Bowling Alone

I recently read an article about Robert D. Putnam, a researcher that has theorized that social capital is declining in the United States due to individualizing of social interactions.  Specifically, the society is falling apart because of the television and internet.

A central piece of data that intrigued me was his finding that over the last 20 years the number of people that bowl has risen 10% while the the number of people that participate in bowling leagues has dropped 40%.  So people are bowling alone and not with anyone else.  This reduction in social interactions has reduced the opportunities for societal connections and debates.  This reduction has then in turn caused a reduction in the participation in the political process.

I wonder how the evolution of social media has impacted the trend Putnam theorizes.  By all accounts, social media has opened up new avenues for social discourse and interaction.  Any person with a computer can potentially become his own publisher and espouse his ideas freely.  Yet, this makes  me think that everyone is just pumping out their viewpoints and no one is really listening.  Is there just more isolation because it doesn’t take much effort to “feel” like you are being heard?  Is there an attitude developing where we all think we have contributed to the conversation because we posted something, but it isn’t a conversation unless someone responds?  So I’m left wondering, am I just bowling alone when I press publish.

BP Oil Spill: A case of prisoners’ dilemma

It has been said several times over, including my own posts, that the culture of BP was to blame for the disastrous oil spill in the gulf.  But applying a little game theory we reveal that there is a lot of blame to go around.  We miss a major point if we just look at the BP culture.  We need to look at the general business culture in the western world.

First a little on the prisoners’ dilemma.  As the story goes two prisoners are arrested for the same murder.  The police chief offers them both the same deal but separately.  He tells them both that whichever confesses first and names the other as an accomplice will get 10 years in prison, while the other will get life.  If both prisoners keep quiet, there is not enough evidence to convict either and they will be set free.  But being separated, they can’t confer and will try to cut the best deal for themselves and confess.  So as the story goes they both confess and each are sentenced to life in prison.  Had they both kept quiet they would go free.  So their dilemma is to trust the other prisoner to do what is best for everyone or just themselves.

So let’s apply the prisoners’ dilemma to BP and applying the most rigorous standards of safety possible.  If everyone does the same, then society will be better off and no one firms has a cost advantage.  If just one oil company choses to cut corners on safety, then they will have a cost advantage and thus a market advantage.  So short of regulatory requirements, each competitor will go optimize their position and go with the lowest safety standards possible.  Had just a single firm held to the high standards, then we can surmise that eventually they would be driven out of business by the lack of cost parity.  So what was BP to do.  Compete in the business environment that exists.

following the Occidental Petroleum disaster over 30 years ago, the British government change the rules for drilling in the North Sea.  Had the US government followed suit and also changed the requirements for drilling in its waters, BP and others would have been forced to follow more stringent safety standards.  Maybe the oil spill could have been avoided.

More on Small Biz Job Growth

In a previous post, I talked of a recent report by the Kaufman Foundation highlight job growth from small businesses.  The main crux of the report  is that 3 Million jobs are created by small business.  Even more importantly in this current economy is the fact that small business job growth is steady in recessionary periods.  Existing firm job loss is very sensitive to the business cycle.  Net-Net new companies are net job creators while existing firms are net job losers.

It’s clear that government policy should shift to supporting new firm and thus new job creation instead of incenting firms to stay in a given locale or recruiting firms to relocate to a new geography, which is a zero sum game.  

To get the Kaufman report checkout http://www.kauffman.org/newsroom/u-s-job-growth-driven-entirely-by-startups.aspx.

Ohio in Top 10 for Clean Energy

Ohio has been identified as a major player in green energy initiatives.  Its exciting to think that Ohio is doing what it can to transition from heavy industry to green technology.  Suprising to me is that Toledo is a major hub for solar panel production and research.  It’s clear that major job growth, which is mainly from startups, will come from green technology.

“Ohio is retooling for a green energy transition, moving away from heavy industry such as auto manufacturing in favor of green initiatives, such as seeking to establish itself as the second biggest wind turbine parts producer in the country. In fact, Ohio ranked among the top five states with the most jobs in clean energy, energy efficiency and environmentally friendly production in 2007.”  http://cleantech.com/news/4845/top-10-us-states-cleantech-2009

Job Growth from Small Business

In an earlier post, Core Competency vs. Innovation, I commented on how focusing too much on your core competency may stifle innovation and how smaller, nimbler organizations are capable or more innovations.  The Kaufmann Foundation, a non-profit who promotes entrepreneurship has recently released the results of a new study showing that job growth, as well, comes from smaller businesses.  In the study, they tell of how “New firms add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually”.  In my opinion this is clearly due to the innovation that smaller firms are capable of delivering.  Instead of protecting past wins and fighting erosion of both market share and employment, small firms are charging ahead to new opportunities and bring jobs with the advance.

Need for National Energy Strategy

Some powerful people are supporting the creation of a national energy strategy. When you consider the “game changing” technologies, (GPS, Internet, Composite Materials, etc.) that have come from national defense spending, viewing Energy independence as a national defense issue would truly unleash some powerful green technologies. http://www.americanenergyinnovation.org/

Seems that other smart people are thinking like I do. http://www.salon.com/news/opinion/feature/2010/08/12/reich_military_jobs  Robert Reich former Clinton Labor Department Head seems to suggest the same idea.  If energy strategy was viewed a defense initiative, not only would we produce some value products but also some much needed jobs.