Showing posts with label Debt Ceiling. Show all posts
Showing posts with label Debt Ceiling. Show all posts
Sunday, March 10, 2013
Sunday, November 20, 2011
Monday, September 26, 2011
Saturday, September 10, 2011
United States Global Competitiveness
Ever wonder where that statistic comes from when a newspaper article states that the United States infrastructure has dropped to 16th in the world? These statistics come out of the Global Competitiveness Report produced each year by the World Economic Forum. The World Economic Forum has recently published its Global Competitiveness Report for 2011-2012. In the July 20, 2011 blog "Why so much discussion about the debt ceiling?" there was a discussion of the report and the differences between pre-recession rankings in 2007 and the rankings in the 2010 report. The previous blog is located in the July entries. The complete 2011-2012 report can be viewed at:
Directly quoting from the 2011-2012 report, their assessment of the United is as follows:
"The United States continues the decline that began three years ago, falling one more position to 5th place. While many structural features continue to make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive. On the other hand, there are some weaknesses in particular areas that have deepened since past assessments. The business community continues to be critical toward public and private institutions (39th).
In particular, its trust in politicians is not strong (50th), it remains concerned about the government’s ability to maintain arms-length relationships with the private sector (50th), and it considers that the government spends its resources relatively wastefully (66th). In comparison with last year, policy making is assessed as less transparent (50th) and regulation as more burdensome (58th). A lack of macroeconomic stability continues to be the United States’ greatest area of weakness (90th). Over the past decade, the country has been running
repeated fiscal deficits, leading to burgeoning levels of public indebtedness that are likely to weigh heavily on the country’s future growth. On a more positive note, after having declined for two years in a row, measures of financial market development are showing a hesitant recovery, improving from 31st last year to 22nd overall this year in that pillar."
Changes between 2007(pre-recession), 2010, and 2011.
Overall Competitiveness 2007-1st 2010-4th 2011-5th
1. Trust in institutions 2007-25th 2010-40th 2011-39th
2. Infrastructure 2007-7th 2010-15th 2011-16th
3. Macroeconomics 2007-66th 2010-87th 2011-90th
4. Health and Primary Education 2007-34th 2010-42nd 2011 42nd
5. Higher Education and Training 2007-5th 2010-9th 2011-13th
6. Goods Market Efficiency 2007-8th 2010-26th 2011-24th
7. Labor Market efficiency 2007-1st 2010-4th 2011-4th
8. Financial Market Development 2007-9th 2010-31st 2011-22nd
9. Technological Readiness 2007-11th 2010-17th 2011-20th
10. Market Size 2007-1st 2010-1st 2011-1st
11. Business Sophistication 2007-4th 2010-8th 2011-10th
12. Technical Innovation 2007-1st 2010-1st 2011-5th
Friday, August 5, 2011
Sunday, July 31, 2011
More Concerns than Just the Debt Ceiling
Over the last few weeks, I have spent a lot of time watching the debate over the debt ceiling. Congress has many very talented speakers that raise compelling points, but even as it appears the crisis will be averted, I will be left with many concerns about the polarity of our country. This willingness to play a deadly game of chicken with our nation's credit rating is a dramatic symptom of the current chasm in our political system.
Coming into the fourth quarter of the year, many large companies automatically begin terminating employees in order to ensure that year end stock prices reflect a positive year. This is not some casual assumption, it is in fact the fiduciary duty of each Chief Executive Officer of a publicly traded corporation to protect the share holder investment.
Consulting Engineering has become big business. Over a decade ago, I worked for what was then one of the largest engineering firms with little more than 10,000 employees. Today several of the largest engineering firms have 50,000 to 60,000 employees. With the large number of acquisitions, engineering firms with between 100 and 250 employees has been reduced precipitously. As firms get larger, decisions are more often made based upon numbers and not the talent of their employees. Examples would be deciding to cut a percentage of their staff instead of "trimming the fat". With smaller markets such as Vermont and New Hampshire some of the larger companies have simply elected to eliminate their offices in these smaller states. Some may be happy to see some of the larger firms exit the state, but these are also well paying jobs leaving that won't necessarily result in a compatible growth in the companies remaining.
Time will tell what impact the whole debt crisis will have over the economy. If nothing else, we have taught the world market that the United States defaulting on our obligations is not outside the realm of possibilities. Even if we now raise the ceiling, there will be some countries less willing to offer us credit. As a minimum, I would expect interest rates to rise even if we do not have our credit rating dropped from AAA to AA.
I was more concerned that the earlier votes were perfectly along party lines. I resented feeling like the American public had a gun to our head through this process. Over the weekend I happened to read "My Declaration of Independence" by former Senator James Jeffords from Vermont. On May 24, 2001, the Vermont Senator effectively switched parties from Republican to Independent. For organizational purposes he shifted his alignment to the Democratic party which at the time shifted the majority vote of the Senate over to the Democrats including many key committee chairmanships over to the Democrats. At the time, I had only appreciated the action as a defection of a long-standing political tradition. At the time this was one of the longest held seats by a single party in the country. Watching our political process, I can now better appreciate the personal reflection and inner strength needed to take such a dramatic step to follow ones ideals against the political establishment.
As Senator Jeffords described the separation from the major parties due to the extreme polarity and the need for more middle ground. In this case it had a lot to do with a battle between tax cuts promised by the Republican President and a personal commitment toward education funding. I now find more in common with the Senator than I ever had. I am finding it hard to identify with a single party and struggle to find any common ground with the more extreme elements within the political parties, finding more in common with the moderates of both groups. Somehow we need to reconstruct the middle ground within congress and within our country as a whole.
As the crisis appears to be finally coming to an end, it will be important that we all learn from this experience and continue to let our representatives know where we stand on these critical issues. By passing legislation solely by political advantage instead of meaningful dialogue, a willingness to listen at opposing views, and at times formulate meaningful compromises, we can avoid continually shifting between the control of opposing parties after each election. We still have a lot of work to resolve many of the challenges still facing this country, but solving these issues while maintaining the current polarity will not be possible.
Coming into the fourth quarter of the year, many large companies automatically begin terminating employees in order to ensure that year end stock prices reflect a positive year. This is not some casual assumption, it is in fact the fiduciary duty of each Chief Executive Officer of a publicly traded corporation to protect the share holder investment.
Consulting Engineering has become big business. Over a decade ago, I worked for what was then one of the largest engineering firms with little more than 10,000 employees. Today several of the largest engineering firms have 50,000 to 60,000 employees. With the large number of acquisitions, engineering firms with between 100 and 250 employees has been reduced precipitously. As firms get larger, decisions are more often made based upon numbers and not the talent of their employees. Examples would be deciding to cut a percentage of their staff instead of "trimming the fat". With smaller markets such as Vermont and New Hampshire some of the larger companies have simply elected to eliminate their offices in these smaller states. Some may be happy to see some of the larger firms exit the state, but these are also well paying jobs leaving that won't necessarily result in a compatible growth in the companies remaining.
Time will tell what impact the whole debt crisis will have over the economy. If nothing else, we have taught the world market that the United States defaulting on our obligations is not outside the realm of possibilities. Even if we now raise the ceiling, there will be some countries less willing to offer us credit. As a minimum, I would expect interest rates to rise even if we do not have our credit rating dropped from AAA to AA.
I was more concerned that the earlier votes were perfectly along party lines. I resented feeling like the American public had a gun to our head through this process. Over the weekend I happened to read "My Declaration of Independence" by former Senator James Jeffords from Vermont. On May 24, 2001, the Vermont Senator effectively switched parties from Republican to Independent. For organizational purposes he shifted his alignment to the Democratic party which at the time shifted the majority vote of the Senate over to the Democrats including many key committee chairmanships over to the Democrats. At the time, I had only appreciated the action as a defection of a long-standing political tradition. At the time this was one of the longest held seats by a single party in the country. Watching our political process, I can now better appreciate the personal reflection and inner strength needed to take such a dramatic step to follow ones ideals against the political establishment.
As Senator Jeffords described the separation from the major parties due to the extreme polarity and the need for more middle ground. In this case it had a lot to do with a battle between tax cuts promised by the Republican President and a personal commitment toward education funding. I now find more in common with the Senator than I ever had. I am finding it hard to identify with a single party and struggle to find any common ground with the more extreme elements within the political parties, finding more in common with the moderates of both groups. Somehow we need to reconstruct the middle ground within congress and within our country as a whole.
As the crisis appears to be finally coming to an end, it will be important that we all learn from this experience and continue to let our representatives know where we stand on these critical issues. By passing legislation solely by political advantage instead of meaningful dialogue, a willingness to listen at opposing views, and at times formulate meaningful compromises, we can avoid continually shifting between the control of opposing parties after each election. We still have a lot of work to resolve many of the challenges still facing this country, but solving these issues while maintaining the current polarity will not be possible.
Saturday, July 30, 2011
Friday, July 29, 2011
Wednesday, July 20, 2011
Why so much discussion about the debt ceiling?
So much has been written about the debate in Washington
Global Competitiveness Reports are published each year based upon twelve pillars of Competitiveness. These include institutions (more of a measure about how much we trust the government, congress, etc.), infrastructure, macroeconomic environment (interest payments, debt, fiscal deficits), health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and technological innovation. I would recommend anyone interested to get a copy of the 2010-2011 Global competitiveness Report to better understand the terms and how they are used.
A recession is defined by two consecutive quarters where the Gross Domestic Product (GDP) growth rate is negative. Using this definition the recession started in the fourth quarter of 2007 and ended in the third quarter of 2009. Although by this definition we are not technically in a recession, the impacts of the recession are still very evident. Using the Global Competitiveness Report criteria as a guideline and comparing the 2007-2008 report with the 2010-2011 report provides some insight as to what has changed and what needs to be addressed to get us back. The reports rate each country by their rank in the world. Below is the change of the United States
Changes between 2007 and 2010:
Overall Competitiveness dropped from 1st to 4th.
1. Trust in institutions dropped from 25th to 40th
2. Infrastructure dropped from 7th to 15th
3. Macroeconomics dropped from 66th to 87th
4. Health and Primary Education dropped from 34th to 42nd
5. Higher Education and Training dropped from 5th to 9th.
6. Goods Market Efficiency dropped from 8th to 26th
7. Labor Market efficiency dropped from 1st to 4th
8. Financial Market Development dropped from 9th to 31st
9. Technological Readiness dropped from 11th to 17th
10. Market Size remained 1st
11. Business Sophistication dropped from 4th to 8th
12. Technical Innovation remained 1st
It is troubling that in only three years our trust in politicians has plummeted 15 positions, but it is unlikely that will be corrected anytime soon. Infrastructure and health and primary education are very concerning, but the recent reduction in investment in these sectors has caused the decline. The leading indicators seem to be the Macroeconomics and the Financial Market Development. The other factors not specifically mentioned are most likely lagging indicators and are more of a result of the poor economy.
At the federal level, we need to reduce the national debt. There should be careful thought before getting our country further in debt, but reductions must be balanced with investment in other areas such as infrastructure, schools, and healthcare. The United States is still the greatest marketplace in the world and continues to dominate the world in technical innovation. Although our Country is facing some tough times, there are still some very positive indicators if the macroeconomics and financial markets can be corrected.
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