Tag: technology

Infinite Progress

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At the start of 2010, I put a positive spin on the nascent economic and psychological recovery with blogs on “The Sky Has Stopped Falling”, “Good Riddance to Utopian Views of 2000” and “Self-Improving Systems”.  Today, I want to promote the broader subject of “Infinite Progress”.

Economics has earned its label as “the dismal science”.  It has been serious, analytical, realistic, short-term and marginal.  Imitating calculus and physics, it has sought to optimize production functions and maximize results subject to multiple linear constraints.  Like other academic disciplines, economics has been shaped by the dominant culture.  Economics has progressed through the Physiocrats, Marxists and Marginalists who in turn proclaimed that land, labor and capital each held the key to economic value.  Even Paul Samuelson’s neoclassical synthesis focused on these three “factors of production”, while mentioning that there was some remaining role for “technology” and “entrepreneurship”.

The “law” of diminishing marginal returns emphasizes that in the short-run, with given technology, additional inputs eventually yield lower incremental results.  This is certainly true, but development and growth economists focusing on the international and business sectors have demonstrated that this fourth factor (technology/entrepreneurship) is the primary driver of progress.  In fact, rather than being subject to diminishing returns, knowledge is the one factor that is subject to increasing returns through time!

In spite of the slow recovery in the current economic cycle, I believe that we are only 50 years into the greatest productivity expansion in history.  Annual labor or multi-factor productivity growth of 2-4% has become commonplace.  Even in the recession, we experienced 6-8% productivity growth.  Productivity growth will accelerate in the coming years to a minimum of 5% annually, in spite of our various challenges (aging population, protectionism, extremism, political polarization, religious stagnation, terrorism, global warming, limited natural resources, multi-polar international powers).

In no particular order, knowledge and practice has expanded and will continue to expand in all of these fields:

  1. Trade.  Lessons were learned in the Great Depression.  Tariffs have continued to fall.  Multilateral treaties have stalled, but bilateral trade agreements are accelerating.  English is becoming the global language, followed by Mandarin Chinese and Spanish.  A majority of the global population produces at a near-subsistence level.  They will all generate modern western levels of output within 40 years, providing added value globally.
  2. Physics/Engineering.  Basic physics, mechanical and civil engineering continue to advance.  Modern materials, energy, devices and structures will advance and be refined in light of breakthrough understandings (supercollider).
  3. Chemistry.  “The Graduate” whispered “plastics” as the key to the 20th century.  Plastics has delivered, but has not exhausted its secrets.
  4. Biology.  Biotechnology and modern medicine is on the verge of major breakthroughs in individualized medicine, medical information, preventive medicine, devices, new drugs and nano-technology based solutions.  Mental health care is leveraging improved understanding of the mind, behavior and chemistry.
  5. Energy.  Delayed by politics and prices, energy exploration and solutions are emerging.  Wind, solar, nuclear, clean-coal, tidal and other answers are now real.  Break-through shale, gas and deep-sea extraction technologies are imminent.  Major investment in alternative transportation options is producing results.
  6. Natural Resources.  The food, fiber and natural resources sector continues its 200 year track record of innovation, with genetically modified organisms, drip irrigation, weather forecasting, satellite guided farming and fish markets adding value.
  7. Transportation. New highways, hiking, biking, high-speed trains, point to point aircraft, larger container ships and usage tolls suggesting continued progress.
  8. Electronics.  Songs, movies, video, instruments, observation, robots, entertainment, games, virtual reality, and the list goes on and on.
  9. Computer Power.  Moore’s Law. ‘Nuff said.
  10. Telecommunications.  Cell phones, internet, computer integration, GPS, much faster speeds.
  11. Integration.  Electronics, telecommunications, media, entertainment in one place, on demand.
  12. Community.  Tribes, cities, nations, world.  Clubs, games, blogs, social media, Face book, LinkedIn, Twitter, no limit.
  13. Specialization.  Professions, suppliers, outsourcing, matrix organizations, consultants, global suppliers, increasing economies of scale, niche markets
  14. Process Improvement.  Process, quality, cost of quality, value added, variability, bottleneck, ISO, TQM, benchmarking, process re-engineering, quantum leap, lean manufacturing, lean, six sigma, kaizen, self-improving systems.
  15. Computer Systems.  Automation, systematization, mainframes, minicomputers, personal computers, applications, man-machine, GUI, windows, mouse, ERP, cloud computing as a utility.
  16. Library Science.  Dewey decimal, multimedia, informatics, knowledge management, Wikipedia, Amazon.com, tripadvisor.com, Angieslist.
  17. Economics.  Markets, global trade, auctions, information, behavioral economics, EDI, e-commerce, capitalism embraced everywhere in one form or another.
  18. Finance.  Stocks, bonds, pork-bellies, futures, puts, calls, mutual funds, checkable deposits, insurance, hedges, securitized debt.
  19. Management/leadership.  Strategic planning.  Product innovation. Growth/margin. Core competencies.  Discipline of Market Leaders.  First or second. Operational excellence.  Situational leadership.  Theory X, Y, Z.  Motivators and de-motivators.  Covey’s 7 habits, urgent and important.  Meyers-Briggs, personality styles and Gallup talents.  Change management.  Engaged/disengaged.  Creativity and thinking hats.  Accountability/Oz Principle.  Good to Great, Both/And. 

 

Knowledge will continue to increase in every discipline.  Market pressures will ensure rapid adoption, expansion and innovation.  The work world in 2010 could not be seen in 1980.  The work world in 2040 will exhibit the same degree of discontinuous change from a much higher base.

Indiana School Finances

tomkapostasy1 Comment

Indiana state school funding will decline for the next 3 years.  The current 5% expense reduction is just the first step.   School districts need to take bold actions to reduce their underlying cost structures.  Other organizations are reducing costs by 10% and increasing labor productivity by 5-8%.  Innovative schools can achieve the same financial gains while improving the quality of education.  These 20 ideas may be infeasible, but they might help to generate some creative solutions.

  1. Rank order career & technical programs and eliminate the single least effective one.
  2. Replace some career and guidance counselors with web resources and volunteers from local civic group partners.
  3. Assign administrators to jointly teach 1 FTE of classes in a technical field.
  4. Employ technology for teaching and testing and eliminate 1 staff/department.
  5. Carefully define “special needs” education and obtain separate funding or sponsorship.
  6. Double the fees for extracurricular programs to cover all costs, including coaching supplements and subsidies for low-income students.
  7. Maximize the use of capital budgets and bond funding for capital maintenance expenses.  Refinance bonds and use savings for capital maintenance.
  8. Reduce employee benefits by one-half for the first 5 years of employment.
  9. Add an additional teaching period for tenured staff.
  10. Assign a mentee to tenured staff and provide incentives for retention/progress.
  11. Provide teachers with a financial incentive in years 3-6 to remain in place.
  12. Eliminate future degree/credit hours based compensation increases.
  13. Outsource transportation, IT, HR, marketing and financial services.
  14. Extend textbook lives by 2 years.
  15. Move to a used computer strategy, recycling the 3-year-old units from local businesses.
  16. Consolidate library/AV staff and resources with community libraries.
  17. Reduce the cost of transportation by increasing the share of walkers, reducing the number of stops and limiting extra services.
  18. Move discipline problem students to countywide alternative programs after 3 strikes.
  19. Collect fees for AP and dual credit programs.
  20. Increase the use of teacher’s assistants when they can cost-effectively increase classroom sizes while providing quality education.

All changes have costs and benefits.  In a world of 10% less funding, schools that are able to identify the areas where the greatest cost reductions can be found with the least negative impact will be the ones that best serve their students, teachers and communities.  Schools should reach out to their communities for help in generating solutions to the coming crisis.

Good Riddance to Utopian Views of 2000

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Much of the anxiety being expressed in the political arena today stems from the discovery that the turn of the millennium consensus views of steady assured progress were exaggerated, or just plain wrong.  The events of the last decade have shown that simple, deterministic conclusions are usually wrong.  This is not the first time that western society has had its “progressive” bubble burst.  Even the recent triple play natural disasters (hurricane, tsunami and earthquake) have a parallel in the Lisbon earthquake of 1755, which lead Voltaire to attack the belief that man was living in “the best of all possible worlds”.

In 2000, we thought that representative government would prevail as an increasing number of countries became functional democracies and established democratic traditions.  Cuba was the special exception.  Even China was seen as a potential convert.  Progress was being made in Eastern Europe, Asia, Africa and Latin America.   We now see that China’s leaders intend to maintain power, that progress in Russia and Eastern Europe is fragile and that a new Bolivarian revolution justifies dictatorships.

In 2000, the division of state and religious spheres was clear and settled in Europe, allowing a variety of religions to work within a set of rules.  The Pope spoke out for radical changes to society, but had limited impact.  Some progress in conflict areas lead to hope for progress, as nations from Turkey to Indonesia to Ireland found solutions.  The “consensus” was an illusion.  Islam, Christianity and other religions are not content to work within the context a secular humanist state.  We now see that “true believers” do not fit within the tidy scheme.

In 2000, a decade after the fall of the “iron curtain”, the U.S. stood tall as the only superpower, even after cashing in the peace dividend.  The US, Europe and the UN began to make significant progress in handling the remaining “trouble spots”, in areas that seemed unfamiliar and insignificant.  We now see that Brazil, Russia, India and China would like to join the US, Europe and Japan in a multi-polar world.  The shifting alliances of earlier centuries are the model of our future.

In 2000, after dodging the ironic Y2K threat, the world saw an unlimited future of technological progress.  The older physics, chemistry and energy based economy continued to grow at a healthy pace.  Agricultural and biological innovations promised to feed the world and heal the sick.  Information technology continued to evolve through the internet, telecommunications and knowledge management.  Even the environment was improving, as 30 years of focus on clean air, clean water and eliminating toxic waste had a cumulative positive impact.  We’re still making progress, but concerns about energy and water shortages, Frankenfoods, genetic manipulation and climate change become greater with time, as no simple “solutions” have appeared.

In 2000, international economic progress was in full-stride.  Individual, regional and global trade agreements increased trade and cross-country investment.  International financial crises were managed and outlier countries were guided through an agreed upon recovery plan.  European economic integration continued to deliver benefits with each new step.  Today, we struggle to find common ground for major trade deals.  A variety of crisis recovery models seem valid.  Further European economic integration is possible, but the benefits are not so certain.  International sensitivity to trade, labor, environmental, property rights and investment differences is growing.

In 2000, a mixed capitalist economic model dominated.  There were two flavors, traditional European and Atlantic, but these were differences in style and degree, not in fundamental substance.  Success stories in all areas of the world indicated that this model could and would be replicated.  Today, there are several varieties of state capitalism (Russia, China, France, Japan, and Venezuela) that offer alternatives.

Finally, in 2000, there was a widespread belief that we had moved into a new economic model where the rough edges of capitalism had been tamed.  The business cycle could be managed through independent monetary policy (and a touch of fiscal policy).  Productivity, inflation and unemployment goals could all be attained.  Financial guidelines like price-earnings ratios had been superseded by a “new economy”.  And, risk and volatility had been tamed through portfolio theory, hedging and new financial instruments.

The world is not in worse condition today than it was a decade ago.  Only by moving past the unrealistically utopian views of the turn of the century can we make progress in addressing the challenges we face.