Accept and Expect Failure

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Mark Tuminello success and failureIn a recent article on Bloomberg View, Peter Orszag analyzed the value of failure, and makes the point that a fear of failure could actually be a detriment to the economy.  He cites two books that highlight failures that have resulted in great success.  ”Brilliant Blunders: From Darwin to Einstein — Collossal Mistakes by Great Scientists That Changed Our Understanding of Life and the Universe” by Mario Livio is about theories by great scientists that turned out to be wrong, and the progress we made because of the failure.  These aren’t examples of pure strings of success, but rather a series of risky chance-taking.

For evidence of a fear of failure in the United States, we can look at the rate of nonfatal fall injuries among children under 14, which have declined over 10% over the past 15 or so years.  Are we trying to safety-proof life?  Are we learning to risk less?  Could that translate to fewer risks at the corporate level, with companies less likely to risk the loss of jobs, for instance?  We know that risk in the financial sector can have disastrous effects.

In Megan McArdle’s “The Upside of Down: Why Failing Well is the Key to Success, failure is depicted as an essential, inescapable part of what it means to be human.  If we start to believe that success means ‘no failures,’ we may prevent ourselves from meaningful successes and progress.  Her calling for the reinstatement of high monkey bars to allow kids to learn that there is sometimes a price for trying to achieve great heights – a broken bone.  This could seem a little heartless, subjecting our children to injury – but removing risk could actually hurt them more than a broken bone.

This could be playing a part in the lack of dynamism in the US economy.  We see fewer Americans moving across state borders.  The rates of job destruction is falling, as is job creation.  These numbers, most likely, mean that growth is going to be slower.  We can even see this with policy makers at the federal level, where the new tendency is to avoid risk as a rule.  Taking a major political risk is something rarely seen in Washington because of the lack of bipartisanship.  We have come to believe that true legislation, or in other words progress and growth, can only happen when one party controls the house, Senate, and the White House (the last major legislation to pass was the Affordable Care Act when Democrats were in control of all of these).

Winston Churchill once pointed out that both success and failure is never final.  Orszag builds on that by remarking that they’re not only never final, but also both essential.  We must therefore learn to expect and accept it.

from Mark Tuminello

Russia’s Economy

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Mark Tuminello Russian moneyI read an interesting article on the Project Syndicate website about Russia in light of the current Winter Olympic Games in Sochi.  It turns out the country is on solid economic footing.

There is a prevalent belief in the United States that Russia, after the collapse of the Soviet Union in the 90′s, is in economic despair.  Certainly Russia is a world behind China’s booming and growing economy.  This is incorrect.  Russians currently enjoy a per capita income average of nearly $20,000 per year.  China’s is $10,000.  Extreme poverty?  Close to zero percent.  In China?  Extreme poverty is over 10%.

For some, this may be startling information.  How did Russia get ahead of China so quietly?  With high oil prices and excellent top-level economic policies.  Changes began in the early 90′s, as the government was fighting high inflation and shortages leftover from Soviet days.  In order to become a market economy, they stabilized their macroeconomic policies and reached out for financial assistance from the west.  Many countries wanted Russia to remain weak, and so money was not forthcoming.  It could be here that our misunderstanding begins.  Russia was working to improve their economy, and in turning them away, they were conceptually frozen in time as a struggling loser.

But as the years went on, Russia bounced back from those hard times.  Amidst extreme government corruption, a market economy managed to emerge.  Economic growth soon hit 4% average annual rate, which was nearly a miracle for the country.  Now inflation is at a recent low of 7% and unemployment just a little over 5%.  Their deficit is less than half a percent of their gross domestic product.  All of a sudden, we are seeing a country that actually seems to be in good shape, particularly at a time when so many countries are dealing with much worse than usual numbers.

The country is not resting on these laurels, though.  Oil and gas are expected to continue providing a serious engine for growth in the region, particularly as they are next door to the new consumer market in China.  Down the road, Russians are looking to develop global tech business, hoping this will be a second mighty engine to propel them into the the next centuries.  Under Soviet rule, Russia was a hotbed of industrial technology.  Because of global politics, this industry was pretty much completely cut off from the rest of the world markets.  Russia still has the potential to be a major global player in these industries.  Once they sort out a way to encourage private domestic investment and open their doors a little more to foreign investors, requiring an overhaul of sorts in the political environment, the road may be shorter than some would expect.

from Mark Tuminello

The Economist

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Mark Tuminello the economistOne of my favorite publications is The Economist.  It’s been around for so long, it feels like a player itself in the world of international economics.  I have been reading about the magazine a little, and wanted to share some of what I found.

The Economist is a UK based weekly media source, starting as a weekly newspaper with a global scope in 1843.  The printed magazine edition still exists, with a weekly circulation of 1.5 million, though many more access the news and editorial content through it’s significant web presence, like online articles, their YouTube channel, and several podcasts, among other outlets.  About half of it’s printed readership is in the United States.

A little look at the steady long-term growth of their printed circulation…

  • 1877 – 3,700
  • 1920 – 6,000
  • 1960 – 30,000
  • 1970 – 100,000
  • 2000 – 1,000,000
  • 2012 – 1,500,000

This is good growth, but in the world of magazines, it’s a very small fraction of the market.  In the 1990′s, they addressed this in their slogan ‘not read by millions of people.’  Back when the publication began, this was roughly the meaning of economism.  While the magazine has larger editorial stances, more diverse views are expressed by the individual contributors.  The staff of 75 journalists are mostly based in London, where they cover a range of world issues.  Who reads The Economist?  Two thirds of its readership earn more than $100k/year.  They explicitly target educated, influential, policy-making readers.

Over the years, the Economist has endorsed major candidates from both sides of the UK political landscape.  Most recently, the Labour Party was endorsed in 2005, and the Conservative Party in 2010 in general elections.  They have endorsed Republicans and Democrats similarly in the United States.  Some would also find conflict in it’s support of the US wars in Vietnam, Iraq, and Afghanistan, while at the same time opposing capital punishment and backing appeals for gun control.  The Economist is also notable for its accusations of dishonesty.  Some of the figures recently singled out include Silvio Berlusconi, Robert Mugabe, Bill Clinton, Donald Rumsfeld, Paul Wolfowitz, and Cristina Fernández de Kirchner.

All of these editorial stances are delivered in a rather dry way.  There is a distinct tone that has remained uniform over the decades.  Authors are not credited officially for the articles – they are simply individual articles of the publication itself.  Also notable is the way the authors presume the reader already have a decent working knowledge of economics.  No great lengths are taken to explain concepts, introduce major players, or give background for topics that are discussed.  If you don’t know what a demand curve is, or you don’t fully understand comparative advantage, a little research might be necessary to fully understand all articles.


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Book Recommendation – Steve Jobs

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Mark Tuminello book reviewI’ve been a fan of Walter Isaacson for number of years.  His biographies of Benjamin Franklin and Henry Kissinger are outstanding pieces of literature.  Even though I have his book Albert Einstein on my to-read shelf, I decided to move ahead with his most recent book, Steve Jobs.  I’d read amazing reviews and even gotten a few personal recommendations from people who know me well.

One of Isaacson’s strengths is choosing exciting material, and the life of Steve Jobs is no different.  Getting an inside look into the birth of one of the most successful companies in history, through every challenge and setback, was a thrill.  I’m not a tech nerd or anything like that, but following his life alongside the launches of iTunes, iPods, and Pixar made it very easy to track the narrative.  The many celebrity cameos in his life were also fun, including outstanding recounts of conversations between Jobs and Bill Clinton, Rupert Murdoch, Bob Dylan, and Bill Gates.

Isaacson spent years working with Jobs on the book, and that’s something that really makes the book stand out in Isaacson’s catalogue.  By the end, he himself is almost a character.  How else could he describe extended conversations between Jobs and himself during his final days?  And a few pages are dedicated to Jobs’ particular wishes for the book, and later we learn how those wishes change.  While unique for Isaacson, it is this personal experience that made this book so tremendous.  He is able to compare facts and events as Jobs remembers, and then get opposing perspectives from former coworkers and family.

The story of Steve Jobs has been told many times, and I was loosely familiar with his professional life.  What was a shock were the events leading to his death.  Instead of seeking modern treatment, of which he would have been afforded the finest we have to offer, Jobs sought homeopathic and new age treatments.  I don’t have firm opinions, ultimately, on these kinds of treatments, but I know that there’s no sense in taking a chance with cancer.  Learning from a doctor that he felt Jobs could have been saved with appropriate and timely treatment comes like a punch to the gut.

I recommend this book for anyone interested in biographies.  The theme legacy is prominent, and I’m happy to have read it as we wait to see what the legacy of Steve Jobs will become.

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