Recent selections from around the web that, we think, would have caught Peter Drucker’s eye:
1. For Many Hard-Liners, Debt Default Is the Goal: Many of us assume that even those who are threatening a debt default don’t want things to work out that way. But economist Bruce Bartlett, writing in the New York Times, says that such a view is misguided. “There has been a movement under way for some years among right-wing economists and activists not merely to default on the debt, but even to repudiate it,” he writes. “Those making this argument are largely unknown to professional economists and journalists, but their research permeates the obscure websites where Tea Party members get their ideas.” Bartlett offers an illuminating history of the roots of default-lust.
2. What the Great Fama-Shiller Debate Has Taught Us: The Nobel Prize in economics has gone to three men this year: Eugene Fama, Lars Peter Hansen and Robert Shiller. It’s an odd lineup, because Fama and Shiller do not see eye to eye. Or, as Justin Fox writes at the HBR Blog, it’s a bit like giving a prize to “(1) a guy famous for advancing a particular hypothesis and (2) a guy famous for relentlessly attacking that hypothesis.” But then Fox explains in detail why the disagreements among this year’s Nobel winners have been so illuminating and, therefore, complementary. “I’ll admit that it’s an odd combination of Nobel Prize recipients,” Fox writes. “But it’s not necessarily an incorrect one.”
3. Is the ‘Too Big to Fail’ Problem Too Big to Solve?: How do you prevent the next big economic meltdown and bailout? Do you vow never to bail out banks again? Or do you impose high capital requirements? Or do you employ a third option? Writing in Knowledge@Wharton, finance professor Jack Guttentag takes a look at the options and comes up with a recommendation of his own: “transaction-based reserving,” in which “financial firms are regulated as if they were insurance companies that are obliged to contribute to a reserve account in connection with every asset they acquire.”
4. Dx Comment of the Week: Last week, when we asked whether consulting firms like McKinsey are effective enough to be worth the money they charge, reader Rasih wrote to say that effectiveness also depends on the ability to connect socially with your clients:
No social skills = no acceptance from the client = no success. I have heard over and over again from my clients: ‘We had countless, smart consultants here. They told us arrogantly what we have to do. But you are the first one who took us seriously, and made us part of the solution.’