Sunday, August 28, 2016

I've Moved!

I've moved! I'm now writing at

Friday, August 19, 2016

Focusing On Our Economic Breath

I've noticed that I get far fewer blog hits and retweets on posts about monetary policy. I don't take that personally at all. Much of the purpose of this blog is to figure stuff out for myself, and writing helps that process. But it's an interesting observation all the same, and I have a few theories why it might be true:

1) I'm a better writer on investing.
2) The self-selecting group that reads my blog is generally less interested in monetary policy.
3) I mostly focus on US monetary policy. Perhaps European and Asian readers are still as engaged.
4) There's monetary policy fatigue. After 8 years of headline-grabbing central bank actions, people are finally getting bored of hearing about policy changes. It's way more entertaining to read about outrageous things Donald Trump has said than to scrutinize cautious central bankers.
5) People are less interested in reading about monetary policy today because they believe it's a less important driver of economic and financial outcomes.

The reality is probably a mixture of these five possibilities. If theories (4) and (5) are true, other bloggers who focus primarily on monetary policy may also be seeing similar trends. You might think that would be reassuring, because it wouldn't be about my failings as a writer; it would merely be an exogenous change in demand for commentary on monetary policy. But you'd be wrong. I'd be incredibly worried if those two were the major factors. Every time someone comments that monetary policy has lost its power to affect macro or financial conditions, I get nervous. It's precisely when monetary policy is working well that we fail to notice it. Complacency is natural as labour markets heal and US financial markets march steadily higher. But it is incredibly dangerous for investors and policy-makers to forget the role that money plays. 

If you've spent any time with mindfulness or meditation practices, you'll know that a common starting point is to focus on the breath. It's actually pretty remarkable to realize how little attention we pay to the mechanism that keeps us alive. Similarly, appropriate monetary policy is the oft-neglected factor that allows policy-makers and investors to focus on structural, rather than cyclical, change. But there's one huge problem with this analogy: when we have trouble breathing, we know immediately that we're short of breath. But when monetary factors are out of equilibrium, we see the effects but aren't always quite as adept at diagnosing the cause. Economic mindfulness requires focusing on money, our economic breath. I'm hoping that the events of the past 8 years have created new economic pulmonologists - but sometimes, I'm just not sure.

Monday, August 1, 2016

Cultural Appropriation (In Business) Is Great!

2015 was a challenging year for US universities. University administrators across the country were forced to grapple with accusations of insensitivity or even outright racism. In the public discourse that followed, I learned the phrase "cultural appropriation". According to Wikipedia, "Cultural appropriation is the adoption or use of elements of one culture by members of another culture." As I understand it, it's generally used to imply a majority culture adopting elements of a minority culture. 

Much of the commentary I saw last year was critical of cultural appropriation. Challenging prevailing sentiment, Noah Smith wrote a great blog post, simply titled "Cultural Appropriation Is Great!" (As a fan of appropriation, he surely won't mind that I latched on to his title for this post.) In it, he lists six reasons why cultural appropriation is a good thing. Commenter Harriet argued that Noah was missing the difference between cultural exchange and cultural appropriation. If there is a difference between the two, it's pretty slim. Unlike trade in goods and services, there is no explicit exchange in culture. No-one ever says, "Here, you take this bit of my culture, and I'll take that bit of yours." I think we can all agree that it's important for members of one racial/religious/ethnic group to be careful not to mock other cultures, or abuse sacred cultural artifacts. (For more on navigating this path, check out The Atlantic's Jenni Avins.) But the reality is that cultural exchange is a fluid process, and is generally a force for good. One of the best lectures I heard this year was Harvard evolutionary biologist Joseph Henrich explaining how constant cultural evolution is the basis of our collective intelligence, which in turn drives our species' evolution. If you agree with Henrich, demonizing cultural appropriation seems misguided.

It struck me recently how much cultural appropriation has benefited the business world. I just finished "Conscious Capitalism," written by Whole Foods Market co-founder John Mackey and Babson College professor Raj Sisodia. Whole Foods is a pretty remarkable story, given that Mackey co-founded it with zero business experience at the age of 22. One of the central tenets of Conscious Capitalism is to encourage a stakeholder orientation. Rather than only paying attention to investors, or even to customers, a stakeholder orientation seeks to find mutually beneficial outcomes for employees, suppliers and many other parties. Whole Foods has gone so far as to create a "Declaration of Interdependence" codifying this philosophy. It all sounds a little hokey and idealistic until you realize how much this sounds like Japanese businesses. Western analysts often find it hard to wrap their heads around Japanese companies' insistence on a stakeholder mentality. But clearly, Whole Foods has successfully adopted this philosophy. 

Ok, you might say. It worked for Whole Foods but that's just one company, and John Mackey is a self-professed student of Eastern philosophy and religion. Can mainstream Western businesses be trusted with cultural appropriation? Absolutely! Sam Walton may have called his autobiography "Made In America", but in it, he details how much he learned about building corporate culture from visiting companies in Korea and Japan (including the famous Wal-Mart company cheer). More recently, appropriated Toyota's "andon cord" philosophy, in which any worker on the line could stop a process that was deemed unsafe or unsatisfactory from a quality standpoint. There's a reason Wal-Mart and Amazon have been so successful: their founders are serial appropriators, relentlessly seeking out other company practices and absorbing them. But don't forget that this process happens constantly in both directions. After all, much of Japan's manufacturing success has been attributed to productivity improvements pioneered by American statistician W. Edwards Deming. 

So, my view is pretty simple. There are times when people are insensitive towards other cultures, and we shouldn't hesitate to educate those who don't understand or don't seem to care what they're doing. But cultural appropriation is a complex, unstoppable process that we should generally welcome. And who better to have the last word on this than a Hong Kong martial arts star (born in San Francisco) credited with changing the way Asians are portrayed in Hollywood? As Bruce Lee said, "Absorb what is useful, discard what is useless and add what is specifically your own." That, in a nutshell, is the best form of cultural appropriation.