South Korea Can’t Just Order Up Creative Economy

South Korea Can't Just Order Up Creative Economy - Bloomberg

South Korea's economy has yet to catch up to its people. They are the world's most-wired citizenry and the most advanced at using smartphones. Korean stars are Asia's most popular; Korean gadgets and fashions the coolest.

Yet at home, huge manufacturing conglomerates, or chaebol, such as Hyundai Motor Group (005380), Samsung Group (005930) and LG Group (066570) remain the mainstays of an export-focused system established after the Korean War by strongman Park Chung Hee. In fact, as the July edition of Bloomberg Markets magazine points out, the chaebols have become even more dominant. Sales of the top 30 conglomerates accounted for 82 percent of South Korea's gross domestic product in 2012, compared with 53 percent in 2002.

As in other parts of Asia, in Korea a top-heavy system no longer delivers for ordinary citizens. Wage growth has slowed, while the costs of housing and education have jumped: According to the McKinsey Global Institute, most middle-income Korean households are now cash-flow constrained. The ranks of the middle class have shrunk from more than three-quarters of the population to about two-thirds.

To make matters worse, a plummeting yen has eroded the competitiveness of South Korean exports. Last month the country's finance minister warned that Japan's currency posed a nastier threat to Koreans' well-being than Kim Jong Un's regime in Pyongyang.

Welcome Measures

Park's daughter, South Korean President Park Geun Hye, understands that something needs to change. She wants to transform Korea into a "creative economy," based more on services than on manufacturing, on innovation rather than industrial brawn. The goal is the right one: Most Asian countries will eventually need to head in a similar direction. To achieve that goal, though, Park can't rely on her father's methods.

In recent weeks, Park's government has begun rolling out welcome measures to foster innovation and startup companies. The government plans to spend 200 billion won ($176 million) on startups directly and 300 billion won on mergers and acquisitions. Angel investors will receive generous tax incentives. Highly skilled foreigners will be offered entrepreneur visas to start businesses. The government estimates that its measures will ultimately unlock 4.3 trillion won in funding.

Yet unlike automobile factories or steel plants, transformative technologies can't just be ordered up by the government. However fine Park's intentions may be, midlevel bureaucrats will be the ones putting her grand plans into action. They are all too likely to stifle the creativity they're meant to promote.

Korean entrepreneurs are already warning that all this state money comes wrapped in red tape. Prospective angel investors -- often successful businessmen themselves -- have to undergo certification before they can draw on matching state funds. Government-sponsored incubators close at fixed hours that make late-night coding sessions tough. Too often money flows to "grantrepreneurs," who are more skilled at writing proposals than code.

The generation of Asian leaders to which Park's father belonged could define and direct whole industries. Now, though, a lingering urge to oversee development just gets in the way. Korea still sets highly specific rules governing Internet development and usage, for instance. Such regulations cut off Korean developers from the kind of cross-fertilization that spurs new ideas -- an isolation that's been dubbed the "Galapagos syndrome." Online innovations developed for the Korean market can't be scaled up globally.

Encouraging Risk

A shift in mindset is needed, not just money. Instead of trying to police fast-changing technologies, the government should lay out clear principles and allow independent regulators to adapt rules as necessary. At the same time, Park should take aim at the maze of laws and regulations that inhibit risk-taking in Korea. According to the World Bank, starting a business in South Korea is harder than in Belarus or Madagascar. Tax laws encourage small businesses to stay small rather than grow. Bankruptcy laws raise rather than lower the price of failure.

The state does have another critical role to play in this transition. Traditional societies like Korea's still prize respectability above all: Parents push their children to memorize their way into the best schools, to pad their resumes with advanced degrees, and then to seek jobs in the government or at one of the chaebols. Starting a company isn't seen as a sign of daring, but of failure. And if one does fail -- as almost all successful entrepreneurs do at some point -- the shame can be debilitating. Few dare to try again.

Leaders like Park need to be cheerleaders, helping to break down cultural barriers to innovation. By declaring creativity to be a critical national priority, she's helping to reassure Korean mothers that their app-designing offspring are contributing to the nation's well-being.

This was the secret to Asia's postwar miracle: Leaders like Park's father transformed their countries by persuading citizens to sacrifice and strive as part of the push to industrialize. If his daughter wants to start her own revolution, she should set the goal -- and then let her people lead the way.

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2013/05/30 17:20 - Nikkei Falls Sharply On Dollar's Fall

Nikkei Falls Sharply On Dollar's Fall

TOKYO (NQN)--Tokyo stocks took a beating Thursday, with the Nikkei Stock Average falling 737.43 points, or 5.15%, to end the day at 13,589.03, its lowest level in about a month and the second-biggest fall this year.

The overnight decline in U.S. and European stocks made investors less willing to take risks, and the dollar's depreciation triggered selling of blue chips, including automakers.

Amid an already lackluster overall market, heavy selling of stock index futures and a fall in the influential stock of Fast Retailing Co. (9983) further weighed on sentiment, sending the benchmark index even lower.

The overnight fall in the Dow Jones industrial average and the dollar's depreciation to the 100 yen level worked against exporters. And with investors reluctant to engage in dip-buying, selling triggered even more selling, causing the Nikkei average to extend its losses.

The Topix index of all first-section issues lost 44.45 points, or 3.8%, to close the day at 1,134.42, its lowest since April 19. All 33 subindexes of the Topix gauge fell. Falls of larger than 5% were seen in shares of property companies, storage and transportation-related companies, financial companies, power companies and gas companies.

Trading value on the first section of the Tokyo Stock Exchange totaled 3.37 trillion yen on a preliminary basis, with 4.47 billion shares changing hands. A total of 1,640 first-section stocks declined, or 95% of the total. Only 62 stocks moved higher, and 14 remained unchanged.

Reports that banks will hike their mortgage rates triggered significant falls for Mitsui Fudosan Co. (8801), Sumitomo Realty & Development Co. (8830) and Mitsubishi Estate Co. (8802).

Declines were logged by all three megabanks -- Mizuho Financial Group Inc. (8411), Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc.

Automakers Toyota Motor Corp. (7203), Honda Motor Co. (7267) and Mazda Motor Corp. (7261) were also lower.

Securities companies, including Nomura Holdings Inc. (8604) and Daiwa Securities Group Inc. (8601), also lost ground.

In contrast, rises were seen for Maruei Department Store Co. (8245), Nipro Corp. (8086), Gun Ei Chemical Industry Co. (4229) and Tsugami Corp. (6101).

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More people renting houses rather than owning them would be better for our economy

Since the British Bankers' Association began keeping records (which admittedly began only in 1997), such a prolonged period of negative net lending has been quite unprecedented. This – by the standards of official received opinion – is Bad News.

To anyone who is not (a) a politician, (b) a banker, or (c) an economic "expert", that judgment may seem rather odd. In fact, to anyone who is (a) a working householder (b) a taxpayer or (c) a common sense human being, it may seem like a sign that much of the population of the country is admirably responsible. But then real people live by a rather different logic from the class that governs national economic policy.

The two factors which contribute to this pattern – the unwillingness of financial institutions to offer mortgages that are out of proportion to applicants' earnings, and the reluctance of people to enter a housing market that will require such a disproportionate mortgage – are both species of sanity.

Flying in the face of this eminent good sense is the Government's Help-to-Buy scheme, which "experts" are relying on to restore the insanity that has, until recently, constituted the British housing market: that is, mortgage lending on an Alice-in-Wonderland scale which will prop up grossly inflated property prices, thus drawing millions of ordinary working people into unsustainable debt.

Let's chant the following sentences all together, shall we? Property prices in this country are too high: they are completely out of sync with ordinary earnings. Many, many people – especially the young, and possibly the old – should not be pressured into owning their own homes: for them, renting would be a far better option. And furthermore, just to compound the heresy, a reduction in home ownership might be better for the economy.

The first of these propositions is the easiest to maintain. Within living memory – which is to say, when my husband and I bought our first house – the understanding was that your mortgage should be two and a half (or, at most, three) times your annual income. House prices reflected this assumption because sellers had no option but to comply with it: you could not sell a house for a price that exceeded any possible mortgage offer. Then came easy credit – and you know the rest.

There is a widespread belief that it is the shortage of available housing that makes British property so expensive. This may be partly true but the sudden ridiculous increase in house values that occurred over the past couple of decades did not coincide with a drastic fall in the number of houses, or even a dramatic increase in population: it came as a direct consequence of easy mortgage credit. People were throwing Monopoly money at a single commodity and the prices went through the roof.

But we know all this, you say. Let's move on. Nothing to see here. So let me take my argument further. It is not a good thing that the health of the British economy is so dependent on property prices – meaning they must always go up, never down.

Nor is it a good thing that everybody should be encouraged on to the property ladder from the cradle. Owning your own home, particularly at the child-rearing stage of life, is generally beneficial: it can – assuming that you are not trapped in too high a mortgage – provide stability and security.

But being locked into (mortgaged) property-ownership before you have undertaken the responsibilities of adult life, or even decided what you want your life to be like, is absurd. It is a trap which makes people less adaptable, less able to grasp unexpected opportunities, and less free to make the sort of adventurous decisions that ought to characterise the early years of grown-up existence. It is so very much harder to sell a home and extricate yourself from a mortgage than it is to escape from a rental agreement.

Much is said in favour of the independence which property-owning brings, but it is easy to forget the loss of social and economic mobility that goes with it.

However, it is not just individuals who are sacrificed to this idealised view of home-ownership. Having so much private household wealth tied up in property means that the population tends not to invest in anything else. Instead of buying shares as Americans do, or investing in entrepreneurial ventures as many Europeans do, the British sink their capital into their houses. A great many of them trust the value of their property to rise with such unquestioning faith that they rely on it to provide a pension, either by outright sale or increasingly now through equity release.

The chronic "under-investment" which has been the curse of British economic life for as long as anyone can recall, is at least partly a result of this reliance on property as the provider of financial security. If fewer people had a home which they saw as the only asset they needed, there might be far more private cash flowing into British businesses either directly or through pension funds and investment accounts of all kinds. Again, money that is not tied up in a static property is more mobile, more flexible and more versatile.

What the Government needs to do if it really wants to help is not subsidise high property prices by underwriting ever more mortgage debt. Instead, it should do everything in its power to facilitate the private rental market. The decision this week to scale back the proposed regulations that would have required all landlords, in every sector of the market, to act as border police checking the immigration status of their tenants, is seriously good news.

The post-war slum landlord scandals gave rise to an understandable political drive toward over-regulating private rented accommodation, and so the commonplace 19th century practice of "taking a house" or a set of rooms on a rental arrangement had virtually disappeared by the 1960s. It was private ownership or the council estate. (And council tenancies, modelled on the ideal condition of home ownership, became permanent and immovable, too.)

But if what you want is a more dynamic economy which can adapt robustly to changing circumstances, then you need people and money to be able to move. Locking them both up in houses does not facilitate this. And in bad economic times, the problem is exacerbated: in Britain a recession is always marked by the property market becoming sluggish (often to the point of being moribund). So it becomes more difficult than ever for people and money to be liberated.

Of course, governments face an intractable political dilemma. How do you explain to a nation of property-owners that it would really be better for everybody if the price of their precious asset could be allowed to fall to a natural level?

That, I admit, would take rather a lot of explaining.

Janet Daley is a columnist on the Sunday Telegraph

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[Graphic News] Korea on alert over widening income gap

Korea saw its income inequality surpass the average of OECD members, raising concerns over the widening economic disparity between the rich and poor.

Korea's top 10 percent group earned 10.5 times the income of the poorest 10 percent, over the OECD average of 9.5 times in 2010, the Paris-based international organization said.

The increased inequality led Asia's fourth-largest economy to rank ninth among OECD members.

Mexico showed the biggest gap with the richest 10 percent earning 28.5 times more than the bottom, followed by Chile and the U.S. posting 26.5 and 15.9 times, respectively.

This is mostly due to the global financial crisis that led to increased unemployment rates especially in advanced economies such as the U.S. and Europe, the OECD report explained.

The report also showed Korea's income distribution measured by the so-called Gini coefficient stood at 0.31, indicating that its economic disparity is growing. A zero represents perfect equality while one is the opposite.

By Suk Gee-hyun 

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Richard Leblanc: J.P. Morgan Post-game Analysis

J.P. Morgan Post-game Analysis

I was interviewed by BNN where I said that what proponents for the split of CEO and Chair at J.P. Morgan had going against them this week was that the stock was up 50 percent and that the split would occur to an incumbent CEO, Jamie Dimon, as opposed to a new CEO, where the decision to split the roles by a board is easier.

Shareholders have spoken and the vote was almost a third in favor of having a separate Chair and CEO. However the risk committee directors received less than 60 percent support for their continued tenure on the board.

What are we to take from this, from a governance and accountability perspective?

First, the directors who received less than 60 percent should all be replaced. New directors should demonstrably possess solid risk and banking expertise -- including a full understanding of complex derivatives -- to sit on a board of this type. Management, including the Chairman, should have no say whatsoever as to who these directors are. Indeed the incumbent board should look to shareholders for suggestions.

Second, there is not a single new argument in the lead up to the chair-CEO vote that was not already mentioned in the Canadian context when Canadian banks ten years ago had combined roles, but now have separate chairs. I remember many bank chair-CEOs making impassioned arguments as to why they should keep the chair role, with the "support" of their boards. Shareholders and regulators eventually won this battle.

Share price or a threat to leave by Mr. Dimon is likely what swayed shareholders away from voting more fully for the split.

These are both troubling from a governance perspective. Directors should be free and empowered to take decisions that are best for the company and shareholders in the long term -- decisions that may even result in short term share price decline. Share price also reflects multiple inputs, and it's not certain that splitting the roles for governance purposes would affect share price irreparably.

Second, and more important, a CEO who threatens to leave is a red flag -- or should be -- for any board. It may signal lack of internal succession planning. No one is irreplaceable and the "leaving" card should be called by more boards -- even in pay negotiations -- through proper succession planning, that is to say internally ready candidates at all times.

Lastly, the decision of a separate chair versus a lead director is vulnerable to the narrative that "it depends." This is impenetrable and can reflect more ego, hubris and board capture. At some point, the decision on chair versus lead director should be an objective standard, not a subjective one. It is the same with standards for director independence.

There is a fundamental difference between a chair role and a lead director role. The chair role is stronger. Regulators should be more prescriptive and say the roles should be split as a matter of good governance and preventing a concentration of power absent accountability. They have done so in Canada and we have fared very well.

 

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The euro crisis: The sleepwalkers

The sleepwalkers

In the euro zone, desperately in need of a boost, no news is bad news

May 25th 2013 |From the print edition

YOU may have missed it, but the European Union held a summit this week. Taking in a nutritious working lunch, Europe's prime ministers, presidents and chancellors devoted half of Wednesday to weighty issues of energy and taxation. Gone are the panic-stricken sessions of last year, dogged by talk of the euro's imminent failure. Today, Europe's leaders note, reform is under way across most of the euro zone and some southern European countries are regaining their competitiveness. The government-debt market is back in its box, where it belongs. And over the past year share prices are up by a quarter. Nobody could pretend that life is easy; Europeans understand that hard work and sacrifices lie ahead. But the worst of the crisis is now safely in the past.

It is a reassuring tale, and those worn down by the Wagnerian proportions of the euro saga (who isn't?) are eager to believe it. Unfortunately, the idea that the euro is yesterday's problem is a dangerous figment. In reality, Europe's leaders are sleepwalking through an economic wasteland.

Someone call a somnambulance, quick

The euro-zone economy has just endured a sixth successive quarter of shrinking GDP. The malaise is spreading to core countries including Finland and the Netherlands, which both contracted in the first quarter. Retail sales are falling. Unemployment, above 12%, is a record—with more than one in four Spaniards out of work (see article). In spite of savage spending cuts, government deficits are persistent and high. The sum of government, household and company debt is still excessive. Banks are undercapitalised and international lenders worry about their as-yet-unrecognised losses. Although official interest rates are low, firms in southern Europe are suffering a cruel credit crunch. All this is causing economic hardship today and eating away at the prospects for growth tomorrow. The euro zone may not be about to collapse, but the calm in Brussels is not so much a sign of convalescence as of decay.

For everyone's sake, Europe's leaders must shake themselves out of their lethargy. They must grasp that if they do not act, the euro zone faces stagnation or break-up—possibly both.

After years of crisis, the to-do list is clear. The urgent task is to sever the ties between banks and governments too feeble to support them. That was the aim of the banking union agreed on last year. But, as the pressure has eased, the union has become ensnared in technicalities and a fundamental argument about how much historic bank debt, if any, should be dumped on it—how much, in other words, Germans, Finns and Dutch should bear the burden of other people's mistakes. This delay is highly damaging. Europe's banks need funds by whatever means. America has recovered before Europe not just because it has been less austere, but also because it rapidly sorted out its banks so that they could lend again (see Charlemagne).

In addition, the euro zone needs growth-boosting reform. The EU should extend the single market further into services. Instead of thinking up red lines, it should pursue a free-trade agreement on offer from the United States, its biggest trading partner. And it should ease austerity by slowing the pace of budget cuts and using cash from the core euro zone to pay for schemes to boost youth employment and investment in small and medium-sized firms in the periphery.

Clearly, the reason for today's inaction is not a shortage of things to do, but a shortage of the will to do them. This hiatus is partly caused by elections due in September in Germany, the prime mover in almost any European policy these days. But there is a deeper reason, too. Across Europe voters have grown resentful of both their own politicians and the EU. In France the president, François Hollande, is paralysed by scandal and a dismal approval rating of 24%, another record (see article). A recent survey by the Pew Research Centre found that the share of French voters who say that they look favourably on the EU has fallen from 60% in 2012 to 41% now, less even than in Eurosceptic Britain. Italy is mired in recession, yet it cannot seem to muster a coherent political platform for change. At the same time, voters want to keep the single currency: 70% of them still support the euro in Greece, which has suffered more in the crisis than any other country. Over the past few years crunch votes in Greece, Ireland, Portugal, Spain and the Netherlands have repeatedly backed staying inside the euro zone.

This is a recipe for inaction. On the one hand, voters want the euro zone to stay together. On the other, they will not back the difficult reforms needed to pull it out of the crisis.

Time was when the bond markets would force politicians to face up to this contradiction. It was the threat of financial panic that kept euro-zone leaders up until dawn hammering out rescue deals and promises of reform. But the financial markets have been anaesthetised ever since Mario Draghi, the president of the European Central Bank (ECB), promised to "do whatever it takes" to protect the euro zone from collapse. Speculators know that to bet against the single currency would be to take on the theoretically infinite balance-sheet of the ECB—and that, at least at first, would mean heavy losses.

Alarm bells

Mr Draghi was right to buy the euro zone time. He was also right to furnish the ECB with the tools to tamp down speculation. The trouble is that the politicians are squandering the chance for orderly reform. Optimists say that everything will be just fine after Germany's election, when its leaders will have a mandate for euro-zone reform. But German reluctance either to lead or to pay for the rest of Europe runs deeper than that. Besides, Mr Hollande's woes mean that the Franco-German relationship, always central to the evolution of Europe, has seized up.

And if euro-zone leaders stumble on? Like Japan, Europe will be under a shadow for years to come. The cost will be measured in disillusion, blighted communities and wasted lives. Unlike Japan, though, the euro zone is not cohesive. For as long as stagnation and recession tear at democracy, the euro zone risks a fatal popular rejection. If the sleepwalkers care about their currency and their people, they need to wake up.

From the print edition: Leaders

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Make the most of being your own boss

Make the most of being your own boss - Telegraph

Are you a micro-business? As a report by Lord Young last week stated, firms with fewer than 10 employees now make up 95pc of all businesses. Many are on a truly tiny scale – limited companies or partnerships with just one or two employees.

They are part of a growing trend towards self-employment in Britain, which is being fuelled by the older generation, as well as by many with young families. Figures from the Office for National Statistics show that those aged over 65 accounted for the largest number of self-employed people between 2008 and 2011, while the average age of a self-employed person is 47, compared with 40 for an employee.

Young parents are also starting many new businesses, prompting Mumsnet, the parenting social network, to launch a "WorkFest" focused on entrepreneurship for parents. "One of the perhaps unsung advantages of having babies is that it often gives women an opportunity to reset their career path or way of working," said Justine Roberts, the chief executive and co-founder of Mumsnet.

What both older workers and young mothers are finding is that self-employment offers a way to be flexible. For many over-65, consultancy work gives them a chance to wind down a little, while parents can work part-time when their children are small. For those made redundant in their fifties, self-employment can also be a survival strategy.

But becoming your own boss has its complexities, not least for personal finances. Employees who have never even filled in a tax form suddenly find they need to account for every penny, and are faced with a large tax bill at the end of the year. Recent figures from StepChange, the debt charity formerly called the Consumer Credit Counselling Service, showed that the self-employed were more likely to have debt problems than others. The charity found that average debt levels among its self-employed clients were 18.6 times annual income, compared with 4.1 among those in full or part-time work.

Delroy Corinaldi of StepChange said: "Self-employed people's business and personal finances are often closely intertwined, and, as they use credit to invest in and support their enterprises, it can leave them particularly vulnerable to problem debt."

However, there is a more glamorous side to self-employment. Celebrities such as Fiona Bruce, Jeremy Paxman and Chris Evans, as well as many Premiership footballers, operate through a limited company because they have a number of business interests. Those with limited companies often pay less tax. This is because corporation tax is lower than the tax paid by individual taxpayers in many cases.

"The self-employed have great flexibility," explained Mike Warburton, a tax specialist from accountants Grant Thornton. He said the main advantage for the self-employed was that they could pay themselves a low salary, equivalent to the tax-free allowance for individuals. They could then pay the rest of their income as dividends, which are effectively tax-free after corporation tax, up to the higher-rate tax band. The dividend payment avoids some National Insurance contributions, too, while costs, from mobile phones to computers and vehicles, can be paid for by the business.

In some cases, the self-employed can keep any extra money in the business until they wind it up and withdraw it. However, setting up a new company soon after this in the same line of work could be regarded as tax evasion.

In addition, the taxman is looking more closely at those who set up a company and obtain tax advantages when they are really employees and have only one client. "HMRC supports a flexible labour market and will support those who wish to comply with their tax obligations," a spokesman said. But he added that the taxman "will challenge those who seek to avoid their obligations, including by seeking to present an employment relationship as self-employment".

Recent figures discovered by Bloomsbury Professional, a specialist tax publisher, show that HMRC is stepping up its investigations into the self-employed. The figures showed an increase in investigations under "IR35" legislation, which allows the Government to tax freelancers e_SEnD who may work using "personal service companies" e_SEnD as though they were disguised employees of their clients.

IR35 is designed to prevent freelancers paying lower tax rates and NI on earnings when HMRC thinks they are really employees. Bloomsbury's figures show that 193 investigations were opened into such abuses in the seven months to October 2012, compared with just 12 in 2009/10. Martin Casimir, managing director of Bloomsbury Professional, said: "IR35 is very problematic as it adds unnecessary complication to the tax system and makes it hard for ordinary contractors to work out their tax bills. Freelancers and contractors have the added complication of HMRC breathing even more closely down their necks."

For legitimately self-employed people, though, there are a variety of ways of minimising tax. As well as paying dividends and a low salary, those with a limited company can pay pension contributions and life insurance from their company, issue childcare vouchers and keep their annual earnings below £50,000 to avoid a cut in child benefit. Thanks to technology there are now more ways to keep track of all this, with online accounting services that show your tax liability throughout the year.

Andrew Halgryn of Boox, an online accountancy group, said freelance working now covered some surprising professions. "Many of our clients are social workers. They're very good at being social workers, but they don't need to be very good at tax." Britain's army of the self-employed, he argued, will need good accountants, especially as they can offset costs against profits.

For more on how to make the most of self-employment, see Action Points, right.

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How Teens Are Really Using Facebook: It's a 'Social Burden,' Pew Study Finds

The Facebook generation is fed up with Facebook.

That's according to a report released Tuesday by the Pew Research Center, which surveyed 802 teens between the ages of 12 and 17 last September to produce a 107-page report on their online habits.

Pew's findings suggest teens' enthusiasm for Facebook is waning, lending credence to concerns, raised by the company's investors and others that the social network may be losing a crucial demographic that has long fueled its success.

Facebook has become a "social burden" for teens, write the authors of the Pew report. "While Facebook is still deeply integrated in teens' everyday lives, it is sometimes seen as a utility and an obligation rather than an exciting new platform that teens can claim as their own."

Teen's aren't abandoning Facebook -- deactivating their accounts would mean missing out on the crucial social intrigues that transpire online -- and 94 percent of teenage social media users still have profiles on the site, Pew's report notes. But they're simultaneously migrating to Twitter and Instagram, which teens say offer a parent-free place where they can better express themselves. Eleven percent of teens surveyed had Instagram accounts, while the number of teen Twitter users climbed from 16 percent in 2011 to 24 percent in 2012. Five percent of teens have accounts on Tumblr, which was just purchased by Yahoo for $1.1 billion, while 7 percent have accounts on Myspace.

Facebook, teens say, has been overrun by parents, fuels unnecessary social "drama" and gives a mouthpiece to annoying oversharers who drone on about inane events in their lives.

"Honestly, Facebook at this point, I'm on it constantly but I hate it so much," one 15 year-old girl told Pew during a focus group.

"I got mine [Facebook account] around sixth grade. And I was really obsessed with it for a while," another 14 year-old said. "Then towards eighth grade, I kind of just -- once you get into Twitter, if you make a Twitter and an Instagram, then you'll just kind of forget about Facebook, is what I did."

On the whole, teens' usage of social media seems to have plateaued, and the fraction of those who check social sites "several times a day" has stayed steady at around 40 percent since 2011.

Asked about teens' Facebook habits during a recent earnings call with investors, Facebook's chief financial officer answered that the company "remain[s] really pleased with the high level of engagement on Facebook by people of all ages around the world" and called younger users "among the most active and engaged users that we have on Facebook."

Here's what that "high level of engagement" really looks like, according to Pew:

They're deleting, lying and blocking: As the chart below shows, some three-quarters of Facebook users have purged friends on Facebook, 58 percent have edited or deleted content they've shared and 26 percent have tried to protect their privacy by sharing false information. Among all teens online (not just Facebook users), 39 percent have lied about their age. The report also notes, "Girls are more likely than boys to delete friends from their network (82 percent vs. 66 percent) and block people (67 percent vs. 48 percent)."

Superusers on Facebook are superusers on other social sites: Teens with large friend networks on Facebook are more likely than their peers to have profiles on other social media sites: 46 percent of teens with over 600 Facebook friends have a Twitter profile, and 12 percent of such users have an Instagram account. By comparison, just 21 percent and 11 percent of teens who have 150 to 300 friends have Twitter and Instagram accounts, respectively.

Teens have hundreds of friends, but they haven't met them all: The typical Facebook-using teen has 300 friends, though girls are more likely to have more friends (the median is 350) than boys (300). Seventy percent of teens are friends with their parents, 30 percent are friends with teachers or coaches, and 33 percent are friends with people they've never met in person.

It turns out parents actually do see what their kids are posting: Just 5 percent of teens tweak their privacy to limit what their parents see.

They're watching out for their privacy: Sixty percent of teens on Facebook say they've checked their privacy settings in the past month -- a third of them within the past seven days. The majority (60 percent) of teens have their profiles set to private, while 14 percent have profiles that are completely public.

But yes, they are sharing personal details: Teens with more Facebook friends are more likely to share a greater variety of personal details about themselves online. Among all teens on Facebook, 21 percent share their cell phone number, 63 percent share their relationship status and 54 perent share their email address.

Seventeen percent of teens on Facebook will automatically share their location in their posts, and 18 percent say they've shared something they later regret posting.

They're enjoying themselves, but they've been contacted by creeps: Among all teens surveyed by Pew, 17 percent have been contacted by strangers in a way that made them "scared or uncomfortable." However, 57 percent of social media-using teens said they've had an experience online that "made them feel good about themselves," and 37 percent say social media has made them feel more connected to someone else.

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Strategic Leadership: The Essential Skills

The storied British banker and financier Nathan Rothschild noted that great fortunes are made when cannonballs fall in the harbor, not when violins play in the ballroom. Rothschild understood that the more unpredictable the environment, the greater the opportunity—if you have the leadership skills to capitalize on it. Through research at the Wharton School and at our consulting firm involving more than 20,000 executives to date, we have identified six skills that, when mastered and used in concert, allow leaders to think strategically and navigate the unknown effectively: the abilities to anticipate, challenge, interpret, decide, align, and learn. Each has received attention in the leadership literature, but usually in isolation and seldom in the special context of high stakes and deep uncertainty that can make or break both companies and careers. This article describes the six skills in detail. An adaptive strategic leader—someone who is both resolute and flexible, persistent in the face of setbacks but also able to react strategically to environmental shifts—has learned to apply all six at once.

Do you have the right networks to help you see opportunities before competitors do? Are you comfortable challenging your own and others' assumptions? Can you get a diverse group to buy in to a common vision? Do you learn from mistakes? By answering questions like these, you'll get a clear view of your abilities in each area. The self-test at this article's end (and the more detailed test available at hbrsurvey.decisionstrat.com) will help you gauge your strengths and weaknesses, address deficits, and optimize your full portfolio of leadership skills.

Let's look at each skill in turn.

Anticipate

Most organizations and leaders are poor at detecting ambiguous threats and opportunities on the periphery of their business. Coors executives, famously, were late seeing the trend toward low-carb beers. Lego management missed the electronic revolution in toys and gaming. Strategic leaders, in contrast, are constantly vigilant, honing their ability to anticipate by scanning the environment for signals of change.

We worked with a CEO named Mike who had built his reputation as a turnaround wizard in heavy manufacturing businesses. He was terrific at reacting to crises and fixing them. After he'd worked his magic in one particular crisis, Mike's company enjoyed a bump in growth, fueled in part by an up cycle. But after the cycle had peaked, demand abruptly softened, catching Mike off guard. More of the same in a down market wasn't going to work. Mike needed to consider various scenarios and gather better information from diverse sources in order to anticipate where his industry was headed.

We showed Mike and his team members how to pick up weak signals from both inside and outside the organization. They worked to develop broader networks and to take the perspective of customers, competitors, and partners. More alert to opportunities outside the core business, Mike and the team diversified their product portfolio and acquired a company in an adjacent market where demand was higher and less susceptible to boom-and-bust cycles.

To improve your ability to anticipate:

Talk to your customers, suppliers, and other partners to understand their challenges.

Goay Joe Lie

Director of Joe Lie Beauty And Cosmetics

Real Business - Let a young world future-proof your business

Let a young world future-proof your business

21 May, 2013 in News by Shane Schutte. Permalink.

Young people across the globe are hoping to change the future that will one day be theirs. According to One Young World, we should let the "brilliant young people" make our countries and businesses future-proof.

Kate Robertson at the Women of the Future Summit 2013

Today's generation of under-30s are the leaders of tomorrow. So why are we not listening to them? Speaking at the Women of the Future Summit last week, Kate Robertson, co-founder of One Young World, shared her vision to raise the voices of young leaders across the globe and give them a platform to change the world.

Robertson believes that we are widely ignoring the opinions of young people and advices that we start listening now, as "they will inherit the awful mess we've made of many things". Surely we should be giving them the chance to reduce the challenges they will have to later face.

But despite numerous global youth forums, nobody listens to what the leaders of tomorrow have to say. As we have tuned out their pleas, so have companies and the government. "In order to get your vision of the future right, to shape your government, country or organisation, you must have among you brilliant young people," said Robertson, highlighting that youth unemployment and a lack of young people in the workforce are concerning.

This can't be for a lack of talent - after all, we are talking about the most informed generation in history. Estonia has started training their seven-year-old children to code, teens everywhere are creating apps and building start-ups. Advancing technology showcases a range of jobs that weren't readily available a few years ago, mostly pursued by eager youngsters who take the challenge of teaching themselves.

As the economy and technology shape the world we live in, the next generation eagerly adapts. They have strong views and fresh ideas, with the energy and passion to create a better world.

"All of us are in some position of power to make a difference," Robertson stressed. "But who's leading that change? We're not getting anywhere. So we should follow young people as they're trying to create a positive change. For example, the two non-executives on my board in the UK are aged 27 and 28, and they're truly talented."

The annual One Young World Summit is an event where young sponsored delegates are given the opportunity to debate solutions for the pressing issues the world faces. The Summit has more countries represented than any other organisation outside the Olympics. One Young World showcases a network of young leaders ready to supply the world with a different perspective and allows One Young World Ambassadors to work on their own initiatives.

"What we try to do for these young people once a year is bring all of them together to try to force the powers that be to listen to the views of young people. It's only a small step but I know that people will start listening," said Robertson.

When the delegates return to their companies, they set about creating change from within and energise their corporate environment, according to One Young World. So why not future-proof your company by sponsoring your young workers to join the One Young World Summit 2013, which will take place in Johannesburg on 2 October?

Goay Joe Lie

Director of Joe Lie Beauty And Cosmetics

why brands must recognise the pitfalls of anti-social media by @nickykc

Brands must do more to recognise the pitfalls of anti-social media

by Nicola Kemp, 22.03.2013

Ask.fm

Jessica Laney was 16 years old when she hanged herself in December.

She had created a profile on Ask.fm, a social network where users can post questions anonymously, and was bullied prolifically. One poster asked: 'Can you kill yourself, already?'

In response, the site's founder, Mark Terebin posted a statement in defence of it: 'Ask.fm is just a tool which helps people to communicate with each other, same as any other social network, same as phone, same as piece of paper and pen. Don't blame a tool, but try to make changes.'

Of course, the paper and pen don't have quite the same power as social-media platforms to wound instantly, nor the guaranteed reach.

Unfortunately this tragic series of events is not unique, but one of an ever-increasing number of stories of cyber-bullying and trolling, which reflect an uncomfortable, but more evident, online culture of dehumanisation.

In the rush to embrace the huge opportunities afforded by the web, are brands guilty of turning a blind eye to the dark side of social media? There is no doubt that social media is making public debate more violent and aggressive, but should the industry be doing more to protect consumers?

Cloaked in anonymity, social-media platforms have fast become a melting pot of some of the very worst cruel and insensitive bullying.

Advertisers whose content is served up next to this kind of poison on social sites would never support traditional media channels featuring this kind of abuse; yet the industry appears to have accepted this as an unavoidable downside of the social-media wave.

But, of course, if you believe the argument that we exist in the 'Wild West' era of social media, then neither brands nor media owners can possibly tackle this growing wave of abuse, or, more importantly, have any culpability for it. For too long, brands have leaned heavily on the notion that the internet is too vast a territory to police, but shouldn't they at least have the courage to try?

Nicola Kemp is Marketing's head of features. 

THE UPSHOT

What brands should know about the rise of anti-social media.

1. The cloak of anonymity

Herb Kelleher, founder of Southwest Airlines, is credited with having said: 'Culture is what happens when no one is looking.' This still holds true in the social-media age; where the cloak of anonymity allows consumers to share and say things they never would openly. Media-owners must be accountable for comments on their platforms.

2. A new moral compass

Media owners must also do more to protect consumers on their platforms, particularly the vulnerable. While many have outsourced moderation or taken a lean-back approach to censorship, brands should engage with charities and NGOs to develop a long-term, sustainable strategy on cyber-bullying. It's not just the right thing to do, it is in the best interests of their business.

3. The silent majority

Brands must beware of believing that social media reflects their entire customer base. According to Google, 75% of consumers don't post online opinions or reviews. If social networks fail to address anti-social media, they may never have the courage to express themselves online and social media will never fulfil its true potential.

Discussion

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Director of Joe Lie Beauty And Cosmetics

Why China's Riches Won't Bring It Freedom

Modern history is the story of how liberal democracy, originating in the U.K. and America, spread around the world. This may sound like an absurd fantasy. In actuality, this Whiggish narrative of progress underpins most newspaper editorials, political commentary and speeches in the West, and frames larger views of political developments in the non-West.

It accounts for the gloomy undertone to Freedom House's latest report, which records the shrinking of liberal democracy worldwide. Even countries with regular elections, such as India, are far from upholding the notion of liberalism, which advocates the maximizing of individual rights for the fullest realization of human potential.

About Pankaj Mishra»

Pankaj Mishra is the author of "Temptations of the West: How to be Modern in India, Pakistan, Tibet and Beyond," ... MORE

Perhaps we should discard the ideological prejudice that assumes the universalization of liberal democracy. We might then be able to see dispassionately the true multiplicity of political forms, how they came into being and what they portend.

The specific socioeconomic conditions that enabled both liberalism and democracy, such as the Reformation's stress on individual responsibility or industrial capitalism, were particular to Western Europe and America.

Catch-Up States

They couldn't be recreated elsewhere easily, especially among countries trying to catch up to the West. Japan, the first non-Western country to try to become modern, became an economic and military power without enshrining liberal concerns for individual rights.

Before Japan, there was Germany, another society that embarked on industrialization relatively late compared with the rest of Western Europe, and was modernized by a strong centralized state.

Neither Germany nor Japan embraced the traditions of Anglo-American liberalism, which encouraged individualism, laissez-faire economics and a fundamental distrust of state power. Individual rights were subordinated to the economic and military imperatives of countries lurching late into the modern world.

Few Japanese wished to criticize the slogan "fukoku kyohei" (meaning "enrich the country and strengthen the military"), as their country rapidly modernized in the late 19th century under the not-so-benign gaze of the U.K., Russia and the U.S.

Even during the politically favorable conditions of Taisho Japan or Weimar Germany, liberals wanted the state to devise and implement social-welfare policies for the benefit of the working poor. Reacting against modern capitalism's built-in inequalities, they trusted in bureaucratic management of the economy (prefiguring in some ways the liberal New Dealers of the U.S.).

Many Indian liberals, too, stressed state initiative in many areas of public life. India's first prime minister, Jawaharlal Nehru, implanted representative democracy by ensuring that individual consent, periodically sought through elections, legitimized the great power of the Indian state.

Yet his liberalism had a communitarian and paternalistic bent. The state was to hold great prescriptive powers in the realm of the economy. The Indian constitution held that free speech, too, could be circumscribed in favor of the public good.

Alas, a straight line runs from this pragmatic acknowledgement of a diverse society to the present, when just about anyone -- a small town mullah as well as a thuggish politician -- can claim to be attacking artists and writers on behalf of the public good. Liberal democracy in India has never seemed more feeble.

China's Challenge

But it is China that poses the bigger challenge to the Anglo-American faith in the onward march of liberalism and democracy.

It has achieved spectacular growth without embracing electoral democracy. Moreover, the state controls the commanding heights of the globalized economy. This will not change anytime soon.

China's experience as a late developer is crucial to understanding its peculiar trajectory. Liberals, always a minority among the country's leaders and thinkers, had little chance of flourishing against a backdrop of civil war and foreign invasions. China's biggest challenge, for much of the 20th century, was survival and self-strengthening.

Chinese leaders first had to establish, in double-quick time, a centralized national state, a center of security and stability in a dog-eat-dog world of international relations. Unlike the Japanese, who developed an indigenous family conception of the state, Chinese leaders had to systematically overhaul the body politic in order to command loyalty from China's citizens.

Having disavowed their imperial system, Chinese leaders -- Chiang Kai-shek as well as Mao Zedong -- had to inculcate a sense of nationalism and national identity from scratch through mass education and propaganda.

Individual challenges to the state's arbitrary power were ruthlessly crushed. The heirs of Mao finally recognized the blunders of investing too much economic initiative with the state. But even Deng Xiaoping, while liberalizing the economy, did not break with older imperatives: of mobilizing China's resources to make it truly autonomous and secure, and postponing the expansion of individual freedoms.

"Development is the only hard truth," Deng claimed. "If we do not develop, then we will be bullied." Speaking of the "China Dream," the new Chinese leader, Xi Jinping, upholds the same imperatives of national unity, strength and pride against the need for broad democratic reforms.

And he may be right to think he has a receptive audience. Soothsayers have been predicting the collapse of the Chinese regime for decades. In recent years, they have transferred their hopes onto the main beneficiaries of China's economic growth: the middle classes. Last year's leadership transition generated much wild talk about imminent revolution.

Remote Apparatchiks

But China's middle classes seem too fragmented to mount an effective political movement, let alone spark a revolution. And to many Chinese left behind by economic growth, the remote apparatchiks in Beijing may appear more committed to their welfare than an affluent minority devoted to further self-enrichment.

With its rhetoric of social welfare, the Communist Party still monopolizes the ideological sources of mass political legitimacy in a poor country. It now also draws on an indigenous discourse, such as neo-Confucianism, in championing the values of discipline, hierarchy and harmony.

The party also remains capable of diverting political ferment among the middle classes into nationalism. In any case, the growing availability in China of some private freedoms -- primarily to consume and travel -- has defused at least some of the urge for political change.

It is why Chinese liberals insisting on the sanctity of individual rights seem as powerless and isolated as their counterparts in 1920s and '30s Japan.

Ignoring their plight, many commentators view China's ability to survive and adapt as proof of an alternative model: a developmental state that, presided over by a technocratic elite, is stronger than society and places the national community above the individual.

But these inverted Sinophiles, or Asianized Whigs, make the same mistake as the ideologues of liberal democracy: China's "model" is not for universal export, either. It is, instead, an unreplicable product of China's peculiar history.

Here is the question before us: Is the model sustainable, and what implications would its failure have for China and the larger world?

The late modernization of Japan and Germany, though largely successful, did not lead to peace in Europe and Asia. Rather, economic crises and growing social unrest led to greater authoritarianism at home and jingoistic expansionism abroad.

Certainly, China's assertive posture with its neighbors and increasing severity against internal dissidents do not bode well. China may turn out to be another cautionary lesson in the dangers of a country arriving too late in the modern world, with its elites determined to regard liberal democracy as an unaffordable luxury.

(Pankaj Mishra is the author of "From the Ruins of Empire: The Revolt Against the West and the Remaking of Asia," and a Bloomberg View columnist, based in London and Mashobra, India. The opinions expressed are his own.)

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Director of Joe Lie Beauty And Cosmetics

Fiat, Peugeot Miss Out as Europe Auto Sales Gain

European car sales inched upward in April for the first time in 19 months, suggesting that the market may be starting to recover from its worst slump in two decades.

But the figures—which show Europe-wide sales up 1.7 percent year on year—underscore a wide disparity between the region's strongest players, Germany's Volkswagen (VOW) and Daimler (DAI), and its weakest, Italy's Fiat (F) and France's Peugeot (UG).

VW, the Continent's biggest automaker, saw its European unit sales rise 9.9 percent, while Daimler's rose 10.7 percent. Fiat sales, by contrast, fell 10 percent during the period, and Peugeot's were down 10.1 percent.

The odds are stacked against Fiat and Peugeot because they rely heavily on sales in their home countries, both of which are stuck in recession. Saddled with excess production capacity and lacking the financial strength of their German neighbors, they've fallen behind in updating their product lines and offering buyer incentives to give sales a boost. "It's a vicious cycle," says Ian Fletcher, senior automotive analyst at IHS in London.

Fiat's European malaise is so severe that Chief Executive Sergio Marchionne is considering moving its headquarters to the U.S., which now accounts for 75 percent of operating earnings.

The French government has stepped in to help Peugeot with €7 billion ($9.2 billion) in bond guarantees, but European Union regulators are investigating whether the aid could violate antitrust rules.

Even if regulators approve the aid, Peugeot isn't expected to reach breakeven until 2014, says Nicolas Meilhan, a senior consultant at Frost & Sullivan in Paris.

Adding to Fiat's and Peugeot's woes, Asian carmakers are now targeting the less-expensive market segments where they've traditionally been strong. Kia (000270), Nissan (7201), and Toyota (7203) have all gained market share in Europe over the past year, while Fiat's and Peugeot's shares have slipped.

Nissan is allied with France's Renault (RNO)—which, though hit hard by the downturn, has suffered less than Fiat and Peugeot have. Renault has been cushioned by its low-cost Dacia subsidiary, which makes models such as the Logan and Sandero. Dacia sales were up 28 percent year on year, while sales of Renault's branded cars fell 1.1 percent. And Renault is building up production capacity in markets outside Western Europe, including Brazil, India, and Russia.

That's good, because the overall picture in Europe is still pretty bleak. First-quarter sales across the region were down 7.1 percent compared with the same period in 2012, the ACEA says. Fletcher of IHS says the seeming rebound in April may have been caused by the Easter holiday, which was in March this year and likely depressed sales that month as dealerships were closed. The recovery, if it has begun, is "fragile," he says.

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Director of Joe Lie Beauty And Cosmetics

Consumer Sentiment Index in U.S. Rose to 83.7 in May

Americans' confidence in the economy climbed in May to the highest level in almost six years as rising real estate values and record stock prices boosted household wealth.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment increased to 83.7, the highest since July 2007, from 76.4 in April, a report today showed. Separately, the Conference Board's gauge of the economic outlook for the next three to six months climbed 0.6 percent in April, more than forecast.

Enlarge image

Shoppers carry their purchases in the Soho district of New York on May 10, 2013. Photographer: Victor J. Blue/Bloomberg

2:00

May 17 (Bloomberg) -- The U.S. economy will continue to recover until at least 2015 without tumbling into a recession, according to a poll of investors, analysts and traders who are Bloomberg subscribers. With the economy creating an average of 208,000 jobs a month since November, 69 percent of those surveyed call the recovery "sustainable" while 27 percent anticipate a new recession within two years. Michael McKee reports on Bloomberg Television's "In the Loop." (Source: Bloomberg)

7:26

May 16 (Bloomberg) -- Liz Ann Sonders, chief investment strategist at Charles Schwab Corp., talks about investor sentiment and Wal-Mart Stores Inc.'s second-quarter profit forecast. Sonders speaks with Tom Keene, Sara Eisen and Scarlet Fu on Bloomberg Television's "Surveillance." Joseph Feldman, an analyst at Telsey Advisory Group, also speaks. (Source: Bloomberg)

The gain in confidence shows Americans are overcoming the effects of higher taxes and a package of federal spending cuts, known as sequestration, that threatens to take a toll on jobs. Stocks rallied as the reports underscored forecasts for a pickup in the economic expansion later this year.

"As fiscal drag fades in the second half of the year, the case can be made that overall growth is going to accelerate," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, and the top forecaster of consumer sentiment in the past two years, according to data compiled by Bloomberg. The gain in confidence "is testimony to underlying growth in spending power."

The Standard & Poor's 500 Index jumped 1 percent to a record 1,666.12 at the close of trading in New York. The Dollar Index climbed as much as 0.9 percent to 84.371, the highest level since July 2010, before trading at 84.261 at 4:07 p.m. New York time, up 0.8 percent. The yield on the 10-year Treasury note climbed to 1.95 percent from 1.88 percent late yesterday.

State Payrolls

Another report from the Labor Department today showed payrolls climbed in 30 states in April, while the unemployment rate dropped in 40, showing the labor market strengthened across the country.

Texas led the gains in payrolls, adding 33,100 jobs last month, followed by New York and Florida. California, New York and South Carolina were among states with the biggest decreases in joblessness.

In Europe, car sales rose in the year ended in April for the first time since September 2011, adding to signs that the 27-nation bloc's recession may be short-lived.

Today's U.S. data alleviated concern the world's largest economy will keep slowing after reports this week showed industrial production declined more than forecast in April and first-time claims for unemployment benefits increased last week.

Consumer Outlook

The Michigan survey follows a Bloomberg measure of consumer outlook, which improved in May to its best reading in five months. The Bloomberg consumer economic expectations gauge, released monthly, rose to minus 1 from minus 4 in April.

The Michigan gauge was forecast to climb to 77.9, according to the median forecast in a Bloomberg survey. The index averaged 64.2 during the recession that ended in June 2009 and 89 in the five years prior.

Rising consumer optimism is good news for retailers including Wal-Mart Stores Inc. (WMT), Kohl's Corp. (KSS) and OfficeMax Inc. (OMX), which have reported that customers remain cautious.

At OfficeMax, a retailer of business supplies based in Naperville, Illinois, Chief Executive Officer Ravi Saligram said customers are being pinched by tax increases.

"We believe uncertainty related to cuts in public sector spending associated with the sequestration, the payroll tax hike and changes in health-care laws have meaningfully impacted customer behavior," Saligram said on a May 7 earnings call.

Current Conditions

The Michigan survey's current conditions index, which takes stock of Americans' view of their personal finances, rose to 97.5 in May, the highest reading since October 2007, from 89.9 last month. The index of expectations six months from now rose to 74.8 from 67.8 in April.

The increase in the leading index followed a revised 0.2 percent drop in March and beat the median forecast of economists, which called for a 0.2 percent gain.

Seven of its 10 components contributed to the increase, including a jump in building permits and the widening interest-rate spread between a federal funds rate and 10-year Treasury notes.

"The biggest risk right now is the adverse impact of cuts in federal spending," Ken Goldstein, an economist at the Conference Board, said in a statement. "The biggest positive factor is the potential for improvement in the recovering housing and labor markets."

Home Prices

Higher home prices have boosted household wealth. Residential real-estate prices rose in February by the most since May 2006, with the S&P/Case-Shiller index of house values in 20 cities up 9.3 percent from a year ago.

The economy is projected to grow at a 1.6 percent annual rate in the second quarter, down from a 2.5 percent annual rate in the first three months of the year, based on the median forecast in a Bloomberg economist survey from May 3 to May 8. The expansion is then projected to accelerate to a 2.6 percent pace in the fourth quarter.

Part of the reason for the projected second-quarter slowdown is an increase in the levy used to finance Social Security, which returned to 6.2 percent from 4.2 percent. A worker earning $50,000 a year is taking home about $83 less a month as a result.

Goay Joe Lie

Director of Joe Lie Beauty And Cosmetics