Article 43

 

Monday, September 27, 2010

Social Security Again

GOP’s ‘Pledge to America’ Would End Up Privatizing Social Security

By John Nichols
The Nation
September 24, 2010

The House Republican ”PLEDGE TO AMERICA” would make permanent GEORGE BUSH’S tax cuts for the wealthiest Americans, at a cost of more than $3 trillion over the coming decade.

Yet, the GOP GAMEPLAN proposes to address the massive shortfall with a freeze on only some domestic programs that would save about $100 billion next year—“approximately 7.7 percent of the projected $1.3 trillion budget deficit,” according to the Baltimore Sun.

How will the rest of the massive budget deficits proposed in the GOP pledge be offset?

BURIED in the twenty-one-page documentis the real pledge: a discussion of “reviewing” Social Security and other entitement programs” and a commitment to a program “requiring a full accounting of Social Security.”

DC bureaucrat-speak, to be sure. But it is not hard to translate.

“What’s hidden in this pledge is the Republican pledge to privatize Social Security,” SAY CONGRESSWOMAN DEBBIE WASSERMAN SCHULTZ, of Florida.

Privatization of Social Security, a longtime GOP priority, was the first focus of former President Bush and the Republican Congressional majorities the last time they won an election cyclein 2004. And, with they scheme to lock in Bush’s tax cuts for the wealthy, the only way Republicans will avoid creating the largest deficits in American history is by ending the nation’s commitment to its seniors and to its most vulnerable citizens - by gutting Social Security and functional Medicare and Medicaid programs.

“They clearly support privatizing Social Security. They clearly support turning Medicare into a voucher program,” says Congresswoman Wasserman Schultz. noting that two key players in the House Republican Caucus - Wisconsin Congressman Paul Ryan and Virginia Congressman Eric Cantorחhave are busy championing such proposals. “Paul Ryan and Eric Cantor wrote a book about it and are in the middle of a book tour promoting that.”

Ryan and Cantor will have plenty of company if Republicans sweep this year’s mid-term elections. Some of the party’s leading contenders are explcit about their disdain for Social Security.

Appearing this week on an Alaska radio show, Republican Senate candidate Joe Miller, Sarah Palin’s personal favorite - referred to maintaining Social Security programs as federal initiative where “government is into something that it shouldn’t have gotten into.”

Miller is blunter than Republican leaders. But the “Pledge to America” makes the agenda clear enough. Either the pledge is an outline for massive new debts and deficits or it is a roadmap to the privatization of Social Secuity, Medicare and Medicaid.

To suggest otherwise would be to engage in what another George Bush once described as “voodoo economics.”

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Posted by Elvis on 09/27/10 •
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Sunday, September 12, 2010

It’s Not Just About Light Bulbs

Under the pressures of globalization, the number of manufacturing jobs in the United States has been shrinking for decades, from 19.5 million in 1979 to 11.6 million this year, a decline of 40 percent.

Light bulb factory closes; End of era for U.S. means more jobs overseas

By Peter Whoriskey
Washington Post
September 8, 2010

The last major GE factory making ordinary incandescent light bulbs in the United States is closing this month, marking a small, sad exit for a product and company that can trace their roots to Thomas Alva Edison’s innovations in the 1870s.

The remaining 200 workers at the plant here will lose their jobs.

“Now what’re we going to do?” said Toby Savolainen, 49, who like many others worked for decades at the factory, making bulbs now deemed wasteful.

During the recession, political and business leaders have held out the promise that American advances, particularly in green technology, might stem the decades-long decline in U.S. manufacturing jobs. But as the lighting industry shows, even when the government pushes companies toward environmental innovations and Americans come up with them, the manufacture of the next generation technology can still end up overseas.

What made the plant here vulnerable is, in part, a 2007 energy conservation measure passed by Congress that set standards essentially banning ordinary incandescents by 2014. The law will force millions of American households to switch to more efficient bulbs.

The resulting savings in energy and greenhouse-gas emissions are expected to be immense. But the move also had unintended consequences.

Rather than setting off a boom in the U.S. manufacture of replacement lights, the leading replacement lights are compact fluorescents, or CFLs, which are made almost entirely overseas, mostly in China.

Consisting of glass tubes twisted into a spiral, they require more hand labor, which is cheaper there. So though they were first developed by American engineers in the 1970s, none of the major brands make CFLs in the United States.

“Everybody’s jumping on the green bandwagon,” said Pat Doyle, 54, who has worked at the plant for 26 years. But “we’ve been sold out. First sold out by the government. Then sold out by GE. ”

Doyle was speaking after a shift last month surrounded by several co-workers around a picnic table near the punch clock. Many of the workers have been at the plant for decades, and most appeared to be in their 40s and 50s. Several worried aloud about finding another job.

“When you’re 50 years old, no one wants you,” Savolainen said. It was meant half in jest, but some of the men nod grimly.

If there is a green bandwagon, as Doyle says, much of the Obama administration is on board. As a means of creating U.S. jobs, the administration has been promoting the nation’s “green economy” - solar power, electric cars, wind turbines - with the idea that U.S. innovations in those fields may translate into U.S. factories. President Obama said last month that he expects the government’s commitment to clean energy to lead to more than 800,000 jobs by 2012, one step in a larger journey planned to restore U.S. manufacturing.

But officials are working against a daunting trend. Under the pressures of globalization, the number of manufacturing jobs in the United States has been shrinking for decades, from 19.5 million in 1979 to 11.6 million this year, a decline of 40 percent.

At textile mills in North Carolina, at auto parts plants in Ohio, at other assorted manufacturing plants around the country, the closures have pushed workers out, often leaving them to face an onslaught of personal defeats: lower wages, community college retraining and unemployment checks.

In Obama’s vision, the nation’s mastery of new technology will create American manufacturing jobs.

“See, when folks lift up the hoods on the cars of the future, I want them to see engines stamped “Made in America,” Obama said in an Aug. 16 speech at a Wisconsin plant. “When new batteries to store solar power come off the line, I want to see printed on the side, “Made in America.” When new technologies are developed and new industries are formed, I want them made right here in America. That’s what we’re fighting for.”

But a closer look at the lighting industry reveals that isn’t going to be easy.

At one time, the United States was ahead of the game in CFLs.

Following the 1973 energy crisis, a GE engineer named Ed Hammer and others at the company’s famed Nela Park research laboratories were tinkering with different methods of saving electricity with fluorescent lights.

In a standard incandescent bulb, in which the filament is electrified until it glows, only about 10 percent of the electricity is transformed into light; the rest generates heat as a side effect. A typical fluorescent uses about 75 percent less electricity than an incandescent to produce the same amount of light.

The trouble facing Hammer was that fluorescents are most efficient in long tubes. But long, linear tubes don’t fit into the same lamp fixtures that the standard incandescent bulbs do.

Working with a team of talented glass blowers, though, Hammer twisted the tubes into a spiral. The new lamps had length, but were also more compact.

“I knew it was a good lamp design,” he recalled recently. In retrospect, in fact, it was a key innovation. The Smithsonian houses Hammer’s original spiral CFL prototype.

At the time, however, the design had one big problem. Bending all that glass into the required shape was slow and required lots of manual labor.

“I used to say you would need 40,000 glass blowers to make the parts,” Hammer said. “Without automation, it was economically unfeasible. It was a lamp before its time.”

The company decided to make investments in other types of lighting then being developed.

Years passed. The next major innovator to try his hand at CFLs was Ellis Yan, a Chinese immigrant to the United States, who had started his own lighting business in China and then in the early ‘90s turned his attention to the possibilities of CFLs.

To make CFLs, he had workers in China sit beside furnaces and bend the glass by hand. Even with the low-wages there, the first attempts were very expensive, clunky and flickered when turned on, he said. But he persisted.

“Everybody [in the industry] stayed back and was watching me,” he recalled. “No one else wanted to make the big investment for the next generation of technology.”

The business prospered and Yan’s factories in China employed as many as 14,000 - not so far off from the 40,000 glass blowers that Hammer had once imagined would be necessary. With new automation techniques, Yan is seeking to cut the number of his employees in China, where wages are rising, to 5,000 by year’s end.

Today, about a quarter of the lights sold in the United States are CFLs, according to NEMA, an industry association. Of those, Yan says, he manufactures more than half.

Someday soon, Yan says, he hopes to build a U.S. factory, though he so far has been unable to secure $12.5 million in government funding for the project.

Manufacturing in the United States would add 10 percent or more to the cost of building a standard CFL, he said, but retailers have indicated that there is a demand for products manufactured domestically.

“Retailers tell me people ask for ‘Made in the USA’ “ Yan said. “I tell them the product will cost 45 to 50 cents more. They say people will pay for it.”

Sales of the CFLs began slowly, but they spiked in 2006 and 2007, when federal and state government efforts promoted their use.

The Energy Department teamed with Disney to develop a public service announcement based on the Disney Pixar film “Ratatouille” to encourage the adoption of technologies such as CFLs. It was shown on CNN, HGTV and the Food Network.

Lawmakers in California and Nevada drafted legislation calling for higher efficiency standards for light bulbs. And in December 2007, Congress passed its new energy standards.

GE balked at the standards at first, knowing that they could impact their U.S. manufacturing. But the company also saw that with restrictions gaining momentum in more states and other countries, some kind of legislation was unavoidable. They decided to support the bill as long as it didn’t amount to a ban on traditional incandescents, but instead simply set energy standards.

“We obviously pointed out to legislators that the impact of an outright ban would be an elimination of some manufacturing operations,” said Earl Jones, senior counsel in government relations and regulatory compliance at the company. “But it was inevitable that some kind of legislation would be coming to the U.S.”

As expected, the new standards hurt the business in traditional incandescents.

The company developed a plan to see what it would take to retrofit a plant that makes traditional incandescents into one that makes CFLs. Even with a $40 million investment and automation, the disparity in wages and other factors made it uneconomical. The new plant’s CFLs would have cost about 50 percent more than those from China, GE officials said.

The company also makes halogen light bulbs, which are an innovative type of incandescent, and Sylvania is transforming its incandescent light bulb factory in St. Marys, Pa. to halogen as well.

But the era of traditional incandescents built in the United States was coming to an end.

In announcing the plant closure here, GE said in a news release that “a variety of energy regulations,” including those in the United States, “will soon make the familiar lighting products produced at the Winchester Plant obsolete.”

“For those who make incandescent bulbs the law was bad for business,” Yan said. “For people like us, it was very good.”

Temperatures at the traditional incandescent plant here can be sweltering because of the heat coming from the machines that melt the glass. It’s noisy, too, and workers wear ear plugs and safety glasses. And the pace of the work demands constant hustle, an atmosphere created by managers over the years who set up competitions among teams of workers striving to meet production goals. The winning line could post a black-and-white checkered flag on their machinery.

Jobs at the plant have been prized locally for years: They pay about $30 an hour.

One day after punching out recently, the workers gathered around the picnic tables by the employee entrance.

Some expressed grievances with the plant managers, who they note will get new jobs elsewhere, or with Congress for passing the energy legislation. Several took aim at the new new technology itself, noting that CFLs have mercury in them.

Some at the plant will be able to retire off their severance packages. Those with less time on the job, or those who are younger, have braced themselves for whatever comes next.

Some are taking classes at the Lord Fairfax Community College, hoping that familiarity with solar panels or HVAC might land them a job. Others scan the want-ads but don’t see how they will replace what they were making at the factory.

This small town has not been terribly hurt by the recession; local unemployment is running at 7.5 percent, well below the national average.

But good-paying jobs in manufacturing, they said, have become difficult to find.

Beverly Carter, 50, who feeds cardboard sleeves into a machine and makes sure it doesn’t jam, has worked at the plant for 32 years.

“It’s very hard to find a job like that around here,” she said.

Moreover, because many of the workers are in their 40s and 50s, some were nagged by worries that other employers would see them as washed up.

“We gave GE the best years of our lives,” Savolainen said.

Matt Madigan, 40, and his twin brothers, Wayne and Dwayne, also work at the plant.

“We’ve always had a lot of industry here in the valley, I’ve never had a problem finding a job,” he said. “A person really wanted to work, you could go from one factory to another. Everything nowadays is tougher.”

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Posted by Elvis on 09/12/10 •
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Monday, September 06, 2010

Labor Day Blues 2010

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On Labor Day, jobs crisis persists

By Andrea Orr
Economic Policy Institute
September 3, 2010

Monday September 6 will mark the third straight Labor Day that the country has been mired in an unemployment crisis. This year, the Labor Department kicked off the long holiday weekend with a new report that wasnt as bleak as expected: the private sector added 67,000 jobs during the month of August.  In fact, while the country was still losing jobs a year ago, it has added jobs to the payroll for the past eight months.

But for the typical worker, this is not cause to celebrate. Far too many Americans cannot find work: The nationwide unemployment rate remains just short of double digits. The August 2010 unemployment rate of 9.6% is barely changed from the 9.7% rate this time one year ago, and it actually rose from 9.5% in July.

This persistently high unemployment rate even as job growth slowly resumes speaks to the depth of the jobs hole resulting from the Great Recession and the tepid nature of the recovery. The United States needs to create about 100,000 new jobs each month just to keep up with population growth, and many more than that to see unemployment rates fall substantially. While RECOVERY ACT INVESTMENTS SUCCEEDED in slowing the pace of job loss and moving the job market in the right direction, job creation is now moving at a pace that EPI Economist Heidi Shierholz recently described as “excruciatingly slow.”

And its not just America’s 14.9 million unemployed and 26.1 million underemployed workers who are feeling the pain. For decades, wage growth has been falling far short of gains in productivity and in recent years the gap has widened, making it difficult even for working Americans to prosper. Earlier this week, EPI published the paper Recession Hits Workers Paychecks, showing that wages are growing at half the rate at which they expanded in the period before the start of the recession in late 2007.

This latest trend of slower wage growth compounds a longstanding problem of workers failing to enjoy the fruits of their labors. Even during the last business expansion, which ran from 2002 until the start of the recession in late 2007, productivity grew but hourly compensation fell for both high school and college-educated workers. In fact, this EPI report shows that workers - including those with college degrees earned less in 2009 than they did in 2000, when adjusted for inflation.

Trends of persistently high unemployment and slow wage growth stand in contrast to other segments of the economy such as corporate profits. Over the summer EPI President Lawrence Mishel compared the change in corporate profits since the start of the recession to the change in the labor market. He found that corporate profits had fully recovered while the labor market remained weak. By the first quarter of 2010, corporate profits were 5.7% higher than in the final quarter of 2007, but the total number of jobs had declined by 5.9% over the same period.

While the official unemployment rate is often used to sum up the health of the labor market, unemployment today would be higher were it not for a large number of workers who have either dropped out of the workforce or not entered it during the recession. Shierholz notes that although unemployment has fallen from its recent peak of 10.1% last October, that does not mean that a larger share of the population is working, but rather reflects the fact that 3.5 million workers are missing from the labor force.

Other troubling signs this Labor Day include the large number of long-term unemployed. Forty-two percent of unemployed workers have been seeking work for more than six months; 21.9% for more than a year. And several segments of the working population are seeing staggering rates of unemployment that make the nationwide rate look mild. The unemployment rate is 16.3% for black workers, 12% for Hispanic workers, and 13.8% for those with less than a high school degree. The share of youth age 16 to 24 who are neither employed nor enrolled in school is 17.9%.

And while Labor Day often calls to mind the sort of well-paying jobs in manufacturing and construction that were once the backbone of the nation’s economy, the United States has lost close to 15% of its manufacturing jobs and more than 25% of all construction jobs since the start of the recession. By contrast, many of the fastest-growing occupations today pay close to minimum wage.

For more detailed data on unemployment by demographic breakdown, consult EPIs new Labor Day Fact Sheet as well as our EconomyTrack Web site.

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Posted by Elvis on 09/06/10 •
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Sunday, September 05, 2010

Article 43 Turns Six

I wrote my FIRST ARTICLE on September 4, 2004.

Like this time LAST YEAR - there’s NOT MUCH GOOD TO WRITE ABOUT

The middle-class is still dying, jobs are still going overseas, while mergers and aquisitions make the big guys bigger, and controllers of our destinies.

The mysterious author over at George Washington’s Blog WRITES ABOUT the eroding middle class and ills that plague this country with clarity…

---

The Government Has Encouraged the Offshoring of American Jobs for More Than 50 Years

President EISENHOWER re-wrote the tax laws so that they would favor investment abroad. President Kennedy RALLIED AGAINST tax provisions that “consistently favor United States private investment abroad compared with investment in our own economy”, but nothing has changed under either Democratic or Republican administrations.

For the last 50-plus years, the TAX BENEFITS to American companies making things abroad has encouraged jobs to move out of the U.S.

The Government Has Encouraged Mergers

The government has actively ENCOURAGED mergers, which destroy jobs.

For example, the Treasury Department encouraged banks to use the bailout money to buy their competitors, and PUSHED THROUGH AN AMENDMENT TO THE TAX LAWS which rewards mergers in the banking industry.

This is nothing new.

Citigroup’s former chief executive says that when Citigroup was formed in 1998 out of the merger of banking and insurance giants, Alan Greenspan TOLD him, I have nothing against size. It doesn’t bother me at all.

And the government has ACTIVELY ENCOURAGED the big banks to grow into mega-banks.

The Government Has Let Unemployment Rise in an Attempt to Fight Inflation

As I NOTEDlast year:

The Federal Reserve is mandated by law to maximize employment. The relevant statute states:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

***

The Fed could have stemmed the unemployment crisis by demanding that banks lend more as a condition to the various government assistance programs, but Mr. Bernanke FAILED TO DO SO.

Ryan Grim ARGUES that the Fed might have broken the law by letting unemployment rise in order to keep inflation low:

The Fed is mandated by law to maximize employment, but focuses on inflation—and “expected inflation”—at the expense of job creation. At its most recent meeting, board members bluntly stated that they feared banks might increase lending, which they worried could lead to inflation.

Board members expressed concern “that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation.” That summary was spotted by Naked Capitalism and is included in a summary of the minutes of the most recent meeting…

Suffering high unemployment in order to keep inflation low cuts against the Fed’s legal mandate. Or, to put it more bluntly, it may be illegal.

In fact, the unemployment situation is GETTING WORSE, and many leading economists say that - under Mr. Bernanke’s leadership - America is suffering a permanent destruction of jobs.

For example, JPMorgan Chase’s Chief Economist Bruce Kasman TOLD Bloomberg:

[We’ve had a] permanent destruction of hundreds of thousands of jobs in industries from housing to finance.

The chief economists for Wells Fargo Securities, John Silvia, SAYS:

Companies really have diminished their willingness to hire labor for any production level,Ӕ Silvia said. ItӒs really a strategic change, where companies will be keeping fewer employees for any particular level of sales, in good times and bad, he said.

And former Merrill Lynch chief economist David Rosenberg WRITES:

The number of people not on temporary layoff surged 220,000 in August and the level continues to reach new highs, now at 8.1 million. This accounts for 53.9% of the unemployed - again a record high and this is a proxy for permanent job loss, in other words, these jobs are not coming back. Against that backdrop, the number of people who have been looking for a job for at least six months with no success rose a further half-percent in August, to stand at 5 million - the long-term unemployed now represent a record 33% of the total pool of joblessness.

And see THIS.

In fact, the Fed INTENTIONALLY curbed lending by banks in an attempt to stem inflation, without addressing whether PUBLIC BANKS could provide credit.

The Government Has Allowed Wealth to be Concentrated in Fewer and Fewer Hands

As I POINTED OUT a year ago:

A new report by University of California, Berkeley economics professor Emmanuel Saez concludes that income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression.

The report shows that:

* Income inequality is worse than it has been since at least 1917

* “The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007”

* “In the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth.”

As others have pointed out, the average wage of Americans, adjusting for inflation, is lower than it was in the 1970s. The minimum wage, adjusting for inflation, is lower than it was in the 1950s. See this. On the other hand, billionaires have never had it better.

As I wrote in September:

The economy is like a poker game . . . it is human nature to want to get all of the chips, but - if one person does get all of the chips - the game ends.

In other words, the game of capitalism only continues as long as everyone has some money to play with. If the government and corporations take everyone’s money, the game ends.

The fed and Treasury are not giving more chips to those who need them: the American consumer. Instead, they are giving chips to the 800-pound gorillas at the poker table, such as Wall Street investment banks. Indeed, a good chunk of the money used by surviving mammoth players to buy the failing behemoths actually comes from the Fed…
This is not a question of big government versus small government, or republican versus democrat. It is not even a question of Keynes versus Friedman (two influential, competing economic thinkers).

It is a question of focusing any government funding which is made to the majority of poker players - instead of the titans of finance - so that the game can continue. If the hundreds of billions or trillions spent on bailouts had instead been given to ease the burden of consumers, we would have already recovered from the financial crisis.

I noted in April:

FDRs Fed chairman Marriner S. Eccles explained:

As in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

***

When most people lose their poker chips - and the game is set up so that only those with the most chips get more - free market capitalism is destroyed, as the “too big to fails” crowd out everyone else.
And the economy as a whole is destroyed. Remember, consumer spending accounts for the lion’s share of economic activity. If most consumers are out of chips, the economy slumps.

And unemployment soars.

As former Secretary of Labor Robert Reich wrote yesterday:

Where have all the economic gains gone? Mostly to the top.

***

ItҒs no coincidence that the last time income was this concentrated was in 1928. I do not mean to suggest that such astonishing consolidations of income at the top directly cause sharp economic declines. The connection is more subtle.

The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.

Whats more, the rich donҒt necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where theyll summon the highest returns җ sometimes thats here, but often itҒs the Cayman Islands, China or elsewhere. The rich also put their money into assets most likely to attract other big investors (commodities, stocks, dot-coms or real estate), which can become wildly inflated as a result.

***

THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity.

***

And as Americas middle class shared more of the economyҒs gains, it was able to buy more of the goods and services the economy could provide. The result: rapid growth and more jobs. By contrast, little has been done since 2008 to widen the circle of prosperity.

So through it’s policies encouraging the offshoring of jobs, mergers, decreasing of economic activity to fight inflation, allowing wealth to be concentrated in fewer and fewer hands, and other policy mistakes (like pretending that there is a “jobless recovery"), the government has channeled water away from U.S. jobs, creating a worsening unemployment drought.

Note for Keynesians: As I have repeatedly explained, the government hasn’t spent money on the right kind of things to stimulate employment. See this and this.

Note for followers of Austrian economic theory: I have repeatedly railed against the government artificially propping up asset prices and leverage, so that malinvestments can’t be cleared, and we have a stagnant, zombie economy which prevents job creation.

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Big Men, Little Shoes

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“In this article Vivek Wadhwa laments that short shrift is paid to management training these days at many high-tech firms. You can’t be born with the skills needed to plan projects, adhere to EEOC guidelines, prepare budgets and manage finances, or to know the intricacies of business and IP law, says Wadhwa. All this has to be learned. Stepping up to address the problems of ‘engineering without leadership,’ which may include morale problems, missed deadlines, customer-support disasters, and high turnover, are programs like UC Berkeley’s ENGINEERING LEADERSHIP PROGRAM and Duke’s MASTERS OF ENGINEERING MANAGEMENT PROGRAM, which aim to teach product management, entrepreneurial thinking, leadership, finance, team building, business management, and motivation to techies.”
- SoukSkill at ShashDot

Tech Industry Managers: Little Men in Big Shoes?

By Vivek Wadhwa
Tech Crunch
September 4, 2010

When I was ready to transition from computer programmer to project manager, my employer, Xerox Corporation, sent me to its huge training center in Leesburg, Virginia. Over two weeks, the people there taught me some of the skills I needed in order to succeed in my new role: managing projects, motivating people, complying with employment regulations, and preparing status reports and presentations. The company also encouraged me to complete an MBA, on a part-time basis, at New York University. It gave me lots of time off and paid for the tuition.

Tech companies in the internet era offer their employees some great perks. But do you think that Facebook, Groupon, or Zynga provide budding professionals with any serious management training? Not at all. Given the way tech companies grow and the HR challenges they face, management training and career development are more important than ever. But few have the timethey are too busy surviving.

Professors Robert Fulmer and Byron Hanson of Duke University’s Corporate Education group researched the management practices of 23 leading high-tech firms. Corporate executives in an overwhelming majority, 89 percent, believed that leadership development was becoming increasingly important for their companies; 58 percent ranked this as a high corporate priority. Yet less than one-fourth of the managers interviewed had a clear roadmap for how they could develop themselves, and more than half didnt even know who in their organization was responsible for the development of leaders. The conclusion of the researchers wasn’t surprising: many high-tech companies are young, so their systems and procedures for grooming leaders arent well developed or firmly established.

Maybe this is why so many tech companies suffer from morale problems, missed deadlines, customer-support disasters, and high turnover. And this may be one of the reasons why so many tech startups who succeed in selling their vision and raising millions in financing are just a flash in the pan.

One of the interesting findings in the Fulmer and Hanson research was that more than 70 percent of the tech executives interviewed said that leadership development in technology-driven firms is different than in other industries. The researchers believed, just as I do, that these tech executives were dead wrong. The lessons that leading companies like Proctor and Gamble and General Electric have learned about management development and training apply as much, if not more, to tech companies.

This means that if you’re a fresh grad joining a hot new tech startup, you shouldn’t expect your managers to train and groom you, or the company to provide you with time off to complete an MBA. You’re on your own. If you are working at some of the more established companies, such as IBM and H Pwhich do have excellent management-development practices - take full advantage of them. You need to learn all you can.

Many people are born with an innate sense of vision; they readily learn new technologies and master them. Some are very good at communicating and inspiring others. But you cant be born with the skills needed to plan projects, adhere to EEOC guidelines, and prepare budgets and manage finances, or to know the intricacies of business and intellectual property law. All this has to be learned. Some skills can be developed on the job, but this is usually through trial and error.

I usually recommend that engineering students who want to become managers and CEOs complete a fifth year of education. There are one-year long engineering management programs which cover such subjects as marketing, finance, intellectual property, business law, and management - similar to the key courses in an MBA program; plus tech-oriented subjects like innovation management, operations management, and entrepreneurship.  One such program (and there are many) is the Duke Masters of Engineering Management program, at which I teach.

For experienced tech workers in Silicon Valley, Berkeley and Stanford both have excellent executive MBA programs. Berkeley Haas School dean, Rich Lyons told me over dinner, last month, of his plans to make his school the premier training ground for Silicon Valley executives. Bostons Babson College is also launching a program in San Francisco.

But not everyone needs to spend two years doing an MBA. Berkele’s college of engineering is creating a much shorter program targeted at Silicon Valley techies with leadership potential. Under the aegis of Fung Institute Chief Scientist and Director of UC Berkeleys Center for Entrepreneurship & Technology, Ikhlaq Sidhu, the school is developing a professional program in Engineering Leadership. This will meet one evening a week for six months and teach subjects like product management, entrepreneurial thinking, leadership and finance. It will also teach team building, business management, and motivation.

The new Berkeley program is highly selective however.  It will only accept 25 candidates in 2011, based on recommendations from senior executives in the valley. Sidhu says that he hopes to address the symptoms of engineering without leadership - which include organizational indecision about new products and services; unresolved conflict between product management and engineering; and superficial technology strategies.  Berkeley will likely expand this program significantly over time and add many others. After all there is a great need.

Editors note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at the School of Information at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwaand find his research at http://www.wadhwa.com.

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Posted by Elvis on 09/05/10 •
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In memory of the layed off workers of AT&T

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The world is slowly understanding that evil is nothing more than ignorance. The light (knowledge/wisdom) always overtakes the darkness (ignorance). The sun rises slowly (at its own time) over the human race. - Anonymous

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