The “Invisible Hand” Slaps China

China is growing at a rapid pace but that growth comes with a few growing pains. The Shanghai Composite has been hit an 8.5% loss and this has caused economists to scratch their heads and wonder why.  The government stimulus package doesn’t appear to be working and this should lead American policy makers to consider their own approaches.

China has some things that have led to its economic increase but it has more things starting to work against it. Cheap labor and growing infrastructure were helped the country spring forward in its growth. They were growing so fast that they even hoped their own currency would become an international standard.

Unfortunately, the tide has turned in many cases. Manufacturing in many countries has reached parity with Chinese manufacturing based in capital investments and technological improvements. It is possible to produce products of same or higher quality in other countries.

There are also trade wars and tariffs that artificially protect Chinese businesses from competition. The tight government control that lack adequate intellectual property right protections and barriers to entry are causing difficulties in gather new innovations, technologies, and intellectual.

The artificial propping of the economy means that the stock market increased in the short-term to take advantage of the massive government influx. This influx has run its course and appears to be poised for major market corrections that put stocks back to their natural value.

China will have a difficult next few years cleaning out their economy and making a solid decision to enter the free market or maintain the heavy controls of the past. Each course will have its own consequences. For now the nation has decided to jump in and manage the market correction.

Despite their best efforts China’s success is based in its ability to engage the world market and engage in meaningful reform that leads to greater prosperity for its people. This cannot be bought with government funds and becomes increasingly difficult as the fundamentals of the economy shift. Greater openness and individual pursuit of wealth can turn the slap of the invisible hand to a helping one.

Learning New Knowledge-Military and Higher Education

Full knowledge development is a slow process that helps integrate and use information to solve practical problems. We learn from our environments, others, and formally through education. The process of learning takes time as we digest the information and then seek to create practical use for that knowledge.  All education, whether military or industry oriented, should be focused on eventual practical application.

From the beginning of time people have learned through their natural settings to ensure survive. As society’s complexity increases it also becomes necessary to formalize that education. Knowledge has turned to higher levels of abstraction and without internal motivation to learn much of the information is lost forever.

Successful learning moves from focusing on knowledge acquisition to application (Vogel-Walcutt, J., et. al. , 2010). Information is drawn through the senses, defined, pondered, and applied for benefit. If information is not used in some capacity its acquisition is earned at a questionable cost.  

Intelligence is the ability to gain new knowledge and skills and use that knowledge to solve practical problems. At times this may be in abstract through the use of theory but it may also be as simple as learning how to use a hammer and nails. Intelligent people work as professors, auto mechanics or anything else.

In the military the time frame for learning must be truncated to fit within a short period. Sometimes this could be a single class or as long as a few weeks. The military must teach, integrate, and then use that knowledge for benefit. The longer it takes someone to learn the less they can capitalize on such knowledge.

Higher education teaches more abstract skills that take much longer to learn. They are less focused and require a broader understanding of an industry and the world. Despite the time-frame it is still necessary to have an “end game” with that knowledge where the person can complete in life.

Learning is an essential part of being human. Those who develop to the highest states are life-long learners who thrive off of their natural intelligence. Their nature continues to seek new information and use that information to solve important problems. As the world becomes more complex both the military and higher education will need to find ways to transfer information cheaper and more efficiently than the past in ways that covert raw knowledge to practical problem-solving.  

Vogel-Walcutt, J., et. al. (2010). Increasing efficiency in military learning: theoretical considerations and practical applications. Military Psychology, 22 (3).

Taking Time to Be Human-Connecting with Nature

We get busy in our lives working, taking care of family, playing sports, paying bills, cooking, running errands and just about everything else that is going on. We become engrained in the flow of bouncing from project to project throughout the day. So much so that by the time evening has arrived we can look back and see how short the day really was. Taking a few moments out to sit back and connect with nature and yourself celebrates what is best about human nature puts it all in perspective. 

We are often unable to develop a brighter and more profound understanding of the world because our lives are immersed like fish in a fish bowl. We don’t regularly step outside of our lives and ensure that it has meaning and value to both us and others. Stepping outside of our daily activities requires some time alone thinking about how we fit within our world and the legacy we would like to leave behind. 

Our animal side was born very connected to nature and the real life issues of fulfilling our basic needs. Ever since the beginning of mankind people lived and struggled with nature but are still an inherent part of that nature. Parks and common areas have become a small refuge in cement jungles so we box up our environment in pots and pictures that we conveniently display in our offices and homes.

  We often make decisions in life and work based upon short-term goals and objectives. Connecting with nature and our core values helps us put these decisions into a long-term perspective that fosters better day-to-day decision making. When in tune with life it is possible to understand how we hold responsibilities to ourselves, others, and the greater good of society
 
Sitting in nature also allows us to gain a better perspective beyond our daily commotions and think about what is really important to us. We may have built houses, cities, and cars but we are still only a few steps above our natural surroundings. Within a couple of minutes of being in the outdoors we connect better with ourselves, reduce stress, and put our lives in a greater context. If you are seeking to take some “time out” just go into nature and relax for a little while before getting back to work.

Maintaining a Nation's Economic Superiority

Economic development is an important topic of discussion for academics, business leaders and government staff. Without a strong economy the country becomes subject to the powerful economic forces of other nations. Maintaining America’s dominance in economic influence is every bit as important as having a strong military. Proper labor and capital management can lead to higher levels of national productivity.

Productivity is a process of creating output with value that adds to the economic strength of the nation. Because we exist within a global world that economic return is generated by selling products increasingly overseas. A nation can focus on the amount or value of products in order to generate wealth back to their home countries that leads to more jobs and the raising of standards of living.

There are a number of ways an economic system can produce more value and create higher levels of national relevancy in the world. According to John Kenneth Gabraith in his book The Affluent Society (1958) the output of the economic system can be improved in five different ways:

1. More engagement of productive resources such as labor and capital (including materials) by eliminating idleness.

2.  Labor and capital can be combined in a way that can better meet consumer tastes in products and services.

3. The supply of labor can be increased.

4. The supply of capital can be increased.

5. Technological innovation can be better used to improve labor and capital.

National systems should seek to enhance their economic engines through fostering international investments in local companies that lead to better use of resources, capital, and labor in a way that enhance the value of regional outputs. Capitalizing on core competencies through education and technology puts resources to better use to generate higher levels of income, jobs and government revenue.

Galbrath, J. (1958). The Affluent Society. NY, ON: A Mentor Book

Do You Manage the Metrics or Does the Metrics Manage You?

Metrics are an important method of understanding what is happening in your business at any particular time. It provides a feedback loop that helps executives make decisions about business strategy. Even though metrics are important, it is equally important to understand that metrics don’t tell the whole story as one can become derailed by over-reliance on metrics.

You need to know how many products are being made, rejection rate, overtime, staffing numbers, sales volume, stock value, time spent on activities, and customer perception. These metrics, in addition to the thousands of others, help describe how a business is functioning. It is possible to run some metrics by the day, month, quarter, year, or decade to get a better grasp of what is going on.

Metrics can also influence employee performance in positive ways by letting employees know that their contributions count. It provides a level of feedback and expectation building that is used for evaluating employee performance. The numbers help motivate and define the nature of work.

The downside is that numbers take on more importance than the actual work and organizational output. This occurs when metrics take on a life of their own and become the focus of employees who want to seek praise and rewards without actually servicing the needs of the company. The focus switches from the customer to the numbers.

The consequences of switching from real life customers or outputs to numbers are that the numbers become the main focus of operations. It is possible to meet all of the numbers but still be turning away customers or turning out an inferior product.  If your business is not measuring properly then the numbers become a type of smoke and mirrors to what is actually happening.

Metrics should be used to create a full picture but also should not supplant common sense in managing entire process. If the numbers take on a life of their own organizational targets may not be hit even though the metrics are giving positive results. Adjusting and changing the metrics from time-to-time can ensure people don’t only focus on the numbers.