Skill or luck?

Newsweek postulates that Alan Greenspan’s 20-year success as Federal Reserve Board Chairman may be significantly due to luck.

First, here are the numbers:

From 1987 to 2005 the Gross Domestic Product grew by 70%. Nonfarm employment increased 31%. Annual consumer price index inflation averaged just 3.1%. Pretax corporate profits increased 38% to $1.3 trillion. The average stock quadrupled in value.

The numbers seem too good to be based on luck alone. But it is possible. Consider this scenario: the email scammer who sent out 1,000,000 emails to investors predicting the rise or fall of the market. Half a million emails say the market’s going up, half a million say it’s going down. Let’s say the market went up. Next month the scammer only emails the half million folks who got the up prediction. The third month the scammer only emails the quarter million folks who got the next correct prediction, and so on.

After a year, the scammer has a perfect record with 244 people. Ask any of those 244 people if the scammer’s perfect record could be due to luck and they’ll probably say no, how could anyone make the right pick 12 months in a row? Very unlikely. They must know something.

But Alan Greenspan’s no email scammer: he’s one smart cookie – he does know something. And I’d put my money on him.

Say what?

Chinese children must learn Mandarin, joining 40 million around the world who are studying to do the same.

I haven’t heard one economist say that China won’t soon be the new #1 economic power in the world. But it seems the US will likely keep its crown for language. Within China itself 175 million people formally study English, and by 2010 that number will grow to two billion people worldwide.

English is de rigueur to succeed in big business. Newsweek reports on a recent survey where 91 percent of multinational employees in Latin America, Europe and Asia believed English was "critical" or "important" to their current positions. Just two years ago McKinsey found that fewer than one out of ten college graduates in China were suitable for employment at multinationals primarily because they didn’t speak English.

Here are the global rankings: Mandarin and English tie for the #1 spoken language in the world, each with 1.1 billion, although some estimates which no doubt include immigrant NYC taxi drivers put the number of English speakers as high as 1.8 billion.

With all the outsourcing in the news it’s funny we don’t hear more about India, where Hindi is spoken by nearly 1 billion people. Rounding out the top ten spoken languages, including those spoken as a second language, are French and Spanish each with 500 million, Arabic with 320 million, Russian with 255 million, and then Portuguese, Bengali, German, and Japanese.

I just hope those Chinese kids are watching their language.