerstone of our economy.
Friday, May 8, 2009
The End of Capitalism?
All over the world, there is a 'marching forward' of state branded capitalism as a response to the out of control globalism that is largely blamed for cratering the world economy. So the question I'm posing is this - should the cure for unfettered capitalism be state sponsored capitalism, or should it be the perceived monster that is being blamed for causing the mess in the first place?
Let's take a look at both sides. Today, governments are the owners of the largest oil companies, and control 3/4ths of the world's known energy reserves. Sovereign Wealth Funds (SWFs) have become chic for the past five years or so now, and are becoming increasingly powerful in the global marketplace. The world's strongest economy is largely under control of the Chinese Communist Party, and I can tell you through my professional experience that more and more business people are not seeing anything wrong with this. Asia and Europe are increasingly looking at the government to do more than just police the private sector, but to overtake it.
But before America rushes to join the fray, it this really what we want? In my upcoming book, "The Death of Management", I suggest that our 1930's approach to capitalism is the answer, not a replication of what other countries are doing today. Since when has the U.S. sought to lead the world economy through playing upon the strengths and strategies of Western Europe and Asia? This just doesn't make any sense at all.
In the late 19th century, and past World War II, the U.S. economy became the most powerful economy of the world by playing upon the strengths of our land and our people. If we seek to escape this recession through copying the strengths of others, we will be streaming forward to our demise as a second rate power. Our strength in the past was largely based upon manufacturing and a sacred covenant between our citizens, workers, managers and owners. This is what we should return to, not to copy others.
Let's take a look at both sides. Today, governments are the owners of the largest oil companies, and control 3/4ths of the world's known energy reserves. Sovereign Wealth Funds (SWFs) have become chic for the past five years or so now, and are becoming increasingly powerful in the global marketplace. The world's strongest economy is largely under control of the Chinese Communist Party, and I can tell you through my professional experience that more and more business people are not seeing anything wrong with this. Asia and Europe are increasingly looking at the government to do more than just police the private sector, but to overtake it.
But before America rushes to join the fray, it this really what we want? In my upcoming book, "The Death of Management", I suggest that our 1930's approach to capitalism is the answer, not a replication of what other countries are doing today. Since when has the U.S. sought to lead the world economy through playing upon the strengths and strategies of Western Europe and Asia? This just doesn't make any sense at all.
In the late 19th century, and past World War II, the U.S. economy became the most powerful economy of the world by playing upon the strengths of our land and our people. If we seek to escape this recession through copying the strengths of others, we will be streaming forward to our demise as a second rate power. Our strength in the past was largely based upon manufacturing and a sacred covenant between our citizens, workers, managers and owners. This is what we should return to, not to copy others.
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