Economic lessons the world is trying to teach us



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The World Economic Forum is held every January in Davos, a picturesque town in the Swiss Alps. "Committed to improving the state of the world," it was started in 1971 by Professor Klaus Schwab, who continues to run and moderate it.This year's conference lasted five days. The agenda is 62 pages long. They've identified 50 risks and challenges the world must address simultaneously.Attendees are a compendium of the who's who of the world and typically include the elite of the business, political, education and scientific communities. You would recognize many of the names.I'm sorry to say I've never been invited (if only I had won a Nobel Prize or something). Even so, I'm always eager to learn, and many of the sessions were videotaped and are available on the web at weforum.org.German Chancellor Angela Merkel gave the opening address. She was not talking like someone who was campaigning. She provided a frank assessment of the problems, even asking for input on the solutions. (I think we used to have leaders like that, but I can't remember how many presidents and/or governors ago it may have been.).Their problems are very similar to ours, but they don't seem to be covering them up. Instead of our "jobless recovery," Chancellor Merkel said quite pointedly that everybody is struggling; everyone needs more jobs. She implored us not to pass our problems onto future generations. She referred to the global financial and economic crisis, never suggesting or implying that things were getting better.It seems the "recovery" is merely a figment of our imaginations, and there was even a session on how to get Americans to understand we are losing.Chancellor Merkel advocated benchmarking economic best practices. I almost fell over. Astute companies have been doing that for decades. Why shouldn't governments do it as well?We keep talking about the problems in Greece and Italy, as if they couldn't happen here. They are happening here; we just haven't quite caught up with them yet. It seems everyone on the planet knows we are in trouble, except us.Why does this matter?When looking for important information, I like to get it from several independent sources. If they all agree, I have a lot more confidence in the information.Few things are more important to our business planning than our economic outlook. We keep hearing there are encouraging signs of a fragile recovery, but I can't see how that can be. Our balance of trade is our biggest problem. As long as we keep exporting our jobs and our money at such horrific rates, we will continue to decline. Hoping for anything else is just wishful thinking.Listening to Chancellor Merkel and others reinforces that there is no such thing as a jobless recovery. In fact, there's a world war for jobs, as many countries compete to attract jobs for their people. Unfortunately, there are still some countries that haven't figured this out, and it sounds like we might be one of them.As a result, finding innovative ways to survive in a down market may be far more beneficial than planning to benefit from a supposed recovery.What would be especially helpful would be developing new products and/or services that required hiring. We have far too many unemployed, and they don't buy things, seriously reducing demand.Until we focus on our real problems, identify the root causes and begin to address these causes, things aren't going to change. Ignoring them and pretending they don't exist just helps them grow.I'm heartened by an article from the Washington Post ("Larry Summers vs. The Long-Termers" by Ezra Klein, 5/7/12) someone just sent. It seems an economist, Raghuram Rajan, who had successfully predicted this financial crisis, is predicting again. They laughed at him in 2005, but now they're taking him more seriously.The sender called the article depressing. Yes, it's bad news, but it shows we're finally starting to realize the status quo is not going to make it.The next step would be realistic forecasts we can actually use while we work on this problem.As you plan the next quarters, please consider strategies that can profitably employ more people. It could be as simple as sourcing more components over here.It just might increase demand for your products and services too.Ronald J. Bourque, a consultant and speaker from Windham, has had engagements throughout the United States, Europe and Asia. He can be reached at 603-898-1871 or RonBourque@myfairpoint.net.

 

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