Wandering in Wonderland?

The answers we seek aren’t always obvious—nor are the questions we need to ask.

January 9, 2012

One of my fondest childhood memories is of Dear Old Dad reading “Alice in Wonderland” to me.

A lesson accompanying the reading was that Lewis Carroll could tell a tale on many levels. A child will enjoy the story at face value, while the adult reader might observe interesting social or political messages “hidden” within the dialogue, plot, and characters.

So can we, as businesspeople and consumers, interpret our surroundings in multiple ways. We can take a singular event at face value—or we can consider how our environment—the competition, government, technological innovations, policy makers, emerging markets, consumer preferences, global activities—interact to create situations in which our strategic business decisions flourish or flounder.

Are you “curiouser and curiouser”? Here are this week’s findings.

Lora Kloth is a research librarian at CUNA.
Lora Kloth is research librarian at Credit Union National Association.

Said Alice, “It would be so nice if something made sense for a change.” The Congressional Research Service (CRS) makes sense of some interesting topics.

In “U.S.-Japan Economic Relations: Significance, Prospects, and Policy Options” we learn about the connections between U.S. and Japanese economies. Further, consider shifting U.S. and Japanese policies.

Japan and the U.S. are the world’s two largest economic powers, together accounting for more than 30% of world domestic product, a significant portion of international trade in goods and services, and a major portion of international investment.

As a result, economic conditions in these two countries have a significant impact on the rest of the world.

CRS also studies “Changes in the Distribution of Income Among Tax Filers Between 1996 and 2006: The Role of Labor Income, Capital Income, and Tax Policy” 

This study reveals that inflation-adjusted, average after-tax income grew by 25% between 1996 and 2006 (the last year for which individual income tax data is publicly available). But this average increase obscures a great deal of variation. The poorest 20% of tax filers experienced a 6% reduction in income while the top 0.1% of tax filers saw their incomes almost double.

Tax filers in the middle of the income distribution experienced about a 10% increase in income during this period.

How might the world economy affect credit unions’ operating environment? And what implications might the growing income inequality have for the financial services industry?

"Off with her head!” shouted The Queen. Perhaps Alice would have had less to fear had she more carefully considered her educational opportunities…

In “New Report Finds That Risk of Unemployment Varies by College Major,” we learn that had Alice only majored in engineering or the sciences, her unemployment odds would have been relatively low, at 5.4%. Her penchant for drawing, (a career in the arts), yields an unhappy 11.1% unemployment rate, according to Georgetown’s observations.

This begs the question, is a college degree still worth the time and expense? The report’s conclusion: It all depends on the major.

Health-care hoopla
To quote the Mock Turtle, “Well, I never heard it before, but it sounds uncommon nonsense.”

Is this an underlying sentiment in Harvard’s report, “Despite Increasing Concerns about High Health Care Costs, New Survey Finds Little Support among Americans for Decisions That Limit Use of High-Cost Prescription Drugs and Treatments”?

“The results of the survey underscore the need for balance between measures to control health care costs and ensuring that Americans receive high-quality health care at all stages of life, particularly for the growing aging population,” notes Daniel Perry, president/CEO of the Alliance for Aging Research.

The Turtle would be also interested in “Empowering Patients as Key Decision Makers in the Face of Rising Health Care Costs” by The Heritage Foundation.

According to the report, “…policymakers must reduce or eliminate barriers to patient decision making, including patient ignorance of and insulation from the true costs of care…”

What do these studies teach us about consumers, how we define ourselves, and how we make financial decisions? Can your credit union make an impact in a positive way?

Reducing remittance costs
Don’t be mad as The Hatter. Inspect World Bank’s “Outlook for Remittance Flows 2012-14,” which reveals “The G8 and G20 countries have agreed to the objective of reducing global average remittance costs by 5 percentage points in 5 years.”

Remittance flows to developing countries are estimated to have reached $351 billion in 2011, up 8% from 2010. A five percentage-point reduction in remittance costs would put millions into the hands of those who need it most.

“Sentence first—verdict afterwards,” proclaimed The Queen. Not a prudent course of action!

For a more reasonable cause and effect, peruse GAO’s “Fiscal Year 2011 Financial Report of the United States Government.” It includes financial statements for the fiscal years ended September 30, 2011 and 2010, and related reports on “internal control and compliance with significant laws and regulations.”

According to The Duchess, “If everybody minded their own business, the world would go around a great deal faster than it does.”

This might indeed be the case. But if we insisted on minding only our own business in strategic planning, our worlds might spin out of control in attempt to make decisions without analysis of important environmental factors.

Instead, we might find success taking the Mad Hatter’s approach in his musings of, “Why is a raven like a writing desk?”

Sometimes the answers we need to find aren’t always obvious—nor are the questions we need to ask.

LORA KLOTH is a research librarian in CUNA's business-to-business publishing department.