Two Key Opportunities for Economic Growth in America

In recent years I have heard several people proclaim the 1950s as the greatest time to be an American. World War II was over with the American industrial base outproducing the rest of the world. The GI bill gave us an educated workforce of empowered veterans with a shared experience of victory. The Cold War had yet to sully our national experience with fears of nuclear war and we had yet to experience the chaos and political assassinations of the 1960s. The Interstate Highway System was championed by Dwight D. Eisenhower, leading to improved transportation and economic activity between states and cities.

I reject the notion that these were our best years, though they certainly served as the foundation for everything that has come since. Since then we have secured greater civil rights for all Americans, alongside tremendous advances not just in knowledge and technology but in nearly every aspect of civilization as we know it. I actually believe that the current era is the best time to ever be alive in the history of mankind, with plenty of reason to hope that our best years remain ahead of us.

Nevertheless, we are facing significant economic headwinds in the United States, with reason to fear a scenario consisting of negligible growth for the foreseeable future. How do we avoid such a scenario? How do we safeguard and instill robust growth and promise for the future? If we have reached the end of robust growth, how do we position our country to be more competitive internationally?

When it comes to boosting the economy, the first thing Democrats point to is education. While it is true that our education system can be reformed and more closely aligned with the needs of the modern era, all of the low hanging fruit is gone here. We don’t need to send everybody off to higher education – we are unable to effectively employ the youth graduating today.

On the other side of the aisle, Republicans point to deregulation and tax cuts. While a certain degree of deregulation and tax cuts could be helpful to businesses in creating an easier and more stable environment for doing business, the potential for either of these are politically quite limited.

Congress has a poor history for deregulating – they tend to go in the opposite direction. While this should not entirely discourage efforts towards deregulation and simplification of our laws, it can not be viewed as a panacea for our economic ills – we need a more politically practical solution to fix our problem.

Tax cuts are good for business, but in a time of significant fiscal concern they are harder to justify. Common sense suggests that any tax cut and reduction in government revenues should be coupled with reduced spending to balance budgets and avoid increasing debt. There’s the catch: not only does reducing spending seem politically impossible, it could also have a deleterious effect on the economy.

Clearly the ideas of both parties are getting stale and ineffective, both in getting passed and in getting positive results. The problem is that our politicians are chasing fields with diminishing returns (education, manufacturing, internet technology, etc). In my travels I have noticed two very important areas that have been neglected for years:

  1. Transportation
  2. Urban Development

A coordinated strategy of investing in our transportation infrastructure and improving the quality of life and economic opportunity in US cities could offer tremendous potential to boost the economy of our nation. Ever since the dawn of the Industrial Revolution, cities have been hotbeds for exchanging ideas and have served as the engines of growth for our economy.

I have recently traveled out of both Philadelphia and New York City by train. In doing so, I could not help but notice the sprawl of urban decay. Clearly both inside and outside of cities lie areas that have been severely neglected in terms of economic development and general beautification. We need to invest in ways to turn these neighborhoods around so once again people are more interested in living in them than moving out. We need to fight crime where it exists and improve education and economic stability for the least fortunate among us. These are low-hanging fruits from which we could reap great rewards. In doing so, we could see economic gains similar to what we see in the developing world.

Key to improving city life is improving public transportation, which has been neglected ever since the Interstate Highway System was developed in the 1950s. Another key to boosting the economic situation in our cities is to improve the connections between them. Have you ever tried driving on I-95 anywhere between Washington DC and Boston? Here is a road that connects some of the biggest cities in America yet if you drive on it for very long you are bound to get stuck in a traffic jam wasting needless hours of your time.

Not only should we improve this particular highway; we should improve and create more connections between more of our large and mid-sized cities. A comprehensive approach would increase the economic competitiveness of the country in many ways. A comprehensive transportation improvement initiative will:

  • Increase the exchanging of goods and ideas
  • Improve job opportunities for residents of our major population centers
  • Improve access to key markets for our businesses
  • Increase freedom of movement and the overall liberty of our people

Past advancements in transportation infrastructure in the United States have occurred out of military and economic necessity. It is time we recognize both the urgency and opportunity within our current system and make the necessary investments to secure the future of our nation.

Forecasting – Excel Is Not Your Enemy

I just posted this as a response to a topic in the APICS (The Association for Operations Management) group on LinkedIn. The topic keeps coming up in the supply chain community.

MRP and Forecasting systems serve their purpose, but consultants need to stop seeing Excel as the enemy. No matter how nice your “new system” processes data and comes up with a forecast projection, a planner will still need to share it with others (sales folks, management, suppliers or customers, etc), manipulate it, and be able to quickly fix the planning system to match a new forecast that was created… in Excel.

  • Excel is great because you can share it with anyone.
  • Excel is great because you can easily manipulate it and overwrite it.
  • Excel is great because it requires minimal training for non-planners to understand it.

Excel is not an antiquated relic of a broken system; it is a critical and relevant tool that nearly anyone can use. Training others to use a “new system” isn’t the solution – it costs too much, doesn’t really solve anything, and just makes it harder to find someone to fill a job opening or bring a new hire up to speed. In today’s ‘flexible economy’ you don’t want to add unnecessary hurdles to cutting or expanding your labor force. You want a system that new people can quickly understand and use to make the critical decisions of the business. Given realities of the global workforce, Microsoft Office is the best match for that task.

Perhaps the biggest risk of using a “fancy system” for forecasting is the tendency for people to avoid taking responsibility for the results. The outputs of a complex modeling system end up viewed as untouchable and magical. The manual manipulation which is often done in Excel forces a planner to take ownership of the output. The ease with which Excel files can be shared across the organization enables others to provide quick feedback. Excel files are also the easiest to use while performing the various steps of the S&OP process.

At the end of the day, any system that doesn’t work with Excel simply doesn’t work.

A Fistful of Coal

I have been pretty busy lately. I just updated the menu here on this website in order to make it easier to navigate and to link to some other projects of mine.

More interestingly, in the past month or so I launched focoal.com! This is the website dedicated to a film project my friend Ces and I have been working on for the past few years. Slowly but surely we are perfecting our script and planning out the next steps in the film making process. Swing by the “A Fistful of Coal” website and get a feel for our project. Let me know what you think!

Facebook Concerns

Facebook has has been receiving a lot of scrutiny lately. Here is recap of the things I have noticed:

The latest thing I have found is a concern where Limited Run Alleges 80 Percent Of Its Facebook Ad Clicks Were Bots (as reported by Fast Company). There have already been significant concerns as to whether Facebook advertisements are effective in the first place. Due to the social nature of the site, the user base is largely trained to ignore the ads. As more companies begin to fear the risk of bots driving up advertising costs on Facebook, the impact to the bottom line (and inevitably to users) will be quite significant.

Robots Versus Humans – Jobs Lose

There is plenty of interesting news in Robotics lately. The question asked in Fast Company is “Will robots cause even more human unemployment?”

The simple answer is of course yes. The more nuanced answer notes that Robots are initially expected to replace the jobs that are dangerous, repetitive, and unsavory for humans anyway. There is also a bit of offsetting from the new jobs created by the emerging Robotics industry. The problem becomes: what do we do with the people who aren’t mentally capable of prospering in the future robotic world?