LyrArc Article Gist
What is the educational system Toyota is relying on as it faces a huge problem stemming from its high growth rate of new employees overseas who have little knowledge of the Toyota Way and the Toyota Production System. Another part of the same problemis that as it ages many of the last generation of Toyota executives who were there from the inception of Toyota's early days in the USA and the early days of the extraordinary growth in the 80's and 90's will now be retiring or in their seventies and eighties. All this is happening as the American Big Three and the German manufacturers are getting new blood and going through a process of renewal, and the Americans especially are seeing themselves as the underdogs coming from behind. So Toyota's concerns can be seen in a new light, any complacency on its part is going to be costly in the long run. Toyota is using the Toyoa Institute in rural Mikkabi, Japan for training its senior executives like Randy Pflughaupt, chief of US marketing for the Toyota brand. Watanabe, presidetn, Fujio Cho chairman, and Akio Toyoda of the Toyota family personally teach there and share their personal experiences. Toyota asks executives there to come up with a problem Toyota faces and come up with a proposed solution all on one 11 by 17 sheet of paper. Hands on on the ground on site fact finding and exploration are stressed. A management school Globis in Japan instructs Toyota's middle management inthe Toyota philosophy including quality control philosophy methods such as asking the 5 Why's, why a problem is ocurring until one reaches 5 or 6 levels of answers. Global centers in USA Europe and Asia have been opened by Toyota to train roving experts who can help increase the numbers of roving experts from todays 2000 mostly at this time from Japan. These roving experts teach older employees as well as coach younger ones. Then there are the Toyota Technical Training Institutes. The one in Bangalore for example offers an intensive program for new hires to teach Toyota's basic principles. The one in Bangalore has 21 teachers. And appicants selection is tight in India just 64 out of 5000. Before working on the assembly line the applicants will spend 2 years in classes in technical training, including discipline and personal grooming. Its interesting that the applicant mentioned here was from a village where his family and friends were especially proud of his Toyota uniform and training. The idea may be to avoid the problems of trade unionism, worker feeling of entitlement and worker rights which has led to the problems in the US and in India of workers not willing to learn new things being open to new ideas. One way would be to avoid entirely areas where there has been trade union influence, history and activity such as rural Kentucky or rural Karnataka. The student Harish Hanumantayappa is 17 years old and sees this as an opportunity that was not even in his imagination, which makes for a highly enthusiastic trainee, just the kind Toyota may be looking for away from India's trade union and worker indiscipline environments in some states and regions. Reflecting on this one can note that its natural for Toyota to respond in this fashion and it may extend the period in which the Toyota Production System and the Toyota Way functions effectively. But companies like HP also had what they called the HP Way but eventually this suffered a decline as new managers and leadership came into the picture. Only now is HP recovering and getting back its step under a manager who spent his training years at NCR not a training ground for managers, but may have been chosen for his good management instincts and performance and personal characteristics. Also many of the tenets such as asking 5 Why's and the Toyota Production System except for the Just In Time Innovation are basic quality control philsophy that is practiced all over Japanese industry and is practiced worldwide and originated in quality control philosophy in the United States in the 1920's and 1930's before declining and then coming back in the 1980's with Deming and Juran two American quality control advocates. So there is a pattern of decline as new managers forget old ideas and its not clear if Toyota can overcome this tendency completely, except to sustain the memory of what Toyota is and how they got here for as long as possible for a new generation of managers. And the risks to Toyota may also come from another direction to which Toyota may not pay as much attention which is the innovation that Americans are known for, and the innovative thinking mode is a bit different from the rigorous training of the total quality mode. ction ...

LyrArc Article Gist
In a program of gradual change the new leadership under premier Li Keqiang steers China's economy in the new direction set by the DRC Report: China 2030 and the Third Plenum in Nov. 2013. New priorities listed under major Tasks in the annual work report by Li Keqiang place setting up deposit insurance at the top of the list. Policy changes include allowing cities to issue bonds directly to increase transparency in construction spending and control burgeoning debt.

LyrArc Article Gist
NYT exhortation for Congress to resist the lobbying pressures of the banks to weaken regulation for a Consumer Protection Agency and derivatives trading on exchanges. The first by amending legislation for a Consumer Protection Agency so that no states can pass tougher consumer protection laws, something that prevented states from protecting consumers from abuses in the mortgage business. The second to propose legislation for derivatives trading that allows corporations and hedge funds to trade derivatives privately. NYT editorial says Congress should require all derivatives dealers and users -banks, hedge funds and corporations- conduct their trades on exchanges where they are reglulations and public scrutiny. NYT responds to the banks and corporations that say this would raise their transaction costs to hedge any given risk, by saying that this is debatable. Greater transparency should reduce costs but even if there were some higher costs it would be outweighed by the larger benefits to the banks themselves and the country through the lower systemwide risks. ...

LyrArc Article Gist
Pope Francis is strongly critical of the manner in which the capitalist system has functioned in recent decades, increasing inequality, and hurting the marginalized, the working class and poor. Pope Francis tells people during his visit to the poorest countries in Latin America, Ecuador, Bolivia and Paraguay, that the Catholic Church committed grave errors during the period of Spanish colonialism by allying with the ruling classes and creating great inequalities and suffering. The director of the Institute for Policy Research and Catholic studies at Catholic University of America, Stephen Schneck, says the Pope is reflecting a century of activism on social issues since the Pope Leo XIII encyclical in 1891, calling for social and economic fairness for labor, with the encyclical "Rerum Novarum" - or "On the Condition of Labor." The Pope's message in Santa Cruz, Bolivia, to nearly 2000 social activists, farmers and trash workers, neighborhood activists, was that change has to come from grassroots, that the local communities have acquired the knowledge which is valuable to act for economic and environmental betterment. He praised cooperatives and local organizations that enhanced the value of labor. His message resonates say Catholics because he has stayed in close contact with local communities, and the poor, working class people in Argentina. It is focussed on empowerment of local communities. In Bolivia the left government has adopted measures that attract foreign capital and investment, so that it is a model that stays away from socialist ideology, while at the same time embracing the grassroots idea of empowering local people and communties. In this way it has improved living standards in Bolivia and received favorable ratings in capital markets....

LyrArc Article Gist
Sheila Bair releases her new book in Sept 2012 on the financial crisis of 2008-2009 and the efforts to introduce financial reforms for a safer financial system: "Bull By the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself." She is particularly critical of U.S. Treasury Secretary, and former head of the New York Federal Reserve, Timothy Geithner, as protecting the interests of Citigroup and Wall Street in his position as Treasury Secretary of the U.S. government. She describes in detail the situations in which Geithner tried to water down essential reforms to the financial system to make it safer, including the Volcker Rule. Of particular concern is the revolving door by which banking regulators or government officials join banks after service in the government which leads to weakening of regulatory and government oversight and systemic risks as in 2008-2009. Sheila Bair is widely respected for her efforts during the financial crisis from 2008 to 2011, when she headed the Federal Deposit Insurance Corporation, the FDIC. Her active involvement in defending reforms and setting up the system by which financially failing banks could be taken over and unwound without risks to the U.S. financial system are lasting contributions. She also succeeded as a manager by setting up an experienced and effective successor in Martin Gruenberg as head of the FDIC, to continue this work. A former Congresswoman, she describes herself as a Republican populist from Kansas. Her current role is as senior advisor to the Pew Charitable Trusts, which itself is a rare phenomenon today for a senior government official leaving government....

LyrArc Article Gist
Ghannouchi of Tunisia's Ennahada Party puts forward ideas for a pathway that Islamists could follow to integrate into the political life of Middle Eastern countries- compromise, working together with non-Islamist parties for the common good, focussing on economic development, pursuing moderate Islamist ideas, bringing in those excluded from the political process thorough a new inclusiveness, and respecting the opposition. He sees the successful election in Tunisia in which Ennahada worked with the opposition parties to ensure a smooth transition, as a model for other countries and the Arab neighborhood. In 2014 another process of smooth transition after elections, and respect for the opposition, happened in Indonesia with the election of Jakarta governor Widodo to be the new president. This set another model of respect for democracy, fair elections, respect for the opposition, focus on economic development and inclusiveness, for Muslim countries in another part of the world. Pakistan is another Muslim country which is working to create a model in the presence of much violence from Pakistan Taliban, and interventions by the military in politics. Assistance from the U.S. helped Iraq make the transition under the Bush administration till it unraveled with the policies of the Obama administration. Libya had the potential to make the transition with continued western cooperation and support- a change in administrations in the U.S. and France resulted in policies not supportive of a stable transition. The whole process now needs to be fostered carefully by western liberal democracies. Here Ennahada's Ghannouchi tells the world about the lessons learned by Islamist parties themselves for pathways to embrace for more inclusive societies focussed on economic development and progress....

LyrArc Article Gist
The IMF's changing views on the value of fiscal austerity. In the current debate about the value of fiscal austerity, there is the IMF view, a German view based on its own experience, and the views of other countries in Europe. The IMF's view has shifted over time. The IMF World Economic Outlook 2010, describes its view of the effects of austerity measures in the form of spending cuts and tax increases- "Fiscal consolidation typically has a contractionary effect on output. A fiscal consolidation equal to 1% of GDP typically reduces GDP by about 0.5% within 2 years and raises the unemployment rate by about 0.3% percentage points." Over the longer term there are benefits as the private sector is not crowded out in the search for captal funding by the excessive government borrowing. The IMF's economic models suggest that it would take 5 years before reaching the breakeven point when the benefits of austerity measures exceed the effects of austerity. The German view held by German central bankers is that the actions stimulate growth in the short term. Manfred Neumann, professor emeritus at the Institute for Economic Policy at the University of Bonn, says this is called the "German hypothesis" as it reflects the experience of Germany from austerity actions taken by Germany. Laurence Ball, professor of Economics at John Hopkins University, is critical of the "German hypothesis" and its application across Europe in different situations. Germany is a large exporting nation and exports helped counterbalance the effects of austerity measures. Within the eurozone with fixed exchange rates the exports of less competitive countries cannot be boosted through devaluing the currency to gain price competitiveness. The other problem is that with interest rates close to zero in the euro zone the central banks cannot cut rates aggressively to counteract the effects of spending cuts. The problem gets compounded when a number of countries are taking austerity measures at the same time accentuating the downturn....

LyrArc Article Gist
Prof. Gorton and Prof. Metrick of the Yale School of Management review 16 scholarly studies and papers on the causes of the 2008-2009 global financial crisis in the current isue of the Journal of Economic Literature. Another article in the same journal reviews 21 books on the subject. Samuelson says the most cited causes- lax regulation and passive regulators, and the policy of home ownership that encourage the packaging and of securitization of mortgages to government sponsored agencies Fannie Mae and Freddie Mac- are only the surface causes. If we are to explain how a whole society seemed to believe in the idea that somehow there was a way to maintain a rising tide continuously, with only small corrections over several decades, by the clever manipulation of monetary and fiscal policies; then one has to look to the hubris of economists who acted as if this was possible and the gullibility of business and a public that desperately wanted to believe as some have put it "that this time it was different," or that shrewd management of economic policy could actually bring about such a panacea. The abiding lesson is economic policies based on a better understanding of how modern industrial economies work are merely useful tools, no more no less, and there is no substitute for a good ethic, wise management and careful thinking on the part of the public, business and government, particularly for the people in leadership positions. ...

LyrArc Article Gist
Bernard Lewis's "The Arabs in History," is a short book which confirms Zakaria's point about the openness of Islamic societies before the 19th century, with some exceptions in certain periods. Most books or a quick look at Wikipedia shows us that the Renaissance in Europe in the 15th century got its boost from books by ancient Greek authors that were available in Arab societies long after they were forgotten in Europe. His point about Indonesia and India is also true to a large extent except for periods such as the one under Aurangzeb (17th c.). Muslim societies in British India (todays Pakistan and Bangladesh) experienced less social and educational reforms under the British than Hindu societies for various reasons leading to larger backwardness, illiteracy which breed extremist ideas. This is likely to change throughout North African Arab societies and South Asia in the next 50 years, especially with the modernization drive underway in India, which is likely to spread to other parts of the region. Islam as a missionary religion with force of arms spread in the 7th-9th century rapidly over Arab North Africa and parts of west Asia, and later to South Asia. Once established there were long periods of openness to ideas and books, and different cultures ( with the exception of preferences for Muslims), and a stress on commerce which inherently reduces religious vehemence, as the example of Britain shows. For this reason the current conditions in Islamic societies is more atypical than typical. A factor that has worsened it is that 19th c.-20th c. Islamic societies have put less emphasis on commerce and industry than historically seen in prosperous Islamic societies, on which more research is needed to understand why. Another factor is the impact of the interface with technologically and scientifically progressing Europe and America not becoming a learning experience for acquisition of this science and technology and making it one's own, a pattern seen in Buddhist societies of Japan in 19th c., South Korea in 20thc.,and China 21st c. Because Buddhism sprang from Hinduism or a response to Hindu ideas in India, India could be put alongside China for the 21st c. rapid assimilation of western science and technology making it one's own. When there is a violent collison between Japan and U.S. Admiral Dewey's ships, or China and British advances around 1900, the initial reaction of rejection is reversed with adoption of western technology and practices making it one's own. Similiar response in India. Islamic societies have had an extended period of rejection for reasons not fully understood even today. This is likely to generate the kind of internal debate about how to revert back to the usual mode of adoption in Islamic civilization, with the potential catalyst in India and other locations in the Middle East. The most respected German of the 19th century is Alexander Von Humboldt, a naturalist who advanced scientific knowledge, and a mentor to Charles Darwin in England, author of "Origin of the Species." Humboldt says- "There are no inferior races, we are all humans, and we are all destined to reach for and grasp liberty." That Humboldt spent most of his best years in Paris, France, which he compared to the provincialism in his native Berlin, goes to show how Humboldt, Darwin and Humboldt's friend Aime Bonpland of France, maintained close cooperation and friendship and anticipated the close cooperation in Europe since the second half of the 20th c., long before European politicians and governments grasped this. Commerce, science, travel, media and free exchange of ideas, are as favorable to progress as politics and ideology is inimical to it....

LyrArc Article Gist
After over two decades of focus on GDP growth targets, China under prime minister Li Keqiang is giving more emphasis to job growth and problems of air pollution, education, and quality of life indicators. Premier Keqiang tells a news conference in Beijing in March 2014 that China needs to create 10 million new jobs each year. More bond defaults can be expected as the financial system is being changed with new rules. Li says China will no longer be "preoccupied" with GDP growth targets. Li made the new priorities clear-"The GDP growth we want is one that brings real benefits to our people, helps raise the quality and efficiency of economic development and contributes to energy conservation and environmental protection."

LyrArc Article Gist
The Economist points out that China's total debt of government, corporate and households has grown by about 100% of GDP since 2008. The 2009 crisis led to rapid increase in debt. It is now about 250% of GDP, according to the Economist. Slower growth of below 7% risks reducing China's ability to service this debt. About half of this debt is owed by state owned companies and property developers. China can use its sovereign reserves to continue supporting bank and state owned companies. Investor's are pricing bank shares to reflect about 10% of this debt as bad debt even though government estimates are much lower. The reserves provided China time to fix the banking system since 2008, yet the debt keeps growing and China has failed to take strong action in the last 6 years. Complacency is a problem, and the incentives for local governments to continue prior practices that increase debt continue. As Krugman and other experts have pointed out at some point the rules of finance will apply to China as they have for other countries that faced a debt crisis- Japan in the late 1980's, South Korea and other Aisan countries in 1997, and the U.S. in 2008. Even without a crisis through deft managemen and use of reserves China risks zombifying the economy as old loans are backed up by new loans, with the further risk of misallocation of capital or poor use of capital. This lowers productivity of capital and hurts development. With poor statistics such as the figure of 1% of debt being bad debt cited here, the problems of complacency can be magnified, as there is less reason for a strong response....