What Peter Drucker Would Be Reading

Posted on Dec 11, 2012 | One Comment

Peter Drucker

Recent selections from around the web that, we think, would have caught Peter Drucker’s eye:

1.     How Apple Really Lost Its Lead in the ‘80s: Many of us think we know what happened to make Apple stumble in the 1980s. For those who don’t, Jay Yarow at Business Insider starts by summing up the conventional wisdom: that Apple pioneered personal computing but “then stumbled because of its closed approach while Microsoft flourished, spraying its software everywhere through low-cost” PCs. A neat story, says Yarow, but not a true one. “First off all, Apple was never really a market leader in the 80s,” Yarow notes. Second, Apple took forever to come up with a viable follow-up to the Apple II, which was released in 1977. The Apple III had to be recalled for flaws, and the Apple Lisa cost nearly $10,000.  Yarow writes, “Apple didn’t deliver a strong follow-up until it released the Macintosh in 1984. By then it was too late.” At least for a while.

2.     A Proper Accounting: The Real Cost of Government Loans and Credit Guarantees: Our fiscal circumstances are dire enough even without a reality check. But an article from Knowledge@Wharton examines a new statement from the Financial Economists Roundtable suggesting that even our current bad numbers are too rosy. For instance, “student loans and mortgages backed by the Federal Housing Administration, among more than 100 other lending programs, contain potential losses that are much more costly than what current accounting suggests.” All in all, the likelihood of fixing the problem is low:  “Washington may be reluctant to reform an accounting system that, by inflating the value of government assets and understating the cost of government guarantees, makes the deficit look smaller than it really is.”

3.     Robots and Robber Barons: While we do not ordinarily link to New York Times columnists in this feature, based on the assumption that the Times already gets attention enough without additional urging (and that Peter Drucker would have regularly scanned its pages as a matter of course), Paul Krugman’s most recent column explores so many ideas that were central to Drucker’s work that we must make an exception. Krugman notes that “profits have been rising at the expense of workers in general, including workers with the skills that were supposed to lead to success in today’s economy.” In short, even knowledge workers, tomorrow’s vanguard, are in trouble. Krugman has two theories as to why: “One is that technology has taken a turn that places labor at a disadvantage; the other is that we’re looking at the effects of a sharp increase in monopoly power.” Do you buy either?

4.     Dx Comment of the Week: Last week, we paid a visit to the fiscal cliff and heard what some different people had to say about it. When we asked whether budget hawks are acting in good faith or not, we received an introduction from Will Hopper, founding chairman of the Institute for Fiscal Studies in the U.K., who suggests we draw on IFS’s work as an example of how to stay above the fray, and we received the following comment from reader Mike Harmanos:

Ask anyone who believes taxes are too high what the requirements of society and the economy are, and they will look at you as if you’ve just arrived from Mount Sharp on Mars. But it is roughly the same concept as ‘price-led costing’ that Drucker championed. It’s a completely different mindset than what Washington knows today. A debate on what the requirements of society and the economy are would have a healthier effect on politics in America. We would all be forced to understand the motives of each other through policy.

1 Comment

  1. Greg Zerovnik
    December 15, 2012

    With regard to Krugman’s piece, I find his focus highly selective. He carefully steers his readers to the two factors that have captured his redistributionist fancy while ignoring others. His clearly disparaging remarks about the inheritance tax are a clear sign of his bias. Corporations are playing the classic game of avoiding risk and raising profits. The current economic environment biases their welfare at the expense of the labor force. The question is, what is the proper response to recalibrating that bias? I don’t think it’s preventing privately held companies from being easily passed along to heirs with the imposition of confiscatory inheritance taxes. I don’t think it’s raising capital gains rates either. I do think that income taxes could go up to some degree on everyone–not just the top 2%. But it should be a modest amount–no more than 2%. I think the mortgage deduction should be pared down, but not eliminated. The charitable deduction should be left alone because private charities do a better and more efficient job of social welfare and justice than government agencies. Corporate welfare needs to be ended. No more ethanol subsidies, no more subsidies to corporate ag firms like ADM, no more Solyndra loans, no more bail-outs to “too big to fail” firms with short-sighted managers and over-reaching unions. No more fiddling with the minimum wage. Raising the latter may be nice for working dads and moms but it is absolutely deadly for unemployed teens and poorly educated minorities. That’s my two cents.


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