DECEMBER 22, 2008

With Christmas a few days away, I (like many) have been shopping more than usual these days. And as I’ve been browsing through the stores, I’ve become more aware of the “made in China” sticker stamped on the bottom of nearly every vase, teapot, scarf, and candle I pick up. I suppose these three little words have stood out to me more recently because of the current economic crisis that the United States is facing; like it or not, they have forced me to think more about things like importing, exporting, and outsourcing of jobs, and they’ve made me curious about the whether China is experiencing the kind of financial troubles that we are or not. After a little research, it seems that China’s economy is, in fact, also struggling.

According to Newsweek, China has been a contributor to global expansion for a long time, fueled mainly by export factories that send products over to the United States for retail sale; however, China’s export growth is slowing down dramatically and fell for the first time in seven years last month due to the global economic crisis. Bad news for China, considering exports now account for about 40% of their total output. Much like Americans, the Chinese are not spending the way they have in the past and are planning more for “emergencies”. Experts say that it may be years before they feel like its safe to start spending again. And so it seems that the Chinese economy is weakening right alongside the U.S. economy - further proof that globalization is alive and well.

I wonder what things will be like next year at this time. Will those three little words stamped on the bottom of my purchases be just as easy to find, or will they be a little scarcer? Given that Chinese goods are cheaper than their domestic counterparts, in most cases, I doubt that the volume of imports will decline.

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NOVEMBER 20, 2008

Warren Buffett once said, “My favorite holding period is forever.”  Apparently, James Altucher, President and founder of Stockpickr, agrees with him. He wrote a book called “THE FOREVER PORTFOLIO: How To Pick Stocks That You Can Hold for the Long Run“, and during an interview on CNBC yesterday, Altucher suggested investing in companies providing services in the following areas:

• Obesity: 33 billion dollars are spent each year on services for the obese.

• Dirty Water: Developing countries are finding it much harder to deliver clean water to their growing populations, and companies that sell clean water treatment technologies will thrive.

• Luxury: The rich are recession-proof, and the stocks of luxury producers make a great hedge against any slowdown in the global economy.

Now I’m no financier, that’s for sure, but from a New Persuasion point of view, his advice makes perfect sense. The future looks a lot more predictable when you actually take the time to pay attention and study the trends/issues that are presently hidden in plain view.

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OCTOBER 3, 2008

In case it hasn’t been obvious in my previous posts, I like to write about innovations in public policy. The idea that small changes in rules and practices can produce big benefits for society is fascinating to me.

For awhile now, I’ve been meaning to pick up Cass Sunstein and Richard Thaler’s Nudge, a book about simple policy changes that can be made by governments and employers to encourage people to make better choices. The book is based on two papers authored by the pair in 2003 (sorry, you’ve got to pay for the second one!).

Backtracking a little bit: traditional economics - you know, the Adam Smith stuff - infers that people in general are “rational actors” - that we collectively make decisions based on our own personal interest. That makes sense in a lot of ways, and many think it’s the basis of how human beings act. For instance, I made a rational decision to come to work this morning because I know that: a) I won’t get paid otherwise; and b) I like what I do.

But in the past few decades, a new field has emerged called behavioral economics that investigates people’s irrational desires and actions, and how they affect the larger economy. Some examples of this can be seen in the poor understanding we human beings have of risk - a concept Kelly Stepno works on here at TMG - as well as the current economic crisis, which some believe was caused by an asset bubble driven by media hype rather than actual value.

The goal of Sunstein and Thaler’s work is to change people’s “choice architecture” by introducing policies that gently correct our tendencies toward irrational behavior. For instance, the authors identify savings rates as one area in which humans do not act rationally, and did a study of ways employers could help their employees save more money. They found that businesses who automatically enrolled their employees in 401(k) plans and offered an opt-out provision had dramatically higher savings rates than employers who had opt-in 401(k) plans. Thaler also experimented with a plan called “Save More Tomorrow” that allows employees to set aside parts of their pay raises toward their savings. The principle here is that people are irrationally loathe to give up any of their current income, but don’t have as much of a problem forgoing future gains. In this program, too, he saw the savings rates of participating employees more than triple.

The authors also discuss smaller policy changes, like removing key lime pie from a buffet line, that could help all sorts of pressing issues like obesity, indebtedness, and global warming. The basic theme is that changing people’s “choice architecture” is a way to deal with the irrational aspects of our behavior.

Like I said, I haven’t read the book yet, but I find a lot of the themes very intriguing. Of course, there are objections to this philosophy - who are you to tell me I shouldn’t have key lime pie? - but it’s refreshing to see people thinking outside left-right paradigms when it comes to public policy.

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AUGUST 29, 2008

High gas prices and a global recession looming have changed our buying behaviors… or have they? I know I’ve been more conscientious lately by cutting out a few habits, but it appears that many others have not. The little things that brighten up our days - coffee in the morning, eating out for lunch, online shopping  - can all add up pretty quickly. But the Londoners in this article say, “Eat, drink, smoke, and be merry,” and apparently that’s exactly what we’re doing.

Despite the economic downturn, companies like Hershey Co., Anheuser-Busch, and Philip Morris have all been profitable this year. I guess candy, beer, and tobacco are items we just won’t quit. The luxury items of yesterday have become the bare necessities of today. When the Desert Sun asked Coachella Valley residents what they would not give up during an economic recession their answers included: pets, cars, fitness, dining out, coffee, and chocolate.

During a recession, what are some of your must-have items and which one are first on your chopping block?

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JULY 14, 2008

It’s easy in tough economic times like these to flip on CNBC and just watch everything collapse - connecting the dots from housing crisis to credit crunch to energy prices to food and material costs and wonder exactly how our country plans to get itself out of this mess. It’s also easy to feel powerless before a torrent of awful news streaming to your computer, television, and Blackberry 24 hours a day. We talk a lot about saturation here at TMG - but what role has it played in the economic run-up and subsequent correction?

Robert Shiller, professor and author of the bestselling Irrational Exuberance, argues that the first economy-wide “bubble” - the tech stock run-up of the late 90’s - was fueled in part by real-time stock prices and 24/7 business networks. The constant availability of information, as well as the economic cheerleading encouraged by the networks themselves, made it easier for investors to focus on minutae like price fluctuations and ignore big-picture variables like actual earnings. The irrational decisions made on the basis of too much irrelevant information helped fuel the unsustainable rise in stock prices.

Now that the financial networks are blasting bad news through every conceivable media, how many investors and business leaders are irrationally spooked about the unsteady market? How many have taken a fatalistic attitude towards their business, willing to simply ride the market conditions out to their end - whatever that end may be? What’s more, how many are listening to half-cocked pundits suggesting nice-sounding but potentially disastrous courses for their sector? My guess is quite a few.

I think we, as communications professionals, have two roles to play here:

1) We must find new angles to sell stories to an increasingly-skeptical marketplace. Exuberance for new products will be in short supply for the next few years, and to serve our clients well we must be on top of trends before everyone else and help them capitalize accordingly.

2) We must act internally, and use media monitoring to help our clients cut through the noise surrounding their business. As outsiders, we should be the ones absorbing the torrent of news and passing on what’s important, while clients should be focused on creating solid products and services. Helping our clients maintain perspective on the fundamentals amid swirling economic bad news is key to keeping morale high and eyes focused on the prize.  

I’d really like to start a dialogue here on Undercurrents about how communicators can help companies weather what may be a transformational economic crisis. If you’ve got thoughts, please comment below. If you’ve got a longer thought, e-mail me and I’d be happy to post it on this blog.

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JULY 11, 2008

I am always in a hurry when I am driving to get somewhere.  But while I want to travel fast, at the same time I also would like to help the environment, save on gas, and get my exercise.  What better solution than the bicycle?  If we stop to think for a moment, isn’t that the obvious solution to high gas prices, global warming, and obesity?

The obstacles are obvious, however.  You can’t take your kids to soccer practice on your bike.  The postal service may not be impeded by ”snow nor rain nor heat nor gloom of night”, but I am.  And unless I only have to travel a short distance, I won’t even consider it.

Something needs to happen to make the bike more user-friendly.  First, why not make it electric? Next, make it semi-recumbent with a roof.   Finally, add a passenger attachment for my child.  As it appears, all these things are currently possible.  It won’t be long before someone thinks to put them all together.

If the design is perfect, and I have the will to do it, what will make me take the leap from car to bike?  Peer pressure.  If I look around, and I see that using a bike for everyday transportation is becoming trend-setting, cutting edge, statement-making behavior,  it won’t seem so formidable.  It doesn’t hurt if your favorite celebs are seen setting the stage for the transformation.  Look at Barack Obama - one of the first things he did after clinching the Democratic nomination was to go ride a bike.   

Right now it seems unlikely that I will ever make this transition to a new mode of transportation.  Yet, I hope some day we can emulate the Chinese and make room for both cars and bikes in our lives.  Who knows, maybe someday my electric bike will be parked in my driveway next to my electric car.   

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JULY 9, 2008

Given the contributions that innovations have made to our society, it always surprises me when there is a backlash against an innovative product.

Take for example a new gallon milk jug that has been popping up in the dairy aisles at Wal-Mart and Costco.  The redesign of the jug has many redeeming qualities, but my personal favorite is that this jug is better for the environment.  What sold me on this improved container was learning how absolutely filthy the old milk crates were from birds roosting on them and the 100,000 gallons of water per day that was needed at one dairy simply to clean the remnants of the roosting.  (Need I say more?)  Switching to the new jug has cut water use alone by 60 to 70 percent and has eliminated the need for the crates.  To me, this sounds like innovation at work for the greater good of our society.

Moreover, in her New York Times article, Stephanie Rosenbloom looks at the jug’s innovation from a broader perspective:

The redesign of the gallon milk jug…is an example of the changes likely to play out in the American economy over the next two decades.  In an era of soaring global demand and higher costs for energy and materials, virtually every aspect of the economy needs to be re-examined…and many products must be redesigned for greater efficiency.

But all this innovation doesn’t stop people from complaining about the jug.  Grumblings from “I hate it” to “[i]t spills everywhere” are being heard ‘round the dairy aisles.  However, it seems that companies are listening – at a Sam’s Club in Ohio, a demonstration showed shoppers how easy the new jug is to use.  With or without the demonstration, the negativity won’t stop me – I am keeping my eyes peeled for these gallon milk jugs at my local store.

While changes like the milk jug positively enhance the world around us, some innovations are seen as merely superficial and needless change-for-the-sake-of-change.  In your life, when has innovation been a rewarding experience?  When has it been merely tinkering with something that wasn’t broke and didn’t need fixing?

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MAY 22, 2008

I’ve always been a big recycler. I hate throwing anything away that could potentially find a new home. Craigslist, Freecycle, my neighborhood listserv - I have used many methods to breathe new life into things like bookshelves, old frames, packages of diapers my kids have outgrown, even styrofoam peanuts.  And I like to buy used things too - I am a regular at used book sales that feed my book obsession, and a few weekends back, I picked up a skirt at a yard sale for $2. I wore it to work a few days later and even got a few compliments on it.

Last week, I cleaned out my closet and filled five bags full of clothes that I just don’t wear anymore. I took them to Goodwill during lunch and decided to stop in and take a look around. I left with only two paperbacks (grand total: $2.69), but the store was impressive. Well-organized, very well-stocked, and excellent prices.

I am far from the only one emphasizing the “recycle” in the old “reduce-reuse-recycle” trifecta. According to this article in The New York Times, 16-18% of Americans shop in thrift stores, while 12-15% shop at consignment stores.  The resale industry itself is growing at a rate of 5% a year.  And thrift store shopping has become the provenance of the fashionable - the NYT article cites one San Francisco shop owner as saying, “A lot of the neighborhood men who shop in our store are very style-conscious. They can recycle their clothing and not wear it into the ground.” There are even fashion blogs associated with thrift stores, such as the DC Goodwill Fashion Blog, where the Fashionista reports weekly on her fashion finds at the Washington, DC area’s Goodwill stores.

This increased commitment to recycling goods, instead of just throwing them away, extends well beyond clothing. Here are some other organizations helping people recycle what they no longer need:

• First Time Computers will fix donated computers and give them to low-income students. (Here’s a site that lists other companies that recycle old computers).
• Bikes for the World has shipped more than 8,000 bicycles this year to non-profit agencies in Africa, Latin America and the Caribbean.
• Re-Stores are thrift stores run by Habitat for Humanity to raise money for low-income housing by selling used building supplies such as lighting, cabinetry, windows, flooring, doors, and furniture. (Here are some other sites that accept used or leftover building materials).

Reducing consumption and waste are clearly important steps toward cutting back on the environmental damage caused by landfills and reducing the energy needed to meet the world population’s increasing needs. I’m thrilled to see the creative ways in which our unneeded, but perfectly functional, goods are finding new lives in new places.

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APRIL 28, 2008

I used to work in the non-profit sector, and one of the most interesting things to me about the New Persuasion world is the change global forces have brought to charitable endeavors. As in other areas, the Internet has dramatically lowered the cost of entry for people who want to be involved with and start non-profit organizations, and the network of people committed to the public good has adapted the forces we talk about on a daily basis to their advantage.

Take, for instance, the idea of microfinance. Microfinance, or microcredit, is an economic concept that revolves around tiny, frequent loans given to those living in poverty. The loans often go to finance small cottage industries that provide a source of income for the borrower. For instance, a woman in Bangladesh might borrow 10 cents a day from the local branch of Grameen Bank (which pioneered this approach), with which she buys the materials to weave small baskets, which she then sells for 50 cents. She repays the loan the next day. Without the microfinance program, she wouldn’t have had 10 cents to spare for the materials, and would have stayed mired in poverty. The microfinance program has effectively taken her out of the cycle of subsistence living. Since the loans are so small, they’re little risk, and Grameen has reported astounding repayment rates of close to 97%.

Another popular trend has been social giving, which consists of websites and platforms that allow people to search for specific charities and find one that meets their interests. Websites like Pledgie.com, YourLuminosity.com and Facebook Causes have helped non-profit entrepreneurs get their organizations off the ground quickly and inexpensively. The result has been an explosion of organizations that are much more specialized than umbrella groups like the Red Cross. Another important element of these sites is the ability to advertise one’s charitable affiliations on a personal profile.

My personal favorite combines a few elements of these two approaches. Kiva.org is a social giving platform that allows individuals to contribute directly to specific, income-generating needs of those in poverty. For example, a recent profile on Kiva featured an Ecuadorian baker, who requested $525 from the Kiva community for supplies for his shop. Each member of Kiva is only allowed to contribute $25 to any specific project, and the money is repaid by the borrower over a set period. Once you’ve been repaid, you have the option of taking the money or passing it onto another borrower.

So what’s at work here? I think the non-profit world is realizing that inexorable forces are at work, and they’re adjusting accordingly. They realize that globalization means that there need not be an artificial barrier or a middleman between haves and have-nots on opposite sides of the globe; that innovation, powered by the Internet and other connective technologies, means that there will always be competitors at their heels; and that personalization means that donors desire not only an accurate account of where their money has gone, but specific causes or people to donate to in the first place.

Have your charitable donations changed over the past few years? Any new charitable initiatives I haven’t mentioned here?

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APRIL 10, 2008

My coworkers can all attest to the fact that lately I’ve become obsessed with HBO’s dearly departed TV series The Wire. Set in Baltimore, the show existed on two planes - first, it was a helluva cop drama, with all the characters and conflicts you might expect in one of the nation’s most crime-ridden cities. But on a deeper level, each of the show’s five seasons was dedicated to exploring a piece of American urban decline.

Most of those explorations were about what you’d expect: the drug trade, corrupt cops, politicians hamstrung by ambition. But the second season was different. It looked at the specific ways globalization has changed the dynamic of the city; in particular, the show examined Baltimore’s once-vibrant port, and the local dockworkers’ union.

In the second season, the union was being slowly but surely squeezed by a variety of global factors: the increasing mechanization of the docks, foreign improvements in shipping methods, and decreasing U.S. exports. The show’s plotline described a real-life trend: according to researchers Barry Hirsch and David Macpherson, 11.1% of about 556,000 total port workers were unionized in 2007, down from 34.9% of about 428,000 in 1983 - and that’s nationwide. Smaller ports like Baltimore’s have suffered even more. Declining membership rates mirror decreases in U.S. exports and manufacturing, and in turn signify trouble for the unions themselves: smaller membership rolls mean a decrease in dues collected and political power. American unions are caught in a perfect storm of cheaper labor abroad and a domestic economy that is increasingly oriented toward service, not manufacturing.

In The Wire, this squeeze leads the union president to take drastic measures to keep money flowing. He forges an alliance with a Greek smuggler, aptly nicknamed “The Greek”, who keeps the union solvent in exchange for help pushing drugs and other contraband through the port. The goods smuggled in have wide-ranging effects on the people of Baltimore - The Greek’s superior drug product leads to a strained public health system and massive gang wars, and his trafficking in humans puts people out of work.

For me, the most compelling aspect of this story is the fact that globalization will have an effect on every organization, whether that effect is good or bad. Since the dockworkers’ union was unwilling or unable to adapt to the globalized legitimate economy, it was all but forced to participate in the globalized underground economy to continue operating.

The Wire was a very intricate show, and it certainly wasn’t all about globalization, but any current, honest examination of American life is going to consider elements of this phenomenon. Fellow Wire fans - what other lessons have you drawn from the show?

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