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Drucker continues the question-and-answer session of the lecture by discussing how the spinning wheel was modified in India to triple its output, cutting the amount of physical labor in half, and how the device is banned in India. Drucker states that a poor country cannot afford a welfare population, though a rich one can, and the prevailing attitude that investing capital is always productive if it saves labor is no longer true for Western countries. Instead, Drucker argues that investing in people and their skills, rather than technology and innovation, is the key and appropriate for developing societies. Responding to a question from the audience, Drucker states that the cause of inflation is government, and the expansion of government the root cause of its continuity. Inflation destroys productivity, and it becomes a vicious spiral, since in order to maintain real wages and incomes, the government has to inflate more. In order to come to terms with inflation and understand it, Drucker highlights two approaches, namely, the political option and the managerial option. He states that both are needed, but only the managerial option is under the control of managers. The political option is influenced more directly by citizens. Drucker then talks about the idea of high-touch environments, and how multinational companies need to have their young people work in a variety of areas and meet together. For senior-level executives, one needs to meet people in situations that are not problem-focused or agenda-focused. Actual meetings should be limited to two minutes or one half-hour, and should be focused and organized. It is the manager’s job to make sure there are no surprises and to anticipate any issues that may arise.
Drucker, Peter F. (Peter Ferdinand), 1909-2005 New York University New York University. Graduate School of Business Administration Spinning-wheel India Welfare economics Welfare state Capital Capital investments Capital market Capital productivity Capital goods Labor Labor productivity Labor supply Labor turnover Human capital Technological innovations Technology Inflation (Finance) Civic improvement Management Management by objectives Government expenditures Symposia
Original recording, April 18, 1979; Drucker Archives; Box 68