Economic Recovery? – Some Americans Look to Economists
Published June 9, 2011 | 
Americans Look to French Economist Leon Walras (1834-1910)
The many economic questions that come out of recessions include just exactly how or why expansions ever begin isn’t very well understood, even after more than a century of economic research. So it seems that some Americans that are in search of answers to help them understand are looking to the French economist named Leon Walras (1834-1910), the founder of general equilibrium theory.
So now Walras speculated that an economy climbs back to full employment through a process called tatonnement, which is a French word meaning groping, a trial-and-error strategy that mountain climbers most often can be seen using to find important handholds and footholds on the rock face of the mountain.
You need to understand that as any rock climber already knows however, tatonnement can many times lead to dead ends. The economic notion is sound only if the economy in question can dig itself out, but many times just like groping mountain climbers the economy hits a dead end. So even if one is able to predict with the highest percentage of certainty, and greatest knowledge of positive-data that demonstrates and proves the economy will sooner or later clean itself up, and the key here is ‘sooner or later,’ if either the ‘sooner’ or ‘later’ turns out to be dreadfully far away, you have to begin to question, speculate and doubt.
Generally speaking, general equilibrium attempts to lend a sound understanding of the whole economy using a “bottom-up” approach, starting with individual markets and agents. Macroeconomics (deals from the viewpoint of entire economies), 
as developed by the Keynesian economists that follow the theories of John Maynard Keynes, focuses on a “top-down” approach, where the economic analysis begins with the much larger combined totals of the so-called “big picture”. Therefore, general equilibrium theory has customarily been classified as part of microeconomics (deals from the viewpoint of the household or enterprise).
Okay, before we get too bogged down into trying to determine through economics what is going to happen, and when is it going to happen. It has to be understood first and foremost that natural economic events take place in the global markets, except when governments and financial bodies take unnatural economic actions to manipulate the markets and delay the inevitable, strange things start to happen and the natural process of economic market events may be stall for a time. 
But eventually the markets will do what they do and end up where they were going in the first place.
Finally, try not to get too wrapped up in the economics of what is happening or you may get lost in the many theories that are debated without satisfactory resolutions… and of course the debate goes on… and on. There are just too many ‘moving parts’ and variable factors that serve together to keep the U.S. and global economies moving targets that defy any certainty of the future, which in the end is what everybody is simply looking for… certainty.
Rising U.S. Debt is Getting Very Scary!
Published September 9, 2009 | 
When you ride any of the scariest rides at amusement parks across the U.S. and world, there is a “point of no return” where you suddenly realize there is “no way out” and the reality of the situation starts to sink in, well that is what has happened in the reality of the ride we are on called “America’s National Debt,” the exception being there is no amusement to it.
Congress continues to raise the national debt ceiling currently set at $12.1 trillion, and it will continue to increase on a regular basis, evidenced by President Obama requesting a higher debt ceiling as the U.S. continues to borrow money to fund its many programs.
Like the scary amusement park rides, the ceiling keeps rising and rising, and whether there is “no way out” is a matter of economic and policy debate, and political will. Either way, the prospect of runaway deficits and debt are a good bit scarier for the American people and their nation’s future.
A true statement attributed to a recent U.S. President and repeated over and over by concerned citizens across the country is that “Future generations shouldn’t be forced to pay back money that we have borrowed,” and continue to borrow.
Nice sentiment, but the reality is that on our current course of adding spending without cutting costs, if you add in deficits that will skyrocket as baby boomers continue to retire and the long-term unfunded commitments to entitlement programs such as Medicare and Social Security, every man, woman and child is saddled with debt approaching $200,000, and that is roughly four times the average American household’s net worth.
One can rail against the fiscal irresponsibility of an administration and Congress that have let federal spending grow by well over 5 to 10 percent a year in real terms, the fastest in 40 years, while raising taxes amid reduced revenues to 
levels that haven’t been seen since cars had hand cranks.
One can also rail about the hypocrisy of policymakers agonizing over budget cuts that amount to one-tenth of 1 percent of federal spending while designing and approving huge spending bills and new supplemental appropriations for the wars in Iraq and Afghanistan that dwarf the Lilliputian budget cuts.
But as some might say, it’s all mind-numbing numbers, and that we’ve worked our way out of deficits before, as we did as recently as the Clinton administration, or, as the really cynical, that might think — and not care — that the Chinese, Japanese and Saudis will bail us out by continue to lend us more money, as they have been doing at new unprecedented rates in the last few years.
However, deficits have a way of hitting home in much more personal terms.
As the deficits continue to march towards higher levels, they will crowd out investment, further slowing economic growth and reduce the average family’s annual income by several hundred dollars in just a few short years.
At some near future point, the U.S. Government Debt will likely drive up interest rates, making the typical $250,000 mortgage, plus the interest that Americans pay on other purchases, cost about several more thousand per year.
Moreover, if we keep our current promises to the elderly, without reforming and controlling the costs of entitlements, the average family would have to pay at least $7,000 a year more in taxes by 2030.
And, like the scariest of amusement park rides, deficits ultimately might spook the paying customers so much that they go running to the exits, and foreign investors who have been so willing to-date to finance our debt could decide to pull out, especially when the point is reach where they can get more in return for their investment somewhere else, throwing the financial markets and the economy into even greater turmoil.
Deficits are such a large and growing problem that we need to come up with additional tax revenues and well-targeted cuts in spending, and the big entitlement programs need to be fundamentally 
reformed, especially so that ever-rising health care costs, in particular, can be contained, before contemplating a new health-care plan.
Developing such policies that produce meaningful reductions in the deficit requires both political will and bipartisan compromise, something that does not exist today, but at some point the people should and will demand such noble bravery from their government, a true “look at yourself in the mirror” moment.
Unlike the scary amusement park rides though, our country cannot just “get off” the scary ride, but instead, our children and grandchildren, and generations to come will face the horrors wrought by deficits every day.
The Market Environment
Published April 28, 2009 | 
Ultimately, any decision that results from the efforts undertaken through market research must exist in the external market environment and macro trends known as driving forces are always at work on markets and industries creating distinct problems and opportunities for the entrepreneur, and given the impossibility of knowing precisely how the future will play out, a good decision or strategy to adopt is one that plays out well across several possible future scenarios.
Driving forces effecting the market environment breakdown into roughly 5 categories including social forces, economic forces, political forces, technological forces, and environmental forces.
Social forces include such factors as quantitative, demographic issues (How influential will youth be in 20 years?), and softer issues of values, lifestyle, demand, or political energy. (Will people get bored with online chatting?)
The founder of the produce supplier Fresh Express asked his son to come in and help increase sales and he unlocked the driving force of the double income working family and discovered an opportunity for any product that would save time for convenience, and from this research opportunity, Fresh Express created the concept of “salad in a bag”, and the industry grew from $0 to $2 billion in four years.
It was Howard Schultz who recognized the driving social force of the blurring between work and home as Schultz realized that people might desire a “third place” being neither work, or home where they could find refuge or meet and socialize, and borrowing a concept from the Italians, Schultz created the modern American coffee bar and one of the country’s most respected brands with Starbucks Coffee.
The Japanese are ahead in robotics because they paid attention to demographics and everyone in the developed countries around 1970 or so new that there was both a baby bust and an education explosion going on; about half or more of the young people were staying in school beyond high school. Consequently, the number of people available for traditional blue-collar work in manufacturing was bound to decrease can become inadequate by 1990, and everyone knew this, but only the Japanese acted on it, and they now have a 10-year lead in robotics.
Economic forces include such factors as macro economic trends and forces shaping the economy as a whole (How will the international trade flow and exchange rates affect the price of steel?), micro economic dynamics (What might my competitors do? How might the very structure of the industry change?), and forces at work, on or within the company itself (Will we be able to find the skilled labor we need?).
For 50 years after the turn of the century, shipbuilders and shipping companies work hard above to make chips faster and to lower their fuel consumption, even so, the most successful they were interesting speed and trimming their fuel needs, the worst the economics of ocean freighters became. By 1950 or so, the ocean freighter was dying, if not already dead, and the real cost in not come from doing work (that is, being at sea) but from not doing work (that is, sitting idle in port), and once managers understood where cost truly they, the innovations became obvious with the roll-on and roll-off ship and the container ship. The solutions, which involve old technology, simply applied to the ocean freighter like railroads and truckers had been using for 30 years, and a shift in economic viewpoint, not technology, totally changed the economics of ocean shipping and turned it into one of the major growth industries of the last 20 to 30 years.
Gillette did not invent the safety razor; dozens of them were patented in the closing decades of the 19th century, and Gillette’s safety razor was no better than many others, and it was a good deal more expensive to produce. But Gillette did not “sell” the razor, as he practically gave it away by pricing it at $.55 retail or $.20 wholesale, not much more than one-fifth of its manufacturing cost.
Gillette designed his safety razor so that it could use only his patented blades, which cost him less than one cent apiece to make and he sold them for five cents, and since the blades could be used six or seven times, they delivered a shade at less than one cent apiece, or at less than one-tenth the cost of a visit to the barber. What Gillette did was to price what the customer buys, namely to shave, rather than what the manufacturer sells, and they were paying for what they bought, that is for a shave, rather than for a “thing.”
Political forces include such factors as electoral (who will be the next president or governor?), legislative (will tax policies be changed?), regulatory (Will the FCC loosened its grip on radio spectrum?), and litigative (Will the courts break up Microsoft?). In November 2000, Bidder’s Edge. Inc. used a software “robot” to record information found on eBay’s popular auction website. Bidder’s Edge automated search program repeatedly visited the eBay site, and various other auction sites, to permit potential bidders to locate items without having to visit each site, and the question of course was whether eBay’s database of individual customer transactions with legal property or whether the information was public domain since anyone with an Internet connection could see the data, and the outcome of such litigation obviously had groundbreaking political ramifications on the future of commerce itself.
Technological driving forces include such factors as direct (how will high-bandwidth wireless technology affect land line telephony?), enabling (Will X-Ray lithography bring in the next chip revolution?), and indirect (Will on demand video wiped out our DVD rental business?).
By understanding the technological driving force the Internet would be in retail commerce, Jeff Bazos built “The Earth’s Largest Bookstore” completely online with Amazon.com, and with in just a few years, Amazon.com (even several years after the Internet stock bubble burst) was worth more than 18 times as much in market capitalization as Barnes and Noble, a company that was started in 1873.
Environmental forces include such factors as natural (what changes in the natural environment will create opportunities or problems for us?), regional (Will California no-smoking laws catch on in other parts of the country?), and attitudinal (Will hybrid cars take off as a result of pollution?).
The purpose of researching driving forces is not to pinpoint future events but to highlight large scale forces that pushed the future in different directions and it is about making these forces visible, so that if they do happen, you will at least recognize them, and it’s about making better decisions today, and a quick step through of the driving forces as applied to your research problem can yield a number of entrepreneurial opportunities.
As you work through the driving forces influencing your market environment, you should formally record any and all opportunities and opportunity register or journal to inventory all the entrepreneurial ideas that emerge, and you want to store good ideas so that you can revisit them to see how new ideas might attend, to determine whether the timing is right to implement older ones, or to figure out what to eliminate as your truth strategic direction becomes more defined.