How not to choke under pressure

The right kind of preparation can keep us from stumbling during stressful situations, says cognitive scientist Sian Leah Beilock

“They choked.”

It’s one of the most humiliating things you can say about a person.Just about all of us have choked at some point in our lives, whether it was during a test, a game, a talk, or a sales call.

And, boy, do I know the feeling. Growing up, I was an avid athlete. My main sport was soccer, and I was a goalkeeper, which is both the best and the worst position on the field. All eyes are on you, and with that comes the pressure. I distinctly remember one high-school game in particular. I was playing for the California state team, which is part of the Olympic Development Program. I was having a great game — until I realized that the national coach was standing right behind me. Then everything changed. In a matter of seconds, I went from playing at the top of my ability to the very bottom. I choked under the pressure of feeling those evaluative eyes on me, my team lost, and the national coach walked away.

My experience on the playing field — and in other important facets of my life — pushed me into the field of cognitive science. I wanted to know how we could use our knowledge of the mind and the brain to come up with psychological tools that would help us perform at our best.

I also wanted to find out: Why do we sometimes fail to perform up to our capabilities when the pressure is on? 

It might not be so surprising to you to hear that in stressful situations, we worry — about the situation, the consequences, and what others will think of us.

But what may surprise you is that we often get in our own way precisely because our worries prompt us to concentrate too much. When we’re concerned about performing our best, we may try and control aspects of what we’re doing that are best left on autopilot and outside conscious awareness. As a result, we mess up.

My research team and I have studied this phenomenon of overattention, which we call paralysis by analysis. 

In one study, we asked college soccer players to dribble a soccer ball and to pay attention to an aspect of their performance that they wouldn’t otherwise attend to. Specifically, we asked them to pay attention to what side of their foot was contacting the ball. We found that when we drew their attention to the step-by-step details of what they were doing, their performance was slower and more error-prone. Much of this paralysis by analysis comes down to activity in our prefrontal cortex, the front part of our brain that sits over our eyes. While it usually helps us focus in positive ways, it often gets hooked on the wrong things.

In basketball, the term “unconscious” is used to describe a shooter who just can’t seem to miss a shot. NBA All-Star Tim Duncan has said, “When you have to stop and think, that’s when you mess up.” In dance, the great choreographer, George Balanchine, used to urge his dancers, “Don’t think; just do.” When the pressure’s on, we frequently try and control what we’re doing in a way that leads to worse performance.

So how do we unhook our brains?

We can do something as simple as singing a song or paying attention to one’s pinky toe — as pro golfer Jack Nicklaus was rumored to do. Or, we can find some other mindless activity that can help take our minds off the details of what we’re trying to do.

Another strategy requires closing the gap between training and competition, so we can get used to that feeling of all eyes on us. 

This means practicing under the conditions that we know we’ll be performing under. Whether we’re getting ready for an exam or a talk, we can put ourselves in a simulation of the future stressful situation.

If you’re taking a test, periodically close the book while you’re studying and practice retrieving the answers from memory in a set amount of time. If you’re giving a talk, practice a few times in front of other people. And if you can’t find anyone who will listen, rehearse in front of a video camera or a mirror. Our ability to become accustomed to what it will feel like can make the difference in whether we choke or we thrive.

We can also take steps to rid ourselves of those pesky self-doubts that creep up in pressure-filled situations and lead to paralysis by analysis.

Researchers have discovered that simply writing down our thoughts and worries before the stressful event can help download them from our minds. Journaling or jotting your thoughts on paper or on your phone can make it less likely they’ll pop up and distract you during the moments that count.

Fast-forward from my high school soccer game to my freshman year in college. I was in a chemistry class for science majors, and I did not belong there. Even though I studied for my first midterm exam, I bombed. I got the single worst grade in a class of 400 students. Not was I convinced I shouldn’t be a science major but I thought about dropping out of college altogether.

Instead, I changed what I did. 

Rather than study alone, I studied with a group of friends who’d close their books and compete for the right answers at the end of the study session. We were learning how to practice under stress, closing the gap between training and competition.

When the day for the final exam came, my mind was quiet, and I got one of the highest grades in the entire class. As it turns out, it wasn’t just about learning the material; it was about learning how to overcome my limits when it mattered the most.

Here Today, Gone Tomorrow: Why Workplace Ghosting Is on the Rise

In the 1999 film Office Space, a dark comedy about the mundane conventionality of work, disgruntled software engineer Peter Gibbons tells his new love interest, Joanna, that he hates his job and doesn’t want to go anymore.

When Joanna, played by actress Jennifer Aniston, asks Peter whether he is going to quit, he responds, “Not really; I’m just going to stop going.”

What was once a funny work of fiction is becoming an increasingly common reality as more employers report being “ghosted” by job applicants and employees who simply disappear without a trace. In fact, the Federal Reserve Bank of Chicago cited an uptick in ghosting in its December economic activity report, and an array of media outlets — including The Washington Post, Inc.and Business Insider — have been publishing stories recently about the pitfalls of the practice.

“Candidates agree to job interviews and fail to show up, never saying more,” Chip Cutter, a reporter for The Wall Street Journal, wrote in a June article for LinkedIn that garnered more than 5,000 comments. “Some accept jobs, only to not appear for the first day of work, no reason given, of course. Instead of formally quitting, enduring a potentially awkward conversation with a manager, some employees leave and never return. Bosses realize they’ve quit only after a series of unsuccessful attempts to reach them.”

The term ghosting comes from the world of online dating, where romantic prospects are often dumped without warning or even so much as a goodbye text. But as this bad behavior spreads from the personal to the professional realm, it raises questions about business etiquette and the shifting balance of power between employers and employees. Wharton management professor Peter Cappelli, who is also director of the school’s Center for Human Resources, believes ghosting reflects a change in today’s work environment, where employers once held all the cards and often treated hiring as “a commodity exercise.”

“When the labor market tightens, the power does start to shift,” he said. “I think part of the reason this is so surprising to employers is we’ve gone through 10 years of the worst labor market for job seekers, but the best labor market for employers and hirers. You know, you didn’t have to do anything, and people were just really grateful that you’d even consider their application. So, the power has changed, and that’s changing the story.”

Cappelli and Jay Finkelman, professor and chair of industrial-organizational business psychology at the Chicago School of Professional Psychology, spoke about ghosting on the Knowledge@Wharton radio show on Sirius XM. Following are key points from their conversation.“When the labor market tightens, the power does start to shift.” –Peter Cappelli

It Works Both Ways

Ghosting prospective employees is old hat for employers. Companies have been engaging in the practice for so long that it has become perfectly acceptable for them, the professors said. And with the prevalence of online applications, job candidates have gotten comfortable with the fact that they probably won’t hear anything back from a company – positive or negative.

“The expectation is that the employers are ghosting you. What’s different now is that the employees are starting to do the same thing to the employers,” Cappelli said. “It’s not a big surprise. But, frankly, anything that happens to employers makes noise and news; anything that happens to employees doesn’t necessarily make news. This is a two-sided problem. It’s started by the employers.”

Cappelli cited a recent survey by HR firm Clutch that found 40% of employees believe it’s reasonable to ghost companies during the interview process. He likened it to putting an item in your Amazon shopping cart but never completing the purchase.

Finkelman said it comes down reciprocity. “There is a feeling that this is more OK because it’s exactly what employers do. Businesses just grind through potential applicants and make determinations and decisions that are in the best interests of their clients and not necessarily of the applicants. And that message gets conveyed through.”

To be fair, Finkelman noted, employers simply don’t have the time to reassure every candidate in the pipeline. That lack of investment can make candidates and existing employees feel fine about ditching without notice.

It’s Driven by the Tight Labor Market

Both Cappelli and Finkelman said the increase in ghosting is also an indicator of just how tight the job market has become. Unemployment is below 4%, and employers across many sectors report they can’t find enough qualified candidates to fill jobs. It’s a situation that gives employees more leverage.

“I think there’s no question that it’s the environment that encourages that behavior,” Finkelman said. “Will it revert back to better manners possibly next year, 2020, when recessions are being predicted again? It will move in that direction inevitably as that ratio of job openings to candidates shifts.”

But the unemployment rate doesn’t tell the whole story, according to Cappelli. Few employers are interested in hiring someone who doesn’t already have a job, so there’s a lot of pilfering of employees across industries.

Cappelli calls them “passive applicants,” people who aren’t necessarily looking but find better offers and head for the door. A majority of people hired last year fell into this category, he said.

“That really starts to change the dynamic a little here, and also the moral question [about ghosting],” Cappelli said. Employees who are approached frequently by recruiters will respond differently – i.e., be more likely to ghost — than those who are desperately looking for work.

Finkelman is bothered by what he calls an “underlying lack of concern about the welfare of others” when it comes to ghosting because the job market seems to rule over individual morality.

“I think the changing job market is more likely to influence the frequency with which candidates solicit other jobs or make changes, rather than the behavior that they engage in when they’ve made a decision to take another job,” he said. “In other words, do they do it in a classy way or do they do it in a tacky way?”

It Has Little Consequence for Applicants

American workers have grown up with traditional advice about the workplace: Always give two weeks’ notice; never burn your bridges; don’t speak badly of your former employer. Such platitudes have waning relevance in the ghosting era because there’s little consequence for employees and applicants who drop everything and leave.

“As long as there are more job openings, the likelihood of getting caught in this is relatively small,” Finkelman said. “And when it does happen, it’s satisfying for employers when someone comes back to them and they tell the applicant, ‘No, that’s already been taken. And if you don’t recall, you didn’t call us back.’”

However, Cappelli pointed out that the average recruiter gets 200 applications per job posting. That pile has to be whittled down to a smaller set to be reviewed by a hiring manager. If an applicant ghosts then reapplies later, the odds of being remembered or even reviewed by the same recruiter are slim.

“You shouldn’t do it because it’s the wrong thing to do, but the idea that you’re going to pay a price for doing this is kind of wishful thinking on the part of the recruiters,” he said. “How many thousand applicants do they see each day?”

Candidates have also become more savvy about what the professors call “ghost jobs,” which are postings for jobs that don’t really exist. Some companies call for resumes just to build their applicant pool; others neglect to delete postings for jobs that have been filled.

“Staffing industry analysts and other organizations that set ethical guidelines for their member staffing companies all know that this is an improper practice, yet it still does go on,” Finkelman said.

Job applicants catch on quickly and let others know about the bogus listings. It’s another aspect of bad employer behavior that enables employees to rationalize ghosting.

It’s Just Plain Rude

Ghosting may be accepted, but that doesn’t make it right, Cappelli and Finkelman said.

“I think we can put this question behind us. This is just not a good thing to do for either side,” Cappelli said. “It’s not a good thing for employers to do. They do it as a matter of policy because they think it’s easier not to respond to all these applicants. And for individual applicants or candidates, it’s not a good thing, particularly at the point where it becomes personal, where you have some tie, some conversation with a human as opposed to the applicant tracking software.”

Finkelman noted that the anonymity of digital is not a justification for rudeness. “There is a way to use digital and still be courteous about it,” he said. “There’s still no excuse for not responding online, either by the potential employee or the employer.” Although it’s not very personal, both sides could at least deliver bad news by email. “Not the most ideal and polite way to do it, but people today are not hand writing notes of regret — and that’s on both sides.”

In a world with few real consequences for ghosting, a person’s moral compass matters more than ever, Finkelman said. “Depending on the degree of narcissism of that individual and how self-centered that person is, there have to be other values in place to avoid playing the game in a way that may well be reciprocal.”

5 Reasons Executives Wait Too Long to Fire Their Direct Reports

Of all the difficult decisions executives face, few torment them more than having to fire someone on their own team. High-risk innovations, layoffs, and even major acquisitions don’t cause as much angst as removing someone from a senior position.

Recently, a client of mine — a division president of a large manufacturing company, let’s call him Kyle — struggled with this problem. One of his VPs of sales had missed his targets for the third consecutive quarter. The VP had been given a coach and additional resources to help him succeed, but was still unable to turn around his performance, causing significant employee turnover in his region. Removing him seemed like the obvious choice, but Kyle was tortured by the thought. “I want to give him one more chance,” he said. “Is it wrong to want to give him every possible chance to make it?”

Kyle, who did not routinely struggle with difficult decisions and leads one of the highest performing divisions in his company, is not alone. Firing someone is a decision rife with complexity and personal angst. But avoiding it only prolongs the inevitable and increases the consequences of keeping a poor performer at the top.

In my work with senior executives, I’ve observed five things that often get in the way of making the necessary call. Recognizing and correcting these behaviors early on can help you overcome the fear of firing an under performing leader and prevent the damage that may occur if you don’t.

A determination to fix others. Well-intended leaders often feel genuine commitment to helping direct reports succeed. The importance of coaching and feedback has been drilled into them. But when your commitment to someone’s growth exceeds their ability to grow, you are unwittingly contributing to their failure.

Kyle offers a case in point. He set out to help his VP of sales turn things around and he wasn’t going to stop until he did. He saw the VP’s under performance as his own personal failure to effectively develop younger executives. In reality, however, the VP was years away from thriving in a role with such high demands. While Kyle’s desire for people to succeed was admirable, his belief that he could, and should, make that happen was a form of arrogance.

This is not uncommon. Another HR executive I worked with prided herself in developing leaders others had given up on. She invested in coaching, training, and created “developmental assignments” for struggling leaders. She sometimes succeeded at uncovering great talent that others had prematurely discarded. But too often, under the guise of creating a culture that prized employee development, she set people up to fail by keeping them in roles they’d long proven to be incapable of handling.

Be careful not to confuse your commitment to employee development with masked “savior syndrome.” Playing the hero could come at the expense of someone else’s career.

Fear of delivering a fatal blow. One of the unique complexities of removing an executive from their role is the damaging consequences it may have on their career. Falling from a high perch can make a leader damaged goods when pursuing future opportunities. As a result, bosses may experience guilt when it comes time to let that leader go — guilt for not preparing that person to take on their current role or guilt about the struggle that person might go through when looking for a new job. But you can do much greater damage to their career and reputation by allowing them to publicly struggle. A better solution is to have an honest conversation with that person and offer support.

In Kyle’s case, a conversation with the VP of sales about his poor performance and his future aspirations enabled Kyle to see that not succeeding in this role didn’t deem the VP unemployable or untalented. While disappointed, the VP knew he wasn’t delivering, and was relieved to acknowledge it. He’d been thinking about other roles in the organization for which he was better suited. Kyle saw that he could help his VP look for more suitable opportunities within the broader organization or provide a reference for him at another company.

Other leaders can follow this example. Feeling guilty about a potential outcome that you have no control over helps no one. In fact, 68% of executives who are fired find a new job within six months.

Ego. Firing executives is especially difficult when you hired them in the first place. The decision to hire someone is a rejection of your leadership and it’s natural to fear what people will think when you need to go back on that decision and remove them. But no one is infallible to making a bad hire, and no one has complete control over whether someone succeeds. You should do everything you can to hire with rigorous standards and onboard effectively. You should not become so attached to your own hires that you lose objectivity.

In the example of Kyle, he had promoted his VP of sales two years earlier and he feared his judgment would be called into question if the VP failed. Though the VP excelled during his first year, further solidifying Kyle’s decision, market headwinds and major competition made his second year difficult. The VP was simply too inexperienced.

It’s common for leaders to be blind to the shortfalls of those they hire. But Kyle needed to see that, while the decision to promote his VP was a calculated risk, the conditions of that risk had evolved and keeping the VP in his current role could have serious consequences for the whole division.

Public visibility. When an executive is fired, the world inside and outside the organization sees it. Irrationally or not, people speculate about what’s going on. While you can’t control what people think about a major decision, you can minimize unfounded conjecture by being intentional in your communications about the exit and why it happened. Internally, try to normalize difficult exits by letting your team know that moving on is a part of business and be gracious to those who are leaving. Externally, focus on looking forward. Publicly acknowledge the aspirations your organization aims to reach or the challenges you are working to address. Remember, it looks far weaker to ignore poor performance than it does to address it.

Kyle feared that his boss, the CEO (for whom he was a succession candidate) and other key stakeholders outside the company, might conclude his division was unstable or his team was weak once he fired his VP of sales. And for the VP himself, it could mean public embarrassment and loss of respect. What Kyle needed to consider was what people might conclude if he didn’t remove the under performing sales VP. It is far more cruel to leave a leader publicly poundering, particularly in Kyle’s case when the VP’s under performance drove other talented employees out the door.

Perceived indispensability. Often, executives fear the disruption a departing executive might cause. Certain it will result in irreparable damage, they convince themselves and others of the executive’s indispensability to justify tolerating a poor performance or bad behavior. I have seen this fear used as an excuse for not firing under performing executives many times, but I have never seen this fear materialize. With a carefully choreographed transition plan, it’s possible for an office to return to normal quickly. Important people, like top customers, understand that things change. What they want to know is how you’re going to take care of them, regardless of who does it.

One of my clients once put up with horrific behavior from their sales executive because they “couldn’t possibly risk” losing his customer relationships. Externally, the sales exec was highly regarded. He spoke at conferences alongside top customers and was regularly invited to exclusive gatherings of prominent buyers. Internally, he was loathed for what he got away with: never attending meetings, refusing to learn new technologies, and consistently violating travel expense guidelines. Eventually, a newly appointed leader had the courage to clean house and replace him, and those who followed in his example, with fresh talent. They didn’t lose one customer in the wake of these exits, and within a year, top-line revenue had grown by 35%.

The complicated decision to remove a senior leader from their job should never be taken lightly. And while there’s no way to avoid some fallout from such a choice, the decision to ignore irreversible poor performance is a choice with far greater consequences. By acknowledging the above behaviors, and practicing ways to overcome them, you will not only help your organization move forward, but also the employees you’re afraid to let go.

Insights From ITR Economics CEO: Three Subtle Signs You Should Know

There is a reason ITR Economics uses rate-of-change to identify four distinct phases to the business cycle: Each phase requires a particular perspective in conjunction with a view to the future.

The US economy is on the threshold of the third phase of the business cycle, Phase C. The “C” stands for “Caution,” which is what we urge most folks to use when thinking about the next four quarters. Caution is warranted if you tend to move in sync with any of the following measures: GDP, Retail Sales, US Total Industrial Production, Manufacturing, or Housing.

We are in that relatively unique stage of the business cycle in which the data is still generally rising (or seems to be at first glance), but the upward movement is definitely decaying. This is Phase C. It is a period of Slowing Growth. Not slowergrowth, but slowing, because it is a progressive phenomenon. The economy will continue to decelerate until it either (a) enters into a recession (negative growth), or (b) shifts into accelerating rise without first going through a recession. The latter is the proverbial “soft landing.” This business cycle will have elements of both (a) and (b). Retail Sales will experience slowing growth without subsequently contracting; Housing (a traditional leading indicator) is already beginning to contract.

ITR Economics presenters frequently provide our leading indicator analysis in webinars, company-specific meetings, and trade association meetings. The leading indicators tell a great deal about how much slowing is likely to occur. Sometimes the signs are relatively subtle; here are three of those subtler (and worrisome) signs:

  1. Adjusted for inflation, Retail Sales are now barely rising, and the 12/12 rate-of-change is below 2.5%. (The 12/12 is at 2.2% and declining; the 3/12 is at 0.8%.)
  2. Food Services and Drinking Places Retail Sales activity is now shifting into Phase C. (The 12/12 is edging upward at 6.3%, but the 3/12 is at 5.3% and declining below the 12/12.)
  3. Light Vehicle Retail Sales (passenger cars and light-duty trucks) over the last three months came in 0.7% below the year-earlier level for the same three months.

It is easy to see why people can miss these signals. They tend to focus on a snapshot of the data rather than the trend. This is one reason why many otherwise good decisions are made at the wrong time.

In other cases, it is simply a matter of not knowing enough of the circumstances. Single-Unit Housing Starts are in Phase C, Slowing Growth. However, Starts over the last three months are down, by 9.3%, from the same three months one year ago. Starts are trending lower.

There is a tendency to attribute this to there not being enough inventory to keep housing going. But that misses the point that these are Housing Starts we are talking about, not sales. The data for Building Permits, which lead Starts, shows that further downward cyclical change is ahead.

Knowing where you are in the business cycle and basing your decisions on the reality of where you are trending is key to making decisions with near-term profitable payback.

It’s as easy as A – B – C – D.

Brian Beaulieu
CEO

This Is Your Company One Year From Now

According to a Harvard Business Review survey, the quality that most distinguishes a leader from a non-leader is how capable she is of forward-thinking. In other words, a leader is someone who envisions a unique view of the future — and can enlist others into that shared vision.

What’s your vision for your organization? If it’s not as forward-thinking as it could be, run it through an exercise called One Year From Now. It’s a strategy-shaping technique that helps leadership articulate how innovation will shape their org twelve months from now — and what steps need to be taken to make that vision a reality.

Along with your fellow senior leaders, take twenty minutes to answer these questions:

  • What’s a recent news headline about our company?
  • What are the key topics our company’s thought leaders are speaking about at conferences?
  • What emerging social issue is our organization associated with?
  • What are customers or clients tweeting about us?
  • What’s the word on Wall Street about us?
  • What are the sales teams at our competition saying about us?
  • What’s the CEO of our top competitor saying about us?
  • Why are our employees excited about coming to work here?

Once you’ve got your future-thinking answers, imagine yourselves a year from now. It’s 2019 and your company has achieved the vision of success it just articulated. To reveal how you got here, take another twenty minutes to answer the following questions individually or in small teams.

  • What one decision or action put us on the path to success?
  • What was our biggest barrier to change?
  • How did we successfully overcome that barrier?
  • What exactly compelled us to make those changes?
  • Who exactly was the driving force for those changes?
  • How did we get buy-in for the changes we made?
  • What would have happened if we had just maintained last year’s status quo?

When time’s up, everyone’s answers should be shared with the room, and any common themes or ideas should be captured. Discuss the feasibility of the most strategic ideas and tactics, and then agree on your top three immediate priorities. Reconvene monthly to track the company’s progression toward its goals for next year and keep people accountability.

Imagining your company twelve months from now can replace hazy or lazy plans for innovation with a clear roadmap for achieving success.Whether you’re a hot start-up or a global brand, this simple technique can put you on track for becoming synonymous with 2019 round-ups of innovators of the year.

10 TRENDS FROM THE TRENCHES 2019: CHANGE ISN’T COMING, IT’S HERE. ARE YOU READY?

BY ANDREA (ANDI) SIMON, PH.D. CORPORATE ANTHROPOLOGIST | CEO SIMON ASSOCIATES MANAGEMENT CONSULTANTS

 

After a busy 2018 of Vistage workshops, keynotes and client engagements across the country and around the world, I thought this was a good time to reflect on the Trends from the Trenches I’ve been hearing and seeing from CEOs and their key executives—and from their clients, college students and customers. What are they seeing? What are the major trends they are confronting as they wrap up 2018 and begin to plan for the new year? Well, some are rather disturbing. Others are very encouraging. Here are ten that are worth sharing. But please, don’t get change fatigue. The pace and path of change are not slowing down. I invite you to enjoy the journey and learn how to “see, feel and think” in new ways. Here we go…

Pay Attention to these Top 10 Trends

George Washington vs. Workplace Drama

10 Ways to Dial It Down from America’s Founding CEO

When George Washington was a teenager, he both copied out by hand and tweaked 110 “rules of civility and decent behavior.” These rules had been compiled by Jesuits in late 16th century France and made the voyage across the Atlantic Ocean.

Manners were up in the air in this new world when Washington put quill to paper. You see, manners were designed for men of high standing, determined by birth. “Court”-liness literally referred to a king or nobleman’s court and how one should act in that context.

What was expected of most commoners was not really manners but deference. You can see this in some of the rules that Washington copied out.

For instance, rule 26 began, “In pulling off your hat to persons of distinction, as noblemen, justices, churchmen, and company, make a reverence bowing more or less according to the custom of the better bred…”

Manners for everyone

But you can also see a break from hard caste in the very next sentence with “but among your equals…” Washington would oversee the rise of a new nation in which most men were equals (with the unforgettable exception of slaves).

These new people believed that the democratization of power called for not less but more widespread observance of manners. Washington sought to model these manners in his life, on the battlefield, as a farmer-businessman, and as president.

10 rules plus one more

Many of Washington’s rules are still relevant today. For this issue on how to motivate your team in the workplace, I offer a curated list of 10 rules on how to behave that will help today’s leaders to command respect, capped off with a bonus rule that we all would do well to head.

  1. Every action done in company ought to be with some sign of respect to those that are present.
  2. Show not yourself glad at the misfortune of another though he were your enemy.
  3. Let your discourse with men of business be short and comprehensive.
  4. When a man does all he can, though it succeed not well, blame not him that did it.
  5. Be not hasty to believe flying reports to the disparagement of any.
  6. Speak not injurious words neither in jest nor earnest; scoff at none although they give occasion.
  7. Be not forward but friendly and courteous, the first to salute, hear, and answer; and be not pensive when it’s a time to converse.
  8. Detract not from others, neither be excessive in commanding.
  9. When your superiors talk to anybody neither speak nor laugh.
  10. Speak not evil of the absent, for it is unjust.

Bonus: Labor to keep alive in your breast that little spark of celestial fire called conscience.

How to Crush Your Habits in the New Year With the Help of Science

It’s the shiniest time of year: that hopeful period when we imagine how remarkable — how fit and kind, how fiscally responsible — our future selves could be. And while you may think “new year, new you” is nothing more than a cringey, magazine-cover trope, research supports its legitimacy.

“It’s not like there’s something magical about Dec. 31,” explained Charles Duhigg, the author of “The Power of Habit.” “What is magical is our mind’s capacity to create new narratives for ourselves, and to look for events as an opportunity to change the narrative.”

One such opportunity? January. Since most of us consider it a fresh start, Mr. Duhigg said New Year’s resolutions can be “very, very powerful” — as long as they’re backed by science, patience and planning.

At the core of every resolution are habits: good ones, bad ones, stop-biting-your-nails ones. So if you want to change yourself, that’s where you need to start. Here are seven science-based strategies for making sure your new habits endure.

Imagine it’s the next New Year’s Eve. What change are you going to be most grateful you made?

Kelly McGonigal, a health psychologist and author of “The Willpower Instinct,” suggested asking yourself this question before making any resolutions. “It’s crazy to me how often people work from the opposite,” she said. “They pick some behavior they’ve heard is good for them, and then they try to force it on themselves and hope it will lead to greater health or happiness.”

Sounds familiar, right? To avoid that trap, Dr. McGonigal recommended reflecting on what changes would make you happiest, then picking a “theme” for your year. That way, even if a particular habit doesn’t stick, your overarching intention will.

Take the theme of reducing stress, for example. You might try meditating and hate it. But, since your goal wasn’t “meditate 10 minutes a day,” you don’t have to abandon the resolution completely. Maybe you try yoga next.

Electing a unifying theme will also stimulate your brain to look for additional opportunities to advance your goal, said Dr. McGonigal, whereas narrowing yourself to a single behavior will cause your brain to “shut off once you check it off the list.”

According to Mr. Duhigg, research shows that rather than “breaking” bad habits, you should attempt to transform them into better ones. To do so, you need to determine your habit’s trigger (cue) and reward, and then find a new behavior that satisfies both.

While Mr. Duhigg said cues usually fall into one of five categories — time, location, people, emotion or ritual — rewards are more difficult to ascertain. Do you always get an afternoon snack because you’re hungry? Because you’re bored? Or is it because you’re starved for office gossip? To determine an effective replacement habit, it’s vital to understand what reward you crave.

“Any habit can be diagnosed and shifted,” Mr. Duhigg said. “You need to give yourself time to really figure out the cues and rewards that are driving that behavior — and oftentimes the only way … is through a process of experimentation.”

You may have heard the key to habit formation is starting small. But you’ve likely never considered starting as small as James Clear suggests in his new book “Atomic Habits.”

His “two-minute rule” prescribes only completing the outset of any new habit. So if you want to read a book a month, you read a page a day. If you want to play the piano, you sit at the bench and open your songbook.

Although he admitted it might sound frivolous, Mr. Clear said mastering “the art of showing up” helps put a behavior on autopilot. He shared the story of one man who drove to the gym every day, then exercised for a few minutes before going home. By performing that seemingly futile action for six weeks, Mr. Clear said the man slowly became “the type of person who works out every day.”

For a habit to abide, it must have immediate rewards. But before you go buying a smoothie after every workout, note that, according to Dr. McGonigal, the most effective rewards are intrinsic, or the ones you feel, not the ones you procure.

So maybe, instead of that frozen strawberry-kale-hemp delight, you simply notice the renewed energy you have after lifting weights. Or the pride you feel when you don’t smoke cigarettes. Naming the payoff, she said, helps your brain build positive associations with the activity.

If you can’t find an intrinsic reward, it might not be the right habit. You shouldn’t, obviously, volunteer to build trails if you dislike being outside. If your goal is to give back to your community, volunteer with animals or at a homeless shelter instead. “Choose the form of the habit that brings you joy in the moment,” Mr. Clear added. “Because if it has some immediate satisfaction, you’ll be much more likely to repeat it in the future.”

We humans are weak. Which means environment design is our “best lever” for improving habits, according to Mr. Clear.

“The people who exhibit the most self-control are not actually those who have superhuman willpower,” he explained. “They’re the people who are tempted the least.” If you want to save more money, unfollow retailers’ social media accounts. If you want to watch less mindless television, unplug your TV. Dr. McGonigal also recommended displaying physical reminders of your goals — yes, that includes motivational Post-its.

Your environment encompasses the people around you, too. Mr. Clear suggested finding a group “where your desired behavior is the normal behavior,” and then forging friendships with its members (which will really get the habit to stick).

Despite your best intentions, chances are you’ll fail at some point along your new-year-new-you journey.

“The question isn’t ‘Are you going to be able to avoid that?’” said Mr. Duhigg. “The question is ‘What are you going to do next?’” If you have a recovery plan, or if you can learn from your failure, he said you’re “much more likely to succeed” in your goal.

So write down the obstacles you foresee and how you’ll surmount them. If you’re trying to drink less wine, for example, you should probably outline a plan for after your mother-in-law’s next visit.

Also effective, said Dr. McGonigal, is sharing your goals with other people, and then telling them how best to support you. By “outsourcing your willpower,” she explained, others can “hold your intention” for you, “even when you’re exhausted or you’re feeling really stressed out.”

Cake might only be for special occasions, but celebrations are for every day. Science says so.

“Celebration is one of the emotions that propel people further on the path of positive habits,” said Dr. McGonigal. Celebrating tells your brain a behavior is beneficial, and that it should look for more opportunities to engage in it.

The celebrations don’t have to be grand. If you finally study for your licensing exam, tell your co-worker. If you survive a tough workout, take a sweaty selfie. Dr. McGonigal said celebrations can actually change your memory of a particular experience, making it more positive than it was. “And that makes you more likely to choose to do it again in the future,” she added. Taking it a step further, you can send yourself a thank-you letter or FutureMe email expressing gratitude for your new habit.

That gratitude and that authentic pride, along with hope, social connection and compassion, are the most effective emotions for promoting long-lasting behavior change, according to Dr. McGonigal. The least effective are shame, guilt and fear.

So even if you stumble when forming your new habit — which research says you probably will — be kind to yourself. Although big, long-term change isn’t easy, it is possible. “Habits are not a finish line to be crossed,” said Mr. Clear. “They’re a lifestyle to be lived.”

by Susan Shain

This is a short story about what happened to the U.S. economy since the end of World War II.

That’s a lot to unpack in 5,000 words, but the short story of what happened over the last 73 years is simple: Things were very uncertain, then they were very good, then pretty bad, then really good, then really bad, and now here we are. And there is, I think, a narrative that links all those events together. Not a detailed account. But a story of how the details fit together.

Since this is an attempt to link the big events together, it leaves out all kinds of detail of what happened during this period. I’m likely to agree with anyone who points out what I’ve missed. My goal isn’t to describe every play; it’s to look at how one game influenced the next.

If you fell asleep in 1945 and woke up in 2018 you would not recognize the world around you. The amount of growth that took place during that period is virtually unprecedented. If you learned that there have been no nuclear attacks since 1945, you’d be shocked. If you saw the level of wealth in New York and San Francisco, you’d be shocked. If you compared it to the poverty of Detroit, you’d be shocked. If you saw the price of homes, college tuition, and health care, you’d be shocked. Our politics would blow your mind. And if you tried to think of a reasonable narrative of how it all happened, my guess is you’d be totally wrong. Because it isn’t intuitive, and it wasn’t foreseeable 73 years ago.

Here’s how this all happened.

1. August, 1945. World War II ends.

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Japan surrendering was “The Happiest Day in American History,” the New York Times wrote.

But there’s the saying, “History is just one damn thing after another.”

The joy of the war ending was quickly met with the question, “What happens now?”

Sixteen million Americans – 11% of the population – served in the war. About eight million were overseas at the end. Their average age was 23. Within 18 months all but 1.5 million of them would be home and out of uniform.

And then what?

What were they going to do next?

Where were they going to work?

Where were they going to live?

Those were the most important questions of the day, for two reasons. One, no one knew the answers. Two, if it couldn’t be answered quickly, the most likely scenario – in the eyes of many economists – was that the economy would slip back into the depths of the Great Depression.

Three forces had built up during the war:

  • Housing construction ground to a halt, as virtually all production capacity was shifted to building war supplies. Fewer than 12,000 homes per month were built in 1943, equivalent to less than one new home per American city. Returning soldiers faced a severe housing shortage.
  • The specific jobs created during the war – building ships, tanks, bullets, planes – were very suddenly not necessary after it, stopping with a speed and magnitude rarely seen in private business. It was unclear where soldiers could work.
  • The marriage rate spiked during and immediately after the war. Soldiers didn’t want to return to their mother’s basement. They wanted to start a family, in their own home, with a good job, right away.

This worried policymakers, especially since the Great Depression was still a recent memory, having ended just five years prior.

In 1946 the Council of Economic Advisors delivered a report to President Truman warning of “a full-scale depression some time in the next one to four years.”

They wrote in a separate 1947 memo, summarizing a meeting with Truman:

We might be in some sort of recession period where we should have to be very sure of our ground as to whether recessionary forces might be in danger of getting out of hand … There is a substantial prospect which should not be overlooked that a further decline may increase the danger of a downward spiral into depression conditions.

This fear was exacerbated by the fact that exports couldn’t be immediately relied upon for growth, as two of the largest economies – Europe and Japan – sat in ruins dealing with humanitarian crises. And America itself was buried in more debt than ever before, limiting direct government stimulus.

2. So we did something about it: Low interest rates and the intentional birth of the American consumer.

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The first thing we did to keep the economy afloat after the war was keep interest rates low. This wasn’t an easy decision, because a burst of inflation when soldiers came home to a shortage of everything from clothes to cars temporarily sent inflation into double digits:

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The Federal Reserve was not politically independent before 1951. The president and the Fed could coordinate policy. In 1942 the Fed announced it would keep short-term rates at 0.38% to help finance the war. Rates didn’t budge a single basis point for the next seven years. Three-month Treasury yields stayed below 2% until the mid-1950s.

The explicit reason for keeping rates down was to keep the cost of financing the equivalent of the $6 trillion we spent on the war low.

But low rates also did something else for all the returning GIs. It made borrowing to buy homes, cars, gadgets, and toys really cheap.

Which, from a paranoid policymakers’ perspective, was great. Consumption became an explicit economic strategy in the years after World War II.

An era of encouraging thrift and saving to fund the war quickly turned into an era of actively promoting spending. Princeton historian Sheldon Garon writes:

After 1945, America again diverged from patterns of savings promotion in Europe and East Asia … Politicians, businessmen and labor leaders all encouraged Americans to spend to foster economic growth.

Two things fueled this push.

One was the GI Bill, which offered unprecedented mortgage opportunities. Sixteen million veterans could buy a home often with no money down, no interest in the first year, and fixed rates so low that monthly mortgage payments could be lower than a rental.

The second was an explosion of consumer credit, enabled by the loosening of Depression-era regulations. The first credit card was introduced in 1950. Store credit, installment credit, personal loans, payday loans – everything took off. And interest on all debt, including credit cards, was tax deductible at the time.

It tasted delicious. So we ate a lot of it. A simple story in a simple table:

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Household debt in the 1950s grew 1.5 times faster than it did during the 2000s debt splurge.

3. Pent-up demand for stuff fed by a credit boom and a hidden 1930s productivity boom led to an economic boom.

The 1930s were the hardest economic decade in American history. But there was a silver lining that took two decades to notice: By necessity, the Great Depression had supercharged resourcefulness, productivity, and innovation.

We didn’t pay that much attention to the productivity boom in the ‘30s, because everyone was focused on how bad the economy was. We didn’t pay attention to it in the ‘40s, because everyone was focused on the war.

Then the 1950s came around and we suddenly realized, “Wow, we have some amazing new inventions. And we’re really good at making them.”

Appliances, cars, phones, air conditioning, electricity.

It was nearly impossible to buy many household goods during the war, because factories were converted to make guns and ships. That created pent-up demand from GIs for stuff after the war ended. Married, eager to get on with life, and emboldened with new cheap consumer credit, they went on a buying spree like the country had never seen.

Frederick Lewis Allan writes in his book The Big Change:

During these postwar years the farmer bought a new tractor, a corn picker, an electric milking machine; in fact he and his neighbors, between them, assembled a formidable array of farm machinery for their joint use. The farmer’s wife got the shining white electric refrigerator she had always longed for and never during the Great Depression had been able to afford, and an up-to-date washing machine, and a deep-freeze unit. The suburban family installed a dishwashing machine and invested in a power lawnmower. The city family became customers of a laundromat and acquired a television set for the living room. The husband’s office was air-conditioned. And so on endlessly.

It’s hard to overstate how big this surge was.

Commercial car and truck manufacturing virtually ceased from 1942 to 1945. Then 21.4 million cars were sold from 1945 to 1949. Another 37 million were sold by 1955.

1.9 million homes were built from 1940 to 1945. Then 7 million were built from 1945 to 1950. Another 8 million were built by 1955.

Pent-up demand for stuff, and our newfound ability to make stuff, created the jobs that put returning GIs back to work. And they were good jobs, too. Mix that with consumer credit, and America’s capacity for spending exploded.

The Federal Reserve wrote to President Truman in 1951: “By 1950, total consumer expenditures, together with residential construction, amounted to about 203 billion dollars, or in the neighborhood of 40 percent above the 1944 level.”

The answer to the question, “What are all these GIs going to do after the war?” was now obvious. They were going to buy stuff, with money earned from their jobs making new stuff, helped by cheap borrowed money to buy even more stuff.

4. Gains are shared more equally than ever before.

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The defining characteristic of economics in the 1950s is that the country got rich by making the poor less poor.

Average wages doubled from 1940 to 1948, then doubled again by 1963.

And those gains focused on those who had been left behind for decades before. The gap between rich and poor narrowed by an extraordinary amount.

Lewis Allan wrote in 1955:

The enormous lead of the well-to-do in the economic race has been considerably reduced.

It is the industrial workers who as a group have done best – people such as a steelworker’s family who used to live on $2,500 and now are getting $4,500, or the highly skilled machine-tool operator’s family who used to have $3,000 and now can spend an annual $5,500 or more.

As for the top one percent, the really well-to-do and the rich, whom we might classify very roughly indeed as the $16,000-and-over group, their share of the total national income, after taxes, had come down by 1945 from 13 percent to 7 percent.

This was not a short-term trend. Real income for the bottom 20% of wage-earners grew by a nearly identical amount as the top 5% from 1950 to 1980.

The equality went beyond wages.

Women held jobs outside the home in record numbers. Their labor force participation rate went from 31% after the war to 37% by 1955, and to 40% by 1965.

Minorities gained, too. After the 1945 inauguration Eleanor Roosevelt wrote about an African American reporter who told her:

Do you realize what twelve years have done? If at the 1933 reception a number of colored people had gone down the line and mixed with everyone else in the way they did today, every paper in the country would have reported it. We do not even think it is news and none of us will mention it.

Women and minority rights were still a fraction of what they are today. But the progress toward equality in the late ‘40s and ‘50s was extraordinary.

The leveling out of classes meant a leveling out of lifestyles. Normal people drove Chevys. Rich people drove Cadillacs. TV and radio equalized the entertainment and culture people enjoyed regardless of class. Mail-order catalogs equalized the clothes people wore and the goods they bought regardless of where they lived. Harper’s Magazine noted in 1957:

The rich man smokes the same sort of cigarettes as the poor man, shaves with the same sort of razor, uses the same sort of telephone, vacuum cleaner, radio, and TV set, has the same sort of lighting and heating equipment in his house, and so on indefinitely. The differences between his automobile and the poor man’s are minor. Essentially they have similar engines, similar fittings. In the early years of the century there was a hierarchy of automobiles.

Paul Graham wrote in 2016 about what something as simple as there only being three TV stations did to equalize culture:

It’s difficult to imagine now, but every night tens of millions of families would sit down together in front of their TV set watching the same show, at the same time, as their next door neighbors. What happens now with the Super Bowl used to happen every night. We were literally in sync.

This was important. People measure their well being against their peers. And for most of the 1945-1980 period, people had a lot of what looked like peers to compare themselves to. Many people – most people – lived lives that were either equal or at least fathomable to those around them. The idea that people’s lives equalized as much as their incomes is an important point of this story we’ll come back to.

5. Debt rose tremendously. But so did incomes, so the impact wasn’t a big deal.

Household debt increased 5-fold from 1947 to 1957 due to the combination of the new consumption culture, new debt products, and interest rates subsidized by government programs and held low by the Federal Reserve.

But income growth was so strong during this period that the impact on households wasn’t severe. And household debt was so low to begin with after the war. The Great Depression wiped out a lot of it, and household spending was so curtailed during the war that debt accumulation was restricted – that the growth in household debt-to-income was manageable.

Household debt to income today is just over 100%. Even after rising in the 1950s, 1960s, and 1970s, it stayed below 60%:

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Driving a lot of this debt boom was a surge in home ownership.

The homeownership rate in 1900 was 46.5%. It stayed right about there for the next four decades. Then it took off, hitting 53% by 1945 and 62% by 1970. A substantial portion of the population was now in debt that, in previous generations, would not – could not – use it. And they were mostly OK with it.

David Halberstam writes in his book The Fifties:

They were confident in themselves and their futures in a way that [those] growing up in harder times found striking. They did not fear debt as their parents had … They differed from their parents not just in how much they made and what they owned but in their belief that the future had already arrived. As the first homeowners in their families, they brought a new excitement and pride with them to the store as they bought furniture or appliances — in other times young couples might have exhibited such feelings as they bought clothes for their first baby. It was as if the very accomplishment of owning a home reflected such an immense breakthrough that nothing was too good to buy for it.

Now’s a good time to connect a few things, as they’ll become increasingly important:

  • America is booming.
  • It’s booming together like never before.
  • It’s booming with debt that isn’t a big deal at the time because it’s still low relative to income and there’s a cultural acceptance that debt isn’t a scary thing.

6. Things start cracking.

1973 was the first year where it became clear the economy was walking down a new path.

The recession that began that year brought unemployment to the highest it had been since the 1930s

Inflation surged. But unlike the post-war spikes, it stayed high.

Short-term interest rates hit 8% in 1973, up from 2.5% a decade earlier.

And you have to put all of that in the context of how much fear there was between Vietnam, riots, and the assassinations of Martin Luther King, John and Bobby Kennedy.

It got bleak.

America dominated the world economy in the two decades after the war. Many of the largest countries had their manufacturing capacity bombed into rubble. But as the 1970s emerged, that changed. Japan was booming. China’s economy was opening up. The Middle East was flexing its oil muscles.

A combination of lucky economic advantages and a culture shared by the Greatest Generation shared – hardened by the Depression and anchored in systematic cooperation from the war – shifted when Baby Boomers began coming of age. A new generation that had a different view of what’s normal and expected hit at the same time a lot of the economic tailwinds of the previous two decades ended.

Everything in finance is data within the context of expectations. One of the biggest shifts of the last century happened when the economic winds began blowing in a different, uneven direction, but people’s expectations were still rooted in a post-war culture of equality. Not necessarily equality of income, although there was that. But equality in lifestyle and consumption expectations; the idea that someone earning a 50th percentile income shouldn’t live a life dramatically different than someone in the 80th or 90th percentile. And that someone in the 99th percentile lived a better life, but still a life that someone in the 50th percentile could comprehend. That’s how America worked for most of the 1945-1980 period. It doesn’t matter whether you think that’s morally right or wrong. It just matters that it happened.

Expectations always move slower than facts. And the economic facts of the years between the early 1970s through the early 2000s were that growth continued, but became more uneven, yet people’s expectations of how their lifestyle should compare to their peers did not change.

7. The boom resumes, but it’s different than before.

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Ronald Reagan’s 1984 Morning in America ad declared:

It’s morning again in America. Today more men and women will go to work than ever before in our country’s history. With interest rates at about half the record highs of 1980, nearly 2,000 families today will buy new homes, more than at any time in the past four years. This afternoon 6,500 young men and women will be married, and with inflation at less than half of what it was just four years ago, they can look forward with confidence to the future.

That wasn’t hyperbole. GDP growth was the highest it had been since the 1950s. By 1989 there were 6 million fewer unemployed Americans than there were seven years before. The S&P 500 rose almost four-fold between 1982 and 1990. Total real GDP growth in the 1990s was roughly equal to that of the 1950s – 40% vs. 42%.

President Clinton boasted in his 2000 State of the Union speech:

We begin the new century with over 20 million new jobs; the fastest economic growth in more than 30 years; the lowest unemployment rates in 30 years; the lowest poverty rates in 20 years; the lowest African-American and Hispanic unemployment rates on record; the first back-to-back surpluses in 42 years; and next month, America will achieve the longest period of economic growth in our entire history. We have built a new economy.

His last sentence was important. It was a new economy. The biggest difference between the economy of the 1945-1973 period and that of the 1982-2000 period was that the same amount of growth found its way into totally different pockets.

You’ve probably heard these numbers but they’re worth rehashing. The Atlantic writes:

Between 1993 and 2012, the top 1 percent saw their incomes grow 86.1 percent, while the bottom 99 percent saw just 6.6 percent growth.

Joseph Stiglitz in 2011:

While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone.

It was nearly the opposite of the flattening that occurred after that war.

Why this happened is one of the nastiest debates in economics, topped only by the debate over what we should do about it. Lucky for this article neither matters.

All that matters is that sharp inequality became a force over the last 35 years, and it happened during a period where, culturally, Americans held onto two ideas rooted in the post-WW2 economy: That you should live a lifestyle similar to most other Americans, and that taking on debt to finance that lifestyle is acceptable.

8. The Big Stretch

Rising incomes among a small group of Americans led to that group breaking away in lifestyle.

They bought bigger homes, nicer cars, went to expensive schools, and took fancy vacations.

And everyone else was watching – fueled by Madison Avenue in the ‘80s and ‘90s, and the internet after that.

The lifestyles of a small portion of legitimately rich Americans inflated the aspirations of the majority of Americans, whose incomes weren’t rising.

A culture of equality and Togetherness that came out of the 1950s-1970s innocently morphs into a Keeping Up With The Joneses effect.

Now you can see the problem.

Joe, an investment banker making $900,000 a year, buys a 4,000 square foot house with two Mercedes and sends three of his kids to Pepperdine. He can afford it.

Peter, a bank branch manager making $80,000 a year, sees Joe and feels a subconscious sense of entitlement to live a similar lifestyle, because Peter’s parents believed – and instilled in him – that Americans’ lifestyles weren’t that different even if they had different jobs. His parents were right during their era, because incomes fell into a tight distribution. But that was then. Peter lives in a different world. But his expectations haven’t changed much from his parents, even if the facts have.

So what does Peter do?

He takes out a huge mortgage. He has $45,000 of credit card debt. He leases two cars. His kids will graduate with heavy student loans. He can’t afford the stuff Joe can, but he’s pushed to stretch for the same lifestyle. It is a big stretch.

This would have seemed preposterous to someone in the 1930s. But we’ve spent a half-century since the end of the war fostering a cultural acceptance of household debt.

During a time when median wages were flat, the median new American home grew 50% larger:

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The average new American home now has more bathrooms than occupants. Nearly half have four or more bedrooms, up from 18% in 1983.

The average car loan adjusted for inflation more than doubled between 1975 and 2003, from $12,300 to $27,900.

And you know what happened to college costs and student loans.

Household debt-to-income stayed about flat from 1963 to 1973. Then it climbed, and climbed, and climbed:

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Even as interest rates plunged, the percentage of income going to debt service payments rose. And it skewed toward lower-income groups. The share of income going toward debt and lease payments is just over 8% for the highest income groups – those with the biggest income gains – but over 21% for those below the 50th percentile.

The difference between this climb and the debt increase that took place during the 1950s and ‘60s is that the recent jump started from a high base.

Economist Hyman Minsky described the beginning of debt crises: The moment when people take on more debt than they can service. It’s an ugly, painful moment. It’s like Wile E. Coyote looking down, realizing he’s screwed, and falling precipitously.

Which, of course, is what happened in 2008.

9. Once a paradigm is in place it is very hard to turn it around.

A lot of debt was shed after 2008. And then interest rates plunged. Household debt payments as a percentage of income are now at the lowest levels in 35 years.

But the response to 2008, necessary as it may have been, perpetuated some of the trends that got us here.

Quantitative easing both prevented economic collapse and boosted asset prices, a boon for those who owned them – mostly rich people.

The Fed backstopped corporate debt in 2008. That helped those who owned their debt – mostly rich people.

Tax cuts over the last 20 years have predominantly gone to those with higher incomes. People with higher incomes send their kids to the best colleges. Those kids can go on to earn higher incomes and invest in corporate debt that will be backstopped by the Fed, own stocks that will be supported by various government policies, and so on. Economist Bhashkar Mazumder has shown that incomes among brothers are more correlated than height or weight. If you are rich and tall, your brother is more likely to also be rich than he is tall.

None of these things are problems in and of themselves, which is why they stay in place.

But they’re symptomatic of the bigger thing that’s happened since the early 1980s: The economy works better for some people than others. Success isn’t as meritocratic as it used to be and, when success is granted, is rewarded with higher gains than in previous eras.

You don’t have to think that’s morally right or wrong.

And, again, in this story it doesn’t matter why it happened.

It just matters that it did happen, and it caused the economy to shift away from people’s expectations that were set after the war: That there’s a broad middle class without systematic inequality, where your neighbors next door and a few miles down the road live a life that’s pretty similar to yours.

Part of the reason these expectations have stuck around for 35 years after they shifted away from reality is because they felt so good for so many people when they were valid. Something that good – or at least the impression that it was that good – isn’t easy to let go of.

So people haven’t let go of it. They want it back.

10. The Tea Party, Occupy Wall Street, Brexit, and the rise of Donald Trump each represents a group shouting, “Stop the ride, I want off.”

The details of their shouting are different, but they’re all shouting – at least in part – because stuff isn’t working for them within the context of the post-war expectation that stuff should work roughly the same for roughly everyone.

You can scoff at linking the rise of Trump to income inequality alone. And you should. These things are always layers of complexity deep. But it’s a key part of what drives people to think, “I don’t live in the world I expected. That pisses me off. So screw this. And screw you! I’m going to fight for something totally different, because this – whatever it is – isn’t working.”

Take that mentality and raise it to the power of Facebook, Instagram, and cable news – where people are more keenly aware of how other people live than ever before. It’s gasoline on a flame. Benedict Evans says, “The more the Internet exposes people to new points of view, the angrier people get that different views exist.” That’s a big shift from the post-war economy where the range of economic opinions were smaller, both because the actual range of outcomes was lower and because it wasn’t as easy to see and learn what other people thought and how they lived.

I’m not pessimistic. Economics is the story of cycles. Things come, things go.

The unemployment rate is now the lowest it’s been in decades. Wages are now actually growing faster for low-income workers than the rich. College costs by and large stopped growing once grants are factored in. If everyone studied advances in healthcare, communication, transportation, and civil rights since the Glorious 1950s, my guess is most wouldn’t want to go back.

But a central theme of this story is that expectations move slower than reality on the ground. That was true when people clung to 1950s expectations as the economy changed over the next 35 years. And even if a middle-class boom began today, expectations that the odds are stacked against everyone but those at the top may stick around.

So the era of “This isnt working” may stick around.

And the era of “We need something radically new, right now, whatever it is” may stick around.

Which, in a way, is part of what starts events that led to things like World War II, where this story began.

History is just one damn thing after another.

by Morgan Housel

6 Scary Numbers for Your Organization’s C-Suite

It’s not the things we worry about that get us in the end, but the things we take for granted. In today’s economy, perhaps more than ever, leaders are waking up to the fact that they can’t take anything for granted and the old rules no longer apply.

It can almost feel like, the more successful your organization, the more in danger you are. And that may be true.

For this reason, good leaders are always in search of evidence to disprove their assumptions and question their biases. So, in that spirit, here are six recent, inconvenient insights from Gallup’s workplace research that you need to know:

1. Only 22% of employees strongly agree their leaders have a clear direction for their organization.

Despite extensive communication plans, presentations and memos, few employees think their leaders know where their organization is headed — and only 15% of employees strongly agree the leadership of their organization makes them feel enthusiastic about the future.

One reason may be that most leaders do not include a significant number of people in shaping the vision of their organization. When people feel like they are a part of the process, they are naturally more enthusiastic about the outcome.

2. Only 26% of employees believe their organization always delivers on its promises to customers.

Most business leaders would agree that delivering on your promise to customers — in quality, delivery or experience — is necessary for success. And in today’s connected world, missing the mark can instantly damage your brand’s reputation.

If roughly one in four employees think their organization consistently delivers for customers, leaders should be worried about the long-term health of their enterprises.

3. Only 12% of employees strongly agree that their organization does a great job of onboarding.

It’s hard to imagine there was a time before every organization had an “onboarding” program. But despite its ubiquity in the corporate world, most employees are not happy with the experience.

A great onboarding program should do more than take care of paperwork; it should help new employees experience your unique culture, see how their work matters, know what’s expected of them, and help them picture a long-term career path with you.

4. Only 14% of employees strongly agree that the performance reviews they receive inspire them to improve.

The truth is that the traditional annual review is in need of serious overhaul. Fewer than three in 10 employees believe their performance reviews are fair and accurate.

One cause is that performance conversations happen so infrequently — and modern business changes so quickly — that when managers and employees finally talk, few of the goals or measurements make sense anymore. That said, there are things you can do to make performance reviews something employees actually look forward to.

5. 67% of employees say they are sometimes, very often or always burned out at work.

Burnout is a serious matter. Employees who are very often or always burned out are 63% more likely to take a sick day and 23% more likely to visit the emergency room.

Burnout impacts employee performance, retention, career growth and even family life. It is not inevitable, and it should never be celebrated as part of a so-called “hard-working culture.”

6. 51% of currently employed adults in the U.S. say they are searching for new jobs or watching for new job opportunities.

Not only are half of all employees looking for a new job, nearly half (47%) say now is a good time to find a quality job. So what do workers want in a job?

Many want flexibility and opportunities to grow. Working for a paycheck is not enough to retain great people. Today’s worker wants a job that fits with their life and allows them to develop their talents.

What These 6 Items Mean For Executive Leadership

So what does this mean for leaders? Business is moving faster than ever. The old ways of doing things aren’t working anymore. And today’s executive leadership needs to be more connected — in a persistent, “always-on” capacity — with the emotions, opinions and attitudes of their employees.

By Ryan Pendell