Tag Archives: The Economist

Corporate disconnect

Two years ago, EADS launched an engagement survey based on the proven approach offered by Gallup. In its website, Gallup offers a downloadable brochure [PDF, 0.7MB] about the survey, its questions, results and best practices.

Some of the standard questions asked to employees can be found in that brochure:

  • At work, I have the opportunity to do what I do best every day.
  • In the last seven days, I have received recognition or praise for doing good work.
  • At work, my opinions seem to count.
  • In the last six months, someone at work has talked to me about my progress…

The results of the first two surveys were widely covered by the press (2009 and 2010) due to the low engagement results showed by the survey. Moral was apparently rock-bottoming. Surely, many initiatives would be launched to overcome the situation. In the end, the same brochure by Gallup offered the clue to what the best companies were doing best:

  • Strategy
  • Accountability and Performance
  • Communication
  • Development

In the last issue of the The Economist I found an entertaining article showing the disconnect between opinions at the top and the bottom of the companies. It reminded me of the big differences in the responses shown by the Gallup survey between groups of low ranking employees and top management.

I loved the following paragraph in the article that summarizes well the corporate disconnect:

Tragicomically, the study found that bosses often believe their own guff, even if their underlings do not. Bosses are eight times more likely than the average to believe that their organisation is self-governing. (The cheery folk in human resources are also much more optimistic than other employees.) Some 27% of bosses believe their employees are inspired by their firm. Alas, only 4% of employees agree. Likewise, 41% of bosses say their firm rewards performance based on values rather than merely on financial results. Only 14% of employees swallow this.

Let’s see if the formula of Gallup it’s indeed proven return on investment.

Leave a comment

Filed under Personal development & HR

For Living or Investing

"Pour Vivre ou Investir", seen in Toulouse.

This is an ad I see every day on my way to the office: “For Living or Investing”. They sell villas and apartments up to 4 rooms.

I have often defended the position that a house cannot be considered an investment. Recently I read yet another article at The Economist, in which they showed the latest graphic of the Case-Shiller index (below). I showed this graphic in a post last year. Now the prices have decreased some percentage points more. Most importantly, the curve and the article point that a further decrease will come. Down to the point where the prices stay stable along the last 130 years once inflation is adjusted.

Case-Shiller index.

Taking that into account, when I see that ad in the morning I can only smile and think of that other story which I included in another post about a message from the future describing how the housing craze continues to go on in Spain for decades… (extremely funny – in Spanish).

I have only one complain to the promoter of these houses in the ad: they are using land so close to the city to build houses for investing… if these houses are just meant for investing, and not necessarily for living, they could have built them under the sea and leave the land in Toulouse for living, public parks, roads, etc…

1 Comment

Filed under Economy, Investing

The end of private property

Last Saturday, while reading the last issue of The Economist at home, I found the following table with the evolution of government spending for some countries:

Government spending as % of GDP, source: The Economist

You can see that the trend is upwards for all countries.

In one of my favourite books, “Augustine’s Laws“, the author goes on extrapolating several trends in the defense and aerospace industry. I did the same with this table for the average of these countries and the particular case of Spain, for obvious reasons.

When will government spending reach 100% of GDP?

Extrapolating the trend, this would occur in Spain  the year 2124 (for the average of the countries in the table it would happen in 2171). What would that mean? By 2124 every euro spent in Spain would be spent by the government (local and central), not a dime spent by individuals. The end of private property.

Government Spending as % of GDP, extrapolation

That is not necessarily worrisome: we would be provided a home by the state, food to eat (the trend doesn’t say whether we would have to eat in public canteens or we would receive vouchers to get stuff from grocery shops), clothing, etc… We would become a kind of communist country in the end. Don’t worry, United States would join us some years later. I guess the last country in joining this pan communist block would be Switzerland, but its time would come, too. No Cold War this time.

In case you wanted to start-up a business, you’d better do it soon: I guess some years before the doomed 2124 it would be prohibited to launch such kind of initiatives. Good luck with your venture! I’ll just look forward to a pleasant and quiet 9-13 position in such an administration. 🙂

Leave a comment

Filed under Economy

La prairie des Filtres

Today, I found in the mailbox the first issue of The Economist to arrive at my new place. I took it and went for a walk to read it in a park by the river.

The park I went to is called “La prairie des Filtres”, named after the infiltration galleries used to purify muddy water pumped from the river Garonne, cleaned and brought up to the water tower of Toulouse. The system was first established back in 1821.

This park was also the place that served as the first field for the rugby matches of the Stade Toulousain, the local team which happens to be the most laureate club in France and Europe (having won 4 European Cups, more than any other club). The team now plays sometimes at the Stadium of Toulouse, just across the river, though most of the times plays at the Ernest Wallon stadium at the other side of the city. I guess I’ll have to pay a visit to one of its matches.

Now… the park is where I read the paper and run by the riverside…

Enjoy the pictures:

This slideshow requires JavaScript.


Filed under France, Sports

Summary of 2010

Let me share with you a brief recap of my 2010.

This was a heavy learning year, to name a few learning experiences:

  • I continued to study French,
  • Toastmasters: I delivered some speeches at Toastmasters, received the CL and ALB awards, and attended 2 District 59 conferences and 1 Division H conference.
  • I went to several EOI conferences and others, including one with the economist Robert E. Lucas who was awarded the Nobel Prize in 1995 and the TEDx Madrid event.
  • I read over a dozen books, many of which I commented here (being the 3 ones I liked the most these ones: first, second and third). At the end of the year I was given an eBook so I expect this trend to continue.
  • I continued to enjoy the subscription to The Economist (frankly, one of the best decisions I’ve taken in recent years) and subscribed to Scientific American for a dime.

I also had lots of fun reading and learning things related to aerospace & defence, to investments, and enjoyed supporting some charities and especially seeing some friends starting to support them as well.

Travelling. Either we together or I visited for the first time Porto, Morocco, Tunisia, Poland and Egypt. We also spent some time in Luxembourg, Brazil, Netherlands, Sevilla and France. Travelling well over 65,000 km last year (equivalent to 1.6 rounds to the Earth). Of all the places we visited, the view that I liked the most was the falls of Iguaçu, no doubt.

Javi 2.0 Encouraged by Luca and some friends I started this blog in February 2010 and a twitter account shortly afterwards. I reckon that my twitter account has become one of my biggest hobbies and sources of information apart from a communication channel with friends. I even saw some friends (here and here) and my sister starting their own blogs!

In the sports side… even though this has been a great year for Spanish sportsmen, it hasn’t been so for Real Madrid: not for the football or basketball section (being the last year I attended with the season ticket). On the personal side I competed in two championships of Minifutbol but won neither one, the same applies to paddle tournaments… the best sports moment was completing once again the San Silvestre race.

Other reasons for joy have been:

  • our friends Amalia & Paco, María & Alberto, Janine & Rients, Leyre & German got married,
  • we saw the newborns Paula and Javier, while two of our friends are pregnant today (that we know),
  • my sister finished her bachelor and continued studying a master; my brother finished his MBA and joined my company; my mother continued to take several courses.

To close the year, I got a new position within the same company in another country, where I moved a month ago. This will allow me to continue learning and experiencing new things!

I use to tell my friends and family that since long ago I feel that I enjoy more and more each coming year and am happier with time; this year, with a few bad moments included (including some sad losses), has been no exception to the trend. Thanks to all of you who contributed to it. As I say, if it continues like this, I may explode one of these years :-).

Now it’s time to make some few resolutions for 2011 as well… I have thought of 5, that if I manage to fulfill, next year’s account will be even shinier. I wish you the same: keep learning and enjoying your time.


Filed under Personal development & HR

Big Mac in Aswan

While in Aswan, Egypt, I went to a McDonald’s restaurant. When I finished my meal I went to the counter to ask “What is the price of a single Big Mac?”, “16.5 Egyptian pounds”.

I wanted to check The Economist‘s Big Mac index, their exchange-rate scorecard (see a detailed explanation), for the case of Egypt.

Already in the last list published it can be seen that they used a 13.0 pound price, while I was given 16.5 pound (probably because I went to a more touristic McD restaurant than the average). At the time of writing the post the exchange rate is: 1 E£ = 0.1726 US$.

The reference is always the price of the hamburger in USA (average of Atlanta, Chicago, New York and San Francisco), which in the latest publication of the index was 3.73$.

The dollar cost at the exchange rate of the hamburger was 2.848$; according to that, the Egyptian pound is 24% undervalued against the dollar (in relation to Aswan prices). The Economist normally calculates as well the implied purchasing power parity of the dollar: 4.42 (=16.5/3.73) while the actual exchange rate was 5.79 (=1/0.1726).

Finally, I wanted to remark 3 other things that caught my attention in the restaurant:

  • They had an employee of the month award and published it.
  • The uniform of the global company made local.
  • They provided delivery service… I wish they did that in Europe.

1 Comment

Filed under Economy, Travelling

Is talent really worth it? (Book review)

I am subscribed to The Economist since about 3 years ago. It not only provides with very interesting articles every week and lots of new ideas, but from time to time I am asked to take part in surveys. As a way to show appreciation they normally offer a study, a book, etc…

The latest book that I received from them and read is “Pay check. Are top earners really worth it?”, by David Bolchover.

The book is ferocious critique of CEO’s and finance workers’ pay. The average CEO in the USA earned in 1980 42 times the average blue-collar salary, while by 2000 this multiple increased to 531 times!

The book makes a clear difference between entrepreneurs, true generators of wealth, and the top management of multinational companies. He argues that there are three necessary conditions to award a high pay to the CEO:

  • Enough revenues available.
  • The CEO should have a measurable and substantially positive impact in the company (e.g. like one could defend the impact of a sports star within a team).
  • We would need to demonstrate beyond reasonable doubt that his abilities are extremely rare making him difficult to replace (could Jordan be replaced in Chicago Bulls?).

More often than not, this is not the case.

The favourite excuse being used to award exorbitant salaries is the scarcity of “talent”. The origin of the “talent” ideology seems to be the 1998 article from McKinsey “The War for Talent”.

Some of the extreme cases cited in the book…

  • Lehman Brothers CEO at the time of bankruptcy, Dick Fuld, who in his 15 years as CEO pocketed $466 million ($34M in 2007) before filing the largest bankruptcy in history (with $613 billion in debts), placing him as the worst CEO in American history according to Portfolio magazine.
  • Oil companies BP and Shell which both CEOs missed the objectives in 2008 yet still managed to be handed the undeserved bonus by the compensation committee from each company!

The author states that today, the main enemy of capital is… “talent”, those undeservingly taking the money away from shareholders and calls for shareholder activism to revert this situation and bring the money to whom it belongs (us, the shareholders… either directly or through investment and pension funds…).

I do recommend this book (~125 pgs.).


Filed under Books, Economy, Investing, Personal development & HR

Where do they pay lower taxes?

A friend posted in Facebook yesterday’s Daily chart from The Economist; she was very disappointed of finding Hungary such high in the ranking.

The chart comes from KPMG’s “Individual Income Tax and Social Security Rate Survey 2010”. I found it very interesting:

  • it contains several charts of rates of income tax and social security rates for different levels of income (high ones by the way),
  • coloured maps of the different regions in the world according to their level of taxation,
  • for some countries you may find graphics with the evolution of taxation levels with income,
  • capital gains tax, and
  • some country-specific information for several ones.


Effective Income Tax and Social Security rates.


What if you could pay Social Security in Philippines (0.2%) and Income Tax in Romania (13.4%)?

1 Comment

Filed under Economy

After the year 2015, there will be no airplane crashes

When I was writing in the previous post about Alberto Dubois idea of evolution being exponential I had in mind the book “Augustine’s Laws”, to which I have referred many times in this blog.

Today, I read a very good article in last week’s issue of The Economist, “Defence spending in a time of austerity”, which describes the current situation of defence budgets around the World and how it will affect many programmes…

The article itself is referring to the computing evolution depicted by Dubois and some other exponential trends identified by Augustine, such as the increased use of computer power and software.

I especially liked the update of Augustine’s chart for the Law XVI which says:

“In the year 2054, the entire defence budget will purchase just one aircraft. This aircraft will have to be shared by the Air Force and Navy 3½ days each per week except for leap year, when it will be made available to the Marines for the extra day.”

Augustine's Law XVI chart, updated by The Economist.

Thus, in the last 25 years, since Augustine wrote his book, the business has not improved much. This situation provokes that different countries have to share weapons, e.g., C-17 transport aircraft (Strategic Aircraft Capability, operated for several countries from Hungary), SALIS (“Strategic Airlift Interim Solution”, chartering of ex-soviet An-124 to NATO countries)…

One of the most striking situations that may come to happen is that UK and France share two aircraft carriers. Carriers were considered essential to have control over oceans… however, if France is going to scale its fleet down to one single carrier: what would happen during the long months when it will be in overhaul?

Lately there have been much discussion about this sharing scheme, though it is still denied by officials. Consider that just back in 1940, the British Royal Navy destroyed much of the French fleet in the Operation Catapult.

Other interesting point is the trend towards using unmanned aircraft versus piloted ones. Already in the “Aircraft Investment Plan Fiscal Years (FY) 2011-2040” (PDF, 0.2MB) that the US Air Force submitted together with its FY11 budget request, it forecasted that the number of unmanned aircraft will almost triple in the next ten years, while the rest of fleets would be either just renewed or decreased.

Nevertheless, this may never come to happen if we take Augustine’s Law Number XIV:

“After the year 2015, there will be no airplane crashes. There will be no takeoffs either, because electronics will occupy 100 percent of every airplane’s weight”.


Filed under Aerospace & Defence

Management Gurus (book review)

According to the Wikipedia a guru is someone “regarded as having great knowledge, wisdom and authority in a certain area, and who uses it to guide others”. The term comes from Sanskrit (गुरु), where gu means darkness & ru means light.

I mention this because during these last holidays I read a book about gurus, “Guide to Management Ideas and Gurus“, by Tim Hindle (322 pgs.).

Guide to Management Ideas and Gurus, Tim Hindle.

About two years ago The Economist used to send within a weekly alert a profile about a management idea and one guru, all of them coming from this book. Since then I had wanted to buy this book, which I found last June at a Schiphol airport book shop.

The book first reviews about a hundred management ideas, e.g., benchmarking, core competence, kaizen, lean production, SWOT analysis… Later it provides a short profile of over 50 authors or gurus, from Taylor and McGregor to Peter Drucker, Tom Peters, C.K. Prahalad… From each idea and author you get two pages. It is a good refresher of different concepts you may have studied and also helps relating some ideas and authors to others, interlinking them.

Along the book there is also bibliography related to each idea and from each author. In total I guess there are over 200 books and papers suggested. Also, it is very handy that from each author the book gives two or three notable quotations, from which you can get a quick idea of what is going to come. So now, after reading it I have a book with lots of marked pages, underlined parts and books and papers to look for.

I wanted to extract some ideas from three of those “gurus”:

  • C. Northcote Parkinson a naval historian famous for his book “Parkinson’s Law“, which can be stated as “Work expands to fill the time available for its completion”.
  • Laurence Peter a Canadian teacher famous for his book “The Peter Principle“, which can be phrased as “In a hierarchy, every employee tends to rise to his level of incompetence”.
  • Robert Townsend a former director of American Express famous for his book “Up the Organisation” with a more clarifying subtitle “How to Stop the Corporation from Stifling People and Strangling Profits”, where he is harsh on the vanity and stupidity of executive leaders.
  • Though not a “guru” from the ones profiled in the book, Scott Adams “Dilbert” comic strip is cited in at least a couple of times, take a moment to check it.

You can be sure that I have marked these three books in the to-read list.


Filed under Books, Personal development & HR