Obama survived the first 100 days. And with record approval ratings to boot.
Hooray! Who'd have thunk, right?
Bank defaults, no problem. Obama the CEO to the rescue. GM and Chrysler going under? No sweat, Obama the Chairman of the Board is there to fire the CEO of GM, and order Chrysler to go bankrupt. Millions in the nation needing health care? No problem. Obama the healer is there to help. Bring peace and prosperity to the world? Obama the conciliator is there to bring long lost respect to the US in international arena. So, Obama the miracle worker should be able to get Americans healthy, wealthy and wise once more, and bring the good old days back, right?
I think "not so fast".
This economic ship called the US of A, captained by our own Barak H Obama, has at least three boat anchors that need to be dealt with before it can be turned around, and set sail into clear waters.
Let me elaborate.
The first boat anchor is the demographics. America is aging. There are more and more people reaching retirement age, with fewer and fewer people feeding into the social security system. If it was not for immigration, we would have gone into negative population growth. But a large portion of the immigrants barely make minimum wage. And therein lies the rub. No matter how hard we try, the math of getting more taxpayers paying into the social security trust fund is not going to work, unless they increase the retirement age, cut benefits, or both. So there goes the historical standard of living. Both the young and the old, rich or poor, will have to pay more to keep even bare bones benefits alive. This is a structural issue - which means there are no feasible solutions in sight under the current legal and economic structure, without burning a huge hole into people's wallets.
The second boat anchor is the total debt in the system. I have blogged about his before, but I strongly feel it needs to be stated again. The total debt, which is the combined debt of local, state and federal governments, individuals, and businesses, is now over 50 trillion dollars. Even with 1 trillion dollar government bailout, which is a drop in the bucket, the debt is about 3.5 times the GDP. In comparison, the total debt was about 2.5 times GDP during the height of the great depression. A healthy, self sustaining economy can handle a debt load of 1.5 times GDP. So, we have about 2.0 times GDP's worth of debt to work out. That is like saying a person's maximum tolerable weight is 220 pounds, but the current weight is 500 pounds, and he needs to lose 280 pounds pronto! Those who have lost weight know, this ain't gonna happen overnight. Maybe over years, if we are lucky. And the agony will come when the governments will tax us more just to service debt, companies will charge more for their products and services, and individuals will cut down spending just to survive.
The third boat anchor is our public education system, especially the K-12. Much has been said, correctly I might add, by Obama and his ed sec Arne Duncan, on how dire the issue is. After all, it has been proven beyond doubt that a well educated workforce is more productive, and a more productive workforce can outproduce the competition and bring prosperity and wealth back to this country. But by many accounts, the system is so stuck in its own little world, blissfully oblivious of the raging storm, that any meaningful change will take more than an act of Congress to occur. I have heard archived speeches of every president of the United States, starting in the 1960's that the US will be #1 in education in the world. I have yet to see objective data that show that the goal has been achieved. If anything, in many ways, we have fallen behind more nations in the rest of the world. The worst indictment, I think, is that we are yet to officially convert to the metric system. We are not the only one, we have a banana republic (Myanmar) and a ship licensing republic (Liberia) to keep us company. The rest of the world has moved on...
I wish President Obama the best of luck as he navigates through his next 100 days!
Thursday, April 30, 2009
Wednesday, April 22, 2009
Friedman Nails It - Again
Thomas Friedman is one of my favorite columnists. His columns continue to shed new light on the issues he brought up in his groundbreaking book "The World Is Flat". (It is now one of the required reading books for students of International Economics course at local Clark College.) In his most recent op-ed article, published in the New York Times, he sheds new light on how the lack of progress in K-12 education has hurt the US economy.
http://www.nytimes.com/2009/04/22/opinion/22friedman.html
Headlined "Swimming Without a Suit", it has some shocking numbers. One of the estimates of the cost of poor showing in our K-12 system is summed up here: "If America had closed the international achievement gap between 1983 and 1998 and had raised its performance to the level of such nations as Finland and South Korea, United States G.D.P. in 2008 would have been between $1.3 trillion and $2.3 trillion higher." In percentage terms, the GDP would have been roughly 10 to 18 percent higher. Which in turn would have meant we did not have to have the recession we are going through now, because the economy would still be growing, instead of shrinking.
If there is a bright spot, the article mentions that more and more top Ivy league graduates are signing up for "Teach For America", an organization that provides college scholarships in exchange for two years of teaching in inner city schools. It has produced produced such distinguished alumni as Michelle Rhee, the chancellor of Washington DC schools. For many years, they have attracted top graduates from various fields, with an average college GPA above 3.5. Apparently their applications are up 40 percent this year, and most of them are graduates of top schools such as Yale, Princeton, and Harvard.
One small problem for those living in the Pacific Northwest. Teach For America does not operate here. Wonder why?
Thanks to Charles Hoff for sending me the link.
http://www.nytimes.com/2009/04/22/opinion/22friedman.html
Headlined "Swimming Without a Suit", it has some shocking numbers. One of the estimates of the cost of poor showing in our K-12 system is summed up here: "If America had closed the international achievement gap between 1983 and 1998 and had raised its performance to the level of such nations as Finland and South Korea, United States G.D.P. in 2008 would have been between $1.3 trillion and $2.3 trillion higher." In percentage terms, the GDP would have been roughly 10 to 18 percent higher. Which in turn would have meant we did not have to have the recession we are going through now, because the economy would still be growing, instead of shrinking.
If there is a bright spot, the article mentions that more and more top Ivy league graduates are signing up for "Teach For America", an organization that provides college scholarships in exchange for two years of teaching in inner city schools. It has produced produced such distinguished alumni as Michelle Rhee, the chancellor of Washington DC schools. For many years, they have attracted top graduates from various fields, with an average college GPA above 3.5. Apparently their applications are up 40 percent this year, and most of them are graduates of top schools such as Yale, Princeton, and Harvard.
One small problem for those living in the Pacific Northwest. Teach For America does not operate here. Wonder why?
Thanks to Charles Hoff for sending me the link.
Monday, April 20, 2009
College Freshmen Still Struggle with Basic Algebra
I found this on another web group on math. It quotes an article from the campus newspaper at Oregon State University, the premier state "tech", known for its strong engineering department. Now, you need to realize that this is a student run paper, with a staff made up entirely of students. Even they are now sensing that something is fishy. Maybe they are not so naive as we think. Another thing to note is that Math 111 is college algebra, which is a remedial math course, about the same level as a rigorous high school Algebra 2 course, for those who do not pass the college math placement test. Here is the headline:
"Math 111 continues to be slippery slope for OSU students
Problems with Math 111 are believed to stem from students' inadequate grade school teaching in math"
The article goes on to say "Math 111 has been rumored throughout campus to be one of the most failed classes at Oregon State. Many students go into class with that expectation."
and an observation from a freshman math professor "After 10 years of teaching the course, Argyres said he felt that many students go into the course feeling they can just memorize things, but he said it's really all about understanding concepts. He said he feels that this issue originates in elementary school." "When students never learned the basic information appropriately in high school, or earlier, it is significantly more difficult for them to succeed when they get to college algebra."
I was aware that the school district that my kids attended in Oregon used "Mathland" for elementary schools in the early 2000's, and switched to "Investigations" around 2005. Now they are moving to "Everyday Math". In other words, they have hopped from one reform curriculum to another, without really making a substantial move towards what I consider real math. Here is a quote from the OSU professor which pretty much sums it up:
"Mathematics is densely a foreign language with a foreign spelling routine with all these different symbols," Argyres said. "Part of [understanding the language] is understanding what we mean by the symbols."
Read the full article here:
http://media.barometer.orst.edu/media/storage/paper854/news/2009/04/20/News/Math-111.Continues.To.Be.Slippery.Slope.For.Osu.Students-3717089.shtml
"Math 111 continues to be slippery slope for OSU students
Problems with Math 111 are believed to stem from students' inadequate grade school teaching in math"
The article goes on to say "Math 111 has been rumored throughout campus to be one of the most failed classes at Oregon State. Many students go into class with that expectation."
and an observation from a freshman math professor "After 10 years of teaching the course, Argyres said he felt that many students go into the course feeling they can just memorize things, but he said it's really all about understanding concepts. He said he feels that this issue originates in elementary school." "When students never learned the basic information appropriately in high school, or earlier, it is significantly more difficult for them to succeed when they get to college algebra."
I was aware that the school district that my kids attended in Oregon used "Mathland" for elementary schools in the early 2000's, and switched to "Investigations" around 2005. Now they are moving to "Everyday Math". In other words, they have hopped from one reform curriculum to another, without really making a substantial move towards what I consider real math. Here is a quote from the OSU professor which pretty much sums it up:
"Mathematics is densely a foreign language with a foreign spelling routine with all these different symbols," Argyres said. "Part of [understanding the language] is understanding what we mean by the symbols."
Read the full article here:
http://media.barometer.orst.edu/media/storage/paper854/news/2009/04/20/News/Math-111.Continues.To.Be.Slippery.Slope.For.Osu.Students-3717089.shtml
Tuesday, March 31, 2009
Boeing Opens R&D Center in Bangalore
Here is a new article that came over the newswires. The link below is for a local on line newspaper in India.
http://www.mangalorean.com/news.php?newstype=broadcast&broadcastid=118670#
Here are some exerpts that caught my eye:
Bangalore, March 31 (IANS) Global aerospace major Boeing has set up a research and technology lab here to develop advanced aerospace technologies and solutions for its next-generation products and services, a senior official said Tuesday.
The India lab, Boeing's third of its kind outside the US, will initially have 30 aerospace engineers working on multiple projects that include advanced aircraft and spacecraft designs and new structure and materials technologies.
"Another 100 engineers will collaborate with our various projects being carried out with Indian academia, research and development (R&D) institutions and private and public enterprises," Boeing chief technology officer John J. Tracy told reporters at the unveiling of the lab here.
"The investments are in millions of dollars from our global R&D budget, which runs into billions of dollars per annum," Tracy added.
Boeing has six advanced R&D labs across the US, and one overseas lab each in Australia and Spain - which together employ about 4,100 engineers.
Clarifying that Boeing was not downsizing its operations in the recession-hit US or shipping projects to this country, Tracy said India's exceptional talent pool with high math quotient and analysis skill was the prime reason for locating its third overseas R&D lab in Bangalore.
"Core technologies are vital for global aerospace eco-system comprising R&D, engineering and IT (software). The criteria is to develop cutting-edge technologies to ensure affordability, breakthrough performance, sustainability and eco-friendly products and services to our customers worldwide," Tracy affirmed.
It is interesting to note that Boeing has specifically called out the "high math quotient and analysis skill" of Engineers trained in India.
The question in my mind - why go halfway across the world just to hire 130 engineers? Can't we get them here in Seattle? Don't our engineers have high math quotients and analysis skills?
What am I missing?
http://www.mangalorean.com/news.php?newstype=broadcast&broadcastid=118670#
Here are some exerpts that caught my eye:
Bangalore, March 31 (IANS) Global aerospace major Boeing has set up a research and technology lab here to develop advanced aerospace technologies and solutions for its next-generation products and services, a senior official said Tuesday.
The India lab, Boeing's third of its kind outside the US, will initially have 30 aerospace engineers working on multiple projects that include advanced aircraft and spacecraft designs and new structure and materials technologies.
"Another 100 engineers will collaborate with our various projects being carried out with Indian academia, research and development (R&D) institutions and private and public enterprises," Boeing chief technology officer John J. Tracy told reporters at the unveiling of the lab here.
"The investments are in millions of dollars from our global R&D budget, which runs into billions of dollars per annum," Tracy added.
Boeing has six advanced R&D labs across the US, and one overseas lab each in Australia and Spain - which together employ about 4,100 engineers.
Clarifying that Boeing was not downsizing its operations in the recession-hit US or shipping projects to this country, Tracy said India's exceptional talent pool with high math quotient and analysis skill was the prime reason for locating its third overseas R&D lab in Bangalore.
"Core technologies are vital for global aerospace eco-system comprising R&D, engineering and IT (software). The criteria is to develop cutting-edge technologies to ensure affordability, breakthrough performance, sustainability and eco-friendly products and services to our customers worldwide," Tracy affirmed.
It is interesting to note that Boeing has specifically called out the "high math quotient and analysis skill" of Engineers trained in India.
The question in my mind - why go halfway across the world just to hire 130 engineers? Can't we get them here in Seattle? Don't our engineers have high math quotients and analysis skills?
What am I missing?
Wednesday, March 25, 2009
Brother, can you please spare a Nano?
Say what?
No, I did not mean to imply the cute little portable music machines the fruit company puts out. They are now very ubiquitous, and a fashion statement to boot. I was pointing to the equally cute, and soon to be ubiquitous mode of transportation for the masses - in the developing world.
You see, it appears that history is about to repeat itself. Back in the 1920's, Henry Ford, the great capitalist, thought it would be a great idea to use mass production techniques to build a car that even his employees could afford to buy. Back then, the assembly workers' wages weren't much to write home about, let alone buy a car with. Anyhow, the story goes that Ford designed and built the model T and mass produced it by the millions, and the rest, as they say, is history.
Well, fast forward to 2009, and a capitalist called Ratan Tata has done it again. This time, his objective is a little different. He wants to sell a car to some 50 million motorcycle riders in India. But Ratan Tata is a different breed of capitalist. His self proclaimed objective is to "go to bed every night knowing I have not harmed anyone". Refreshing? Considering most Harvard trained executives live to "maximize shareholder equity", or "optimize workflow", you bet his objective is quite refreshing. And if you look at the picture of this poor Indian chap with his whole family on a motorbike (no helmets or seatbelts, mind you), you see exactly why he feels that way. The miracle is, I think, he feels, while most others figure, calculate, strategize, optimize.......
Well, Mr. Tata put 500 of his best engineers and marketers to work on figuring out what will make a typical motorcycle owner to trade up to a car. The biggest barrier was price. A lot of motorcycle owners who shell out 50,000 to 75,000 Rupees (about $1000 to $1500) for a motorcycle, they found, would rather have something safer that would shield them and their families from the elements. But they could not afford the 200,000 rupees ($4000) for an entry level car. But they would seriously consider something that cost around 100,000 rupees (around $2000). So, the engineers went to work on designing a car that would be profitably sold for around that price. Mr. Tata made it clear that he wanted it to look visually appealing, while taking liberties on cost where it did not matter. Gone were all power accessories, fancy seats, and rear hatch. So were two engine cylinders. Even the tiny 12 inch tires are fastened with only three lug nuts instead of four or five. But it had to have four doors (anything less is not a car in India). Not only did it have to seat four in comfort, it should get around 50 mpg gas mileage. The result has been nothing short of impressive (see pic). On March 23, the Tata Nano was launched in India with much fanfare. Advanced bookings for the initial production lots were oversubscribed several times over, so Tata Motors, the manufacturer, had to resort to drawing lots to pick the first 100,000 lucky owners. Production is expected to ramp to around 250,000 next year, and a million a year thereafter, but given the instant success, this will be gone as well.
None of this has escaped the attention of the world press. Last year in the Detroit Auto Show, it was dubbed "the most popular car" and it was not even shown! This year, in Geneva, a new version was shown (see below), which will have a larger engine, all safety and power features expected in Europe, and still cost around 5000 Euros. Tata did not plan on marketing one in the US, but considering the economic situation we are in here, he has changed his mind. So, in spite of all the reengineering and redesign it is going to take to meet the US specifications, he is planning on bringing one here around 2012 or 2013. That will bring affordable transportation (again) to a lot of people who cannot afford it now. I bet a lot of them cannot wait till they get their hands on one.
My kids can't either.
No, I did not mean to imply the cute little portable music machines the fruit company puts out. They are now very ubiquitous, and a fashion statement to boot. I was pointing to the equally cute, and soon to be ubiquitous mode of transportation for the masses - in the developing world.
You see, it appears that history is about to repeat itself. Back in the 1920's, Henry Ford, the great capitalist, thought it would be a great idea to use mass production techniques to build a car that even his employees could afford to buy. Back then, the assembly workers' wages weren't much to write home about, let alone buy a car with. Anyhow, the story goes that Ford designed and built the model T and mass produced it by the millions, and the rest, as they say, is history.
Well, fast forward to 2009, and a capitalist called Ratan Tata has done it again. This time, his objective is a little different. He wants to sell a car to some 50 million motorcycle riders in India. But Ratan Tata is a different breed of capitalist. His self proclaimed objective is to "go to bed every night knowing I have not harmed anyone". Refreshing? Considering most Harvard trained executives live to "maximize shareholder equity", or "optimize workflow", you bet his objective is quite refreshing. And if you look at the picture of this poor Indian chap with his whole family on a motorbike (no helmets or seatbelts, mind you), you see exactly why he feels that way. The miracle is, I think, he feels, while most others figure, calculate, strategize, optimize.......
Well, Mr. Tata put 500 of his best engineers and marketers to work on figuring out what will make a typical motorcycle owner to trade up to a car. The biggest barrier was price. A lot of motorcycle owners who shell out 50,000 to 75,000 Rupees (about $1000 to $1500) for a motorcycle, they found, would rather have something safer that would shield them and their families from the elements. But they could not afford the 200,000 rupees ($4000) for an entry level car. But they would seriously consider something that cost around 100,000 rupees (around $2000). So, the engineers went to work on designing a car that would be profitably sold for around that price. Mr. Tata made it clear that he wanted it to look visually appealing, while taking liberties on cost where it did not matter. Gone were all power accessories, fancy seats, and rear hatch. So were two engine cylinders. Even the tiny 12 inch tires are fastened with only three lug nuts instead of four or five. But it had to have four doors (anything less is not a car in India). Not only did it have to seat four in comfort, it should get around 50 mpg gas mileage. The result has been nothing short of impressive (see pic). On March 23, the Tata Nano was launched in India with much fanfare. Advanced bookings for the initial production lots were oversubscribed several times over, so Tata Motors, the manufacturer, had to resort to drawing lots to pick the first 100,000 lucky owners. Production is expected to ramp to around 250,000 next year, and a million a year thereafter, but given the instant success, this will be gone as well.
None of this has escaped the attention of the world press. Last year in the Detroit Auto Show, it was dubbed "the most popular car" and it was not even shown! This year, in Geneva, a new version was shown (see below), which will have a larger engine, all safety and power features expected in Europe, and still cost around 5000 Euros. Tata did not plan on marketing one in the US, but considering the economic situation we are in here, he has changed his mind. So, in spite of all the reengineering and redesign it is going to take to meet the US specifications, he is planning on bringing one here around 2012 or 2013. That will bring affordable transportation (again) to a lot of people who cannot afford it now. I bet a lot of them cannot wait till they get their hands on one.
My kids can't either.
Monday, March 16, 2009
Businessweek - Innovation and Math, Science Achievement Linked
Here is a recent article (March 16) on the ranking of different nations based on their record of innovation. Innovation as in creating new products, new wealth, and therefore greater standard of living for their citizens.
http://www.businessweek.com/globalbiz/content/mar2009/gb20090316_004837.htm?campaign_id=yhoo
The top of the list is Singapore, followed by South Korea.
We have seen Singapore and South Korea top international math and science tests year after year. It has also resulted in a better quality of life for their people. 25% of the Singaporeans were millionaires last year. That percentage is expected to cross 40% in 2014. The "global slowdown" is not expected to change this appreciably. Why Singapore? One reason given below:
"Government commitment to education is one reason many large drugmakers have made Singapore a base for their manufacturing and research. In January, GlaxoSmithKline (GSK) announced plans to invest $65 million to expand its Singapore operations. Schering-Plough (SGP) is opening a center to conduct research and clinical trials in the country, and Novartis has made Singapore the center for company researchers investigating treatments for malaria, tuberculosis, and dengue fever. "Science education is very good here," says Thierry Draganc, project manager for Novartis' malaria research team. "There's a nice constant flow of young graduates." "
Where is the US in all this? Well, we came in 8th. One of the biggest reasons given here:
James P. Andrew, the leader of BCG's global innovation practice and co-author of the report, says "the quality of the workforce" in the U.S. is the biggest problem that many respondents had. As part of the survey, BCG questioned some 800 high-level executives at U.S. companies, and many put concerns about human resources at the top of the list of concerns. "Are we developing the skills at the high school level?" asks Andrew, explaining the responses researchers often encountered. "Are we making it easy for the best and brightest to study and stay in the U.S.?"
http://www.businessweek.com/globalbiz/content/mar2009/gb20090316_004837.htm?campaign_id=yhoo
The top of the list is Singapore, followed by South Korea.
We have seen Singapore and South Korea top international math and science tests year after year. It has also resulted in a better quality of life for their people. 25% of the Singaporeans were millionaires last year. That percentage is expected to cross 40% in 2014. The "global slowdown" is not expected to change this appreciably. Why Singapore? One reason given below:
"Government commitment to education is one reason many large drugmakers have made Singapore a base for their manufacturing and research. In January, GlaxoSmithKline (GSK) announced plans to invest $65 million to expand its Singapore operations. Schering-Plough (SGP) is opening a center to conduct research and clinical trials in the country, and Novartis has made Singapore the center for company researchers investigating treatments for malaria, tuberculosis, and dengue fever. "Science education is very good here," says Thierry Draganc, project manager for Novartis' malaria research team. "There's a nice constant flow of young graduates." "
Where is the US in all this? Well, we came in 8th. One of the biggest reasons given here:
James P. Andrew, the leader of BCG's global innovation practice and co-author of the report, says "the quality of the workforce" in the U.S. is the biggest problem that many respondents had. As part of the survey, BCG questioned some 800 high-level executives at U.S. companies, and many put concerns about human resources at the top of the list of concerns. "Are we developing the skills at the high school level?" asks Andrew, explaining the responses researchers often encountered. "Are we making it easy for the best and brightest to study and stay in the U.S.?"
Thursday, March 12, 2009
Outsource Creativity? Surely You Jest.
I admit. I have been hearing a lot about Slumdog millionaire, mostly from word-of-mouth. Everyone seems to be humming Jai Ho (not knowing what it means is OK), and like an unemployment check, everyone has seen it or knows someone who has. Don’t have $10 for a movie ticket? Take heart. It will be out on video on March 31, and you can rent it from your favorite video store or on-line rental firm.
But that is not what caught my attention. What caught my attention was the low key coverage from the media before and after the Oscars. It was as if someone behind the scenes was pulling the strings for the movie to its Oscar glory. Could it be.. I thought. Nah… it couldn’t be. But let me tell you what went through my mind.
Back in the late ‘90s, story goes that the large cosmetics and fashion apparel companies were worried that the West was saturated with their products, profits were thin, and wanted to create new markets in the developing countries. But these countries had thousands of years old tradition of using natural herbs like turmeric, saffron and sandalwood for their cosmetics, and floral aroma for perfume. Something had to be done to get them interested in laboratory born, patent protected $500 an ounce perfumes and $100 a stick lip gloss. Their solution was….to crown Indian contestants in the beauty pageants like Miss World. A string of new Miss World winners, like the now movie star Aishwarya Rai (Pink Panther 2, The Last Legion…) came out of the mill and started peddling beauty products, and Presto! – a new cosmetics and perfume market was born.
So, why do I think something like that may be happening here?
Simple. Follow-the-money.
Let us first look at the cost. Slumdog millionaire cost $15 million to make. It may sound like a lot of money, but if you compare to big name actors like Branjalina, the Cruisemeister , Reese Witherspoon, all command around $20 million per movie, or sometimes a percentage of the take, this is cheap. An average Hollywood “A” movie costs around $100 mil. A high budget blockbuster costs around $200 mil. The other Oscar contender starring Brad Pitt, “….Benjamin Button”, cost $150 mil to make.
That is only half the story. Now, putting my MBA hat on, I looked at the returns, because every movie producer is looking to make a profit at the end of the day. Slumdog is on its way to grossing $300 mil worldwide, “Benjamin” crossed that mark and may end up with $400 mil. Let us do some quick math – for every dollar spent, Slumdog will have grossed $20, and Benjamin would have grossed $2.66. Even the biggest blockbuster of the year, the Dark Knight, made about a Billion dollars, and cost $185 million to make. That is a little over $5 gross per dollar spent. But Slumdog with $20 for every dollar spent? Even after deducting distribution costs and other expenses, this is an insane rate of return by any standards. It is an eye popping difference that will make even a dead Hollywood executive turn in his grave. So, despite all the political rhetoric about supporting “Made in America” things, I expect more Hollywood movies to be made outside the US.
But what about American creativity? Don’t our schools jealously guard our kid’s ability to be creative? What about all the music lessons, orchestra and band concerts? Don’t we have the most creative people in the world?
Well, we have been told we do. And I see the emphasis placed on it by the schools I deal with. But the giant sucking action of insane profits will lead creativity to be outsourced as well. Consider the fact that Danny Boyle, who some consider an eccentric British director who gave us the “Full Monty” and “Trainspotting”, picked up a few slum kids and paid them pittance and got Oscar worthy performance out of them. AR Rahman, who was totally unknown to the world outside India, composed the Oscar winning score in two weeks, for a fraction of the time and money that Hans Zimmer took for “Gladiator”.
So, yes, creativity can be outsourced – and I am betting that if business has its way, it will continue to be.
And please, stop calling me Surely.
But that is not what caught my attention. What caught my attention was the low key coverage from the media before and after the Oscars. It was as if someone behind the scenes was pulling the strings for the movie to its Oscar glory. Could it be.. I thought. Nah… it couldn’t be. But let me tell you what went through my mind.
Back in the late ‘90s, story goes that the large cosmetics and fashion apparel companies were worried that the West was saturated with their products, profits were thin, and wanted to create new markets in the developing countries. But these countries had thousands of years old tradition of using natural herbs like turmeric, saffron and sandalwood for their cosmetics, and floral aroma for perfume. Something had to be done to get them interested in laboratory born, patent protected $500 an ounce perfumes and $100 a stick lip gloss. Their solution was….to crown Indian contestants in the beauty pageants like Miss World. A string of new Miss World winners, like the now movie star Aishwarya Rai (Pink Panther 2, The Last Legion…) came out of the mill and started peddling beauty products, and Presto! – a new cosmetics and perfume market was born.
So, why do I think something like that may be happening here?
Simple. Follow-the-money.
Let us first look at the cost. Slumdog millionaire cost $15 million to make. It may sound like a lot of money, but if you compare to big name actors like Branjalina, the Cruisemeister , Reese Witherspoon, all command around $20 million per movie, or sometimes a percentage of the take, this is cheap. An average Hollywood “A” movie costs around $100 mil. A high budget blockbuster costs around $200 mil. The other Oscar contender starring Brad Pitt, “….Benjamin Button”, cost $150 mil to make.
That is only half the story. Now, putting my MBA hat on, I looked at the returns, because every movie producer is looking to make a profit at the end of the day. Slumdog is on its way to grossing $300 mil worldwide, “Benjamin” crossed that mark and may end up with $400 mil. Let us do some quick math – for every dollar spent, Slumdog will have grossed $20, and Benjamin would have grossed $2.66. Even the biggest blockbuster of the year, the Dark Knight, made about a Billion dollars, and cost $185 million to make. That is a little over $5 gross per dollar spent. But Slumdog with $20 for every dollar spent? Even after deducting distribution costs and other expenses, this is an insane rate of return by any standards. It is an eye popping difference that will make even a dead Hollywood executive turn in his grave. So, despite all the political rhetoric about supporting “Made in America” things, I expect more Hollywood movies to be made outside the US.
But what about American creativity? Don’t our schools jealously guard our kid’s ability to be creative? What about all the music lessons, orchestra and band concerts? Don’t we have the most creative people in the world?
Well, we have been told we do. And I see the emphasis placed on it by the schools I deal with. But the giant sucking action of insane profits will lead creativity to be outsourced as well. Consider the fact that Danny Boyle, who some consider an eccentric British director who gave us the “Full Monty” and “Trainspotting”, picked up a few slum kids and paid them pittance and got Oscar worthy performance out of them. AR Rahman, who was totally unknown to the world outside India, composed the Oscar winning score in two weeks, for a fraction of the time and money that Hans Zimmer took for “Gladiator”.
So, yes, creativity can be outsourced – and I am betting that if business has its way, it will continue to be.
And please, stop calling me Surely.
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