Opinion

The Great Debate

How GM can recover

General Motors chief executive officer Mary Barra on Tuesday and Wednesday will appear before Congress to explain why GM took more than a decade to issue a recall on a faulty ignition switch, which led to at least 13 deaths. The hearings will be a proving ground for Barra, who became CEO in December 2013, as well as for GM’s new chairman, Theodore “Tim” Solso, and the entire GM board.

Congress will question why Barra’s most recent predecessors didn’t catch the defective switch. A likely explanation is that the board and senior management were so focused on digging GM out of bankruptcy that they weren’t paying attention to what else may have been going amiss.

Of course, that excuse is insufficient, since the company needs to do both things simultaneously: avoid bankruptcy, while building safe cars. Barra, Solso and the board must convince Congress, the markets and consumers that they have identified why the faulty ignition switch went undiscovered for so long, and that they can be trusted to prevent a similar crisis from happening again.

At GM, the board and executive team must look back at the last decade and determine what went wrong — both within GM, and also in the relationship between the board and senior management. As a board director I can say this is not always a comfortable process, but it is vital that every board director understand the historical dynamic between the management and the board. Most of the current GM board members joined the board after 2009, but they can learn valuable lessons about why the recall did not occur earlier, what previous boards should have been doing and why the board is only now finding out about the recall.

The board must also make sure there will not be another situation where executives make a decision under the guise of protecting the company, but in the end puts GM in an untenable position, like the one it’s now in. In the case of the faulty switch, GM chose to create two small and isolated committees to handle recall cases, fashioned in such a way that senior executives were purposely kept in the dark. Board members have an obligation to challenge senior management’s thinking on these types of decisions and structures, which seem to make sense within in a bureaucracy, but in reality put the company at risk.

States act on tax reform

The United States needs tax reform — and soon. Our corporate tax rate is 35 percent, while the European average is 25 percent. We are not competitive. Our individual tax code has rates too high and too many politically driven tax credits and deductions. All true. But it’s also likely that no real tax reform will move in Washington for the next three years.

Why? Because the Democrats,who control the White House veto pen, oppose any reform that does not include at least $1 trillion in higher taxes on net and the Republicans, who control the House of Representatives, will never vote for such a tax hike.

In Washington we have three years of guaranteed gridlock ahead. But in 37 of the 50 states there is unified government — the opposite of gridlock.

How Big Pharma is slowing cancer research

In a March 27 article in the New England Journal of Medicine, a team led by physicians at Massachusetts General Hospital revealed that a new cancer drug from Novartis has shown exciting clinical results in a small trial of lung cancer patients. While additional trials are necessary before the drug can obtain approval from the Food and Drug Administration, this type of success story demonstrates why research to develop new cancer therapies is critically important.

Researchers in academia, biotech and pharmaceutical companies are making remarkable discoveries to help identify new drugs and drug targets for cancer patients. Many new compounds are under investigation — including those that inhibit the growth of cancer cells, block the blood supply to tumors and prevent tumors from evading the immune system.

Even as scientists seek to bring new cancer treatments to market, however, drug patent issues are holding back some researchers. A major hurdle is in combination drug trials that test two or more therapies at once. Pharmaceutical companies often shy away from trials that have great potential, because the drugs may not generate profits if they are used together with a generic drug or a drug patented by a different company.

America is not broke

“We’re broke.” House Speaker John Boehner (R-Ohio) and Tea Party groups have repeated that phrase so frequently that it must be true, right?

But America is not broke. Our short-term budget outlook is stable, and our long-term challenges are manageable if both sides are willing to compromise. So why would politicians falsely claim that we’re broke? To justify radical changes to our nation’s social contract that Americans would never accept any other way.

This may be surprising, given how much we hear about a looming “debt crisis.” But annual budget deficits have fallen by almost two-thirds over the past five years. The total national debt is actually projected to shrink in each of the next three years as a share of the economy.

from Compass:

Putin’s action is no surprise

Surprise is the least forgivable sin of statecraft. Yet nothing has so characterized the Ukraine crisis as the West's continuing surprise at Russia's behavior.

The past 30 days have provided almost daily reminders of the deep disconnect between Western expectations of what statecraft would -- and ought to -- look like in the 21st century, and the reality of how the Kremlin seeks to assert its interests in the world.

From the outset of this crisis, the West consistently underestimated the strategic significance of Ukraine, and Crimea, to Russia. The West also assumed that the threat, and subsequent reality, of economic sanctions would alter Russian President Vladimir Putin’s strategic calculus. One month later, Russia has irreversibly annexed a region of Ukraine and left the West divided and floundering in its response.

In Turkey, taking on West wins elections

Is Turkish leader crazy, or crazy like a fox?

Confronted by a series of revelations involving corruption, Turkey’s Prime Minister Tayyip Erdogan countered by banning Twitter by court order last Friday. He has now moved onto other social media networks — blocking YouTube on Thursday.

Though another court ordered Erdogan’s Twitter ban to be lifted this week, his repressive regime looks intent on lashing out at social media as part of a broad policy aimed at controlling the important municipal elections on Sunday.

This is all part of Erdogan’s calculated effort, as Amnesty International describes, to “silence and smear those speaking out against the government’s crackdown on the protest movement, including doctors, lawyers and journalists.” This crackdown has, not surprisingly, resulted not only in massive protests within Turkey, but exasperation from Turkey’s allies in the West.

from Anatole Kaletsky:

Forget the drama: A solution for Crimea

President Vladimir Putin has disastrously miscalculated and Russia now faces deeper isolation, tougher sanctions and greater economic hardship than at any time since the Cold War. So declared President Obama after the NATO summit in Brussels.

European leaders have sounded even tougher than Obama, though less specific. Some whose countries lie far from Russia -- for example, British Prime Minister David Cameron -- have whipped themselves into a fury reminiscent of King Lear: “I will do such things -- what they are, yet I know not, but they shall be the terrors of the earth.”

For more specificity we must turn to pundits. Geopolitical experts have predicted global anarchy because of the violation of postwar borders; economists have warned of crippling trade wars as European financial sanctions collide with Russian energy counter-measures, and eminent financial analysts have argued that investors and businesses are dangerously under-pricing enormous geopolitical risks.

from Ian Bremmer:

The G7 and the limits of Russia’s ‘political isolation’

 

On Wednesday, President Barack Obama delivered the major address of his weeklong trip to Europe, focusing on the Russian incursions into Ukraine and the coordinated Western retaliation. “Together, we have isolated Russia politically, suspending it from the G8 nations,” Obama said. For annexing Crimea, Russia was punished with temporary exile from this coalition of advanced industrial democracies, a group of Western countries that collectively act on their shared values.

There is just one problem: Russia never shared these values, and the G7 has neither represented global interests nor driven the international agenda for quite some time.

There are a few reasons why that’s the case. Even among countries with similar values and political systems, it can be difficult to align interests, as we’ve seen with the varied Western response to Crimea. Second, as new players have emerged in recent decades, the global power balance has shifted, leaving the G7 representative of a smaller piece of the pie. Any organization that does not include China, for example, is not truly global.

The bill for climate change is coming due

Americans have just endured one of the coldest winters in memory, so global warming may not be on their radar. But a new U.N. panel report has just refocused the public debate on a problem some scientists call the greatest threat facing the world.

There is trouble ahead for global agriculture, warns the influential Intergovernmental Panel on Climate Change, if measures are not taken quickly to reduce greenhouse gas emissions. The panel, which synthesizes the findings of thousands of peer-reviewed studies every seven years, has issued a report card on the state of the planet.

The report card serves as a guide to policymakers and a basis for international deliberations, including the summit on global warming and greenhouse gas emissions scheduled to be held in Paris next year. The report will be officially released on Sunday in Yokohama, Japan, but an advance copy has been leaked.

Tackling inequality: Where a president meets a pope

There has been much speculation about President Barack Obama’s meeting with Pope Francis on Thursday. One Catholic church authority asserted, “it is not the task of the pope to offer a detailed and complete analysis of contemporary reality.” The pope got that message — he wrote it himself in his first official “Papal Exhortation” last year.

Yet Francis has also asserted that his papacy has a “grave responsibility” to  “exhort all the communities to an ever watchful scrutiny of the signs of the times” — particularly to know the face of the poor and outcast.

For the pope, this scrutiny must take in the fierce public debate about government cuts that now overshadows U.S. politics. The left and the right are battling over sharp reductions in foods stamps and unemployment benefits, denial of healthcare to those least able to afford it and cuts in many programs designed to help the poor and needy.

  •