MY REMARKABLE SISTER LUCY IN AUSTRALIA (she normally lives in London)
The photo was taken by our sister, Hermione, and I really like it. Hard to believe that Lucy has five exceptionally good-looking children—most of them grown up. Hermione, by the way, actually lives in Australia and Lucy was visiting.
We siblings are decidedly scattered. I live in Seattle, Washington in the U.S., and sister Leslie lives in France.
Lucy is the youngest, but the real head of the family.
ECONOMIC MOJO: There is an interesting article in Time about Nobel economist Edward Phelp’s new book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change. How is that for a short and snappy title!
Phelps is trying to figure out why our current rate of economic growth is so anemic. Well, I have my own ideas in this regard—and have strong reservations about using GDP as an adequate measurement of our economic wellbeing—but a couple of paragraphs, in particular, caught my eye. They are deeply troubling.
Another troubling development, in Phelps’ view, is the culture of short-termism that has enveloped both corporate America and Wall Street. America’s most significant firms are run not by entrepreneurs but by professional managers who are incentivized to think about quarterly profits rather than long-term growth. Indeed the average tenure of a Fortune 500 executive is just 4.6 years, hardly enough time to lead a company towards visionary innovation. And as the financial sector becomes more and more concentrated, these firms are being funded by a small number of massive funds that are concerned about short term profits while having little intimate knowledge of the businesses to which they allocate capital.
And finally Phelps argues that the American populace itself has lost its appetite for innovation. New businesses are being started at a slower rate than they have been in more than 30 years, and fewer Americans work at small companies. Phelps cites studies which show that while Americans haven’t lost their appreciation for entrepreneurial values, they increasingly value the safety and stability of a job at a large company and more robust government benefits.