Views on current issues by UCLA Anderson faculty ...
- Sebastian Edwards - The Financial Hurricane Hits Latin America
- Edward Leamer - A Dose of Urgency for Home Buyers is the Medicine Our Bipolar Economy Needs
- Judy D. Olian - The Millennials and Us
- William Ouchi - Local Rule for New York City Schools
- Daniel J.B. Mitchell - Lost in Translation
- Bhagwan Chowdhry - Regulators Need To Be Open To Innovation: Integrate micro-insurance with micro-savings and micro-lending
- Shlomo Benartzi - The Friendly Skies (and Terminals) Can be Hazardous to Your Health
A few weeks ago, the world was on the edge of disaster. Fortunately, the decisive actions taken by the advanced countries' monetary authorities - including provision of unprecedented amounts of liquidity - prevented a complete financial meltdown. The world has avoided the "Argentinization" of the international financial system.
What has not been avoided is a recession that will be deep, long, and global. In the coming months, nearly every region in the world will experience economic deceleration, with exports declining and unemployment increasing.
Recent events have disproved the notion that emerging nations had "decoupled" themselves from the advanced economies. The facts have shown the opposite to be true. Most emerging economies are still fragile and affected by what goes on in the advanced countries. The effects of this recession will be particularly severe in Latin America.
Brazil and Mexico have been the hardest hit so far, to the point that the value of their firms has fallen by approximately 50 percent. The situation in these countries is so serious that a few days ago the United States granted them credit for up to $60 billion.
But Brazil and Mexico are not the only ones hit by financial volatility: Chile's currency has lost a third of its value, in Peru the cost of external financing has soared, and in Argentina the government has had to resort to extreme measures - such as the nationalization of the pension system - in order to avert an imminent fiscal calamity.
Indeed, with the recession possibly lasting 18 months or more - which would make it the longest since World War II - Argentina will be one of the hardest hit. Its external financing needs are enormous, and its exports will fall sharply. But politics will also play a role in Argentina's economic distress.
The administration of President Cristina Fernandez de Kirchner generates a great deal of distrust among local and foreign investors, who fear arbitrary measures. The recent decision of Standard and Poor's to lower Argentina's rating is fully justified and reflects many analysts' fear that Argentina will again default on its public debt.
Mexico and Central America will also suffer from the long recession. For many years, their economic fate has been closely tied to that of the US. These ties increased with the signing of bilateral free-trade treaties with the US, so there is a good chance that they could experience negative growth in 2009 and, perhaps, in the first half of 2010, as the US goes into recession.
Less affected by the financial crisis and the US recession will be those that have developed with an eye toward Asia nations - particularly Chile, Colombia, and Peru, and have accumulated resources to meet unexpected financial storms. They will be quicker to recover their levels of employment.
But the most important question is what will happen in Brazil, Latin America's giant. Over the past few years, analysts and investors around the world began to see Brazil as an economic power in the making. There was mention of a miracle, and many argued that Brazil would grow spectacularly like China and India, and no longer be the eternal country of "the future." Unfortunately, everything suggests that this was an illusion based on wishful thinking.
Brazil's boom of the past few years stood on an incredibly weak foundation. President Luiz Inacio Lula da Silva did indeed decide to avoid the rampant populism of Hugo Chavez of Venezuela, and successfully tackled inflation. But it takes more than that to become a great economic power.
What Lula did was simply to decide that Brazil would be a "normal" country. But more than controlled inflation is needed to create a robust economy with a high and sustainable growth rate. Agility, dynamism, productivity, and economic policies that promote efficiency and enterprise are required.
As many studies have shown, Brazil has not been able - or has not wanted - to adopt the modernizing reforms needed to promote a productivity boom. Brazil is still an enormously bureaucratic country, with an educational system in crisis, very high taxes, mediocre infrastructure, impediments to the creation of businesses, and a high level of corruption.
It is sad but true: in recent years Brazil did not opt for modernization and efficiency and will have to pay the consequences during the difficult years ahead.
A Dose of Urgency for Home Buyers is the Medicine Our Bipolar Economy Needs
Edward E. Leamer, Director, UCLA Anderson Forecast, Professor of Management, Economics and Statistics
When it comes to homes, we suffer from a collective bipolar disease, swinging from manic buying to depressed waiting. We are currently two years into the waiting stage of this disease, and we are experiencing a depressive episode that will soon be the longest and most severe since the Great Depression, with no end in sight. Though this disease is concentrated in the housing sector, it has almost always infected the rest of the economy, and led into national downturns with massive layoffs in manufacturing as well as construction.
The treatment for this disease is not a rescue package for current home owners, or a general tax rebate to stimulate spending. What we need is a dose of urgency in the form of a temporary tax rebate for first-time home buyers.
In our manic moods, frantic buying drives home prices to unaffordable levels, and one cure for the subsequent depression is a reduction in prices that is great enough to bring buyers back. While lower prices are part of the solution, they are also part of the problem. Our much-touted free-market system relies fundamentally on what economists call "downward sloping" demand curves: if the market price falls, sales rise. For homes that is not always the case. Lower prices are now creating the hope and expectation of still lower prices later, and buyers are choosing to wait it out to get the best deal. Thus lower prices create lower sales. This is a market pathology that causes unemployment and underemployment of homes first, and then workers.
The market experiences the flip-side pathology during the manic phase. Price increases, rather than reducing sales, create the fear and expectation of still higher prices to come, and buyers rush to get homes before it is too late. This is the key to designing the medicine we need now: a well-timed dose of urgency.
Most of us are frightened silly by the decision to buy a new home even in the best of times, and it takes some urgency to overcome the fear. The housing market is now utterly lacking urgency. The Federal government could administer a dose of urgency with a temporary tax rebate of five percent of the purchase price up to $25,000 for first-time home buyers. To create the urgency, it has to be temporary. Buy it now, or you don't get it.
Alternatively, the Federal Reserve could control the manias by raising interest rates to limit excessive price appreciation and overbuilding. If the Fed successfully eliminated the housing manias, the housing depressions would disappear as well. But the Fed chose very low interest rates in 2002-2004, just when the housing market needed some cooling off. Now the Fed is impotent to alleviate the depression because no level of interest rates is going to bring buyers back to a market with declining home prices.
A temporary tax rebate for first-time home buyers is an appealing solution. This rebate directly targets a worthy group: middle class families who thought they were priced out of the market forever, and young people who will benefit from getting a home sooner rather than later. It doesn't bail out speculators in houses or in mortgages. But by creating demand for homes, this temporary tax rebate does cushion the fall for all the players, and helps every American by stimulating economic growth.
A temporary tax rebate needs to be carefully timed. If the rebate is offered too early, it will only delay the depression. If the rebate is offered too late, we risk creating another short-lived mania.
Last the really good news. There is no real cost for this program. It just puts happy and deserving American families into homes that would otherwise sit empty waiting for buyers. And financially, there might be no cost to the Treasury. This tax rebate is likely to stimulate enough economic growth to pay back the Treasury with higher revenues soon enough. After all, there is a lot of collateral spending surrounding the purchase of a home. The other tax reductions of which I am aware cannot come close to this level of stimulus.
The Millennials and Us
Judy D. Olian, Dean and John E. Anderson Chair in Management
Reprinted from the AACSB eNewsline
Not long ago, I sat on stage with Bill Gross, Founder and Director of PIMCO, one of the largest fixed-income management companies in the world, waiting our turns to speak at the 2007 commencement ceremony at UCLA Anderson School of Management. Despite our fairly frequent experiences addressing large crowds, we chuckled that we were both nervous. In contrast, our student speakers seemed confident and entirely comfortable with the circumstances. They could have been speaking to four people or 4,000 -- it didn't seem to matter. Bill reminded me that this generation has grown up in front of the camera and their approach toward public exposure is profoundly different than ours. They share everything, really everything, on Facebook, YouTube or Flickr, and they are fearless, uncensored, and unguarded in displaying their emotions and passions.
This generation of students -- the millennials -- has other distinctions. It thinks big and expects to have an impact. In the 2006 Cone Millennial Case Study, 61% of those born between about 1977 and 1998 feel personally responsible for making a difference in the world. But to them, it's not enough to talk or to IM. They want to engage, to take action, to galvanize others, to be part of a larger community making a difference. Take a look at some of your students' blogs -- it’s much more than who they are -- it's what they aspire to be.
As the most technologically adept generation ever, millennials have grown up with internet networks that transcend time and space. Being part of a global community is natural when the medium is the web. Just consider the Live Earth concert weekend fueled by the energy of mostly millennials, reaching 178 countries, 35 territories, and resulting in 30 million web downloads so far. They used technology for the greater good. Music was the hook for those who watched or went online, but the purpose was larger -- to solve the world's climate crisis.
According to a recent survey by Net Impact, only one in three MBA students expects to work for large- or medium-sized businesses five to ten years after graduation. Four of every five MBA students believe companies should work to better society and will seek socially responsible employment in their careers. UCLA's Higher Education Research Institute collects survey data annually from college freshmen attending over 1200 colleges and universities in the US. In 2006, "helping others" was rated important by 66.7% of the freshmen, the highest rating this value has received in the last 20 years.
In business schools, we are recognizing and adapting to the shifting needs and passions of millennials. We've added new content into our curricula on social entrepreneurship, business and environmental sustainability, and leadership preparation for various segments of the not-for-profit world. According to the World Resources Institute and Aspen Institute's Beyond Grey Pinstripes survey, 54 percent of business schools require a course on corporate social responsibility or environmental sustainability, up from 34 percent in 2001. The nature of experiential learning among business students also has changed. Students are taking the analytic frameworks and leadership principles from the classroom, to internships and team projects that build self sufficiency and business skills in under-served and developing communities near their homes, and around the globe. The range, scale, and impact of these projects are breathtaking.
We're also realizing that we need to adapt the way we teach. Growing up with multiple technological 'toys' that they use concurrently, millennials do learn differently. Seymour Papert from MIT's Media Lab has used the term, "grasshopper mind", to describe their shorter attention span, and their rapid movement from one topic to another. Though perhaps challenging to the teacher, moving from one learning medium to another, engaging students in discussions and rapid exchanges, structuring learning through simulations and virtual reality, connecting learning to the world of the web rather than to abstract concepts, and creating collective rather than individual learning opportunities, are all required as ingredients of millennials' learning styles. Otherwise, teachers lose in the fierce competition for students' attentiveness.
But, one area where we've been slow to change concerns our measurement of outcomes. While AACSB has been promoting the assessment of learning outcomes as part of the accreditation process, media rankings are still fixated on a single model of career success -- placement among large, traditional employers that tend to pay higher salaries and recruit according to a fixed cycle. Dean Joel Podolny of the Yale School of Management dared to ask, at the AACSB Annual Conference this year, whether a higher starting salary is indicative of a better program.
Taking a cue from the millennials, their interests and passions are likely to steer many of them away from the standard business employer, in a different, yet equally noble direction. They may willingly sacrifice salary for their ideals, and they take their time to find the perfect fit. Are they less successful graduates for that? Is the education they received inferior? Is the school less reputable because of these values exemplified among its students? Surely, we should accommodate and applaud the range of choices that students make when we successfully prepare them for organizational and global leadership of many forms.
The way we frame outcomes translates into admissions profiles. If we broaden our concept of the successful graduate, the profile of the desired candidate will change in parallel. At present, we tend to favor in admissions students who fit the predictive model of purposeful, career-focused, quantitatively strong students, who will be attractive to traditional employers. What about the charismatic applicant with an unformed plan for social entrepreneurship, who might enrich the learning community of students but doesn't fit the predictive mold of the successful corporate-minded graduate. Do we do justice, in business schools, to that type of millennial applicant to our programs?
I looked across the field of mostly millennials at last month's commencement. I felt very good about their values, and confident that we've stretched their ways of thinking. But I couldn't avoid the questions: Are we broad minded enough to embrace the full diversity of millennials who aspire to use a management education to realize their ideals? Are we as effective as we can be in igniting the excitement of learning among them? Where must we change?
I'll let you know after I IM a few millennials. I welcome your thoughts.
This year, (New York City) Schools Chancellor Joel Klein and Mayor Michael Bloomberg have proposed changes that would radically alter financing formulas for the city school system and revolutionize its existing bureaucratic management structure. City lawmakers and the State Board of Regents are nervous, but they shouldn't be. Despite what the critics say, the changes will work.
The proposals (disclosure: I served as an adviser to the chancellor on these proposals) involve extending to all public schools three core elements: equity, empowerment and choice. Essentially this means that money will be assigned to each student -- with financial adjustments for those who come from low-income families, who don't speak English, who need special-education services and the like -- that will follow him to the school he attends. Principals will have greater autonomy in determining how best to spend their school's money. And parents or caregivers will continue to have choices in where to send their children.
This makes sense, and here's why. Since 1999, I, along with a team of educators and school policy experts, have been studying the adoption of equity, empowerment and choice in school districts in Boston, California (namely Oakland and San Francisco), Chicago, Houston, New York City, St. Paul, Seattle and Edmonton, Alberta. We visited nearly 700 schools and several thousand classrooms.
What we found is that the money that followed students to the schools they attended greatly improved financial equality among schools. For example at the Bailey Gatzert Elementary School in Seattle, many of the students come from low-income families and qualify for special-needs programs and additional financing. The financial adjustments for these students gave the school enough money to hire social workers and specialized teachers to meet the needs of all the children attending the school.
At most of the "empowered schools," where principals have significant freedoms, principals used their control over the budget to hire more classroom teachers rather than administrators, greatly improving the student-teacher ratio. And with greater freedom over curriculums, schedules and staffing, the lower student-teacher ratio meant that while teachers and students clocked the same number of minutes in class as before, the teachers spent more time with their students in small advisory groups, in tutoring and in one-on-one advising.
The results have been good. In Boston, where some of the 20 autonomous pilot schools have been operating since 1995, the average number of students for high school teachers in the pilot schools is 66 compared to 81 in the traditionally managed schools. Scores on state tests at these pilot schools are 30 percent to 50 percent higher than they are at regular public schools with similar student bodies.
We also found that parental choice in where to send children results in courses geared to the needs of children in the community. In St. Paul, choice has meant that each school now has to figure out how to compete for students by offering what families need. One school there has developed courses in the Hmong language and culture to meet the needs of a sizeable Hmong immigrant population.
Another school is offering "looping" in which the same teacher and students stay together for two years -- an idea that appeals to some families. These innovations are not dictated by a central office; they rise up from the teachers and the principals.
Over the last five years, my team has visited 66 New York City public schools and 42 of the city's more than 300 empowerment schools. At the empowerment schools, where principals on average control 81 percent of the money spent in their schools, we found fewer administrators, more teachers and an array of unique instructional innovations.
At the regular schools, we found that the average teacher was responsible for 121 students. At empowerment schools, however, the average teacher had 86 students. As a result, the teachers at the empowerment schools were spending more time working directly with their students either in small groups or one on one.
New Yorkers should not underestimate the magnitude of the innovations that the mayor and the chancellor have put forward. The extension of autonomy to all of the city's 1,467 schools is a natural step and one that will almost surely benefit all students. And allowing the money to follow students will remedy inequities of long standing and strengthen the autonomy of each school. Moreover, continuing to give parents a choice in where they send their children creates a powerful incentive for schools to perform and address specific needs.
Although school reform can seem at times both endless and pointless, Chancellor Klein's proposals represent a clear break with the school district as a monopolistic, bureaucratic monolith. And more important, they are a positive step in the right direction in terms of educating our children.
Business leaders often bemoan the fact that government is not run like a business. Of course, businesses are not democracies and most people would resist living under a government run like a business. However, there is one place where we would all benefit if California's state government emulated business practice: basic budget accounting.
As the state's fiscal crisis worsens - and it will - you will be seeing references in the media to budgetary "deficits," "shortfalls," "gaps" and "holes." You will also find that these terms are rarely defined - even by the state government officials who use them, from the governor on down. Although the numbers associated with these terms are always in the billions of dollars, the amounts vary dramatically from one telling to the next.
When I ask business people what they think it means when someone says that the California state budget is in deficit, they almost always respond that it means the state is spending more than it is collecting in revenue. In business terms, they are thinking of in-and-out flows of funds, the kinds of flows found on corporate income statements.
But in California's budget discourse, sometimes words like "deficit" don't refer to the inflows and outflows, but instead refer to stocks.
Let's step back and recall that in business accounting, there's a differentiation between stocks and flows. Stocks refer to what you have at a moment in time, such as assets or liabilities. The balance sheet is a compilation of stock measures, i.e., all assets and all liabilities as of a given date.
By contrast, flows occur over time. The change in inventory over a time period such as a year, for example, is a flow. The income statement is a compilation of flow measures; what happened over the course of a period of time such as a fiscal year.
If I had $1,000 in the bank at the beginning of the year - a stock measure - and I netted all the deposits and withdrawals made during the year (flows) - I should arrive at my balance at the end of the year. So if my balance at the end of the year is $700, it must be the case that outflows exceeded inflows during the year by $300. I ran a deficit of $300.
Of course, I have a problem if I continue year after year with my outflows exceeding my inflows. But sometimes, in California budget-speak, I would be said to have a "surplus" of $700. Sometimes I might be described as having a balanced budget because I still had a reserve left to draw down. Sometimes I might be described as having a deficit because my outflows exceeded my inflows.
What's more, unlike corporate income statements that refer to a fixed time unit - typically a year - deficits, shortfalls, gaps and holes in California budget-speak may refer to more than one year. Sometimes, deficit refers to past debt accumulation (a stock concept) plus this year's difference between revenue and expenditure plus next year's difference between revenue and expenditure.
What can such a mix of flows and stocks with uncertain time dimension possibly mean? How can such a figure help make a good decision?
Of course, any accounting framework can be gamed and abused. We all remember Enron's cooking of the books. But undefined accounting has no standards at all.
So a good first step in addressing California's current budget crisis would be to define fiscal terms precisely. A deficit or surplus should refer - and refer only - to the difference between revenues and expenditures in a single year. And particularly on the revenue side, a basic definition is needed.
Obvious sources of state revenue are taxes, user fees, grants received from the federal government, and interest earned on state funds. These are receipts analogous to sales on a business income statement. But unlike business accounting, borrowing - external and internal - and sales of state assets are sometimes treated as a type of revenue in California budgeting. That is bad practice. If borrowing were revenue, even the federal government could be said to have a balanced budget.
A much overused phrase of late is "transparency." In regards to one dimension of transparency, putting all its basic budget documents on the Web for public inspection, California gets a grade of "A." But making lots of tables and charts readily available is not truly transparent if the underlying concepts behind the numbers are fuzzy. On business-consistent use of basic accounting definitions, California gets a "D."
There is no way to prove that with well-defined business accounting principles, public officials in California would make better budgetary decisions than they seem to have made so far. But it seems improbable that good decisions can be made without such basic principles.
Regulators Need To Be Open To Innovation: Integrate micro-insurance with micro-savings and micro-lending
Bhagwan Chowdhry, Professor, Director of the Center for International Business Education and Research (CIBER)
Reprinted from The Financial Express
Risk and uncertainties in life affect everyone. Most people, including the poor, use savings as a mechanism to deal with unexpected demands for resources caused by death, disability and illness. For poor people, however, saving for the unexpected can often mean severely containing consumption which often includes going hungry, undernourishment for children, and pulling children out of school and putting them to work to conserve resources. But even then, meagre savings that the poor do manage to accumulate are rarely enough and there is a need for insurance against such unfortunate events.
Many informal risk-sharing mechanisms evolve in societies to deal with risk and uncertainty. One such mechanism is the joint or extended family in which the resources and risks are shared. The idea of sharing resources and risks is further enhanced by use of institutions such as the temple, the church, the mosque and the gurudwara, where people with means make a contribution and the needy members of the society obtain free food, medicine and other services in times of need. Various forms of safety nets, such as public unemployment insurance schemes, public health services and various public food distribution programmes are further examples of risk-sharing mechanisms. A study by Professor Robert Townsend of University of Chicago indicates that the extent of risk-sharing, even in poor parts of the world, is not insignificant. So, the glass is not empty.
But the glass is only half full. The level of formal and informal insurance that exists, even in developed countries, is far from adequate. In poor countries such as India, the inadequacy of insurance for poor people is far too palpable to require statistical confirmation. There are good reasons why risk-sharing, using both formal and informal mechanisms, is often inadequate. Formal mechanisms consisting of market insurance and use of financial contracts and derivatives to hedge risks are often infeasible for the poor. First, the transaction costs are too large compared to the size of the financial contract to make such contracts economically not viable. Second, the information problems are severe. Adverse selection - when only the people who privately know that they are high risk choose to buy the insurance priced at a certain level - and moral hazard - when the insured people deliberately engage in high risk activities knowing that they are insured - make formal insurance contracts infeasible.
Informal mechanisms are able to get around some of the problems caused by information asymmetries. Informal risk-sharing is often provided by people who know the insured well - usually a family member. Moreover, since the contracts are informal and implicit, it eliminates the need for any paperwork or formal rules reducing transaction costs. Instead, moral and societal codes of conduct put a check on recalcitrant behaviour.
- Most people use savings as a mechanism to deal with unexpected demands
- The formal and informal insurance that exists is far from adequate
- Be flexible and creative in designing composite financial services
But informal contracts don't provide adequate protection for many reasons. First, since informal contracts are only feasible among people who know each other relatively well, the reach of the risk-sharing is limited to a small number of people who are also likely to be poor and face many similar risks - for example they generally live in the same geographic area. Ideally, risk-sharing should occur amongst peoples with uncorrelated risks - for example people who are geographically apart. Attempts to achieve this are observed in practices such as marriages among families from distant villages. Nevertheless, informal mechanisms cannot confer benefits provided by formal insurance contracts which, in effect, can expand the risk-sharing neighbourhood to the entire world!
So, if we can devise mechanisms that can either reduce transaction costs or alleviate information asymmetries, the scope of formal insurance contracts can be expanded. We argue that integration of financial services demanded by the poor, micro-insurance, micro-savings and micro-lending, achieves both. Transaction costs are reduced because poor clients' needs for all their financial services can be taken care of under one roof. Moreover, when a client has a track record of, say regular savings, or a loan with regular repayments, some information is learnt about the client. This alleviates information problems making it feasible to offer other products such as micro-insurance.
Regulators are, sometimes with good reasons (but not always), wary of financial innovations of the kind we suggest. It is worth pointing out that one of the most popular financial products that bundles savings with insurance, namely whole life insurance, has not only gained wide acceptance by the public, but also enjoys the blessings of the regulators. But this product is aimed at the middle class. The poor in the country have not benefited from this at all even though it is the poor, as we have argued, who are the most vulnerable and would benefit the most from insurance products of the type we suggest.
We must be flexible and creative in designing these composite financial services so that we are able to offer services that will help the poor the most but at the same time proper safeguards and regulation are put in place to ensure that poor clients are not subject to fraud, anti-competitive practices and risk of losing their savings. But that will require creative and dynamic regulation.
For instance, savings of the poor can be protected by allowing, and in fact requiring, financial institutions that offer savings products to buy deposit insurance from the government. Similarly, small local institutions offering insurance products can be required to hedge their exposure by unloading the risks of their portfolios in the larger re-insurance market or by using financial derivatives with proper controls. The present stance of the regulators, altogether prohibiting financial institutions from offering products that combine micro-savings, micro-lending and micro-insurance, putatively for protecting the interests of the poor, amounts to throwing the baby out with the bathwater.
The Friendly Skies (and Terminals) can be Hazardous to Your Health
Shlomo Benartzi, Associate Professor and Co-chair of the Behavioral Decision Making Group
They say frequent traveling can be a real killer. On one recent flight, I saw how this could literally be true.
After a flight from Washington DC to Los Angeles, I entered the United terminal to find a man in the gate area passed out and turning blue. An "airport official" was already with him but no medical care was being administered. When I inquired if an announcement could be made to summon a doctor from the near vicinity, the employee informed me that 911 had been called and help was on the way. There was nothing to be done in the meantime.
I found the lack of action astounding. Whatever happened to "Is there a doctor in the house?" In an airport with its extensive paging and intercom systems as well as bustling activity, it seems an ideal place to quickly send out the call for help and get a first responder in seconds rather than minutes.
But what the airport also offers - thanks to poorly run airlines, government intervention and bankruptcies galore - are nameless, faceless, company-less employees with zero authority and little incentive to think beyond the training manual.
Apparently, the manual says to call 911 and then ... wait (another thing airports are famous for). These manuals are no doubt written with great reverence to the attorneys who prescribe the path of least discretion to avoid potential lawsuits. (Never mind that Good Samaritan laws protect those who aid the injured or ill in emergency situations.)
The employee in "charge" was hired to do a specific job: to follow directions. He doesn't get paid to assess a situation and take action to solve the problem at hand in the most expedient fashion. When you pay employees as little as possible, you get as little as possible.
While this was just one small incident (though the injured man and his family would probably disagree), it illustrated a disturbing trend toward the dumbing down of employee performance. When I asked for the employee's name and contact information, he became rude and aggressive. Apparently there is no need for a customer to follow-up on specifics of the service provided. Or more likely, he knew the best way to avoid trouble is to remain anonymous.
As a professor of business at UCLA and researcher of economic behavior, I see this trend playing out in government institutions, corporate boardrooms, factory floors and in the classroom. The old can-do American attitude has changed into a shrug of the shoulders and a "What can I do?" indifference. The employee no longer feels accountable for his or her actions (or inactions) and is not given responsibility by the employer. The end result is diminished service, sometimes even life-threatening in nature (such as in this case).
While we fear the hidden cells of mass chaos, could there already be small-scale chaos on a daily basis? Poorly trained employees of American businesses and government-subsidized entities have little skin in the game and little desire to go above and beyond. What once made our country strong - ingenuity, entrepreneurial thought, risk taking - has been squashed by fear.
After this experience and several others - not always life threatening but troubling nonetheless - it leads me to an unnerving conclusion. If we can't save one man from turning blue how will we prevent a large-scale disaster?
Hindsight is always 20/20, but maybe the problem is that foresight is ignored. As I raise this issue, will anything be done? Will airport management reconsider how they handle emergency situations? Will individual employees be allowed and even encouraged to take action when required?
The less-than-stellar response to the medical condition of one man in one airport is not considered a national disaster, but the warning signs are there that if something is not done, this one incident will be replayed again and again. In the face of a true disaster, the consequences may be too much to bear.