On to the next phase

LAST summer Mark Carney brought to the Bank of England a winning smile and the latest monetary fad. In August the bank unveiled “forward guidance”, modeled on action taken by America’s Federal Reserve, in an effort to buoy up Britain’s recovery. Markets should not fear looming rate rises, the bank explained: so long as inflation and financial markets behaved, the bank’s main policy rate would not go up until unemployment fell to at least 7%. The economy responded obligingly; since August it outperformed the Bank of England’s projections on almost every measure. Yet as Mr Carney prepared to unveil the bank’s February inflation report, he was hounded by arguments that guidance had failed and should be scrapped.

The bank’s main error was one of prognostication. The unemployment rate tumbled much faster than projected back in August. That, in turn, led to allegations the bank gave a misleading impression of how long rates would remain low. Not so, Mr Carney’s defenders countered; despite a booming economy markets expect no rate rise until early 2015. Without the bank’s promise, sinking unemployment would surely have markets looking for increases any month now. On February 12th, the bank rolled out its “next phase” of forward guidance, hoping to eliminate confusion.

The bank’s latest inflation report judges guidance a clear success. A majority of firms and households reported greater confidence as a result of the policy, according to figures in the report. In comments to the press Mr Carney seemed pleased to recount how thoroughly the British economy exceeded expectations. The bank sees more good times ahead. It now reckons Britain is on track for roaring 3.4% GDP growth in 2014, much better than the 2.6% market consensus.

The Bank of England hopes updated guidance will help deliver the goods. With unemployment expected to drop below 7% this spring, it is shifting focus to a broader measure of economic health: “spare capacity” in the economy, or room to raise GDP without sparking higher inflation. The bank aims to eliminate it within three years. The statement gives the bank some wiggle room, as it will publish its own estimates of the remaining shortfall. Yet Mr Carney seems to have outdone peers at other rich-world central banks in setting both a clear destination for the economy and an expected time of arrival.

The unemployment rate will remain on the bank’s dashboard; it should fall to 6-6.5% as the economy closes an estimated output gap of about 1-1.5% of GDP. (Longer working hours will also help.) But more than a dozen other measures, including wage growth and productivity, will also be monitored for signs the bank has over- or underestimated potential.

Communication about the path of bank rate has also improved. The output shortfall must shrink before a first rate rise, and eventual increases will be gradual and in line with published estimates of spare capacity. Even after rates have “normalised”, according to Mr Carney, they will settle at a level below historical norms. That is down to global headwinds, including weak demand and busted balance sheets, that may discourage investment.

This particular evolution of forward guidance is not without risks. What the Bank of England has given markets in detail has come at the cost of simplicity; no longer is there the single point of focus the unemployment threshold provided. Mr Carney will nonetheless hope his intentions are clear enough. “The MPC will not take risks with this recovery,” he stressed, with Canadian intensity. The bank must hope British firms will bet on it.

via:http://www.economist.com/blogs/freeexchange/2014/02/forward-guidance

Slumlords' colonial roots

A PIECE in this week’s finance section discusses whether slums are poverty traps. Economic research on slums is very tentative: speak to anyone who researches shanty-towns and they will tell you how difficult it is to get even the simplest data. But most economists agree on one thing: some people do very well out of slums.

The people who control housing are one such group. Contrary to popular belief, a large proportion of slum-dwellers rent their home. About 92% of households in Kibera, a massive Nairobi slum, do so. And there is plenty of opportunity for exploiting tenants.

A new paper* by Sean Fox of Bristol University focuses on absentee landlords in Kibera. Well-connected types, Mr Fox finds, can acquire control over swathes of land thanks to their political connections. One survey found that 41% of Kibera’s landlords were in fact government officials: 16% were politicians. 

These landlords can exploit their privileged position. Research from MIT, again in Kibera, find that when the chief of the local area and the landlord come from the same tribe (but the tenant does not), renters end up paying 6-11% more. Chiefs and landlords collude to extract higher rents. Investments in housing infrastructure are also lower when a landlord and the chief belong to the same tribe.

We discuss the consequences of these oligarchic arrangements in the article:

In Kibera, a big slum in Nairobi, the authors of the MIT study show that rents represent one-third of non-food expenditure, whereas in rural areas in Kenya 90% of households pay no rent at all.

Mr Fox reckons that these arrangements are partially a legacy of colonial rule. He argues:

Colonial administrative structures were weak and highly centralised, and municipal authorities were granted very limited authority over development and regulation…In a context of rapid population expansion, such structures have proven cumbersome and have contributed to the proliferation of unplanned settlements.

In other words, clumsy colonial governments were bad at controlling urban development. Mr Fox demonstrates this empirically. Legal fragmentation in the colonial era, a proxy for indirect rule, is strongly correlated with contemporary slum incidence (measured here as the percentage of a country's urban population living in slums):

Poorly-run colonial systems allowed for the emergence of dodgy groups that monopolise rental markets. These unfortunate arrangements remain today. 

* Fox, S. (2014). The Political Economy of Slums: Theory and Evidence from Sub-Saharan Africa. World Development, 54, 191-203.

via:http://www.economist.com/blogs/freeexchange/2014/02/metropolitan-economies

This Isn’t Capitalism — It’s Growthism, and It’s Bad for Us

You know the alien cults that announce to their followers that next year, on October 28^th, at precisely 4:05 pm, the master race will arrive, and save humanity? Of course, the aliens never arrive. But that doesn’t stop the cult from believing. It only strengthens their belief.

If, as I’d bet you do, you’re head-shakingly familiar with said cults, allow me to ask you a question.

Has capitalism failed? Or, if you like, is it failing? Let me be clear. I don’t mean: is capitalism useless, awful, worthless? I do mean: is capitalism failing at being the best possible means of organizing human work, life, and play?

Imagine a country called CapitalismStan. Imagine that country’s proud emblem was a great invisible hand. In every town square, its flag flew proudly. Prices were its idols; markets were its temples; products its litanies; and all knew what the great hand stood for: the undying ideals of competition, self-reliance, riches. A man’s worth was his wealth; the measure of people’s time was how much they earned; together, millions worked, hour after painstaking hour, on what they called “innovation”; good works divinely ordained by their titans; the markets.

Yet something was wrong in CapitalismStan. That very society was foundering. Its middle class was collapsing. It had already had a lost decade; and was starting on another. Its young had become a lost generation, desperately seeking opportunity. Median incomes had stagnated for decades. The economy spun headlong into a great recession; and then it “recovered”; but during the “recovery”, the richest 1% captured 95% of the gains. Millions faced chronic unemployment and poverty. Social mobility was low and decreasing. Life expectancy was dropping.

In short, life in CapitalismStan was getting shorter, nastier, unhappier, and harder. Meanwhile, other rich nations—notably those which did not worship the invisible hand so completely, totally, obediently, and unflappably—had prospered.

Does CapitalismStan’s story sound a little bit like America’s to you?

Now, allow me to rebut myself.

Maybe what’s practiced in the USA isn’t capitalism at all. It seems to be a toxic admixture of capitalism for the poor, who are ruthlessly whittled down, in brutal Darwinian contests; and socialism for the rich, for whom there appears to be no limit to bailouts, subsidies, and privileges. It’s a lethal cocktail of cronyism for the powerful; and endless struggle for the powerless. It’s neither fish nor fowl; but a chimera.

So what is this system that is faltering, precisely, if it’s not quite capitalism?

I’d call it “growthism.” It’s not just a system or a set of institutions. It’s a mindset; an ideology; a set of cherished beliefs. And one that’s hardened into dogma. A dogma which is palpably failing; but can’t be dislodged—because it’s become an article of faith, the central belief of a cult, whose priests and acolytes threaten mysterious, terrible, divine revenge whenever their authority is questioned.

Growthism says: growth must be achieved at all costs. When growth is achieved; societies are said to be successful; when it is not, they are said to be failing.

Growthism is willing to sacrifice everything for more growth. Even the very rights which enlightened societies once held to be inalienable. Are you concerned about the rise in extrajudicial mass spying, drone strikes, private security guards, military contractors, or even just the analytics that provide detailed information on what you say, do, and search to both the government and private companies? Too bad! Those are our growth industries, and woe to whatever or whoever stands in their way. Who cares about freedom of speech and assembly or the right to privacy when what we really need is good, growth-creating jobs? Jobs like becoming butlers and maids (or coaches, consultants, and “service-providers”) to the super-rich, who can purchase the “right” not to be frisked, stopped, or surveiled. Heaven forbid people protest. Why, that might hurt growth!

Growthism, then, is antithetical to democracy. Basic political and human rights, from the perspective of a growthist, are niggling sources of inefficiency that must be erased, rubbed out, sanded down. They are sources of social friction and tension that make people less productive workers and that encourage them to do things like wonder, question, agitate, challenge, defy, rebel, and think. Dammit! We don’t want a citizenry! We want a workforce.

Growthism contends that growth is the point; the alpha and omega; the sole purpose of all human effort—and therefore, all human effort must be directed towards growth.

That is the great mistake growthism makes. But growth is not an end. It is a means. A means to, at best, expanding eudaimonia; the capacity to live meaningfully well. And a means, at least, to expanding human freedom.

And because it is a means, not an end, growth is necessary—but not sufficient. For what? For prosperity. And nowhere is that more evident that in the USA; where the economy is “growing” but the majority of people under 40 are worse off than their forebears.

But wait! The average Joe now has riches he might never have dreamt of! Giant 3D TVs with subwoofers the size of small countries! A venti-soy-latte-ccino bigger than a beer keg…for $3.99! Soon, he’ll have a flying car…a robo-butler…a self-cleaning house…Talking Glasses That Tell You The Weather!! It’s amazing!

All of those toys are nice. But they are not substitutes for working societies, or real human prosperity, or the fact that it takes a working society to spark real human prosperity.

A good education; transport; energy; healthcare; community; food; all these and more are the foundations of real prosperity. Real prosperity isn’t a supergadget in every pocket…while educational attainment, income, wealth, community, opportunity, and life expectancy are dropping, while insecurity, loneliness, poverty, and inequality are skyrocketing.

Supergadgets, if they are to reduce you and I to something like fat miserable drooling zombies who’ve never read a book and enjoy no rights and don’t really remember why they matter…well, if that’s the upside of capitalism, maybe it’s a bargain only a fool would make.

Remember the alien cults? The aliens never arrive. The leaders turn around and say: followers! The aliens have been delayed on Jupiter! Why, the very fact that they’re not here is precisely how we know they’re coming! They’ll be here next year, same day, same time! Just hold on!

Sound familiar? It’s the story that growthism keeps telling all of us…about our lives. That one day, if we just believe in the magical power of growth, we’ll be saved! It’s just around the corner! The economy’s picking up steam! GDP’s growing again! Just hold on a little while longer. What, things didn’t get better for you this quarter? They surely will next quarter!

Growthism is a kind of cult. Like all cults, it asks us to deny reality; to sacrifice ourselves; to sever our ties with all that we love; and to indulge in magical thinking. Its high priests soothe us with incantations that have been flat wrong for decades. Its acolytes recite the prayers that have failed to bring rain for years. And still, they tell us: keep the faith. One day, salvation will be yours.

Growthism’s great crime—and yes, it is a crime; for it is costing you and I, right here, right now, lives we should be living, instead of the days we find ourselves limited to—is that it prevents societies from developing a sophisticated conception of what prosperity is. And hence, how to attain it. It is failing because it is stifling us from reaching past the tired, rusting idea that prosperity is merely stuff and trinkets, glittering baubles and gewgaws—and that it might, instead, be health, friendship, purpose, wisdom, resilience, happiness, a searing sense that all one’s days have mattered.

My answer, then, is this. Capitalism’s devolved into growthism. And growthism’s to this age what alchemy was to another. It’s a futile, mystical, laughable quest to turn lead into gold. But lead is just lead. And the truest wealth of life is having lived a life that matters.

The problem with alchemy isn’t that it doesn’t work. It’s that it does. It works so well—at telling us what we so desperately want to hear; Pssst! here’s the Secret! The Secret Formula! The Hidden Recipe!—that it leaves us incapable of thinking, feeling, dreaming, wondering, challenging, defying, rebelling. Thus, science remained stuck for centuries while alchemists searched in vain for the Philosopher’s Stone that they knew — they just knew — had to be possible.  So, too, we’re stuck—lured by the glittering seduction of growthism.

But there was never any shortcut to turn lead into gold. And there’s no shortcut for building societies that work, in which every single person has a shot at a life that matters. And for each of us, there’s no shortcut for living that meaningful life.

So maybe, then, it’s time for you and I to leave this cult. The aliens probably aren’t going to arrive. The cheap, plastic junk that surrounds us probably isn’t worth what we paid – not just in cash (or, more likely, credit) to get it, but in freedom, time, and tears.

Maybe it’s time for each of us to take a deep breath, tell growthism to shove it, and chart our own new course.

via:http://blogs.hbr.org/2013/10/this-isnt-capitalism-its-growthism-and-its-bad-for-us/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness%2Fhaque+%28Umair+Haque+on+HBR.org%29

America’s Economy Is Officially Inside-Out

This is the first generation of Americans in modern history expected to enjoy lower living standards than their forebears. It is the first generation in modern history whose life expectancy is dwindling. It is the first generation of modern Americans whose educational attainment is declining. It is the first generation of modern Americans who face less opportunity than their parents.

Shorter, nastier, dumber, harder, bleaker. That’s the future for not only Americans, but for many in the world’s richest countries.

Let me be clear why this is so remarkable. It’s not that the great wheel of prosperity is merely decelerating. It is that it actually seems to be turning backwards. The great wheel of progressalready ground to a halt—several decades ago, if measured in terms of average incomes. And the real danger now? That it may be beginning to spin—in reverse.

Perhaps it’s just a blip. Perhaps it’s a temporary malfunction. Perhaps I’m overreacting — after all, the economy’s growing, right?

Yes… it is. And that’s precisely the problem.

For that is what tells us we are in truly uncharted water. The economy is indeed “growing.” But the top 1 percent have taken 95 percent of the gains in this so-called “recovery.”  The plain fact is thatthe average household is poorer in the “recovery” than during the “recession.”

We cannot suggest that an economy is perfectly fine—nay, even healthy—just because a tiny number are growing richer while the lives of the vast majority are literally growing shorter, nastier, dumber, harder, and bleaker.

I can think of many other examples of progress slowing. Of prosperity decelerating. The great wheel’s motion is never even; there are bumps in the road of human progress — sometimes the great wheel spins furiously, sometimes, it hums along gently, and sometimes, it sputters and strains.

But.

I can think of almost no other example in the history of modern democracies of progress actually becoming regress. Short of war or cataclysm, it is literally unprecedented. And that’s not the half of it. It’s unprecedented…because it should be impossible. If the rich get richer, it should be precisely because they create goods of real value to people, which elevate their living standards. In a working economy, “growth” should reflect real prosperity multiplying.

But when growth rises and living standards fall? That begins to hint that there is something wrong—very wrong, perhaps terribly wrong—with the way things are.  It suggest that what is happening to this society is not merely a simple, passing, self-healing ailment; but a chronic, possibly permanent, definitely debilitating condition. Not a flu—but a cancer.

Economics has no language—no word—to describe this condition: one in which the economy is “growing” but human progress is reversing. It’s not a depression—for that’s a situation where growth flatlines. It’s not a recession—for that’s just a temporary setback in growth. A “dark age” would signify both a decline in growth and a decline in living standards.

We have no words for this condition because economics has no concepts with which to fully grapple with—let alone understand—it. And economics has no concepts with which to understand this condition because economics believes, more or less, that it simply isn’t possible. Progress cannot go backwards when an economy is “growing”; because growth, as I’ve noted, is believed by the acolytes of the cult of economics to be the alpha and omega of human prosperity.

What, then, do we call it?

For we must give it a name, this secret hidden in plain sight. The secret that, if it were to be mentioned, would—and should—instantly discredit our leaders. Would and should silently condemn our institutions.

Given that the growth rises even as life expectancy, mobility, and educational attainment fall — that GDP expands even as the lives of the vast majority contract from shrinking health, intelligence, income, wealth, relationships, stability, security, meaning, and purpose — I suggest we call it a Great Inversion.

In this post-recession twilight zone, our economy is upside-down and inside-out.

I won’t pretend to smile, pat you on the back, and offer you bullet-pointed “solutions.” Because to a phenomenon this great, this unprecedented, this historic? I don’t believe there are any.

But I do believe that maybe, just maybe, if we have the wisdom to think through the above, the empathy to feel the tremendous suffering the future already surely holds, and the courage to see what is right in front of us—well, then, maybe, just maybe we can reach another turning point.

Not one in which human progress goes into reverse. But in which it goes into overdrive. In which the great wheel hits the redline and we all surge forward.

That’s the real challenge of the 21^st century. Not just more tired, piecemeal incrementalism; not more excuses for a broken status quo; not more apologists and yes-men for leaders barely worthy of the term; not more dead ideologies and empty dogmas—the very ones that led to a Great Inversion. But revolutions. Millions of them. In every mind; in every undreamt dream; in every skyward eye. In every life.

via:http://blogs.hbr.org/2013/12/americas-economy-is-officially-inside-out/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness%2Fhaque+%28Umair+Haque+on+HBR.org%29

Who Will Create the Future?

Who will offer the world more than a dead end?

Consider: Walmart is the biggest employer in America.

The typical Walmart “associate” (sorry—I meant Highly Exploited and Vulnerable Person With No Access to Healthcare, Job Security, Or Other Benefits, All of Which Are Subsidized By the Public Purse, Who’s Sometimes Locked in the Store Overnight) earns the princely sum of about fifteen and a half thousand dollars a year.

Fifteen thousand five hundred dollars is less than the average income…in Botswana. Other countries with higher average income than the typical Walmart employee earns? Lebanon, Malaysia, Gabon, and Barbados.

Perhaps, you protest: but not everyone in the US works at Walmart! Why, the nation’s full of super brainiac quantum rocket scientists! Who—justifiably deserving of their riches—are cracking tough, vexing problems, tackling noble, grand endeavors! Undertaking world-changing work! Like…like…ah, inventing highly leveraged synthetic financial products, finding better ways to deny healthcare to the elderly, creating the next housing bubble, making gigantic talking billboards, creating “sympathize” buttons for those awkward occasions you have to display real human emotion, and dreaming up reality TV shows that are even more stomach-churningly grody than the fast not-quite-food advertised in them.

No wonder heading to the office instills most of us with a heady, spine-tingling sense of dread, horror, resignation, and regret.

What’s happening to us?

Yesterday’s noble paragon of prosperity—the USA—isn’t finished. But what you might call its model of growth—its how and why of prosperity; what it means; why it counts; and where it is found—sure is.

America’s Way—or at least what it’s devolved to in the last decade or three—is a dead end. It’s a cul de sac—one that we’re driving around and around in…endlessly.

You know the endless “debates” the talking heads have had on cable news, every night…for the last thirty years…about the same topics…taking the same sides…offering the same failed ideas…over and over and over and over again…until most of us would rather eat our own socks than turn on CNN? You know how you know exactly what every major newspaper columnist is going to write…before you even read it…before you even open your laptop…before you stopped bothering to read the paper? You know how both “left” and “right” at this point seem like deviously not-quite-different brand names for two treacly flavours of high-fructose-corn-syrup-society-substitute that are actually marketed by the same McGovernment-Lobbying-Complex? You know how middle class incomes haven’t risen in decades…while people are working harder than ever…while their kids are deeper in debt, their prospects less stable, their opportunities quietly winking out?

You know how you probably wake up, blearily punch your alarm clock, curse your stars…and head to a “job” that—if you’re lucky enough to have one—makes you want to gnaw your own leg off, beat your boss over the head with it, and do a victory dance, because you can’t bear the thought of even another microsecond of another totally pointless meeting about a utterly useless product whose only purpose is to earn yet a few more pennies for brainless robo-shareholder-bots …every single day, over and over and over again?

That’s what I mean by a cul de sac. That’s what I mean by a dead end. America used to set an example for the world. But that example today? It’s a nowheresville of prosperity. A Potemkin Town of plenitude.  A twilight zone of human possibility.

And nations today should be mortally, lethally afraid of getting stuck in it. More worried, in fact, about getting stuck in it than they are about marveling at how pretty the tree-lined boulevards approaching it are.

Many, it seems, are choosing to bypass the neighborhood entirely. China’s “capitalism”—more properly, a kind of mercantilism—seems designed to thumb its nose at America’s failed model entirely. Dubai’s a neofeudal kingdom built on modern-day indentured servitude, brushed under the glittering spires like so much worthless sand. Singapore? A benevolent technocracy, which bears little resemblance to a liberal democracy. And so on.

The point isn’t that these nations are, as though the global economy were a horse race, “surging ahead”. Indeed, they may not be at all. But the economy isn’t a race. It is an act of exploration—and then, of creation. And so: their erstwhile paths forward may equally well prove to dead ends—and I’d bet many already are.

And so the great question this decade, for the smallest of all human concerns, at least—the political economy—is this: who will offer the world more than a dead end? Who will pioneer a way forward—past the barren exurbs America’s stuck in? Who will offer the world—its teeming billions, its hungry slums, it’s crowded, surging masses—a future?

Are we—yes, you and I, each one of us—up to that challenge? I don’t know. Here’s what I do know.

I wouldn’t pay someone fifteen and a half thousand bucks to shove boxes of disposable junk around a warehouse. It wouldn’t free them. It would shackle them; and obligate us to jealously guard the key. And so it would not just be unfair to them—it would be unfair to the people both of us could andshould be, at our fullest, truest, noblest, worthiest, highest.

And if that’s all America can offer to the world’s billions, then, well, they can—and rightly should—stop looking to America as the globe’s shining flame of prosperity.

The future’s made of us. And so, from now, until the end of time; it is nothing less than the only power we—fragile, small, brief—might be said to have.

The power to laugh at fate. And create the future.

via:http://blogs.hbr.org/2014/01/who-will-create-the-future/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness%2Fhaque+%28Umair+Haque+on+HBR.org%29

How to Have a Year That Counts

Happy New Year! Here’s your challenge. You—yes, you—right here, right now, have a chance, nothing more, a slim reed of a chance, at a year that counts.

So I’d be willing to bet you’ve been cutting back on the sugar and vowing to get to Inbox Zero. 2014 is the year you will finally floss! And make junior vice president assistant director!

But wait.

Before you get carried away by your Evernote file of Paleo recipes and your elaborate new system of Outlook sub-folders — you have a bigger opportunity here. Being the person you were put here to become.

I believe, first, in a humble, simple truth: that each and every one of us is here to live a life that matters. And we must do so by making each and every moment of each and every day of each and every year that we are privileged to live count.

And while dental hygiene is important, I’d like to postulate four resolutions that will help you create something that matters even more: a year that counts.

Don’t give up on your dreams. If you want your year to count, don’t start with your goals. Don’t start with your plans. Don’t start with your objectives. Start with your dreams. The bigger, the more laughable, the more impossible—the better. We feel as if our lives count when—and only when—we brush against our dreams, with the fingertips of our days. When we feel them; when we know them; when we become them. Our dreams do more than “inspire” us—that insipid word so loved by TED talkers and motivational speakers. Our dreams infuse us. They sing to us of who we may become. They elevate us. For our days to count, we must feel—sometimes painfully, sometimes joyously, never easily—that our better selves are roaring, exploding, thundering to life. And our dreams are the songs that awaken them.

Never, ever give up on your dreams. Not when it’s difficult; and especially not when it’s sensible. Nothing is more senseless than the sensible choice to live a meaningless life.

Don’t be afraid to suffer. There are two reasons for human action, and economists, with their superficial talk of “incentives,” don’t understand either. Fear and love. What are you afraid of? Rejection, poverty, disgrace? Whatever you call it, here is what it is: suffering. But you must never be afraid to suffer. It’s not that suffering makes you “stronger”—for life isn’t merely an exercise in empty stoicism; and, indeed, suffering for it’s own sake is futile. Nor merely must you suffer for the “sake” of what you want—money, power, sex, fame. No: it’s that suffering is so intimately connected with love — with what makes life worth living. Your fears are not imaginary: they will, it is likely, come true. Yes, you will get dumped, axed, insulted. You will fail, stumble, falter You will hurt, ache, yearn, long, want, despair. But that is precisely the fire in which all the elements of greatness—empathy, grace, tolerance, forgiveness, perseverance—are forged.

It is no accident that the word passion arose from the Latin word for suffering. When we treat suffering as merely pain to be escaped, we sacrifice passion in the process. In a world where so many want to feel passionate about their lives and their work, very few seem willing to suffer. But you can’t have one without the other.

Suffering is the fire that melts the glass of the person you must leave behind. Suffering signals the price of growth; and we can never learn the worth of growth if we are afraid to suffer.

Seek the mystery inside the truth, not the truth inside the mystery. We’re taught to be obedient rationalists—super-nerd-brains running computer programs that optimize the lives other people tell us we should want—instead of, you know, human spirits capable of creating the lives we could live. What gets measured, goes the old adage, gets managed. So analyze, test, explain, iterate! But the universe is not just greater than what we can explain—it is infinitely richer. Can you put love in a spreadsheet? Can you iterate towards friendship? Can you explain happiness?

The truth alone isn’t enough if you want your days to counts. The mystery in the truth is where life begins to count. Why does this person love me? Did I really create that? What inspired me to break the rules and say that? What the hell just happened?!

Uncovering truths alone can help us make sensible choices—but sensible choices don’t propel to lives that matter. That leap is only taken in the instant you venture beyond certainty, beyond reason, beyond logic. And you must make that leap beyond truth every day, if you wish your days to count.

Let you happen. We, we are told, must “make it happen”; if we wish our lives to be precisely so. But that is the social philosophy of a child. Is it true that we must press the lever, if we wish to obtain the rewards we seek? Sure. If we’re lab rats—or smiling, thoughtless automatons. If, instead, we are here to live lives that matter, resonant with purpose, luminous with celebration, here is what is truer: we must let ourselves be, in every instant, who we were meant to become. We must be more than lever-pressers. We must escape our cages. We must let “it” happen. What is “it”? All that which imbues our actions with meaning; without which life is little more than an empty, meaningless performance—good and bad. Love. Yearning. Loss. Grief. Heartbreak. Tragedy. Despair. Triumph. Will. All that and more—we must let happen, if we are to grow. What stands in their way, most often? The world? No. It’s us, ourselves—it is the worst in us, that will not budge, that will not yield, that limits us. That leaves us feeling thwarted; stifled; cheated—because, in truth, we are. We are cheating ourselves of meaning when we do not let life happen—and act as we are merely conditioned to, by the cheap desires programmed into us instead: Achieve! Earn! Spend! Die!

So let you happen—all of you. Free yourself. Want a year that counts? Maybe you have to end a bad relationship so that you can have your heart shattered into a million tiny aching pieces…so it can beat with a fiercer rhythm. Maybe you have to tell your NeanderBoss “no” instead of smiling and nodding like a spineless flunky. Maybe you have to apologize to someone, and look your shortcomings straight in the eye. Or maybe you have to start that company, marry that person, and put down roots — even when the ground beneath you feels like shifting sand. Or maybe you have to strike out and get lost in the unknown to find the opportunity on the other side. Whatever it is, let it happen.

Rumi once said: “There are a thousand ways to kneel and kiss the sky”. What did he mean? Something like this: we truly know what it is to love only when we humble ourselves to what counts. Our days count—and only count—when we may love more than we could before. Think about it: if you loved your partner, job, house, city, country, family, friends, ideas…less and less every day, how would you feel about your life? Like it was empty, futile, senseless: like it hadn’t…counted.

Which instants count? They’re not the ones that fill up our wallets. They’re not the ones where we have a pretty girl (or boy) on our arms. They’re not the ones where we buy, have, possess, barter, win, conquer. They’re the ones in which humble ourselves to the meaninglessness of all that. That’s when we kneel. And come face to face with the sky.

So stop. Stop scurrying. Stop chasing. Stop worrying, envying, hoarding, scheming.

You’re free. (You always were.) And you have a choice–and a chance. At making it all count. Not just this year. But every instant. Every moment. It. Your life. You.

Here’s a great secret: you don’t only live once. You live an uncountable multitude of times; a lifetime in every day. And that’s more than enough for anyone.

via:http://blogs.hbr.org/2014/01/how-to-have-a-year-that-counts/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness%2Fhaque+%28Umair+Haque+on+HBR.org%29

The Great Leap Generation F Needs to Make

Imagine a towering, sheer cliff. Imagine a deep canyon below, full of ruined cities. Now imagine, on the canyon’s other side, a bountiful plain, rippling in the breeze, stretching into the sunset.

Welcome to the economy of the twenty-first century.

For young people today, the economy basically feels something like the portrait above, and they’re the ones stuck at the bottom of the ravine.

Consider the following:

1. The global economy is broken. I’ve suggested for many years that we are living through a zombieconomy – where the economy seems to stagger forward in a lifelike fashion, but it’s really just a reanimated corpse. I’ve attributed this mismatch to “growthism” – the blind pursuit of growth empty of real improvements in living standards. Another way to look at it is what both Tyler Cowen and I have called a “Great Stagnation.” But don’t take my word for it. No less an august personage than Larry Summers has finally pronounced this an era of “secular stagnation.” If Larry Summers, former treasury secretary and president of Harvard, is agreeing with the puny likes of me, I think it’s safe to say the phenomenon is real.

Stagnation means, in plain English, that living standards in many rich nations are going to fall for young people. That’s a fancy way of saying that life is going to get shorter, harder, nastier, dumber, and bleaker. No, sorry, just because you can buy a gigantic 4D plasma TV on 4000% APR credit and a bag of Doritos the size of an Escalade for 99 cents doesn’t mean you will live longer, be healthier or happier, or be able to afford an education for yourself or your children.

2. Our debts are overwhelming. Young people in many nations, especially rich ones, have unprecedented economic burdens to shoulder. There’s the small matter of paying for the planet not to melt down. Not to mention the massive debts so kindly passed on to us by bailed-out bankers. Or the massive debts racked up by the public sector. And that’s before we even talk about fixing our aging healthcare, transport, energy, and education systems; that’s before we even get into investing in new stuff we need that we don’t have. Think you’re going to retire? Think again. At this rate, you’ll still be busy paying off the debts of your parents and grandparents before you’ve even paid off yourown student debt.

3. We can’t get jobs—much less careers. Opportunities for young people in many nations are somewhere between LOL and nonexistent. Globally, the unemployment rate is 4.5%, according to recent data from the World Economic Forum – but for workers under 24, it’s 12.5%. Crunch the numbers a different way and you get the same maddening result: 40% of the world’s unemployed are under the age of 25. In the Middle East and North Africa, more than 1 in 4 young people can’t find work. It’s roughly one in five in Europe, and it’s getting worse, not better: youth unemployment rates reached record highs in 2013 in Greece (65%) and Spain (56.1%).

4. The jobs we can get are awful. What few opportunities there are are underwhelming—and unfair. Guess what the largest employer in the USA is? Walmart. Guess what the second largest employer in the USA is? McDonald’s. Guess what the average income at a McJob is? Around $15.5K. Guess where the poverty line is? Around $22k. Think you’re gonna save up for that palatial summer home one day? Think again. You’re probably going to be cleaning it…for an aging billionaire…who owns twenty seven of them.

Even in economies where the “talent wars” still rage, is it really such a triumph that young people in China and India can finally aspire to…spend eighteen hours a day working in call-centers and factories? Because while those jobs are a step “up” the rusty ladder of material success, the brutal truth is that they don’t pay nearly what they should. Wages (Hi, I’m the ghost of capitalism—it’s very nice to meet you! Hey—look!! It’s a Kardashian!! Now hold on while I pick your pocket!!!) haven’t kept track with productivity. Even if you want to concede the weak point that the best the world can do is creating soul-sucking McJobs for the poorest, then the problem is that even the lucky “winners” of this game that our not-quite-leaders call an “economy” are getting the bad end of a worse deal.

Forget Generation X, Y, Z. Welcome to Generation F. If you’re under the age of 35ish, you’re getting (pardon my French) screwed.  We are all put here to live lives that matter—but the life youshould be living is circling down the drain of history. We are all here, in every moment, to make the most of our limitless potential—but your human potential is being squandered, wasted, thrown away.

What does it feel like to be a member of Generation F? It feels like purgatory.

Like you could send out a billion CVs and never land a job. Like you could work a billion jobs and never earn a living. Like you could earn a living, but never quite reach the same level of stability your parents knew. Like if you can’t hope for stability…what shot is there at prosperity? At, security, solvency—much less fulfillment, happiness, purpose? A life of lasting prosperity becomes something like $40,000 Birkins on the arm of a billionaire’s latest trophy wife: a super-luxury that is so far out of reach, we look at it with mockery and contempt rather than aspiration or hope.

Generation F is getting a deal so raw that no one but a politician or a serial killer could offer it with a straight face. So let’s call it what it is. Not just unfair—but unconscionable. The world’s so-called leaders have more or less abandoned this generation. Think that’s unkind—maybe even unfair? Then here’s a more generous take. The world’s leaders have coolly, calmly, rationally, senselessly decided that bankers, CEOs, lobbyists, billionaires, the astrologers formerly known as economists, corporate “people”, robots, and hedge funds are worth more to society than…the young.

The world’s leaders are letting the future crash and burn.

That’s right, burn. Because the damage that’s being done is permanent and irreversible. Basic math tells us this much. A lack of opportunity, especially when one is young, puts people on lower earnings and wealth trajectories for life. They’re not unlike prison sentences in that regard.

So what should Generation F do about all the above?

Create the future. The one that we’re not being allowed to live. And to do that, we’re going to have to break a few rules—so that the rules don’t break us.

We’re going to have take great leaps. Not baby steps. We’re taking too many of the latter, and we’re barely learning to walk. We’re going to have to stop wasting our time on pleasant, meaningless trivialities like minigames, dating apps, tacocopters, reality TV, and asymmetrical haircuts (OK, I admit it. I have one too).

Great leaps. Over the rubble of failed societies and broken economies. Or else we will remain trapped in the ruins, massed against the cliffs; a generation going nowhere.

Great leaps. In every aspect of work, life, and play that you can think of—and then more. We’re going to have to create, among other things: new ways to measure progress (like the Social Progress Index); new political parties (like the Pirate Party); new methods of governance (likeHolacracy); new kinds of financial institutions and financial instruments (like Square), so money can get to useful places, instead of lining the pockets of econocidal maniacs in handmade suits; ways to provide healthcare, food, education, and transport, that actually have a hope in hell of working for everyone over the long haul, instead of breaking down all the time before they work for anyone—not to mention reinventing institutions like “schools,” “jobs,” “corporations,” “economies,” “governments,” and “banks,” and “pensions” so we can actually do all the above. We are going to have to literally take the giant plate of steaming, tasteless gruel we’re being so kindly, generously offered, carefully extract magic beans from it—and build a ladder right past the clouds and into the wide blue sky. 

It’s not going not be easy. And it doesn’t feel fair. But every generation has a challenge. And that challenge must be faced, with courage, with dignity, with grace—if they are to grow into the people they may become. This is ours.

And so. The “F” in Generation F doesn’t stand for probably what you think it does. It stands for fixing the world. It stands for going further. And it stands for creating the future.

via:http://blogs.hbr.org/2014/01/the-great-leap-generation-f-needs-to-make/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness%2Fhaque+%28Umair+Haque+on+HBR.org%29

Groupon’s Friday Night Dump Blooper

We’re always amazed at what we find in the weekly Friday Night Dump, that golden period on Friday evenings after the markets close, but the SEC remains open.. Much of what we find, we only share with subscribers to our premium service.

But we wanted to share this amended 8-K filed by Groupon after 5 pm on Friday. In it, the company corrected a mistake that it made nearly a year earlier, when it filed this 8-K outlining long-term equity awards, in the form of RSUs, to four of its top executives.

The biggest RSU award granted on Jan. 28, 2013 was to COO Kal Raman, who received 1.2 million shares. Coincidentally, 25% of those shares vested yesterday, which is probably what prompted the Friday night filing. With Groupon stock having doubled over the past year, we’re guessing that at least some of those RSUs will be cashed in.

However, as the amended filing notes, Groupon (or most likely their outside counsel) recently realized that the 1.2 million shares that were granted exceeded the limits under the 2011 Incentive Plan they were granted under. Under that plan, the maximum award available to one person in any calendar year is 1 million shares. So Raman had to give back 200,000 shares. Indeed, shortly before the amended 8-K was filed, Groupon filed this amended Form 4to document the change.

Maybe this seems like too much inside baseball stuff, but to us this seems like a pretty big oops. After all, didn’t someone — anyone — check the limits of the plan before offering the 1.2 million RSUs up to Raman? We went looking for the plan after Friday’s filing and found itattached to an S-1/A filed on Sept. 28, 2011. While the item was on pg. 6 of a 14-page document, it wasn’t that hard to find. It also strikes us as odd that it took nearly a year for someone at Groupon to “discover” the error.

What really strikes us, though, is how rare this sort of thing is. We went looking for other examples at other companies over $1 billion in market cap over the past year and came up empty, which probably explains why it was filed late on a Friday.

via:http://www.footnoted.com/groupons-friday-night-dump-blooper/

The Many Joys Of A Dead Week

Because of the way Christmas and New Years fall this year, there’s an unusually long period of time when people are more focused on things other than the disclosures in SEC filings. Which makes it a perfect time to visit the SEC filings dump, which most people lovingly know as EDGAR.

While many people cleared their calendars from Dec. 20 to Jan. 2, the SEC is only closed two of those days. And judging by the amount of stuff we’ve seen crossing our radar this past week, we can only imagine what tonight’s Friday Night Dump will look like. While some of the biggest disclosures have already been reported, when you look at them all together, it’s hard to just chalk the timing up to mere coincidence, or a rush to complete things before the end of the year. Here’s a brief run-down of some of the biggest ones:

• Occidental Petroleum disclosed on Monday that it had reached a settlement with former CEO Ray Irani. Irani will get $26 million in severance plus another $1.3 million to cover various expenses for the rest of his life.
• Also on Monday, Freeport McMoran Copper & Gold agreed to give its CEO, Richard Adkerson, about $36 million worth of stock in exchange for him giving up his rights to severance pay.
• On Thursday, Harbinger Group Inc. disclosed that Chairman and CEO Philip Falcone — the same person who was banned from trading by the SEC earlier this year — would be eligible for up to $20.8 million in bonus payments.

While those are the biggest of the big, we also saw interesting disclosures from Barnes & Noble, Cisco, Goodyear Tire & Rubber, and Sotheby’s, to name a few.

One filing we’ve yet to see, but which we continue to look for, is from Target. It’s hard to imagine that the massive security breech that was first disclosed at the height of the Christmas shopping season wouldn’t warrant an 8-K, especially since the DOJ is now investigating. But other than some Form 4s, Target’s last filing was this 10-Q on Nov. 27. Perhaps that’s being saved for later today!

via:http://www.footnoted.com/the-many-joys-of-a-dead-week/

2013: The Year In Numbers In SEC-Land

There’s a new book that’s attracting a fair amount of attention these days for its attempt to make big data — a term used increasingly frequently in all walks of life — a bit more fun. Maybe it will even do for Big Data what Freakonomics did for the “dismal science”.

We thought about that as we dove into the trove of stats on SEC filings in 2013 that we asked the folks at Morningstar Document Research to compile for us. In 2013, there were 655,846 filings made to the SEC, a modest 2.5% uptick from the 640,017 in 2012. But beyond the sheer number of filings, was the size of some of the filings that were made last year.

Of course, since many of those filings are hundreds or even thousands of pages long, it gives a whole new meaning to big data. Take this 8,315 page behemoth filed by IShares Trust, which was the single largest filing made to the SEC last year. We’re sure that someone was tasked with reading that thing (not to mention proof-reading it), but it wasn’t going to be us. Lending Club Trust, was also unusually verbose last year: of the 10 largest filings made to the SEC in 2013, the peer to peer lending service was responsible for nine of them, weighing in at over 72,000 pages of text!

For the filings that we tend to pay closer attention to — 10Ks, 10Qs, proxy statements, comment letters and 8Ks — the stats were slightly less dizzying. The largest 10K filed last year, clocking in at 2,322 pages, was made by tiny School Specialty Corp. We don’t tend to pay attention to tiny companies like that. But two other companies on our radar — Coach Inc. and Neustar Inc — each filed 10Ks that were over 1,100 pages. For subscribers to our Pro product, we flagged nearly 1,500 filings in 2013.

Eastman Kodak Co. which emerged from bankruptcy in Sept. 2013, filed the largest 10Qs.This one, filed on April 29, weighed in at 3,210 pages. A second 10-Q filed on Nov. 12, 2013, after the company emerged from bankruptcy, was 2,483 pages.

As with years past, Valentine’s Day was the single busiest day for SEC filings: there were 10,364 filings made that day. SC 13Gs and amended 13Gs, primarily filed by large institutional holders, accounted for nearly half of those filings on Feb. 14. The second busiest day, once again, was Feb. 13 when 5,777 filings were made. Other busy days were April 30, when proxy statements for companies on a calendar year are due and Feb. 28, when 10Ks for companies on a calendar year are due.

Financial firms continued to dominate the filings: UBS AG was the single largest filer, filing over 5,073 items with the SEC; JP Morgan Chase was in second place with over 3,100 filings. Taken as a group, the 10 largest filers — all of them financial firms — were responsible for 24,210 filings.

There’s also our single favorite stat: the number of 8Ks that were filed after 4 pm on a Friday afternoon, which we lovingly call the “Friday Night Dump” (subscribers to footnotedPro can get a feed of Friday Night Dump posts). In 2013, nearly 9% of all 8Ks filed were made late on a Friday, roughly the same as it has been in prior years.

via:http://www.footnoted.com/2013-the-year-in-numbers-in-sec-land/

Wells Fargo Wins Forward-Looking Statement Award

On Tuesday, both Wells Fargo and JP Morgan Chase reported earnings, which attracted plenty of coverage, including this Wall Street Journal story, whose headline declared that Wells Fargo was “Now No.1 Bank Profit Maker” beating JP Morgan, which had held that spot since 2010.

But as we skimmed through Wells Fargo’s press release and then quickly compared it to the one that JP Morgan put out, we noticed another place where Wells Fargo clearly bested JP Morgan: the length of its forward-looking statement. Weighing in at over 1,100 words, it’s nearly six times the size of the one included in JP Morgan’s 4th quarter release.

For those not as familiar with forward-looking statements, they are the seemingly routine boilerplate that companies use to describe some of the assumptions that they make in coming up with those numbers that everyone pays such close attention to. They’re often in very tiny print, written by some junior associate fresh out of law school and to make matters even worse, italicized, practically daring someone to actually read them! Here’s a snip from Wells Fargo’s release:

Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements.

Snore city, right? But we’ve been paying closer attention to forward-looking statements for awhile now, ever since we noticed companies trotting out new disclosures and even risk factors buried in the italicized boilerplate. Over the summer, we even put out this Pro report which looked at some of the more unusual disclosures we were noticing.

At the same time, we’ve also noticed a substantial increase in the amount of words many companies — but not all — seem to be devoting to their forward-looking statements. And since we believe there are few accidents in SEC filings, we started paying closer attention to what was actually being said in them. Up until this year, for example, Wells Fargo’s forward-looking statements were running around 800 words. It was only last summer that the company decided to expand this disclosure by more than one-third.

Last week, the Journal also ran this story, warning that corporate attorneys were “on guard for new legal pitfalls”. While the story didn’t specifically mention forward-looking statements, it’s safe to assume that they’re likely to grow as a result.

So let’s have a little fun with this: if you come across a particularly amusing disclosure in the forward-looking statements for a company that you follow, I hope you’ll consider sharing it with other footnoted readers. Send me your best pick. I’ll crown a winner in early February and in exchange, give you a free month of access to footnotedPro.

via:http://www.footnoted.com/wells-fargo-wins-forward-looking-statement-award/

Flying At Starbucks: Which Number Is It?

As footnoted regulars know, the weekly Friday Night Dump is rarely boring. Because of that, we recently  began providing a special feed to our paid subscribers that just focuses on these late Friday disclosures. But we wanted to share something that we found in the proxy that Starbucks filed after 5 pm last Friday because it raises an interesting question about truthiness when it comes to personal jet usage disclosures in SEC filings.

It was on pg. 54 that a disclosure about a new arrangement with Chairman and CEO Howard Schultz caught our attention. Here’s a snip:

At the end of fiscal 2013, Starbucks entered into a series of agreements under which Starbucks acquired the right to use an aircraft leased by an entity owned by Mr. Schultz (“Sublessor”) to address the Company’s need for additional flight capacity for business purposes. Under an exclusive sublease agreement with the Sublessor, Starbucks subleases and operates the aircraft for a monthly rent of $269,297 and is responsible for the operation of the aircraft, aircraft maintenance, insurance and all other overhead costs. The sublease will terminate upon Mr. Schultz’s discontinuation of day-to-day activities in Starbucks management or may be terminated sooner by either party upon 45 days’ notice.

The disclosure goes on to note that the company gets reimbursed for Schultz’ personal use of the aircraft one month in advance and that Schultz paid the company nearly $500K, which is “equal to one and one-half times the estimated monthly costs for his personal use of the aircraft” when the agreement was signed (whenever that was. We couldn’t find a copy of the agreement in Starbucks filings). The proxy notes that during the last month of 2013, Schultz paid the company an additional $332,316 for his use during the first month of fiscal 2014.

There were a few things that surprised us about this disclosure. For one, those are some big numbers for personal use. If October 2014 represents a typical month, that means that Schultz’s personal plane use will come in at $4 million this year, a number that far exceeds any other CEO personal use that we’ve seen disclosed in filings. In over 10 years of reading these types of disclosures, only Abercrombie CEO Michael Jeffries has come close, as wefootnoted here. The number also far exceeds any prior disclosure that Starbucks has made about Schultz’s prior personal use. In fiscal 2012, that number was $428K for the year.

It seems hard to believe that Schultz suddenly increased his personal use by a multiple of nine. Which leaves us with the other option: the earlier number way understated the actual cost, which we’ve long thought to be the case — not just at Starbucks, but at most companies that disclose personal use of the corporate jet for their CEOs.

It’s pretty rare to see even a big company break $500K on this item and many companies have imposed limits on personal use, capping the number at $200K or a certain number of flight hours per year. But that’s likely due to the way companies choose to calculate that number by using the price of a first-class ticket and stripping out various other fixed expenses.

Starbucks doesn’t provide much detail on how it arrived at the $332,316. But it does raise an interesting question: if Schultz is spending nearly $4 million a year on personal use, what’s the real number at other companies?

via:http://www.footnoted.com/flying-at-starbucks-which-number-is-it/