June employment

The BLS jobs data for June saw a slight increase in the unemployment rate — up 0.1% to 9.5% — and a larger than expected increase in the employment decline (467,000). As the New York Times and the Wall Street Journal noted, the number had been expected to be around 365,000.
Once again, however, I do see one of those famous (infamous?) “green shoots” in the data on involuntary underemployed (part time for economic reasons). That number has been relatively stable for the past four months at around 9 million underemployed. As I said last month, not great news, but possibly an indicator of a bottom.
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Auto sales – and cash for clunkers

In an earlier posting, I noted that the “cash-for-clunkers” program might result in an increase in uncertainty for car buyers – and a temporary decline in sales while people wait for the program to be implemented.

Well, the June car sales figures are in, and as a story in the Washington Post relates:

Economists say consumers are warily making purchases again. Yet some held off last month, as Congress rallied to pass the “cash for clunkers” bill, which gives consumers vouchers to purchase new, more fuel-efficient cars and trucks when they trade in older models. “It certainly put some people on the sidelines,” said Mark LaNeve, GM North America vice president of sales, service and marketing.

Don’t get me wrong – I think the program is a good idea. And Congress is to be praised for enacting the program quickly. An extended debate would likely have hurt sales even more.

But it does speak to the need to carefully look at effects of the transition periods while new programs are being implemented. Another case in point is the new credit card regulations — where companies are raising rates before the new law can take effect (see story in Washington Post).

As I said earlier, this is all a great opportunity for the behavioral economists to make an important contribution to economic policymaking.

Design Thinking for Innovation

Over at Idea Connections they have a great interview with Tom Kelley – General Manager and co-founder of IDEO (with his brother David Kelley) . There is far too much in the interview for me to try to summarize. Trust me – you just have to read the whole thing.
However, there are a couple bits I will highlight. One has to do with the importance of “being there.” At lot was written years ago about how modern information and communications technology (ICT) would result in the “death of distance.” IDEO uses a lot of collaborative technologies. They have operations spread across the globe. But this quote from Kelley is telling.:

We did an IDEO off-site recently where we had presentations from every office in the firm and, for the first time, we made extensive use of video conferencing. It’s getting better, but even so we still believe that whenever possible at the beginning of a project, or at the time of the formation of a team, there still is no substitute for getting people together face-to-face. Even if only for the first week. The reason is friendships get made and bonds are formed when having dinner together after hours and during sidebar conversations about what people have in common – such as hobbies and other interests. In a videoconference participants are not likely going to be able to have those types of conversations.

. . .
The second bit is about the “abundance mentality.”

The opposite of an abundance mentality is a scarcity mentality. If people have a scarcity mentality about their ideas, and we’ve all encountered people like this, they’ve usually got one favorite idea. They’ve been plugging at this one idea for the last decade, and are worried about not getting enough credit for it. They’re defending their idea–even if it’s weak they’re defensive about it.
If you can have the opposite attitude – an abundance mentality – it goes a long way towards fueling a culture of innovation. With this mentality you are more likely to say, “I’ve got this idea, but you may take it and build on it.” You and the other person go back and forth and when he or she says, “This part won’t work”, you are more likely to reply, “Okay, how can we make it work?” rather than, “No, I think it will”. You are not defending your turf all the time.
In an abundance mentality, you are more generous with your ideas because you know you’ve got more. This allows you to blend and mix your ideas, and to get synergy. It’s an important cultural value that contributes to innovation.

I think our current discussion about intellectual assets suffers from the scarcity mentality. This especially manifests itself in the focus on intellectual property — which is based on a “its mine, you can’t have it” argument. The standard idea is that unless you can prevent others from using this asset (which is by its very nature non-rival and non-excludible), there will be a serious free-rider problem which will distort the incentives to invest. Without investment, there will be no innovation.
Kelley’s comments turn that concept on its head. Sharing and building on shared knowledge is the key to innovation. Without sharing, there is no innovation.
Obviously, the dynamic of innovation doesn’t fall perfectly or exactly into either of these two arguments. Both sharing and protection to provide incentives are important. The trick – as is so often in live – is to get the balance right.
But first, everyone has to understand there is a balance to be reached — something that I’m afraid is not always in evidence in discussions over IP.
. . .
The third bit is these snippets on the fusion of goods and services and the important of non-technological innovation. The first is this:

By the way, only about 30% of the innovations we do these days at IDEO are with products.

And then there is this point that I have been trying to make over and over and over again:

The iPod became the leading music player in the world because of the link between iPod hardware and iTunes. It became super easy to download music, and it’s this design experience that’s created billions of dollars of value for Apple.

. . .
As I said, a lot there.