I love the summer. My teaching duties are reduced; leaving administrative duties, some adult classes, and lots of reading. I’d like to emphasize lots of reading. I am currently invested in four books, as well as some case studies in preparation for classes in the Fall. I am reading Creativity, Inc., which is about Pixar. This is a very good book about the inner workings of Pixar during its initial years. It is a great study of leading and managing within a creative environment. The author deals with the dissonance associated with the human and economic issues associated with creative endeavors.
The second book I am reading is View From the Top, by Dr. Michael Lindsey. It explores how people at the top view the wor and attempt to shape it. It is a very interesting read. I have not observed anything world shattering yet, but I have read some confirming words. “Using relational influence rather than positional power, allows a leader to get what she needs by using her unique understanding of each of her coworkers and constituents.” The power of influential leadership rather than a military style of telling people what to do is critical to modern leadership in organizations.
The third book I am trying to get into is “The Rational Optimist.” This was a recommended alternative to “Capital” by Thomas Piketty. I thought if I was going to attempt to wade my way through Piketty’s book, I should have the counter view in front of me too. Matt Ridley attempts to demonstrate another perspective on “how prosperity evolves.” In this book I read something that reaffirmed what I think is true. Instead of focusing efforts on the rich, let’s focus on the poor and helping them develop the skills needed to compete in this economy. Frederick Hayek said, “once the rise in the position of the lower classes gathers speed, catering to the rich ceases to be the main source of great gain and gives place to efforts directed towards the needs of the masses. Those forces which at first make inequality self-accentuating later tend to diminish it.” This is contrary to what Piketty focuses on in my fourth read for the summer, “Capital, in the 21st Century.”
Pikettymania has emerged from the publishing of this French economist’s book. I am finding the book interesting and his argument to be good, just not compelling. As Alan Blinder mentioned in the WSJ this morning, Piketty’s “central claims are that inequality is both too high already and destined to rise further,” and I agree that these two claims need to be discussed, but Blinder thinks the focus should be placed in income inequality rather than wealth inequality, which I find this to be a compelling statement.
Piketty does a good job of describing the difference between the owning of capital and income. He also does a good job of describing how our current economic situation is generating more wealth for those who own capital, and less for those who rely on income to live. Piketty’s solution is to tax the owners of capital and distribute what is taken from the rich to the poor. He feels the rich are too rich and therefore needs to be brought down a peg or two.
Blinder points out three things that I think we should focus on. First, “a significantly smaller share of the nation’s income now goes to labor than was true 30 to 35 years ago.” This is an important point. Lower wages, less jobs, and more complicated tasks have impacted our workers in a way that has resulted in a reduced participation rate in the work force. This needs to change. To get this maybe the owners of capital will need to generate less wealth for themselves and be willing to distribute more income to laborers.
Blinder’s second point involves how the reduction of wages for labor has impacted the standard of living for a great majority of Americans. “In 1979, 11.7% of Americans lived below the official poverty line. By 2012, the percentage rose to 15%, even though real GDP was 72% higher. Only about a third of these unfortunate people worked in 2012, and fewer than 10% worked full-time, year around. As a result, much more of their income domes from government transfer payments than from earnings.” Oh my gosh, does that concern you as much as it does me? Talk about initiative destroyers.
Thus when Blinder describes his second bottom-line as “labors shrinking-share has grown more unequal,” there is the real, observable result of increased poverty and reliance on government. Blinder’s third point is that our government does less than European government’s do for their people, but the fact of the matter is, if someone can get free money for doing nothing, the incentive to work, especially if it is difficult to find jobs that provide livable wages, diminishes.
Now you have it. The list of books I am reading this summer. Sounds exciting huh! I am convinced, that productivity is the solution for poverty, not larger government. Just recently, I found out that a company I know about was going to remove a long-term employee from a role that they were in but was not doing a good job. This person could not be depended on to do anything. Someone else tried to remove the unproductive person from their position, and the person who was not doing a good job talked to someone in the organization that was protecting them, and now the person who was trying to do something about this unproductive person has now been removed from their position. The lazy unproductive person wins. This is so wrong.
Sometimes I think our world is so upside down, but I will not give up! Productivity, creativity, and initiative are critical for a meaningful life. This is why I read, so I can help my students learn this lesson a lot earlier than I did.
And that is my thought for the day!