Sunday, November 4, 2012
The New York Times' November 4th Business Section includes an article by economist Clayton Cristensen (http://www.nytimes.com/2012/11/04/business/a-capitalists-dilemma-whoever-becomes-president.html?ref=business) which addresses the topic of innovation as capital generator. After reading the article, summarizing it and stating your views in the blog, be ready to discuss the author's views and yours in class for extra credit.
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BasicallyI feel that the aurthor is rying to get us to understand the leadership role the new president is going to haveto undergo to get the economy back on track. At this moment everyone wants to know if the economy doesnt change who will step up and take over?
ReplyDeleteThis article is talking about different innovations that the economy is facings and the moment that the presidnt will have to ake the change. The three main point were CREATING MORE JOBS, SUSTAINING AND, EFFICIENCY.
The author wrote this article to introduce three different innovations that will in his opinion fix things in the United States that the president and the Federal Reserve can not fix. He calls this "nexus" the Doctrine of New Finance which is taught religiously by economist. The doctrine if followed by Americans can create real economic growth. Executives and investors might finance three type of innovations with their money. Empowering Innovations which transform complicated and expensive products into affordable and easy ones. Sustaining innovations which replace old models with new models, for example replacing a Camry with a Toyota Prius. Lastly, efficiency innovations which reduces the cost of making and distributing existing products and services.
ReplyDeleteMy classmates summed up the problems with the economy quite well. This article written by a Harvard Business professor, Clayton M. Christensen, who says our leaders are focusing on the wrong thing. Instead of pouring capital into a sea of capital which is making the problem worse, we should change our focus on education. For instance, our leaders are spending billions on Pell Grants and subsidized loans to students who graduate with skills and majors that employers cannot use. First, we should change the metrics, use capital with abandon now, its abundant and cheap. Optimizing return on capital will generate less growth than optimizing return on education. Second we should change capital gains tax rates and make it regressive overtime e.g. taxes on investments should be reduce the longer its held. Near term impact on the budget will be minimal, but over a long time this policy change should have a positive impact on the federal deficit, from taxes paid by companies and their employees that make empowering innovations. He further suggest, instead of taxing the wealthy give them an incentive to invest for the long term, this can really create growth. He has a very valid point one our leader can take into account and make some changes.
ReplyDeleteI found tho article pretty interesting. I liked the way how this article could opened my eyes to a different point of view; it is true that the better way to retake the upgrowing economy is making the money moving constantly, but also it is important how to do it and knowing where the input will be aimed. As i understand is also truth that the capital mut be invested on innovations so the market can get mroe expasions taking advantage from the private sector using technogy and services as tool, or even as a weapon , which are bascally how the market is moving around currently. Excecutives' most popular idea when a company need a change, is to re-structure the system of the company making the expansion and diversify they work, which statement is mentioned on the article about re-directing the way how investment are made.
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