Fed’s focus on ‘too big to fail’ won’t save taxpayers from next bank bailout – Oz Shy

MIT Sloan Senior Lecturer Oz Shy

MIT Sloan Senior Lecturer Oz Shy

From The Conversation

Last month, the Federal Reserve announced that 31 out of 33 U.S. banks had passed its latest “stress test,” designed to ensure that the largest financial institutions have enough capital to withstand a severe economic shock.

Passing the test amounts to being given a clean bill of health by the Fed. So are taxpayers – who were on the hook for the initial US$700 billion TARP bill to bail out the banks in 2008 – now safe?

Yes, but only until the next crisis.

Skeptics of these tests (myself included) argue that passing them will not prevent any bank (large or small) from failing, in part because they’re not stressful enough and the proposed capital requirements are not high enough.

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One earth, two social fields – Otto Scharmer

MIT Sloan Senior Lecturer Otto Scharmer

MIT Sloan Senior Lecturer Otto Scharmer

From the Huffington Post

Dallas, Ferguson, Nice. Turkey, Trump & Brexit. The simultaneous rise of global terrorism, of authoritarian strongmen and the far-right are the twin faces of our current moment. Even though Trump-type politicians and terrorism pretend to fight each other, on a deeper level they feed off each other. The more terrorist attacks occur in the US, Turkey, France, or Germany, the greater the chances that Trump, Le Pen, and their allies will be elected. But what’s more interesting is the intertwined connection on a deeper spiritual level: both movements, to various degrees, thrive on activating a social-emotional field that is characterized by prejudice, anger, and fear.

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Why your diversity program may be helping women but not minorities (or vice versa) – Evan Apfelbaum

MIT Sloan Asst. Prof. Evan Apfelbaum

MIT Sloan Asst. Prof. Evan Apfelbaum

From Harvard Business Review

When it comes to issues of race, gender, and diversity in organizations, researchers have revealed the problems in ever more detail. We have found a lot less to say about what does work — what organizations can do to create the conditions in which stigmatized groups can reach their potential and succeed. That’s why my collaborators — Nicole Stephens at the Kellogg School of Management and Ray Reagans at MIT Sloan — and I decided to study what organizations can do to increase traditionally stigmatized groups’ performance and persistence, and curb the disproportionately high rates at which they leave jobs. Read More »

A candidate scorecard – Neal Hartman

MIT Sloan Senior Lecturer Neal Hartman

MIT Sloan Senior Lecturer Neal Hartman

From The Huffington Post

And it’s a wrap.  The two major conventions are over and we now begin the long slog toward Election Day in November.  As someone who studies both communication and leadership styles here at MIT, I think it is worth pausing and sifting through the sometimes overly loud and outsized rhetoric of the past two weeks to create a kind of scorecard.

The presidency is a job after all, an amazing and powerful one, but a job all the same.  So, it seems like a good idea to dispassionately assess the leadership and communication skills of the two candidates—not unlike what we would do if this were a job opening in a major corporation.

Donald Trump has shown his ability to manipulate the media and his facility with social media. He keeps his name in the headlines day in and day out, most recently inviting Russia’s Vladimir Putin to hack Hilary Clinton’s e-mails.   He also seems to have the facility to vacillate on positions without getting into a lot of trouble for doing that.  While many would accuse Trump of flip-flopping, one could suggest that he has developed this as an art or a skill. He’s done a good job of positioning himself as an outsider at a time when people have a great deal of anger towards Washington.

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China must draw the right lessons from the failures of its one-child policy — Yasheng Huang

MIT Sloan Prof. Yasheng Huang

MIT Sloan Prof. Yasheng Huang

From South China Morning Post

In 1983, the UN gave China and India awards for their efforts to control the population. The recipient for India was its then prime minister, Indira Gandhi. She famously pushed for a compulsory sterilisation campaign and even suspended elections in order to enforce it. Her programme failed miserably, and one of its enduring effects is a pervasive distrust of India’s health care system, which still plagues public health efforts today.

By contrast, China’s one-child policy was in place for 35 years until this October, when the government announced a shift to a “one couple, two children” policy.

The contrast in duration between the Chinese and Indian population control policies cannot be sharper, and it is this, among other differences, that prompted some Western observers to argue that the authoritarian Chinese system is more capable of enforcing politically tough but economically rational policies.

The reality is much more complicated. It is true that India has a higher fertility rate than China and it is also true that India could not enforce population controls as effectively as China has. But there are many other differences between China and India that would account for a lower fertility rate in China, regardless of policies. Chinese women enjoy a higher socio-economic status than Indian women. Chinese basic education and public health are far superior to those in India. All these factors would have led to a declining fertility rate in China even if China did not have the one-child policy in place.

Read the full article at South China Morning Post.

Yasheng Huang is the International Program Professor in Chinese Economy and Business and a Professor of Global Economics and Management at the MIT Sloan School of Management.