Capitalism and closing the great divide
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I’m sure you all were obsessed with coronavirus this weekend, but I hope you spared a moment to look at this arresting chart from the New York Times’ David Leonhardt. It is based on a book being published later this month by economists Anne Case and Angus Deaton, entitled Deaths of Despair and the Future of Capitalism. What it illustrates is the great divide that has opened up in the U.S. between those with college degrees and those without, tragically punctuated by rising death rates from alcohol, drugs and suicide.
What does this have to do with the future of capitalism? I’ll let the economists make their own case. But it’s worth noting that a small but growing group of far-sighted CEOs—including folks like IBM’s Ginni Rometty, Hyatt’s Mark Hoplamazian, Accenture’s Julie Sweet, Apple’s Tim Cook, and JPMorgan’s Jamie Dimon—have been focused for several years now on the challenge of creating “alternative pathways” to work. They recognize that the lack of a college degree too often has become an unnecessary obstacle to a well-paying job. It’s an important effort, and one that needs to be accelerated.
While I look forward to reading the Case and Deaton book, I’m taking a pass on Thomas Piketty’s 1,000-page Capital and Ideology, also out this month. You can read reviews in The New Yorker here and The Economist here. Inequality is a critical issue for our society; but exploring what causes inequality without also exploring what creates economic growth is a fool’s errand.
More news below. And read here how 15 of the world’s most powerful women in business describe the personality traits that led to their success–which we published yesterday in honor of International Women’s Day.
Brace yourselves. After talks broke down between OPEC and Russia, Saudi Arabia launched an oil price war. Prices collapsed by more than 25%, and the stock markets are ugly—the Nikkei 225 fell 5.1%, Australia's ASX 200 7.3%, the Hang Seng 4.2%. Europe's Stoxx 600 plunged more than 6%, and U.S. futures look dire. Bloomberg
With Covid-19 deaths increasing rapidly, Italy has locked down areas encompassing some 16 million people—including Milan, Italy's financial capital (where the market fell almost 10% at one point this morning.) Prime Minister Guiseppe Conte: "We are facing a national emergency…We have to limit the spread of the virus and prevent our hospitals from being overwhelmed." Germany's health minister has also recommended the cancellation of large events. Meanwhile, Saudi Arabia has locked down its oil-producing province of Qatif due to the coronavirus outbreak, and Israel may keep out visitors from all countries. Fortune
But don't worry…
…Because Elon Musk says "the coronavirus panic is dumb." Reminder: the outbreak has so far claimed around 3,800 lives, 22 of them in the U.S., where at least 539 cases have now been recorded. National Institute of Allergy and Infectious Diseases director Anthony Fauci warns that regional lockdowns could become necessary. The Hill
Boeing 737 Max
The Federal Aviation Administration is reportedly set to tell Boeing that it has to relocate electrical wires in each of its nearly-800 737 Max jets before they can return to service. The FAA is worried about wiring failures causing flight-control systems to point down the plane's nose, in a similar way to how automated maneuvers brought down two of the craft, killing 346 people. Wall Street Journal
AROUND THE WATER COOLER
Australia's privacy regulator has sued Facebook over the Cambridge Analytica scandal, in which more than 300,000 Australians were caught up. Information Commissioner Angelene Falk: “We consider the design of the Facebook platform meant that users were unable to exercise reasonable choice and control about how their personal information was disclosed." Guardian
Jack of all trades
Is Jack Dorsey distracted from his job as Twitter CEO? That's the question some investors are asking after Dorsey—who also heads up payments firm Square—said he would spend some months of this year in Africa. But is @Jack really pushing his luck? As the Financial Times notes: "How much time a CEO needs to devote to a company comes down to culture, conduct, context and consequences." FT
Reuters has a sobering rundown of the collapse in vehicle sales that took place in China last month, due to the impact of the coronavirus. Overall, passenger car retail sales fell 80%. Reuters
Jingye Group's takeover of British Steel should be completed today. The Chinese firm says it will save more than 3,000 jobs at the insolvent steelmaker (it had around 5,000 workers at the time of its collapse last year) and invest around $1.6 billion in its plants and machinery over the next decade. BBC
This edition of CEO Daily was edited by David Meyer.