Quotes of the day

The thing to remember about the short-term is that we'll almost certainly be around when the long-term shows up.--Seth Godin

Future generations will look back with bemusement on a time when airline passengers couldn’t pay extra for a flight that’s guaranteed first place in the runway queue, and more generally on our odd reluctance to embrace prices. They’ll be unable to imagine why we thought it was better to let people die of liver disease than to pay organ donors, or why the “net neutrality” cult had a problem with Internet content providers being able to purchase resources to serve their customers better. ... The moral circle will continue to expand. As we look back in horror on our ancestors’ harsh treatment of slaves or of Native Americans, our descendants will look back in horror on our treatment of immigrants and our reluctance to trade with foreigners. Slogans like “Buy American” will strike our grandchildrens’ ears the way “Buy White” would strike ours.--Steve Landsburg

A poll in the late 1920s of 282 economists showed that 251 favored a monetary policy aimed at price level stabilization. Isn’t that sort of like New Keynesian inflation targeting? And of course the University of Chicago economists of the 1930s favored a combination of fiscal and monetary stimulus. What Keynes did was move the profession away from the idea of monetary cures for business cycles–which actually can be effective, toward the idea of fiscal cures, which (short of WWII) are almost never effective. It would take many decades for money to be rediscovered. Indeed the influence of Keynes was so powerful that even in 2009 there were many Keynesian economists who should have known better who suddenly announced that monetary policy couldn’t work at the zero bound, and that fiscal stimulus was needed. Fortunately those Keynesians rediscovered money much more quickly this time, indeed within 2 years.--Scott Sumner

In World War I the Allied strategy was to engage and defeat the center of gravity of the Central Powers, the German field army. This strategy was simple in conception but heartbreakingly difficult in execution, being based on flawed assumptions, an irreconcilable gap between strategic design and execution, and a comprehensive failure of management information systems. But by 1918 firepower had been integrated with protective cover and mobility, in the form of tanks and military aviation, and had been complemented by the use of radio to open the lines of communication and facilitate alignment from top to bottom and across units. This ultimately restored mobility to the battlefield and initiated the blitzkrieg form of warfare that would dominate the battlefields of the twentieth century. Great story, but what does it have to do with American business leadership today? A lot, because the strategic models are strikingly similar. Rarely in warfare have the challenges of the battlefield looked so insoluble as in 1916 and ’17; rarely in business have the macroeconomic, fiscal, and technological characteristics of the marketplace looked so complex as in the post-2008 world. And the fundamental problem is the same: a failure of alignment, by which I mean of the elusive ability to link strategic intent at the top of an organization to tactical performance at the bottom, via an unbroken internal narrative. In business terms, this means a chief executive must not only have the intellectual clarity to define his vision but also be willing to give leadership away to those around and beneath him. Only by mandating, and explicitly trusting, successive levels of management to execute according to his strategic design can he release the full potential of his organization.--Robert Fry