As i begin to write my fist assignments on Economic factors, both micro and macro, that are changing in this complex world i have stumbled across this great lecture from Professor Paul Krugman in October 2009, regarding the history and future of globalization. This was part of the Citigroup Foundation lecture at the Ford School of Public Policy and International Policy Centre.
In this video Krugman highlights that this is not a new phenomena, and walks us through the standard theory of comparative advantage and how this is perhaps not entirely relevant in todays world. He talks about a new Economic geography, including clustering and specialisation, and the demands that the complex value chain has on firms. He goes onto mention by products of globalization to include an integration of thought (ie all people thinking the same when faced with a crisis), and how perhaps globalisation needs policy coordination.
Have a listen to this, as i think it is well worth the hour and half.
A friend of mine from the University West Of England Executive MBA course just sent me this fantastic youtube video, of Boston University’s School of Management’s first event in the Dean’s Speaker Series. Entitled “The World Economy in Crisis: Debt, Double-dip, Employment Outlook – What Happens Next?” it kind of describes it all.
The Panelists included:
Jeffrey L. Knight, Head of Global Asset Allocation, Putnam Investments
Lawrence Kotlioff, Professor, Department of Economics
Michael Salinger, Professor, Markets, Public Policy & Law
John Zhao, CEO of Hony Capital
Boston University School of Management Dean, Ken Freeman, moderated the event.
Be sure to watch this video, as it gives some great insights into what the great minds of today, are suggesting we do for tomorrow. I will aim to give this video some more time on this blog as some great concepts are talked over. I found it very inspirational, and almost a challenge to go and make ‘it’ work. But for now, here is the video….
I have begun to read the ‘Principles of Business Economics’ by Joseph G. Nellis and David Parker for my Executive MBA Course at University of the West of England, or UWE for short. And in an attempt to get this into my brain, i am going to try and condense some of this into Blog format. If this is not useful for you, please excuse me, or alternatively if this is useful and you have other comments or links please let me know.
This is is process by which business managers decide:
– what goods and services to produce.
– how to combine available resources to provide goods and services.
– and for whom these goods and services are supplied.
One of the major determinants on this what, how and who concept is the “Price Mechanism’.
‘Vertical Integration’ is the basis for deciding at what point the company/business begins and where the market begins. For example, to decide whether or not to undertake the Public Relations for a particular business or product in-house or to employ the market to do this for you. A business manager will be looking at both the Transaction Costs of buying in this service from the outside market and also the Opportunity Cost that will result by allocating resources to providing this in-house.
Transaction Cost – this is the cost incurred when buying in market skills.
Opportunity Cost – this is what is ‘given up’ when we decide to persue a particular choice
As business managers we can look at the Production Possibility Curve to make decisions like this, regarding both new products and services that we may look to perform in-house.
This model offers a tool to understand what we will loose (the Opportunity Cost) should we choose to pursue another business aim. For example, if a company is producing only colour printers and wishes to enter the personal computer market it must decide what effect the manufacture of personal computers will have on the production of the colour printers. In this model below, OB represents the current manufacturing level of colour printers. If the company where to decide to make OC personal computers then the new production rate for colour printers would be OD. And furthermore, if the company where to make OG personal computers then it would be producing OH printers. However, what we have to be aware of are ‘Diminishing Marginal Returns’. Please note that this Production Possibility Curve only results when all the current resources of the business are at maximum.
It must be noted, and understood when looking to make these production decisions (or simply the allocation of resources) that as we apply more of one input (e.g. labour) to another input (e.g. capital or land) that after some point the resulting increase in output becomes smaller and smaller. This is known as Diminishing Marginal Returns.
Therefore to increase the production possibility of the business without decreasing the output seen in the other areas (in this particular case of colour printers), more resources are required.
The RSA Organisation is a true inspiration to myself, with many lectures and articles from some of the best intellectual minds on the planet. Jeremy Rifkin is one such mind, and is a bestselling author, political adviser and social and ethical prophet. In this lecture he explores the evolution and development of empathy and the ways in which this has profoundly shaped our development as a species and our social interaction within communities. Mr Rifkin calls for a more empathetic world, one where we can extend our empathy outside of our blood line, religion, and nation to include the entire population of the world, the animals within it, and the environment itself. He claims that the 6.8 Billion people of today (now actually over 7 Billion) are decendents from 2 individuals, ie we are all family. In the words of Rodney King;
“Why can’t we all just get along?”
As we have evolved our consciousness over time, from the early hunter gatherers, to the coffee drinking shoppers of today, we have expanded our levels of empathy to include people further and further afield. Taking Haiti as an example of the state of Global Empathy reached following the devastating earthquake there, Jeremy Rifkin suggest that we can evolve further using technology to communicate and spread the word. He believes we can evolve into a more empathetic species, called Homo-empathicus where we are concerned and feel for all people of this world and the world itself. Without this development, he states, we are doomed to self-destruction. Mr Rifkin calls for the beginning of a global debate to bring about empathic socialability and to begin to rethink the institutions (educational, political, commercial, societal) to promte a more empathetic world. And i suppose in short, this is what the RSA Organisation stands for.
I believe that unless the individuals within the business world begin to function with a higher level of morality and empathy towards others and with a better social vision that we will see a period of Global Destabilisation that will rock our species to the core, and will cost the Global Economy untold Trillions and set us back into the dark ages. Many people believe that Milton Friedman, the prophet of Free-Trade, to be an evil man but i feel this is a vast oversimplification. I am aware that he was involved in some dubious dealings and that his theories have caused hardship for many around the world, but i aim to look at his economical ideology rather than the results of such ideologies. But he once wrote;
‘our minds tells us, and history confirms, that the great threat to freedom is the concentration of power’.
Although in this he was talking about the centralised government, and the need to ensure a more de-centralised base for political and governmental power i believe this can be applied to a concentration of wealth, as it is easy to see that economic power can lead to political leaning and thus enable monopolies of power and self-interest. We, as business people, need to ensure that we are able to view anothers situation and seek empathy for that person so that we can share the resources of this world and promote freedom around the globe.
As ever, a truly enlightening and thought-provoking lecture from the RSA Organisation.
Please let me have any comments you have, so that we can aim to develop conversations and debate over this topic.
A friend of mine put me onto the RSA Organisation, and i have to say that they have some incredibly insightful talks/lectures/animations that really do make you think about some important social and work issues.
The RSA is a self proclaimed enlightenment organisation committed to researching and presenting practical solutions to some of today’s social challenges. Utilising its 27K strong following, it aims to understand and enhance human capability so that it can close the gap between the reality of today, and the hopes for tomorrow’s world.
This video below, is well put together, including some great animation which seems to make the content sink even deeper into your mind cogs. It talks about Motivation, and within a work environment this has to be one of the most important factors to gain the most out of your Human Capital. It actually highlights some surprising truths and ideas about the real reasons and motivations behind ‘Motivation’ (yes i did write that correctly).
Which company would want to recruit, train, and invest into its staff to then go and demotivate them, so that they begin to look elsewhere and leave, which will eventually reduce the bottom line? We have all worked in a an uninspiring workplace, for bad managers or bosses and we have all been as quick to leave. Surely offering autonomy, promoting innovation and instilling trust in your employees and work colleagues is imperative to a well functioning company? Perhaps this is not so obvious to all.
Watch this video, and for more great videos and information click on the link below.