Italian Luxury Eyewear Maker Luxottica to Offer Recession Benefits

From WSJ:

"Italian eyewear maker Luxottica SpA is expected to unveil a new social-benefits program for its domestic work force, an attempt to ease the pain as the global economic downturn hits Italy's industrial north.
Cities in northern Italy are home to some of the country's biggest employers. But they've been hard hit as demand for luxury goods has dried up.
Luxottica, which produces eyeglasses under license for brands such as Prada and Salvatore Ferragamo near the Belluno district of Northern Italy, announced plans earlier this year to place about 6,000 workers on temporary, state-subsidized leave for a total of four days during January and February. Last month, Safilo SpA, Italy's second biggest eyeglass maker, said it will idle plants for two months as it grapples with slumping sales and a heavy debt load.
The shutdowns are taking a toll on factory towns, as households scrimp on spending to offset lost wages. Workers who are placed on state-subsidized leave take an average 20% pay cut while their jobs are suspended.
Associated Press
Eyewear maker Luxottica is among Italian companies hard hit as demand for luxury goods fades.
Under the terms of an accord reached after 15 months of negotiations with unions, Luxottica will spend more than €2.5 million ($3.2 million) a year on benefits for its workers ranging from dental care to scholarships. The measures are apart from union contracts that cover wages and working conditions. Employees' health care and social services are covered by the state social welfare system.
"The assumption is practical: You cannot deliver and produce quality products unless people enjoy a decent quality of life and have the basic needs fulfilled," said Nicola Pelà, Luxottica's head of human resources.
Under the new system, Luxottica aims to leverage its scale to buy basic goods, such as baby food, and services at discount prices and distribute them to employees who reach production and efficiency targets.
Luxottica will distribute scholarship money for the children of employees to attend local vocational schools and colleges. In the luxury industry, where know-how is often passed down through generations of craftsmen, keeping young people close to home is essential.
Even before the economic downturn gripped the luxury industry, towns specializing in luxury goods faced tough odds. Over the past decade an increasing number of brands have begun to buy textiles and semifinished materials from countries with lower-cost labor like China.
As competition with China tightened, worker wages across the luxury industry stagnated and workers struggled to keep apace with a rising cost of living. Luxottica's average monthly salary of €1,200, Mr. Pela said, was "above market rate," but needed a supplement. At the same time, Luxottica didn't want to simply raise wages, which are heavily taxed in Italy, he added.
Valeria Fedeli, a union representative for Luxottica's employees, applauded the benefits program, but added: "We're still in a crisis situation."

Obama administration should radically change the terms of stimulus plan(if they designed the previous to get a bit of bi-partisanship)

People will take you responsible for any failure.
If you are gonna be charged so be by playing according to your belief.
If you believe that tax cut's bang for the buck is way lower than government spending, well go for it!!
Soon!

The Smart Growth Manifesto

Umair Haque from Harvard Business blog:

Obama is stimulating. Davos is deliberating. C-levels are eliminating. Wall St is recriminating. Welcome to the macropocalypse: no one, it seems, can put the global economy back together again.
It's time to reboot capitalism. So where do we begin?
Here's a suggestion for what should be at the top of agenda of every decision-maker across the economy, from Davos, to Obama, to Sand Hill Road, to the revolutionaries in tiny garages hatching tomorrow's Googles: reconceiving growth.
Why?

20th century capitalism is eating itself. For the first time since World War II, global growth is forecast to turn negative -- and that's an optimistic forecast, relative to the possibility of a global lost decade.Today's leaders are plugging dikes, bailing out industries and banks as they fail. Yet, what negative global growth suggests is that the problem is of a different order: that we have reached the boundaries of a kind of growth.

Reigniting growth requires rethinking growth. The question Davos -- and most leaders -- are asking is: where will tomorrow's growth come from? Will it result from oil, cleantech, bailouts, China, or Obama? The answer is: none of the above. Tomorrow's growth won't come from a person, place, or technology - but from understanding why yesterday's growth has failed. The same growth models applied to new people, places, and technologies will simply result in the same crises, over and over again. We have to reboot growth: the problem is not what is growing versus what is not, but how we grow.

20th century growth was dumb. The central, defining lesson of the macropocalypse is that 20th century growth wasn't built to last. Dumb growth is unsustainable - if the world grows the same way that developed countries did, well, there won't be a world. Dumb growth is unfair: it's growth that's an illusion for many; just ask the American middle class. And, ultimately, perhaps most dangerously, dumb growth is brittle: it falls too easily into collapse, reversing many of yesterday's gains; just ask Iceland.

21st century economies will be powered by smart growth. Not all growth is created equal. Some kinds of growth are more valuable than others. Where dumb growth is unsustainable, unfair, and brittle, smart growth is sustainable, equitable, and resilient.

Here are the four pillars of smart growth - for economies, communities, and corporations:

1. Outcomes, not income. Dumb growth is about incomes - are we richer today than we were yesterday? Smart growth is about people, and how much better or worse off they are - not merely how much junk an economy can churn out. Smart growth measures people's outcomes - not just their incomes. Are people healthier, fitter, smarter, happier? Economics that measure financial numbers, we've learned the hard way, often fail to be meaningful, except to the quants among us. It is tangible human outcomes that are the arbiters of authentic value creation.

2. Connections, not transactions. Dumb growth looks at what's flowing through the pipes of the global economy: the volume of trade. Smart growth looks at how pipes are formed, and why some pipes matter more than others: the quality of connections. It doesn't just look at transactions at the global, regional, or national level -- how much world trade has grown, for example -- but looks at how local and global relationships power invention and innovation. Without Silicon Valley's relationships powering the development of personal computing and the internet, for example, the volume of trade between Taiwan, Japan, and China, would be a fraction of what it is. Smart growth seeks to amplify connection and community -- because the goal isn't just to trade, but to co-create and collaborate.

3. People, not product. The next time you hear an old dude talking about "product", let him know the 20th century ended a decade ago. Smart growth isn't driven by pushing product, but by the skill, dedication, and creativity of people. What's the difference? Everything. Globalization driven by McJobs deskilling the world, versus globalization driven by entrepreneurship, venture economies, and radical innovation. People not product means a renewed focus on labour mobility, human capital investment, labour market standards, and labour market efficiency. Smart growth isn't powered by capital dully seeking the lowest-cost labour -- but by giving labour the power to seek the capital with they can create, invent, and innovate the most.

4. Creativity, not productivity. Uh-oh: Creativity is an economic four-letter word. Why? Because it's hard to measure, manage, and model. So economists focus on productivity instead -- and the result is dumb growth. Smart growth focuses on economic creativity - because creativity is what let us know that competition is creating new value, instead of just shifting old value around. What is economic creativity? How many new industries, markets, categories, and segments an economy can consistently create. Think China's gonna save the world? Think again: it's economically productive, but it's far from economically creative. Smart growth is creative -- not merely productive.

Here's a final point -- and a question.

Smart economies are driven by smart growth. The four pillars of smart growth are design principles for next-generation economies. 20th century economies are limited to unsustainable, unfair, brittle, dumb growth. Smart growth is more sustainable, equitable, and resilient.
Capitalism 2.0 cannot be powered by growth.1.0: that's why the race for smart growth is inevitable. The economic pressure -- the potential for value creation, in a world being ripped apart by value destruction -- is simply too great.

Can you build a business powered by smart growth? The four pillars of smart growth aren't just design principles for next-generation economies: they're also design principles for next-generation businesses. Already, tomorrow's radical innovators don't accept yesterday's toxic, tired consensus. Revolutionaries like Apple, Threadless, Etsy, Whole Foods, American Apparel, and Google are already reinventing better ways to grow - from the grass-roots up.
Yesterday's incumbents are beginning to fail en masse, while these revolutionaries remain resilient. Why? As our research at the Lab suggests, getting smart is a better choice than staying dumb: smart growth results in more creativity, innovation, effectiveness, and power than dumb growth.
For now, fire away in the comments with questions, examples, or criticisms. Which other companies are seeking smart growth? Is your organization building any of the pillars of smart growth? Are there countries or cities that are pockets of smart growth?

Here Ibn Battuta: I don't share the manichean polarization and the idea that XXth century growth was dumb.
This is not to say that it wasn't, at all! Just that to judge history is not that wise, let alone productive.

For the general approach, what should I say, I enjoy greatly the fact that somebody is writing something that close to my ideas that just allows me to use it a sample to remix.
Since english is not my native language this is quite important.

Protectionism and stimulus

Paul Krugman lucid as ever:

Should we be upset about the buy-American provisions in the stimulus bill? Is there an economic case for such provisions? The answer is yes and yes. And I do think it’s important to be honest about the second yes.
The economic case against protectionism is that it distorts incentives: each country produces goods in which it has a comparative disadvantage, and consumes too little of imported goods. And under normal conditions that’s the end of the story.
But these are not normal conditions. We’re in the midst of a global slump, with governments everywhere having trouble coming up with an effective response.
And one part of the problem facing the world is that there are major policy externalities. My fiscal stimulus helps your economy, by increasing your exports — but you don’t share in my addition to government debt. As I explained a while back, this means that the bang per buck on stimulus for any one country is less than it is for the world as a whole.
And this in turn means that if macro policy isn’t coordinated internationally — and it isn’t — we’ll tend to end up with too little fiscal stimulus, everywhere.
Now ask, how would this change if each country adopted protectionist measures that “contained” the effects of fiscal expansion within its domestic economy? Then everyone would adopt a more expansionary policy — and the world would get closer to full employment than it would have otherwise. Yes, trade would be more distorted, which is a cost; but the distortion caused by a severely underemployed world economy would be reduced. And as the late James Tobin liked to say, it takes a lot of Harberger triangles to fill an Okun gap.
Let’s be clear: this isn’t an argument for beggaring thy neighbor, it’s an argument that protectionism can make the world as a whole better off. It’s a second-best argument — coordinated policy is the first-best answer. But it needs to be taken seriously.
What’s the counter-argument? Don’t say that any theory which has good things to say about protectionism must be wrong: that’s theology, not economics.
The right argument, I think, is in terms of political economy. Everything I’ve just said applies only when the world is stuck in a liquidity trap; that’s where we are now, but it won’t be the normal situation. And if we go all protectionist, that will shatter the hard-won achievements of 70 years of trade negotiations — and it might take decades to put Humpty-Dumpty back together again.
But there is a short-run case for protectionism — and that case will increase in force if we don’t have an effective economic recovery program.