I couldn't agree more with the conclusions and similarities this article from today's Wall Street Journal draws about unions. If organizations can't fire easily, they definitely don't hire easily. Did you know that Michigan had the lowest rate of home price appreciation of all 50 US states last year? This theme also rings true in the Indian context....labor reform is key to a vibrant future India. I, personally, have observed the impact of unions on 2 of my former clients. At a mining client, we had a really tough time implementing pay for performance on the front line...as unions are generally anti performance based differentiation (which I'm definitely for!). At a hospital client, I saw how expenses grew uncontrollably due to unions...forcing prices up and/or profits down (usually into the red).

Here's the article:

At first glance, they seem to have little in common. But the riots in France over labor reform, the slow-motion suicide of General Motors, and the continuing decline of the New York economy all share one defining trait: entrenched and unchangeable union power.

These columns have always favored the right to collectively bargain, and any private company that allows a union to organize its workers deserves what it gets. But that doesn't mean we should fail to appreciate the consequences when unions become entrenched inside any organization. On the evidence throughout business and politics today, unions do not provide individual job or income security. On the contrary, they undermine security by contributing to broader business and economic decline.

At the national level, the French example is clear enough. While the French private sector is less unionized than America's, it must cope with mandated work rules that make it all but impossible to fire someone; so naturally companies are also reluctant to hire. The jobless rate is double America's, while youth unemployment is 23%. More significant is that the political clout of public-sector unions has blocked all but minor changes in these rules. Public-sector workers account for more than a quarter of the entire French work force (6.4 million of out 24.6 million), and their salaries and pensions made up 45% of the entire state budget as recently as 2003.

Is General Motors Unraveling? The current French protests are in response to a modest change that would allow employers to fire people under age 26 more easily. So entrenched has the politics of union entitlement become in France that even at the onset of their careers these young protesters are demanding security over opportunity. In the global economy, this means they will end up with less of both.

France remains a wealthy country, and its economic decline can be masked for a time as it lives off accumulated capital. But already the promises that its unions have extracted from the government seem unlikely to be kept. A growth rate of between 1% and 2% a year won't be enough to finance the pensions and health care of an aging nation. And facing up to those facts will require an increasingly painful political reckoning.

* * *
Here in the U.S., the same burden is slowly crippling New York, once a bulwark of American industry. Power in the state capital of Albany is shared by Republicans and Democrats. But both parties bow before the public-sector unions, especially the teachers, and the health-care workers led by perhaps the most powerful man in the state, Dennis Rivera.

Thanks to his political clout, New York's Medicaid costs are higher than those of Texas and Florida combined; a health-care insurance premium for a young family of four is roughly six times what it is across the border in Connecticut; and high-deductible health-savings accounts that can help the self-employed afford insurance can't even be offered in the state. New York is also a rare state that actually taxes private health insurance, to the tune of about $2.4 billion a year.

Another union-driven business cost is workers' compensation, and in New York the average cost per claim is second highest in the nation (after Louisiana) and 72% higher than the national average. Governor George Pataki has proposed a reform that would lower costs while actually raising the average payout for the truly disabled, but he's run up against a French-like union roadblock in the legislature.

Thanks to immigration, as well as America's continuing advantage in financial services, New York City has so far been able to avoid another fiscal collapse of the kind it had in the 1970s. But upstate is a different story, with jobs and young people fleeing to better business climes. New York manufacturing employment fell by 41% between 1990 and 2005, or double the national rate.

Even Eliot Spitzer recently referred to upstate New York as "Appalachia." Alas, the Attorney General shows no sign of understanding that the heart of the problem lies in Albany. One reason he hasn't pursued the state's rampant Medicaid fraud with any vigor is because it would get him crosswise with Mr. Rivera.

As for GM, its management mistakes are legion and its weak product line well-known. But the root of its problem is that it long ago became a corporate version of the welfare state, with the same entrenched union interests. Yes, as a private company it has had to answer to shareholders. But the size of its market dominance going back to its heyday 40 years ago allowed its managers to avoid confronting its uncompetitive wages, benefits and work rules even as they saw Toyota and Honda gaining in the rearview mirror.

In retrospect, GM management should have provoked a union showdown. Yet only a very brave CEO would have been willing to risk a potentially catastrophic strike on his watch for the sake of making the company more competitive after he retired. In any case, would the United Auto Workers really have budged? In 1998, young executive and future CEO Rick Wagoner endured a 54-day UAW wildcat strike at two plants in Flint, Michigan, after GM had tried to change some production rules. The strike shut down most GM production in North America and cost the company some $2 billion. In the end GM caved and the UAW escaped, having made virtually no concessions.

Even now at auto-parts maker Delphi -- which is already in Chapter 11 -- the UAW is declaring it will take a strike that could destroy both Delphi and GM rather than agree to Delphi's proposed job cuts and work changes. As in France and New York, these union leaders would rather sink the company than make concessions that would reduce their own power.

This pattern has repeated itself again and again -- in the steel and textile industries attacked by foreign competition, or the unionized grocery chains routed by Wal-Mart. The union answer has rarely been to work with a company to allow more job flexibility to become more competitive. The answer has typically been to seek a ruinous strike or lobby for political intervention that might stave off disaster for at best a few more years.

We recount all this because, even amid GM's decline and France's economic turmoil, most of America's liberal elites refuse to draw the right lesson. They cling to the belief that if only the Democrats can retake Congress, or the union movement can once again organize more of the American labor force, the old economy of union-backed job security and egalité will return. Or, worse, they propose seceding from global competition via protectionism. It is all a delusion. Down that road lies France -- a nice place to vacation, but you wouldn't want to work there.

The role of money in creating or facilitating happiness is a subject of great interest to me. I find every individual has their own unique relationship with money. Here are some fascinating excerpts from a recent Wall Street Journal article on this topic:

"During the holidays, we will give thanks for the important things in our lives. For most people, money is not one of these things -- at least this is what we would like others to think. We are after all constantly reminding each other that "money doesn't buy happiness." Economists aren't so sure.

They note that people with a lot of money tend to express a higher subjective happiness than people with very little. According data from surveys by the National Opinion Research Center, for example, people in the top fifth of income earners are about 50% more likely to say they are "very happy" than people in the bottom fifth, and only about half as likely to say they are "not too happy."

There is, however, generally very little change in the average level of happiness in populations getting richer over the years. For instance, the percentage of the U.S. population saying it was "very happy" in 1972 was exactly the same as it was in 2002: 30.3%. Social critics of "consumerism" explain this by claiming that what makes rich people happy is not money per se, but rather the fact that they have more of it than others -- so if everybody gets richer, happiness remains unchanged.

...beyond earning, taxing and spending, there is an even clearer link between money and happiness: charity. The evidence is unambiguous that donating money (and time) is one of the best ways to buy happiness. People who donate to charity are 40% more likely to say they are "very happy" than non-donors. Psychologists have even tested whether charity makes people happy using randomized, controlled experiments -- the same procedure used for testing pharmaceuticals, except that, instead of administering a drug to one group and a placebo to the other, researchers randomly assign one group to act charitably toward another. The results are clear: Givers of charity earn substantial mental and physical health rewards, even more than do the recipients of charity -- empirical evidence that it is indeed more blessed to give than to receive.

The bottom line is that the old axiom about money and happiness, properly understood, is quite wrong."

(Mr. Brooks (the author) is an associate professor at Syracuse University's Maxwell School of Public Affairs)

So what do I think? When I was younger, I focused more on the negatives of money....and tended to notice when rich people were also unhappy. Over the years, after many courses on economics taught by compelling 'free marketers', after seeing the enormous positive impact economic liberalization has had on the India I am familiar with, and after getting practical experience making and spending it - I've come to view money as a powerful facilitator and enabler...and financial independence as a critical positive step in everyone's life.

I'm getting ready to write some checks for my favorite charities before year end. It's that time of year. Act now to get that tax break in the 2005 tax year....it can only help the way you feel.

I was reading an article about the french riots and the core liberal philosophy underlying french society and government. The french believe (rightly) that all people are equal and that race, color, ethnicity shouldn't matter. As a result, they don't measure any of their social outcomes by race, color or ethnicity.

No data on whether there are particular ethnic or racial segments of society that are having major problems? No way to fix these problems. If you've read the papers at all in the last few weeks, you know what I'm talking about.

Not sexy, but true (to me anyways). You achieve what you articulate and focus on. You fix problems you see. You improve metrics you measure and report regularly.

So why the hell is this the subject of a blog? Well, I'm not sure this is going to be a crowd-puller, but I was reading an article my boss sent me from the Wall Street Journal and I'm feeling validated (enough to share anyways!). The article is about Michael Walker, founder of the Fraser institute in Canada. A few snippets from the article which I totally agree with:

"A debate about government policy isn't likely to be settled around values. But when there is objective measurement, resolution emerges"

"The dirty little secret of Canada's single payer health system: that care is rationed through time rather than price"

"I firmly believe that you become what you think about, and that is as true for countries as it is for individuals"

"A five-bedroom river-view house sold three years ago for $45,000. Two years ago it sold for $80,000. It sold a third time in August for $300,000. Who would have guessed it was in Baghdad? The place is a disaster, and keeps getting worse. Despite the violence, property values have increased close to 1,000% in the past three years in parts of town. Go figure."

I was struck by the above quote (and information)in a real estate newsletter I recently received.

Besides providing a fascinating peek into an Iraq dynamic I wasn't aware of, this quote brought to my mind an issue that is popping up more and more for me.

Where does one go for the real story nowadays? The world is globalizing...but the media seems incapable of providing a balanced view of 'reality'. Is it time for a brand new non-profit, non-political, non-partisan global news organization?

I just received my latest edition of the McKinsey Quarterly, a pretty interesting business journal mailed regularly to me by my former employer. I get about 6 a year, which I loyally place on a bookshelf at home for future knowledge seeking moments. But this one caught my attention: Fulfilling India's Promise.

The various articles analyze (and offer a ton of facts about) many business/economic aspects of India: the view of foreign and indian executives, the indian consumer, marketing to the masses, when to make india a manufacturing base, india's offshoring future, reforming india's financial system, securing india's energy needs, an interview with manmohan singh (the prime minister) on india's economic agenda. the recommendations in the aggregate could transform the economy i.e., the lives of the population!

The sheer power of the knowledge creation I was witnessing amazed me. Echoing Gotham's recent optimistic post, although problems do sometimes seem to abound, there are some things that are amazing about what's going on in this new, developing, evolving world of ours!

Some on this blog have complained about the use of labels to denote 'bundles of opinions'. Liberal. Conservative. Democrat. Republican. Gay. Straight. Pro or Anti-Hindu. These complaints struck a cord with some of the feelings I have on this issue. Why do we need someone else...a political party, a social group etc to tell us which opinions and views 'belong together'?

I have a practical answer to this question: most people don't have or want to take the time to think through how they really feel about each issue that is important to our society, particularly if their own life is 'OK' in that particular area. So, they align broadly with a group or party...and vote based on this broad choice, thinking most of the time they will vote 'right' (i.e., consistent with a more thought through personal choice on any particular topic).

This practical consideration, however, doesn't make me feel better about the choices available, as I believe they significantly (and potentially adversely) impact legislation 'on the margin' (i.e., active legislation today).

A few examples:

1. Why does a pro-free trade stance belong with an anti-gay rights stance? Trade doesn't have much to do with religion.
2. Why can't you be pro-teacher and pro meritocracy and pay-for-performance in education (charter schools in America)?
3. Why can't you be pro-Hindu (one of the greatest, and most flexible religions in the world!) without being anti-Muslim?
4. Why can't you be pro-business and pro-gay rights or pro-choice? Who do you vote for if this is the case?

I think it's time we started voting for issues, not parties!!

Almost everything I, and we, do at work or in life revolves around people and our relationships with them. I am fascinated by what makes relationships meaningful and what makes some people more successful than others in life. I have come to the conclusion that separating people's actions from their words is the key to answering some of these questions. In fact, I believe actions are all that matter!

Having said that, I'll caveat my statement by acknowledging the importance of communication, and education in our lives and for society. But at the end of the day, I've found that the only way to 'cut through the crap' and get to the heart of what's right and valuable is to look at actions not words.

How many of you know people who claim to be bleeding heart liberals and who are vehemently anti-globalization? I know a few, who immigrated to America and stay here. How many of these folks have moved back to India (if that's their home country) and stopped working their high paying corporate jobs? None.

How many people do you know who go to the temple everyday and discuss the importance of religion in their lives and decision making? I know a few. Many of these folks drive lavish cars and have a lot of money but would pass by a hungry homeless person without offering them a bite to eat. Also, most don't engage in any significant charitable activity.

How many people do you know who are against allowing legal rights for same sex couples in multi-year relationships (as they believe this is anti-family) but are divorced or engaged in extra marital affairs themselves? I know many...and know there are even more I don't know..most of whom voted for Mr Bush.