Austerity in the EU

Insightful graphic on the well-known econ blog Marginal Revolution about government spending in five European Union members which have been following the austerity path.  As you can easily see, spending in France and the UK has continued to increase every year, whereas spending moved from rapid growth to flatline in Italy.  Government spending has actually fallen in Greece and Spain over the last two years but remains well above where it was 10 years ago.  And these are countries with little to any population growth. 

How French employers react to labor regs

Great article in Bloomberg Businessweek titled "Why France Has So Many 49-Employee Companies."  The answer is that once a company has 50 employees, it "must create three worker councils, introduce profit sharing, and submit restructuring plans to the councils if the company decides to fire workers for economic reasons."  In effect this means that it becomes very difficult, if not impossible, to have a reduction in force once the worker councils are in place.

As small companies expand, they either start outsourcing activities or set up new companies to avoid these regulations.  As a result, France has 2.4 times as many companies with 49 employees as it does with 50.  Another classic case of how regulations that were intended to protect jobs end up having the opposite effect. 

Kudos to TEC students

Student teams from NC State's TEC program swept top honors at two recent competitions.  Vindhya Kunduru, Ryan Libert, Scott Moore and Guarav Shah won first place at the Poole College of Management Leadership and Innovation Showcase.  They assessed NC State patented technology that allows for the creation of vaccines against Salmonella, E.coli, and over 2,000 other species in the Enterobacter family. The team is launching a company, EnteroVax, following completion of this course; its first product will be the Hassan Salmonella Vaccine for poultry.  

Scott Bolin, Ryan Chan, Mohammad Hassan, Ying Lui and Moataz Mussa won second place for the business plan for their new company, Tethys Water Treatment System.  The company is applying NC State patented technology to solve an environmental hazard resulting from the fracking process used to extract natural gas from shale.

NC State teams took first and second place in the 2012 Lulu eGames’ New Venture Challenge.  First place went to 7ED, a company using NC State technology to manufacture an essential component used by most LED manufacturers. 7ED’s team members are Dragana Mendel, Michael Teal, Garret Foster, and Sunny Wang.  Second place was awarded to Zeek, a company that displaces the paper coupon book with an online and mobile coupon system that takes fundraising into the 21st century. Zeek’s team members are Matthew Davis, Josh Robertson and Jonathan Stephens.

It has been exciting to see the great work the HiTEC teams have been doing over the years.  It is especially exciting to see their business plans validated and placed on the path toward funding and the launch of new business ventures.  And the cash prizes are a nice bonus. 

Whose side are you on?

Today's WSJ reports that 500 workers at Caterpillar's Joliet, Ill. plant are on strike.  They are resisting a pay freeze, benefit reductions, and changes in work schedules.  This is a noteworthy story for two reasons:

1. Strikes in today's economy are rare.  The willingness of the Machinists union to go out at a time of high unemployment and to test the management of a company with a strong and successful history of resisting union demands is a bit surprising.
2. The media coverage basically portrays the union leaders as morons, as indicated by the fllowing quotes:

The most obvious question for workers striking at a Caterpillar Inc. CAT -1.27% plant here is: Are you crazy?

"Maybe [the Joliet strikers] are miscalculating," says Harry Katz, dean of the industrial and labor-relations program at Cornell University.

Mr. Bailey [a striker], on the advice of a fellow worker, recently bought stock in Caterpillar. Does that mean he thinks the company will do well in the long term? "They might," he said. "We won't."