World population was only one Billion in 1859, when Charles Dickens wrote his historical novel, A Tale of Two Cities, set in 1775 London and Paris, at the time of the French Revolution. In reality, in 1803, the Macro-economic errors leading to The French Revolution allowed Thomas Jefferson to enlist the aid of Barings Bank to complete The Louisiana Purchase.
By America’s centennial in 1876, The United States was the world’s largest economy. In spite of the benefits of The Industrial Revolution, The Trans-Continental Railroad, the Telegraph and the Telephone, excesses of ‘The Gilded Age’ led to extreme economic fluctuations from depression to panic to recession, eventually leading to collective action.
The ‘Shared Prosperity between the 1930’s to the 1970’s, saw no systemic bank failures. The Glass-Stegalls, Davis-Bacon, Bretton Woods Agreements, the creation of the International Monetary Fund, The Economic Bank for Reconstruction (The World Bank), The Marshall Plan, GI Bill guarantees, contributed to a rapidly growing stable economy. For instance, distinguishing acidic from alkaline solutions Arnold Beekman’s pH meter revolutionized scientific study, eventually contributing to automobile catalytic converters to reduce lead air pollution decades later. Similarly, like an attorney-client or physician-patient relationship, Marvin Bowers envisioned Mackenzie & Company, as an engineering-consulting-management relationship of equals in industry. Moreover, by 1965, Gordon Moore’s observation that the number of computer chips on an integrated circuit would double every two years; the cost simultaneously reducing by half with 64 chips in 1965 eventually becoming 65,000 chips on an integrated circuit in 1975, contributed to the search for the “killer computer application”. Furthermore, along with mass consumption, mass marketing, public education, continually fed the development of skilled workers climbing the economic ladder of upward mobility. By the middle of the 20th century America stood like a colossus, as the world’s largest creditor nation.
On the other hand, ‘the deep state’ decision of dis-industrialization, led to trading risk, speculation and volatility allowing private firms to leverage other people’s capital. Changing the 1:20 ratio of entry level versus C-suite compensation based on stock options to becoming 1:300; Warren Buffet’s 1985 letter he warned of the possibility of manipulation to enhance compensation. The end of usury laws, private sector ‘cost of living adjustments’; the acquisition of junk bonds saw the Savings and Loan industry consolidated as The Resolution Trust Corporation in 1989. By 1994, ‘rogue trader’ Nick Leeson put Barings Bank completely out of business. Similarly, by 1994, Marvin Bower admitted ‘that business was not working as well as when he first started in 1932’. Peter Drucker concurred with his friend Marvin Bower, stating that Drucker’s advocating for decades for the implementation and utilization of the ‘information knowledge worker employee as an instrument for improved Enterprise growth results, had only received lip service over his lifetime. By 1998, The Federal Reserve said, “this time is different” as it assembled representatives of 20 of the largest banks to unwind the hedge fund Long-Term Capital. Ten years later in 2008 the almost one Trillion Toxic Asset Relief Program (TARP) Fannie Mae, Freddie Mac, the American International Group had to be ‘taken over’, while nine of America’s largest banks received $135Billion and the Federal Reserve continued to do it’s best to help save the rest of the international banking system. Subsequently, the world has learned of manipulations involving LIBOR, the London Inter-Bank Offer Rate, the ‘Flash Crash’, as well as the FOREX, Foreign Currency Markets.
2015, seven years after The Great Recession some of the scars still remain, as International Monetary Fund President Christine Lagarde voices concern about ‘a possible new normal mediocre slow growth global economy’. In short, does a $60Trillion global economy easily absorb a $12Trillion speculative-toxic-asset-price-bubble-tsunami within seven years?
Along with 7Billion people on the planet, over the next 35 years, as world population approaches 9Billion by 2050, where will your Enterprise fit in its contribution to growth and the city you are creating?
The $18.5Trillion US economy with 320Million median income $50,000; $12Trillion Chinese economy with 1.4Billion at a median income$7,000; $2Trillion Indian economy with 1.3Billion at a median income of $3,500 will each approach economic growth challenges differently.
In 2015, 50% of the 7Billion or 3.5Billion live in urban settings, however by 2050, 70% of the 9Billion or 6.3Billion will live in urban settings. In other words, cities like London (8miilion), Paris (2million), New York (8million), Shanghai (24million) and Mumbai (12million) have the potential to each double within the next 35 years by 2050.
Similarly, seven years after The Great Recession, former Treasury Secretary Henry Paulson, Jr. is concerned about the manner in which healthy quality sustainable growth is created; debating good-growth versus bad-debt-related-growth. For example, the over use of legal strategies like ‘eminent domain’ to seize raw land, borrow against that raw land to build over-leveraged housing by local municipalities for over-leveraged populations has the potential to contribute to another global financial crisis, even bigger than the 2008 Great Recession. Antediluvian, 19th century take-make-sell-waste Industrial Revolution business-models, present challenges going forward in a new normal mediocre slow growth global economy. Given these circumstances, over the next few years, how will the growth results of your Enterprise contribute?