A little break

I'm leaving for Paris for a few days, even though we still have 3 weeks of class to go but a little break cannot be bad. I'm going to Paris to vote for the EU Constitution on Sunday and with polls so tight, every voice will count! I'm voting 'YES' in case you wonder because I believe the current institutions needs to be adapted to a larger Europe with 25 members and more to come. I'm also a firm European, having lived in more than 4 European countries so far and I believe the Constitution will make Europe stronger.

You hear so many things on the treaty: it will allow Turkey in, a flow of cheap workers from Central Eastern Europe to France, stealing the jobs and working for €1/hour... The problem is that the debate is too much polarized now so no side wants to hear the other argument. Am I in that case? Did I really consider a 'NO' vote at some point? Honestly I didn't but I've tried to read a lot from the 'NO' side to see if their arguments made sense and of course they did: the Consitution address so many issues and tries to accomodate so many parties that it was certain some articles, taken in isolation, would not make sense. Yet, when one looks at the big picture, I think it's a good document and France should vote for it.

Is the American dream just... a dream?

The WSJ is writing a series of articles on the challenges to the American dream. The first article [May 17 - Moving Up: Challenges to the American Dream: U.S. Mobility Stalls as Disparity Widens --- Those in Bottom Economic Rung Enjoy Better Odds in Europe; How Parents Confer an Edge] gives statistics from various studies that apparently hurt this notion of a land of exceptional opportunities. While some examples such as Benjamin Franklin who rose from printer apprentice to politics after accumulating an incredible wealth are catching the eye, the reality is murkier and data suggest that if you are born poor, odds are that you will remain poor and if you are born rich, you are not likely to fall into poverty.

Despite the widespread belief that the U.S. remains a more mobile society than Europe, economists and sociologists say that in recent decades, the typical child starting out in poverty in continental Europe (or in Canada) has had a better chance at prosperity. Miles Corak, an economist for Canada's national
statistical agency who edited a recent Cambridge University press book on mobility in Europe and North America, tweaked dozens of studies of the U.S., Canada and European countries to make them comparable. "The U.S. and Britain appear to stand out as the least-mobile societies among the rich countries studied," he finds. France and Germany are somewhat more mobile than the U.S.; Canada and the Nordic countries are much more so.

This belief in the American dream can explain why "Americans, much more than Europeans, have tolerated the widening inequality in recent years. It is OK to have ever-greater differences between rich and poor, they seem to believe, as long as their children have a good chance of grasping the brass ring." Based on these studies, can we infer that wealth redistribution policies (ie: European model) are a good way to create a more egalitarian society and decrease the gap between riches and poors?

Private Equity Conference at the London Business School

I was at the 3rd annual Private Equity Conference at the School last Friday. It was a great event with more than 200 participants and keynote speakers from KKR and Warburg Pincus. There were more than 10 panels and I assisted to the two VC panels and one about the convergence between PE and Hedge Fund.

The main theme of the Conference was about Europe which was interesting given the "locust" comment made in Germany by the SDP chairman a few days before. All this anti-capitalism rhetoric did not bother Todd Fisher (KKR) who was really bullish for private equity firms. According to him, CEOs (yes even in Germany and France) are now more and more considering private equity funds as a viable alternative. Todd then acknowledged the threat from Hedge Funds but he believed they were facing the huge challenge of impacting the businesses that they owned and lacked the resources and capabilities to do so. Indeed, with the old financial skills being commoditized, the real challenge was to create value from the businesses, which requires operational skills more than financial ones. So advice to all private equity wanabees: the traditional Investment Banking background is becoming less useful and major PE houses are now looking for real operational experience (ie: CEO level of big businesses).

The first VC panel talked briefly about the AIM London market now viewed as the European NASDAQ which would be great because the lack of exit opportunities is really hurting the VC industry in Europe. All the panellists agreed that there was no shortage of people with ideas in Europe but most entrepreneurs here lacked marketing skills (ie: understand the market dynamics). European entrepreneurs were also viewed as "lazy" because after a successful venture, few of them went on to create a new one whereas it is not the case in the US.

I won't describe here all the panels to which I went but it was clearly a great conference and I'm looking forward to the 4th event. Interestingly, the MBA office has just announced today that you could now have a concentration in Private Equity which is something I'm probably going to consider seriously.

European Google

Well not exactly, but the WSJ [May 12, France Leads an Assault on Google --- A Rival European Project To Scan Millions of Books Aims to Offset U.S. Culture] reports of the French efforts to lead an assault on Google in the book scanning project of the search engine giant.

In case you don't know what's this all about, Google has announced a few months ago its intention of digitalizing millions of books in US and UK libraries and make them available on the web. While this is a great initiative, some voices in France warned that this would provide an Anglo-American view of history only and the counter-offensive started: last week, the EU commission has pledged €60 millions to an European project to scan 5 millions book in the next 5 years.

The WSJ then comments on the European initiative and writes:

The University of Michigan, whose seven-million-book library Google is scanning, says it has extensive international collections, including roughly 250,000 volumes each in French and German. "When you consider the buying habits of large research libraries, the [European] `fears' are simply naive," says John Wilkin, an associate university librarian.

Sorry what? The 'fears are naive'... May be I didn't read the numbers correctly but 250,000 volumes out of 7 millions is completely insignificant so I think the Europeans are right to be concerned about this project and one way or the other, we must be able to read French, German, Spanish, Italian, Russian, Japanese, Chinese and many more other volumes on the web in addition to the US and British ones.

What is a bit worrying is that it's European public money that is going to be used for this initiative whereas in the States, it's Google's money who is undertaking the project. But the sad fact is that there is definitely no player in the IT industry in Europe capable of undertaking this kind of project so we have to rely on public funds for now.

75 millions de français, et moi et moi et moi...

Le Figaro reports the latest population estimate based on the 2004 French census. According to an optimistic reading of the data, there could be 75 millions Frenchmen by 2050, making France the most populous country in Europe (right now, its Germany but with its low natality rate, the country would have only 71 millions inhabitants by 2050).

Although a 45 years prediction has little value, what is clear is that there is a trend towards higher natality rate. This is interesting because it shows a not-so-bad scenario for France. After all, if French were so depressed, they wouldn't be making babies right? This is good news for France and this time, the government has played a role by encouraging birth and he should continue to do so. If the statistics are true, it means the pension payments will be less of an issue and investments in infrastucture will have to be made, thus (hopefully) creating more jobs.

Oxford Street on a Sunday

I was having a walk in Oxford Street last Sunday. With two rays of sun, the Londoners were out and the street was completely crowded, people enjoying the warm weather and the shops. Indeed, all the shops were opened and people were buying en masse according to the number of retailers bags each were carrying.

As I was witnessing this shopping spree, I was reflecting on a walk I had on a sunny afternoon in Paris last year. The town was beautiful as ever and people were enjoying drink on terraces but almost no one was shopping for the very simple reason that most of the shops were closed (except on the Champs-Elysées). This is something I can't understand: the French government is desperate to decrease unemployment and is asking French people to consume more to drive growth and yet, most of the shops are still closed most Sunday. Allowing shops to operate every Sunday would probably be a popular measure with the population, it would decrease unemployment because more staff would be required in the shops and it would drive consumptions because of the extra day for shopping.

I guess it's not that simple otherwise our politicians would have pushed for it but I don't really understand the drawbacks. Of course, people would have to work on Sunday but many services are operating on Sunday (public transportation, hospitals...) so it's not an impossible task.

International strength of EU business schools

I've read this interesting post from a Harvard student blogger about the international outlook of Harvard University. I think that Harvard has the best reputation of all business schools worldwide: it's the best in the US and because the US is the leading economy, it makes it the best worldwide. Simple as that.

Yet, it suffers the common symptom of major American schools: it's too much US-centric. No matter how much foreign students the US schools are admitting, they will never reach the proportions of EU schools with more than 60 different nationalities in a graduating class. Further more, most of the students at theses top EU schools have a real global background as opposed to the foreigner but US-educated students in the US schools. I, for example, lived and worked in 7 different countries; some of my classmates are speaking up to 6 languages and a typical study group of 6 is composed by people from 6 different nationalities. This global community is particularly attractive in today's world and interestingly enough, the US applicants are recognizing this since the largest student body in our class is from the States.

The picture is however not that rosy. For example, a very large proportion of the graduates of the School are working in the UK. A truly global institution would have alumni spread evenly across the major economies. Yet, even recruiters are becoming increasingly sensitive to this global outlook. For example, the US company I will work for over the summer has recruited interns exclusively at EU schools because the project is an international ones and requires a non-US view of the business. Anyway, in the end, it depends on where you want to work. For someone who wishes to work in the US, a top US school makes much more sense than a EU school but for someone with an international outlook, I would argue that a EU school is the best choice today.

Finally, which school will be the next Harvard? I'm ready to bet some good money at an Indian business school but the whole question is when?

Light blogging

No new post since almost a week... I'm not keeping my goal of trying to write at least twice a week but in my defence, it's pretty busy right now. We have 2 exams coming up this week (Management Accounting and Operations and Technology Management) plus a couple of take home exams, reports or assignements to deliver for next week so it's a bit busy. Markstrat ended this week and we did pretty bad: we managed to go from the 2nd largest firm in our industry to the 5th (out of 6) so nothing to be proud of...

I'm also starting to plan my summer transition and the second year since I'm going to spend a couple of weeks outside London for my internship (US and Continental Europe) but I also have to find a new place to live for next year since my friend is moving to London.

A few news that caught my attention: the 'YES' is gaining back some points in the latest polls for the French referendum on the EU treaty, the Chinese intern who is spying on Valeo and the upcomming British election.