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Bagehot by James Grant — an engaging biography of a purveyor of punditry
August 2, 2019 | Financial Times | by John Plender

Bagehot: The Life and Times of the Greatest Victorian, by James Grant, WW Norton, RRP£19.99/$28.95, 368 pages
19th_century  biographies  books  book_reviews  economics  financial_crises  financial_history  journalists  magazines  paradoxes  politicaleconomy  pundits  Victorian  Walter_Bagehot 
11 weeks ago by jerryking
A Recession Is Coming (Eventually). Here’s Where You’ll See It First. - The New York Times
By Ben Casselman
July 28, 2019

Another recession will come eventually. Fortunately, economic expansions, unlike coin-flip streaks, usually provide some hints about when they are nearing their end — if you know where to look. Below is a guide to some of the indicators that have historically done the best job of sounding the alarm.

Indicator 1: The Unemployment Rate
What to watch for: Rapid increases, even from a low level.
What it’s saying: All clear.

Indicator 2: The Yield Curve
What to watch for: Interest rates on 10-year Treasury bonds falling below those on three-month bonds. (It has already happened.)
What it’s saying: Storm warning.

Indicator 3: The ISM Manufacturing Index
What to watch for: The index falling below about 45 for an extended period.
What it's saying: Mostly cloudy.

Indicator 4: Consumer Sentiment
What to watch for: Declines of 15 percent or more over a year.
What it's saying: Partly cloudy.

Indicator 5: Choose Your Favorite

* Temporary staffing levels: Temp workers are, by definition, flexible — companies hire them when they need help quickly and get rid of them when demand dries up. That makes them a good measure of business sentiment.
* The quits rate: When workers are confident in the economy, they are more likely to quit voluntarily.
* Residential building permits: The housing market has frequently led the economy both into and out of recessions. That has made building permits — which are generally issued several weeks before construction begins — one of the best historical indicators of economic activity.
* Auto sales: After houses, cars are the most expensive thing most families buy.
consumer_confidence  economics  forecasting  indices  interim  lagging_indicators  leading_indicators  manufacturers  recessions  unemployment  warning_signs  yield_curve 
11 weeks ago by jerryking
Opinion: Why economics must go digital - The Globe and Mail
DIANE COYLE
CAMBRIDGE
CONTRIBUTED TO THE GLOBE AND MAIL
PUBLISHED JUNE 9, 2019

But economists’ benchmark mental world – particularly their instinctive framework for thinking about public policy questions – is one where competition is static, preferences are fixed and individual, rival goods are the norm, and so on.

Starting from there leads inexorably to presuming the “free market” paradigm. As any applied economist knows, this paradigm is named for a mythical entity. But this knowledge somehow does not give rise to an alternative presumption, say, that governments should supply certain products.......Having led a review of the spread of anti-microbial resistance – which will kill millions of people if new drugs are not discovered – O’Neill is dismayed by the lack of progress made by private pharmaceutical companies.

Drug discovery is an information industry, and information is a non-rival public good which the private sector, not surprisingly, is under-supplying. That conclusion is not remotely outlandish in terms of economic analysis. And yet, the idea of nationalizing part of the pharmaceutical industry is outlandish from the perspective of the prevailing economic-policy paradigm......Or consider the issue of data, which has lately greatly exercised policymakers. Should data collection by digital firms be further regulated? Should individuals be paid for providing personal data? And if a sensor in a smart-city environment records that I walk past it, is that my data, too? The standard economic framework of individual choices made independently of one another, with no externalities, and monetary exchange for the transfer of private property
Big_Tech  digital_economy  drug_development  economics  increasing_returns_to_scale  market_power  network_effects  personal_data  pharmaceutical_industry  platforms 
june 2019 by jerryking
Jevons paradox
In economics, the Jevons paradox (/ˈdʒɛvənz/; sometimes Jevons effect) occurs when technological progress or government policy increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the rate of consumption of that resource rises due to increasing demand.[1] The Jevons paradox is perhaps the most widely known paradox in environmental economics.[2] However, governments and environmentalists generally assume that efficiency gains will lower resource consumption, ignoring the possibility of the paradox arising.[3]
economics  Jevons_paradox  paradoxes  Wikipedia 
march 2019 by jerryking
Opinion | The Secret Lives of Central Bankers - The New York Times
By Annelise Riles
Ms. Riles, a professor of law and anthropology, is the author of “Financial Citizenship: Experts, Publics, and the Politics of Central Banking.”

Oct. 20, 2018

The acculturation process for central bankers begins early. Most of them attend a handful of elite universities — the University of Chicago, Harvard, Yale, Oxford, Cambridge — to study neoclassical economics, and their early training often involves a secondment to the central banking institutions of another country. In Tokyo or Frankfurt or New York, they operate within a closed set......Central banks should think more boldly about diversity, by welcoming not just more women and people of color, but also more people with real-world economic and business expertise, rather than only Ph.D.s. Central bankers already meet regularly with academics and financial institutions such as Goldman Sachs. Why not also meet with civil society groups that critique their work?..arrogance, toward the public and even toward one another, undermines central banks’ effectiveness. One of the goals of monetary policy is to shape people’s behavior. When a central bank says it anticipates that prices are going to rise, it expects the public to take that advice seriously. If people do, and they buy things now before prices rise, then perhaps prices won’t rise as much. But central banks need credibility for this stabilizing mechanism to work.

Some countries do have this level of public trust, built carefully over decades. In Denmark, for example, central bank officials make a concerted effort, in speeches and other public comments, to tell the story of how their work contributes to the egalitarian society that Danes value. Danes love their central bank..
books  central_banking  diversity  economics  monetary_policy  secondments 
october 2018 by jerryking
Technology has upended the world’s advertising giants - Mad men adrift
March 31st, 2018 | The Economist |

The world’s advertising giants are struggling to adapt to a landscape suddenly dominated by the duopoly of Google and Facebook. Some of their biggest clients, such as Procter & Gamble (P&G) and Unilever, are also being disrupted, in their case by smaller online brands and by Amazon. They are cutting spending on advertising services, and also building more capabilities in-house. Consultancies with digital expertise such as Deloitte and Accenture are competing with agencies, arguing that they know how to connect with consumers better, and more cheaply, using data, machine learning and app design.......This month Marc Pritchard, chief brand officer of P&G, criticised their (i.e. the ad giants) model as a “Mad Men” operation that is “archaic” and overly complex in an era when campaigns and ads need to be designed and refined quickly across lots of platforms.

Technological forces are buffeting this model.

(1) The first big challenge is disintermediation. Despite the growing backlash against the tech giants, Google and Facebook make it easy for firms big and small to advertise on their platforms and across the internet via their powerful ad networks.
(2) The second headache is the rise of ad-free content for consumers, especially on Netflix, and the corresponding disruption of ad-supported television, which has declining viewership globally.
(3) Third, Amazon’s e-commerce might, and the growing clout of internet-era direct-to-consumer upstarts, have weakened the distribution muscle and pricing power of the advertising giants’ biggest clients.....cost discipline among clients is driven partly by the influence of thrifty private-equity investors like 3G, the Brazilian owner of AB InBev, the world’s largest brewer......Sir Martin argues that the budgetary pressures that have forced his clients to cut back on advertising are a cyclical problem, not like the structural challenges posed by technological disruption.

In private, however, a senior executive at a rival ad-holding firm rejects much of this optimism. Technological disruption and disintermediation, he says, will only deepen. The efficiency of targeted digital ads means companies can spend less for the same outcome in branding. ....The advertising firms are responding by hiring away talent, acquiring businesses (in 2015 Publicis bought Sapient, a digital consultancy, for $3.7bn) and gradually changing how they make money. Their plans mostly boil down to two things: investing in digital services and consolidating their collections of businesses so that they can provide a range of services to one client more cheaply under one account.
advertising  economics  marketing  advertising_agencies  Martin_Sorrell  digital_strategies  WPP  Google  Facebook  Amazon  competitive_landscape  P&G  Unilever  disruption  Deloitte  Accenture  Publicis  Omnicom  via:sparkey  ad-tech  programmatic  direct-to-consumer 
april 2018 by jerryking
Droughts, storms and global demand tests America’s love affair with avocado - Lack of guac
Jan 25th 2018 | NEW YORK

America’s enthusiasm for avocados may be dented, however, by soaring prices. The wholesale price for a case of 48 avocados peaked at $83.75 in September, up from $34.45 a year before....Supply shortfalls, brought about by droughts, storms and wildfires in California, Chile and Mexico, help to explain the jump. Production in California dropped by 44% in 2017. Harvests in Mexico that year were off by 20%. Labour strikes in the country further reduced supply.

Growing global demand is also pushing up prices. Both Chile and Peru have concluded trade agreements with China, eliminating tariffs on their avocado exports. Peru’s avocado sales to China, although small in volume compared with Chile’s and Mexico’s, surged by 3,700% in 2016. Other countries, including Canada and Japan, have also worked up their appetite, raising aggregate imports by 32% between 2014 and 2016.

Raising production will be tricky. This is because avocados are a fussy plant to grow...Salinity levels need to be just right, the slope of the terrain not too steep and temperatures stable. Erratic weather conditions can easily kill the crop.
agriculture  economics  food  guacamole  recipes  avocados  salsa_chutney_relish_pickle  Chipotle 
february 2018 by jerryking
This is the age of the Microsoft and Amazon economy
Tim Harford

the big digital players: Google dominates search; Facebook is the Goliath of social media; Amazon rules online retail. But, as documented in a new working paper by five economists, American business is in general becoming more concentrated.

David Autor and his colleagues looked at 676 industries in the US — from cigarettes to greeting cards, musical instruments to payday lenders. They found that for the typical industry in each of six sectors — manufacturing, retail, finance, services, wholesale and utilities/transportation — the biggest companies are producing a larger share of output..... “superstar firms” tend to be more efficient. They sell more at a lower cost, so they enjoy a larger profit margin. ....Superstar firms are highly productive and achieve more with less. Because of this profitability, more of the value added by the company flows to shareholders and less to workers. And what happens in these groups will tend to be reflected in the economy as a whole, because superstar firms have an increasingly important role.
economics  monopsony  monopolies  Facebook  Amazon  superstars  David_Autor  retailers  platforms  corporate_concentration  economies_of_scale  network_effects  Tim_Harford  Microsoft 
january 2018 by jerryking
Algos know more about us than we do about ourselves
NOVEMBER 24, 2017 | Financial Time | John Dizard.

When intelligence collectors and analysts take an interest in you, they usually start not by monitoring the content of your calls or messages, but by looking at the patterns of your communications. Who are you calling, how often and in what sequence? What topics do you comment on in social media?

This is called traffic analysis, and it can give a pretty good notion of what you and the people you know are thinking and what you are preparing to do. Traffic analysis started as a military intelligence methodology, and became systematic around the first world war. Without even knowing the content of encrypted messages, traffic analysts could map out an enemy “order of battle” or disposition of forces, and make inferences about commanders’ intentions.

Traffic analysis techniques can also cut through the petabytes of redundant babble and chatter in the financial and political worlds. Even with state secrecy and the forests of non-disclosure agreements around “proprietary” investment or trading algorithms, crowds can be remarkably revealing in their open-source posts on social media.

Predata, a three-year-old New York and Washington-based predictive data analytics provider, has a Princeton-intensive crew of engineers and international affairs graduates working on early “signals” of market and political events. Predata trawls the open metadata for users of Twitter, Wikipedia, YouTube, Reddit and other social media, and analyses it to find indicators of future price moves or official actions.

I have been following their signals for a while and find them to be useful indicators. Predata started by creating political risk indicators, such as Iran-Saudi antagonism, Italian or Chilean labour unrest, or the relative enthusiasm for French political parties. Since the beginning of this year, they have been developing signals for financial and commodities markets.

The 1-9-90 rule
1 per cent of internet users initiate discussions or content, 9 per cent transmit content or participate occasionally and 90 per cent are consumers or ‘lurkers’

Using the example of the company’s BoJ signal. For this, Predata collects the metadata from 300 sources, such as Twitter users, contested Wikipedia edits or YouTube items created by Japanese monetary policy geeks. Of those, at any time perhaps 100 are important, and 8 to 10 turn out to be predictive....This is where you need some domain knowledge [domain expertise = industry expertise]. It turns out that Twitter is pretty important for monetary policy, along with the Japanese-language Wiki page for the Bank of Japan, or, say, a YouTube video of [BoJ governor] Haruhiko Kuroda’s cross-examination before a Diet parliamentary committee.

“Then you build a network of candidate discussions [JK: training beds] and look for the pattern those took before historical moves. The machine-learning algorithm goes back and picks the leads and lags between traffic and monetary policy events.” [Jk: Large data sets with known correct answers serve as a training bed and then new data serves as a test bed]

Typically, Predata’s algos seem to be able to signal changes in policy or big price moves [jk: inflection points] somewhere between 2 days and 2 weeks in advance. Unlike some academic Twitter scholars, Predata does not do systematic sentiment analysis of tweets or Wikipedia edits. “We only look for how many people there are in the conversation and comments, and how many people disagreed with each other. We call the latter the coefficient of contestation,” Mr Shinn says.

The lead time for Twitter, Wiki or other social media signals varies from one market to another. Foreign exchange markets typically move within days, bond yields within a few days to a week, and commodities prices within a week to two weeks. “If nothing happens within 30 days,” says Mr Lee, “then we say we are wrong.”
algorithms  alternative_data  Bank_of_Japan  commodities  economics  economic_data  financial_markets  industry_expertise  inflection_points  intelligence_analysts  lead_time  machine_learning  massive_data_sets  metadata  non-traditional  Predata  predictive_analytics  political_risk  signals  social_media  spycraft  traffic_analysis  training_beds  Twitter  unconventional 
november 2017 by jerryking
The vanishing middle class : prejudice and power in a dual economy : Temin, Peter, author. : Book, Regular Print Book : Toronto Public Library
Fairview Book In Transit In Transit 339.22089 TEM

As Peter Temin, an MIT academic who connects these dots eloquently in his new book The Vanishing Middle Class: Prejudice and Power in a Dual Economy, puts it: “None of this bodes well for democracy.” Temin and a growing number of other economists see America not as a single country but as two — an upper 20 per cent who live, metaphorically anyway, by the lake, and a lower 80 per cent who, hamstrung by a lack of education and unable to build an asset base, are increasingly despondent. Given this, it’s perhaps no wonder that the county where my husband and I will spend the next two weeks voted Trump. Sadly, if the president has his way, the policies that have helped create New Hampshire’s bifurcated economy will be rolled out to the rest of the nation. That’s an affliction we will all have to deal with.
books  economics  economists  TPL 
july 2017 by jerryking
How Nature Scales Up
June 23, 2017 | WSJ | By Charles C. Mann

Review of SCALE By Geoffrey West; Penguin Press, 479 pages, $30
books  book_reviews  physicists  scaling  growth  innovation  sustainability  cities  economics  business  linearity  efficiencies  economies_of_scale  sublinearity  massive_data_sets  natural_selection 
june 2017 by jerryking
The Amazon-Walmart Showdown That Explains the Modern Economy - The New York Times
Neil Irwin @Neil_Irwin JUNE 16, 2017

The decision by Amazon and Walmart to compete for my grocery business — as well as for space in my closet — is a tiny battle in a war to dominate a changing global economy.

And for companies that can’t compete on price and technology, it could cost them the shirt off their backs.....[Amazon's purchase of high-end grocery chain Whole Foods places it] on a collision course with Walmart to try to be the predominant seller of pretty much everything you buy.

Each one is trying to become more like the other — Walmart by investing heavily in its technology, Amazon by opening physical bookstores and now buying physical supermarkets. But this is more than a battle between two business titans. Their rivalry sheds light on the shifting economics of nearly every major industry, replete with winner-take-all effects and huge advantages that accrue to the biggest and best-run organizations, to the detriment of upstarts and second-fiddle players.....in turn...this has more worrying implications for jobs, wages and inequality.

Amazon vs. Walmart

Both want to sell everything!!!!

Walmart is buying Bonobos, an omnichannel innovator. Its website and online customer service are excellent, and it operates stores in major cities where you can try on garments and order items to be shipped directly. Because all the actual inventory is centralized, the stores themselves can occupy minimal square footage. The acquisition helps Walmart build expertise in the very areas where it is trying to gain on Amazon.

Walmart and Amazon have had their sights on each other for years, each aiming to be the dominant seller of goods via omnichannel.

Amazon's purchase of Whole Foods helps it to understand the grocery business which has a whole different set of challenges from the types of goods that Amazon has specialized in heretofore.

A Positive Returns-to-Scale World
The apparel business has long been a highly competitive industry in which countless players could find a niche.....any shirt-maker that tried to get too big rapidly faced diminishing returns.It would have to pay more and more to lease the real estate for far-flung stores, and would have to outbid competitors to hire all the experienced shirt-makers. The expansion wouldn’t offer any meaningful cost savings and would entail a lot more headaches trying to manage it all....in the digital economy, rather than reflecting those diminishing returns to scale, show positive returns to scale: The biggest companies have a huge advantage over smaller players. That tends to tilt markets toward a handful of players or even a monopoly....The apparel industry...is moving in the direction of being like the software business (high fixed costs, zero variable costs, enormous returns to scale)..... the reason why Walmart and Amazon are so eager get into the shirt business is because retailers know that they need to figure out how to manage sophisticated supply chains connecting Southeast Asia with stores in big American cities so that they rarely run out of product. They need mobile apps and websites that offer a seamless user experience so that nothing stands between a would-be purchaser and an order....Larger companies that are good at supply chain management and technology can spread those more-or-less fixed costs around more total sales, enabling them to keep prices lower than a niche player and entrench their advantage....large companies will invest in automation/robotics...the future of clothing/apparel might be a handful of companies with the very expensive shirt-making robots---and everyone else shut out in the cold.

What It Means for the Economy

A relative few winners are taking a disproportionate share of business in a wide range of industries....in turn may help explain why the income gap has widened in recent years. How much on income inequality is driven by shifting technology — as opposed to changing corporate behavior, or loose antitrust policy — is an open debate.
increasing_returns_to_scale  winner-take-all  fixed_costs  variable_costs  Amazon  Wal-Mart  Whole_Foods  retailers  economics  Bonobos  shirts  mens'_clothing  omnichannel  apparel  digital_economy  automation  robotics  competitive_landscape  market_concentration  barbell_effect  income_inequality  antitrust  market_power  corporate_concentration  grocery  fresh_produce  supermarkets  large_companies  UX  inventory-free  global_economy 
june 2017 by jerryking
Review: How Laws of Physics Govern Growth in Business and in Cities
MAY 26, 2017 | The New York Times | By JONATHAN A. KNEE

Book review of “Scale: The Universal Laws of Growth, Innovation, Sustainability and the Pace of Life in Organisms, Cities, Economies, and Companies” (Penguin), by Geoffrey West, a theoretical physicist.....Mr. West’s core argument is that the basic mathematical laws of physics governing growth in the physical world apply equally to biological, political and corporate organisms.....The central observation of “Scale” is that a wide variety of complex systems respond similarly to increases in size. Mr. West demonstrates that these similarities reflect the structural nature of the networks that undergird these systems. The book identifies three core common characteristics of the hierarchal networks that deliver energy to these organisms — whether the diverse circulatory systems that power all forms of animal life or the water and electrical networks that power cities. First, the networks are “space filling” — that is, they service the entire organism. Second, the terminal units are largely identical, whether they are the capillaries in our bodies or the faucets and electrical outlets in our homes. Third, a kind of natural selection process operates within these networks so that they are optimized......These shared network qualities explain why when an organism doubles in size, an astonishing range of characteristics, from food consumption to general metabolic rate, grow something less than twice as fast — they scale “sublinearly.” What’s more, “Scale” shows why the precise mathematical factor by which these efficiencies manifest themselves almost always relate to “the magic No. 4.”

Mr. West also provides an elegant explanation of why living organisms have a natural limit to growth and life span following a predictable curve, as an increasing proportion of energy consumed is required for maintenance and less is available to fuel further expansion.

....Despite his reliance on the analysis of huge troves of data to develop and support his theories, in the concluding chapters, Mr. West makes a compelling argument against the “arrogance and narcissism” reflected in the growing fetishization of “big data” in itself. “Data for data’s sake,” he argues, “or the mindless gathering of big data, without any conceptual framework for organizing and understanding it, may actually be bad or even dangerous.”
books  book_reviews  physicists  scaling  growth  Jonathan_Knee  innovation  sustainability  cities  economics  business  linearity  efficiencies  economies_of_scale  sublinearity  massive_data_sets  natural_selection  physical_world  selection_processes 
may 2017 by jerryking
Steve Ballmer Serves Up a Fascinating Data Trove - The New York Times
Andrew Ross Sorkin
DEALBOOK APRIL 17, 2017
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Steve_Ballmer  government  Andrew_Sorkin  databases  data  measurements  economics  indicators  real-time  forecasting  economic_data 
april 2017 by jerryking
Marginal gains matter but gamechangers transform
25 March/26 March 2017 | FT | by Tim Harford.

In the hunt for productivity, the revolutionary long shot is worth the cost and risk.

.............................As Olympic athletes have shown, marginal improvements accumulated over time can deliver world-beating performance,” said Andrew Haldane in a speech on Monday, which is quite true. Mr Haldane, the Bank of England’s chief economist
........The marginal gains philosophy tries to turn innovation into a predictable process: tweak your activities, gather data, embrace what works and repeat.......As Mr Haldane says, marginal improvements can add up.

But can they add up to productivity gains for the economy as a whole? The question matters. There is no economic topic more important than productivity, which in the long run determines whether living standards surge or stagnate.
........
The idea that developed economies can A/B test their way back to brisk productivity growth is a seductive one.

An alternative view is that what’s really lacking is a different kind of innovation: the long shot. Unlike marginal gains, long shots usually fail, but can pay off spectacularly enough to overlook 100 failures.
.....
These two types of innovation complement each other. Long shot innovations open up new territories; marginal improvements colonise them. The 1870s saw revolutionary breakthroughs in electricity generation and distribution but the dynamo didn’t make much impact on productivity until the 1920s. To take advantage of electric motors, manufacturers needed to rework production lines, redesign factories and retrain workers. Without these marginal improvements the technological breakthrough was of little use.
....Yet two questions remain. One is why so many businesses lag far behind the frontier. .......The culprit may be a lack of competition: vigorous competition tends to raise management quality by spurring improvements and by punishing incompetents with bankruptcy. ....
But the second question is why productivity growth has been so disappointing. A/B testing has never been easier or more fashionable, after all. The obvious answer is that the long shots matter, too.
.....In a data-driven world, it’s easy to fall back on a strategy of looking for marginal gains alone, avoiding the risky, unquantifiable research (jk: leaps of faith). Over time, the marginal gains will surely materialise. I’m not so sure that the long shots will take care of themselves.
adaptability  breakthroughs  compounded  economics  game_changers  incrementalism  innovation  leaps_of_faith  marginal_improvements  moonshots  nudge  organizational_change  organizational_improvements  organizational_structure  productivity  productivity_payoffs  slight_edge  taxonomy  thinking_big  Tim_Harford 
march 2017 by jerryking
Emerging markets offer clue for investors in 2017
December 31/January 1 2017 | Financial Times | by Gillian Tett.

Now (people = politicians = capriciousness/alternatively, unpredictable waves of populism) are shaping events, not established party platforms or policy programmes....the pricing of political uncertainty has moved from being an emerging market phenomenon to an emerged market issue....Is there any way for investors to adapt to this new world? ....(1) Start by abandoning the idea that asset values can be predicted by using neat economic models alone. ...investors urgently need to think about the difference between "risk" (i.e. events that can be predicted with a certain probability) and "uncertainty" (i.e. unknown future shocks). Until now, investors in developed markets have tended to focus primarily on risks and assume that these can be priced (and hedged against). But 2017 is likely to produce uncertainty. That cannot be easily priced or hedge--and investors should recognize this. (2) Investor should also embrace "optionality": the only way to prepare for a world of uncertainty is to stay as flexible and diversified as possible. Now is not the time for investors to put all their eggs in one basket, or bet on just one asset class. Nor is it time for businesses to be locked into rigid business plans: political and geopolitical upheaval could strike almost anywhere. (3) If 2017 does deliver more risk and uncertainty, expect financial markets to be "skittish" about "news" of all types, and not just economic....Bad news for those who despise market volatility (expectation: we're in for volatility like we've never seen before)....Uncertainty can deliver huge opportunity alongside risks..."good" surprises....Surviving 2017 in the developed economies requires that investors use tools beyond those found in the realm of economics: psychology, sociology and political science. Also, talk to successful emerging market investors to find out how they practice their craft.
concentration_risk  Gillian_Tett  emerging_markets  political_risk  unpredictability  Brexit  investors  Donald_Trump  uncertainty  risks  optionality  geopolitics  financial_markets  politicians  volatility  tools  economics  psychology  sociology  political_science  FT  institutions  rule_of_law  Gary_Cohn  populism  indicators  human_factor  assets  asset_values  asset_classes  diversification  dislocations  bad_news 
january 2017 by jerryking
Ultra-rich man’s letter: “To My Fellow Filthy Rich Americans: The Pitchforks Are Coming” – TIP
Ultra-rich man’s letter: “To My Fellow Filthy Rich Americans: The Pitchforks Are Coming”

By NICK HANAUER | politico

You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor. Then I founded aQuantive, an Internet advertising company that was sold to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own a bank. I tell you all this to demonstrate that in many ways I’m no different from you. Like you, I have a broad perspective on business and capitalism. And also like you, I have been rewarded obscenely for my success, with a life that the other 99.99 percent of Americans can’t even imagine. Multiple homes, my own plane, etc., etc. You know what I’m talking about. In 1992, I was selling pillows made by my family’s business, Pacific Coast Feather Co., to retail stores across the country, and the Internet was a clunky novelty to which one hooked up with a loud squawk at 300 baud. But I saw pretty quickly, even back then, that many of my customers, the big department store chains, were already doomed. I knew that as soon as the Internet became fast and trustworthy enough—and that time wasn’t far off—people were going to shop online like crazy. Goodbye, Caldor. And Filene’s. And Borders. And on and on.

Realizing that, seeing over the horizon a little faster than the next guy, was the strategic part of my success. The lucky part was that I had two friends, both immensely talented, who also saw a lot of potential in the web. One was a guy you’ve probably never heard of named Jeff Tauber, and the other was a fellow named Jeff Bezos. I was so excited by the potential of the web that I told both Jeffs that I wanted to invest in whatever they launched, big time. It just happened that the second Jeff—Bezos—called me back first to take up my investment offer. So I helped underwrite his tiny start-up bookseller. The other Jeff started a web department store called Cybershop, but at a time when trust in Internet sales was still low, it was too early for his high-end online idea; people just weren’t yet ready to buy expensive goods without personally checking them out (unlike a basic commodity like books, which don’t vary in quality—Bezos’ great insight). Cybershop didn’t make it, just another dot-com bust. Amazon did somewhat better. Now I own a very large yacht.

But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?

I see pitchforks.

At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.

But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.

And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.

If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.

_h3218_w4866_m2_bwhite(Image: news.msn)


Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. I know you fellow .01%ers tend to dismiss this kind of argument; I’ve had many of you tell me to my face I’m completely bonkers. And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction.

The model for us rich guys here should be Henry Ford, who realized that all his autoworkers in Michigan weren’t only cheap labor to be exploited; they were consumers, too. Ford figured that if he raised their wages, to a then-exorbitant $5 a day, they’d be able to afford his Model Ts.

What a great idea. My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.

It’s when I realized this that I decided I had to leave my insulated world of the super-rich and get involved in politics. Not directly, by running for office or becoming one of the big-money billionaires who back candidates in an election. Instead, I wanted to try to change the conversation with ideas—by advancing what my co-author, Eric Liu, and I call “middle-out” economics. It’s the long-overdue rebuttal to the trickle-down economics worldview that has become economic orthodoxy across party lines—and has so screwed the American middle class and our economy generally. Middle-out economics rejects the old misconception that an economy is a perfectly efficient, mechanistic system and embraces the much more accurate idea of an economy as a complex ecosystem made up of real people who are dependent on one another.

Which is why the fundamental law of capitalism must be: If workers have more money, businesses have more customers. Which makes middle-class consumers, not rich businesspeople like us, the true job creators. Which means a thriving middle class is the source of American prosperity, not a consequence of it. The middle class creates us rich people, not the other way around.

On June 19, 2013, Bloomberg published an article I wrote called “The Capitalist’s Case for a $15 Minimum Wage.” Forbes labeled it “Nick Hanauer’s near insane” proposal. And yet, just weeks after it was published, my friend David Rolf, a Service Employees International Union organizer, roused fast-food workers to go on strike around the country for a $15 living wage. Nearly a year later, the city of Seattle passed a $15 minimum wage. And just 350 days after my article was published, Seattle Mayor Ed Murray signed that ordinance into law. How could this happen, you ask?

It happened because we reminded the masses that they are the source of growth and prosperity, not us rich guys. We reminded them that when workers have more money, businesses have more customers—and need more employees. We reminded them that if businesses paid workers a living wage rather than poverty wages, taxpayers wouldn’t have to make up the difference. And when we got done, 74 percent of likely Seattle voters in a recent poll agreed that a $15 minimum wage was a swell idea.

The standard response in the minimum-wage debate, made by Republicans and their business backers and plenty of Democrats as well, is that raising the minimum wage costs jobs. Businesses will have to lay off workers. This argument reflects the orthodox economics that most people had in college. If you took Econ 101, then you literally were taught that if wages go up, employment must go down. The law of supply and demand and all that. That’s why you’ve got John Boehner and other Republicans in Congress insisting that if you price employment higher, you get less of it. Really?

The thing about us businesspeople is that we love our customers rich and our employees poor.

Because here’s an odd thing. During the past three decades, compensation for CEOs grew 127 times faster than it did for workers. Since 1950, the CEO-to-worker pay ratio has increased 1,000 percent, and that is not a typo. CEOs used to earn 30 times the median wage; now they rake in 500 times. Yet no company I know of has eliminated its senior managers, or outsourced them to China or automated their jobs. Instead, we now have more CEOs and senior executives than ever before. So, too, for financial services workers and technology workers. These folks earn multiples of the median wage, yet we somehow have more and more of them.

140624_fatcats_grid_1160
The Art of the Fat Cat A century and a half of soaking the rich—with ink.
By MATT WUERKER – (politico)

The thing about us businesspeople is that we love our customers rich and our employees poor. So for as long as there has been capitalism, capitalists have said the same thing about any effort to raise wages. We’ve had 75 years of complaints from big business—when the minimum wage was instituted, when women had to be paid equitable amounts, when child labor laws were created. Every time the capitalists said exactly the same thing in the same way: We’re all going to go bankrupt. I’ll have to close. I’ll have to lay everyone off. It hasn’t happened. In fact, the data show that when workers are better treated, business gets better. The naysayers are just wrong.

Most of you probably think that the $15 minimum wage in Seattle is an insane departure from rational policy that puts our … [more]
economics  feudalism  politics  wealth  via:enochko  middle_class  minimum_wage  income_inequality  the_one_percent  social_fabric  worldviews 
september 2016 by jerryking
How I learnt to love the economic blogosphere
July 27, 2016 | FT.com | Giles Wilkes.

Marginal Revolution
Econlog
Cafe Hayek
Stumbling and Mumbling
Brad Delong
Nick Rowe - Worthwhile Canadian Initiative
Steve Randy Waldman - Interfluidity
Slack Wire - JW Mason

"Sympathetic opinions coalesce in clusters of mutual congratulation (“must read: fellow blogger agreeing with my point of view!”). Dispute is often foully bad-tempered. Opposing positions are usually subject to a three-phased assault of selective quotation, exaggeration and abuse.'..."Lacking an editor to roll their eyes and ask what’s new, many writers soon become stale... Editors exist not only to find interesting pieces to publish but also to hold at bay the unstructured abundance of bilge that we do not need to read."....."...nothing as reliably good as the (eonomics) blogosphere. Some of its advantages are simply practical: free data, synopses of academic papers that the casual dilettante is unlikely to ever come across, a constant sense of what clever people are thinking about. But what is better is how its ungated to-and-fro lets a reader eavesdrop on schools of academic thought in furious argument, rather than just be subject to whatever lecture a professor wishes to deliver. No one learns merely by reading conclusions. It is in the space between rival positions that insight sprouts up, from the synthesis of clashing thoughts. Traditional newspaper columns are delivered as if to an audience of a million, none of whom might reply. The best blogs are the opening salvo in a seminar rather than the last word on the matter. They dumb down less "....."Ancient thinkers such as Adam Smith, John Maynard Keynes and Iriving Fisher were deployed not as some sort of academic comfort blanket but because their insights are still fresh, and beautifully written."..."Reading the economic blogosphere in 2008 felt to me like the modern equivalent of watching Friedrich Hayek, Keynes and Friedman quarrelling in front of a graduate class about how FDR should react to the depression. "...."Interfluidity is where to find such brilliancies as “the moral case for NGDP [Nominal Gross Domestic Product] targeting”, a political look at a seemingly technical subject, and “Greece”, a furious examination of how the term “moral hazard” is being traduced in the euro crisis. "..."Waldman’s thoughts go far beyond such a crude duality. After a long discussion of measurement problems, the institutional constraints on innovation and much more, he zeroes in on how governments build institutions to handle the disruption wrought by technological change. In a few hundred words he flips around Cowen’s stance and, instead of looking at the growth of government as the problem, makes a case for its opposite. Technological change creates concentrations of power, which “demands countervailing state action if any semblance of broad-based affluence and democratic government is to be sustained”. We have always needed institutions to divert spending power to those left behind, otherwise social disaster beckons. "....When reading, look for sources with something new to say!
economics  economists  blogosphere  Tyler_Cowen  Paul_Krugman  Adam_Smith  information_overload  social_media  Brad_Delong  blogs  Friedrich_Hayek  Milton_Friedman  political  economy  editors  tough-mindedness  FDR  Great_Depression  insights  John_Maynard_Keynes  sophisticated  disagreements  argumentation  technological_change  innovation_policies  moral_hazards 
july 2016 by jerryking
Fort McMurray blaze shows what ‘the economy’ is really about - The Globe and Mail
TODD HIRSCH
Fort Saskatchewan, Alta. — Special to The Globe and Mail
Published Thursday, May 05, 2016
Alberta  fires  economics  natural_calamities 
may 2016 by jerryking
How to make good guesses
| FT | Tim Harford

“base rate”,

Base rates are not just a forecasting aid. They’re vital in clearly understanding and communicating all manner of risks. We routinely hear claims of the form that eating two rashers of bacon a day raises the risk of bowel cancer by 18 per cent. But without a base rate (how common is bowel cancer?) this information is not very useful. As it happens, in the UK, bowel cancer affects six out of 100 people; a bacon-rich diet would cause one additional case of bowel cancer per 100 people.

Thinking about base rates is particularly important when we’re considering screening programmes or other diagnostic tests, including DNA tests for criminal cases.
economics  howto  forecasting  predictions  guessing  probabilities  Tim_Harford  base_rates  ratios  communicating_risks 
april 2016 by jerryking
Too much stuff, with no one to buy it: Is this the future economy? - The Globe and Mail
Scott Barlow
Too much stuff, with no one to buy it: Is this the future economy?
SUBSCRIBERS ONLY
The Globe and Mail
Published Tuesday, Feb. 02, 2016

University of California professor Brad DeLong’s “Economics and the Age of Abundance” highlighted the new economic study of global production growth – a new-ish school of thought that attributes much of the economic malaise in the developed world to a technology-driven “too much of everything.....The economic challenges of abundance, however, go far beyond commodities. There’s too many mutual funds, television channels, cereal brands, auto companies (China hasn’t even started exporting cars and trucks yet), land-line telephones, clothing brands, taxis, department stores and, if we’re being honest, journalism. Technology and its ability to increase productivity are to blame for virtually any major market sector beset with poor profit margins and layoffs. ....... The larger problem, and I suspect Mr. DeLong would agree, is that technology increases efficiencies and reduces the need for labour. A dystopian future in which anything can be produced quickly and cheaply, except everyone’s unemployed with no money to spend, is easy to envisage without considerable structural change in the economy.

Unemployment is the most severe outgrowth of abundance and low profitability ....... ......
abundance  economics  economists  Colleges_&_Universities  oversupply  technology  commodities  over_investment  scarcity  innovation  China  productivity  deflation  manufacturers  outsourcing  unemployment  job_destruction  job_displacement  downward_mobility  hollowing_out  books  developed_countries  dystopian_futures  structural_change  developing_countries 
february 2016 by jerryking
What Scented Candles Say to an Economist - The New York Times
By DIANE COYLE NOV. 7, 2015

We need a wider variety of indicators to help us take a more accurate reading of the economy. Some of these might seem frivolous, but paying close attention to worldly detail could make forecasting more reliable.
(1) height of hemlines
(2) the number of cranes visible on the skyline
(3) Spending on luxury items is another example. During a boom, sales of fast cars, expensive paintings, prime real estate and diamond necklaces all soar, as do their prices.

Less obvious are trends in retailing. When the good times roll, people decide that their great idea for a specialty store is viable. Thus booms bring all those boutiques selling just one type of good: socks or scented candles or freshly squeezed juices. But like flowers that display the behavior known as nyctinasty — opening to the sun’s light and warmth — they close as soon as the skies darken and things start to cool.

(4) how easy, or otherwise, it is to get restaurant reservations or tickets for shows.
(5) how many “help wanted” signs appear in the windows of stores and restaurants.

....G.D.P. almost certainly fails to capture newer areas of economic activity, such as today’s digital innovation — so other sources of information are needed to fill the gap....economic policy makers usually scrutinize tens, or even hundreds, of indicators, covering different industries and assets, different parts of the country, different groups of people. They monitor jobs reports, advertising rates, wage settlements, the cost of shipping freight, asset prices, sales of consumer durables and much, much more.
economics  economists  forecasting  non-obvious  GDP  indicators  trends  retailers  boutiques  detail_oriented  economic_data  information_sources  policymakers  policymaking 
november 2015 by jerryking
How Stanford Took On the Giants of Economics - The New York Times
SEPT. 10, 2015 | NYT | By NEIL IRWIN.

Stanford’s success with economists is part of a larger campaign to stake a claim as the country’s top university. Its draw combines a status as the nation’s “it” university — now with the lowest undergraduate acceptance rate and a narrow No. 2 behind Harvard for the biggest fund-raising haul — with its proximity to many of the world’s most dynamic companies. Its battle with Eastern universities echoes fights in other industries in which established companies, whether hotels or automobile makers, are being challenged by Silicon Valley money and entrepreneurship....reflection of a broader shift in the study of economics, in which the most cutting-edge work increasingly relies less on a big-brained individual scholar developing mathematical theories, and more on the ability to crunch extensive sets of data to glean insights about topics as varied as how incomes differ across society and how industries organize themselves....The specialties of the new recruits vary, but they are all examples of how the momentum in economics has shifted away from theoretical modeling and toward “empirical microeconomics,” the analysis of how things work in the real world, often arranging complex experiments or exploiting large sets of data. That kind of work requires lots of research assistants, work across disciplines including fields like sociology and computer science, and the use of advanced computational techniques unavailable a generation ago....Less clear is whether the agglomeration of economic stars at Stanford will ever amount to the kind of coherent school of thought that has been achieved at some other great universities (e.g. Milton Friedman's The Chicago School neoclassical focus on efficiency of markets and the risks of government intervention and M.I.T.’s economics' Keynesian tradition)
economics  economists  empiricism  in_the_real_world  Stanford  MIT  Harvard  Colleges_&_Universities  recruiting  poaching  movingonup  rankings  machine_learning  cross-disciplinary  massive_data_sets  data  uChicago  microeconomics  Keynesian  Chicago_School 
september 2015 by jerryking
Economic stagnation is here to stay - The Globe and Mail
LAWRENCE MARTIN
Special to The Globe and Mail
Published Tuesday, Apr. 14 2015

The bleak economic predicament hasn’t received much attention. Seems we’re living under an illusion that we’re doing reasonably well, the reason being that until the recent oil price plunge the Conservatives pushed out a lot of feel-good messaging about Canada faring better in the wake of the global financial crisis than other major economies. But doing better than some rivals doesn’t necessarily mean you’re doing well yourself.

Over and above the energy price fall, experts cite a range of causes for the inertia. A major one is productivity. “On that, we’re doing terribly relative to our own historic rate,” said economist Don Drummond, “and we’re doing terrible relative to the rate of almost every developed country.”

Our business class, he added, is neither aggressive nor entrepreneurial, consumer demand is inhibited by high household debt and we have an aging labour force that is only going to grow at about 1 per cent a year. The small increase will come from immigrants, who make lower wages.

“I don’t look for growth to be above 2 per cent on an average basis, I’d say, for the next 10 years,” Mr. Drummond said.
economics  Lawrence_Martin  economic_stagnation  slow_growth  Don_Drummond  productivity  economists  Christopher_Ragan  the_Great_Decoupling 
april 2015 by jerryking
Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance - NYTimes.com
APRIL 10, 2015 | NYT | By SENDHIL MULLAINATHAN.

Every profession produces both private returns — the fruits of labor that a person enjoys — and social returns — those that society enjoys. If I set up a shop on Etsy selling photographs, my private returns may be defined as the revenue I generate. The social returns are the pleasure that my photographs provide to my customers....
career_paths  career  Wall_Street  students  economics  Harvard  Colleges_&_Universities  talent  rent-seeking  arbitrage  finance 
april 2015 by jerryking
Economists’ magic
John Kenneth Galbraith’s admonition: “The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists....
economists  economics  John_Kenneth_Galbraith  forecasting  quotes 
march 2015 by jerryking
Canadian economy suffers from the myth of comparative advantage - The Globe and Mail
ANDREW JACKSON
Canadian economy suffers from the myth of comparative advantage
SUBSCRIBERS ONLY
Special to The Globe and Mail
Published Thursday, Mar. 05 2015

Consider the recent bid by China to assist in the design, build and operation of high-speed trains in Ontario, perhaps in return for preferred access to raw resources. China is seeking to displace Bombardier, one of our foremost innovative companies, in our own domestic market.

Just as instructively, Bombardier is entering into joint aerospace production deals with Chinese companies, in large part because that is the key to access to the Chinese market. China wants to import our raw resources, not out trains or our planes, and wants to build up a competitive aerospace industry.

The key point here is that China has a competitive advantage based upon still relatively low wages (though they have risen a lot) and is also creating a competitive advantage in sophisticated industries through active industrial and managed trade policies. While we talk about comparative advantage, they are shaping trade and production in their own developmental interests.
industrial_policies  China  Bombardier  high-speed_rail  competitive_advantage  competitiveness_of_nations  comparative_advantage  myths  international_trade  economics  HSR 
march 2015 by jerryking
Competition Is for Losers - WSJ
By PETER THIEL
Sept. 12, 2014

Adapted from Mr. Thiel's new book, with Blake Masters, "Zero to One: Notes on Startups, or How to Build the Future," Mr. Thiel’s “Zero to One,” offers three prongs of his philosophy: 1) It is better to risk boldness than triviality. 2) A bad plan is better than no plan. 3) Sales matter just as much as product.
Peter_Thiel  competition  economics  Google  monopolies  books 
september 2014 by jerryking
A Spanish lesson in economics - The Globe and Mail
TODD HIRSCH
Special to The Globe and Mail
Published Friday, Jun. 20 2014

The lesson here is that public infrastructure projects are necessary to promote arts and culture, but they need to be considered carefully in terms of size, scope and cost. They should be beautiful and inspiring, but they cannot become the ego-driven projects of mayors or architects. Unlike government spending on education or health, which can be scaled up, down or redesigned over time, a huge public infrastructure project has one chance to get it right.

I’m certainly no expert on the Spanish economy, and the country and its people have so many wonderful attributes that it’s impossible to not love the place. And certainly Canada has its share of service failures, publicly funded white elephants and other blunders. The point is that economics is everywhere – even when you’re at a Spanish café gulping an ice-cold Agua de Valencia (don’t ask – just go to Valencia and order one.)
circumspection  cultural_institutions  economics  infrastructure  olive_oils  publicly_funded  Spain  Todd_Hirsch  tourism  travel  Valencia  white_elephants 
june 2014 by jerryking
Stephen Dubner and Steven Levitt teach us how to think like a freak - The Globe and Mail
IVOR TOSSELL
Special to The Globe and Mail
Published Friday, May. 23 2014

In a collection of stories that read like modern parables, Mr. Dubner and Mr. Levitt try to teach their approach to problem-solving to the rest of us, with tactics that range from “thinking like a child” to devising incentives for miscreants to reveal themselves....they want to deputize the entire world to think differently about the world's problems differently... there’s a growing body of research that suggests the human mind does a lot of things incredibly well between the ages of late childhood and late adolescence.

I asked these kids, what if I told you that your brain right now, at 13, is almost at its peak power, and that you have another 12 or 15 years where it’s just gonna be kicking ass, and then it’s going to start to diminish. Once you start to think about that, what would you use your brain to do now, knowing that it’s a perishable resource?

That for me was a takeaway I got from the book. I really want to encourage my kids to understand that their brains are not the premature versions of the adult brains. Their brains are the optimal brain. When we say, “think like a child,” if you’re over 25 or 30, that’s the best we can do.
economists  book_reviews  incentives  freakonomics  economics  takeaways  books  thinking  howto  children  cognitive_skills  problem_solving  conventional_wisdom  metacognition  think_differently 
may 2014 by jerryking
Is music streaming becoming a mighty river?
Bishop Cheen. SNL Kagan Media & Communications Report (May 20, 2013).
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music  streaming  economics 
april 2014 by jerryking
Hard Times at Howard U. - NYTimes.com
FEB. 4, 2014 | NYT | By CHARLAYNE HUNTER-GAULT.

Howard has been in turmoil for several years over its fiscal direction as well as a series of public relations blunders, notably the news of bonuses to high-level administrators amounting to $1.1 million amid cost-cutting and tuition increases.
Colleges_&_Universities  African-Americans  hard_times  HBCUs  Morehouse  leadership  Washington_D.C.  crisis  education  enrollment  Howard  economics 
february 2014 by jerryking
The Economics of Surveillance - Digits - WSJ
Sep 28, 2012 | WSJ | By Jennifer Valentino-DeVries.

surveillance has crept into people’s lives gradually as computers have become more efficient and cheaper – and as data analysis has become more enticing. The price for businesses to store and use a gigabyte of information for a year dropped from $18.95 in 2005 to $1.68 in 2012, and it’s expected to drop to just 66 cents in 2015, says market research firm IDC....The average price of a cellphone has increased 17% over the past 10 years – but processing capability has increased by 13,000% in that same time, ABI says. This allows phones to do things such as shoot video, get email and locate the user on a map, but it also means the devices store a lot of information about people that can be collected and tracked.

“Nowadays cellphones are sensors,” said says Col. Lisa Shay, a professor of electrical engineering at the U.S. Military Academy at West Point who studies tracking technology. “You’re now carrying a personal sensor with you at all times.”
surveillance  massive_data_sets  privacy  data  sensors  digital_storage  economics 
january 2014 by jerryking
How Jeffrey Sachs failed to save Africa - The Globe and Mail
Margaret Wente

The Globe and Mail

Published Saturday, Sep. 21 2013

What he forgot was the human factor. It turns out that people are not always rational. They don’t always do what’s in their own best interests, even when the benefits are completely clear to a development economist.....At every turn, Mr. Sachs’s master plan was undermined by culture.
Jeffrey_Sachs  economics  Africa  economic_development  Margaret_Wente  economists  failure  human_factor 
november 2013 by jerryking
What is good for a business isn’t necessarily good for the country
Aug. 27 2013 | The Globe and Mail |CHRISTOPHER RAGAN
...Most non-economists probably think economics and business are the same. But anyone who has studied economics knows they are very different. Having done so for about 30 years, I am very comfortable thinking about how markets work, how they often fail to function effectively and how various government policies affect their operation. But I readily admit to having no expertise about product development, marketing campaigns, distribution networks or managing employees.

I only wish more business people admitted to having the opposite ignorance. People successful in their businesses obviously know a lot about running their own companies and dealing with their unique competitive challenges. But many of them believe their business acumen extends to the broader economy. They suffer from the misconception that what is good for their business is good for the country as a whole. And this is where they are terribly wrong.... Adam Smith was crystal clear about business interests, writing in 1776 that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”...Fortunately for us, [James Moore] understands the difference between business interests and the national interest.
Adam_Smith  business_acumen  business_interests  businessman_fallacy  delusions  economics  humility  misconceptions  marketing  national_interests  policymaking  pro-business  product_development  rent-seeking  self-interest 
november 2013 by jerryking
More Data Can Mean Less Guessing About the Economy - NYTimes.com
By STEVE LOHR
Published: September 7, 2013

measurement shortfall in the small-business sector, and a series of other information gaps in the economy, may be overcome by what experts say is an emerging data revolution — Big Data, in the current catchphrase. The ever-expanding universe of digital signals of behavior, from browsing and buying on the Web to cellphone location data, is grist for potential breakthroughs in economic measurement. It could produce more accurate forecasting and more informed policy-making — more science and less guesswork.... THE economics profession is gearing up to exploit new sources of digital data. In a recent paper, “The Data Revolution and Economic Analysis,” two Stanford economists, Liran Einav and Jonathan Levin, concluded that “there is little doubt, at least in our minds, that over the next decades ‘big data’ will change the landscape of economic policy and economic research.”

At Intuit, the small-business data portray a sector that was “hurt much more than big business by the recession and its recovery has been far worse,” says Ms. Woodward, the economic consultant. Over the last three and a half years, payroll employment for all companies has increased 6.9 percent, while small-business employment has risen far less, just 1.9 percent. Hiring among the small companies, though still sluggish, has inched ahead in the last three months.
data  Steve_Lohr  massive_data_sets  Intuit  information_sources  small_business  measurements  Freshbooks  economy  Erik_Brynjolfsson  economics  indicators  real-time  forecasting  economic_data  information_gaps  signals  economists  data_driven 
september 2013 by jerryking
Who Will Prosper in the New World - NYTimes.com
August 31, 2013 | NYT | By TYLER COWEN.
Who Will Prosper in the New World

Who will do well?

THE CONSCIENTIOUS
PEOPLE WHO LISTEN TO COMPUTERS
PEOPLE WITH A MARKETING TOUCH
MOTIVATORS
==================================================
Who will be most likely to suffer from this technological revolution?
PEOPLE WITH DELICATE FEELINGS
PEOPLE UNLUCKY IN HEALTH CARE
PEOPLE WHO DON’T NEED MONEY
POLITICAL RADICALS:
technology  economics  productivity  the_Great_Decoupling  career_paths  winner-take-all  automation  Tyler_Cowen  marketing  motivations  inequality  income_distribution  income_inequality  downward_mobility 
september 2013 by jerryking
How Dr. King Shaped My Work in Economics - NYTimes.com
August 27, 2013| NYT | By JOSEPH E. STIGLITZ.

The battle against outright discrimination is, regrettably far from over: 50 years after the march, and 45 years after the passage of the Fair Housing Act, major United States banks, like Wells Fargo, still discriminate on the basis of race, targeting the most vulnerable of our citizens for their predatory lending activities. Discrimination in the job market is pervasive and deep. Research suggests that applicants with African-American sounding names get fewer calls for interviews. Discrimination takes new forms; racial profiling remains rampant in many American cities, including through the stop-and-frisk policies that became standard practice in New York. Our incarceration rate is the world’s highest, although there are signs, finally, that fiscally strapped states are starting to see the folly, if not the inhumanity, of wasting so much human capital through mass incarceration. Almost 40 percent of prisoners are black. This tragedy has been documented powerfully by Michelle Alexander and other legal scholars.
African-Americans  books  economics  economists  fallacies_follies  human_capital  incarceration  Joseph_Stiglitz  mass_incarceration  MLK  predatory_practices  racial_discrimination  racial_disparities  social_justice 
august 2013 by jerryking
Fewer break-ins? Turns out thieves are economists, too - The Globe and Mail
Aug. 01 2013 | The Globe and Mail | TODD HIRSCH

Special to

Last updated Thursday,
criminality  economics  ideaCity 
august 2013 by jerryking
The Undercover Economist - Being Economical with the Data
June 1, 2013 |The Financial Times p52.| By Tim Harford.

According to IBM, the computers with which we have surrounded ourselves are now generating 2.5 quintillion bytes of data a day around the wor...
massive_data_sets  economics  Mastercard  credit_cards  forecasting  data  Tim_Harford 
june 2013 by jerryking
How Milton Friedman Changed Economics, Policy and Markets - WSJ.com
November 17, 2006 | WSJ | By GREG IP and MARK WHITEHOUSE

How Milton Friedman Changed Economics, Policy and Markets
Milton_Friedman  economics  free_markets 
may 2012 by jerryking
The Dismal Science? Hardly! - WSJ.com
June 4, 2003 | WSJ | By ROBERT D. MCTEER, JR. on the merits of an undergraduate education in economics.
economics  U.S._Federal_Reserve  Colleges_&_Universities  commencement 
april 2012 by jerryking
Ray Dalio: Man and machine
Mar 10th 2012 | The Economist |
The economic ideas of the world’s most successful hedge-fund boss.

Mr Dalio says his ideas are entirely the product of his own reflections on his life as a trader and his study of economic history. He has read little academic economics (though his work has echoes of Hyman Minsky, an American economist, and of best-selling recent work on downturns by Carmen Reinhart and Kenneth Rogoff) but has conducted in-depth analysis of past periods of economic upheaval, such as the Depression in America, post-war Britain and the hyperinflation of the Weimar Republic. He has even simulated being an investor in markets in those periods by reading daily papers from these eras, receiving data and “trading” as if in real time.
Bridgewater  Ray_Dalio  hedge_funds  finance  economics  debt  business 
march 2012 by jerryking
Charlie Rose's Interview with Ray Dalio
October 20, 2011 | Charlie Rose Show | with Ray Dalio.

CHARLIE ROSE: And you always make a point that you know what you don`t know and that`s equally valuable.

RAY DALIO: More valuable. I want to say that -- so this is the whole philosophy. I -- I so, know that I can be wrong; and look, we all should recognize that we can be wrong. And if we recognize that we`re wrong and we worry about being wrong than what we should do is have a thoughtful dialogue....RAY DALIO: So the way I get to success. The way -- it`s not what I know. I`ve acquired some things that I know along the way and they`re helpful.

(CROSSTALK)

CHARLIE ROSE: It is -- it is -- it`s not what you know but it is --

(CROSSTALK)

RAY DALIO: It`s knowing what I don`t know or worrying that I won`t -- that I`ll be wrong that makes me find --

CHARLIE ROSE: Yes.

RAY DALIO: Well, I want people to criticize my point of view -- I want to hold down.

CHARLIE ROSE: Right.

RAY DALIO: Say I have a -- I think this but I may be wrong. And if you can attack what I`m saying -- in other words stress test what I`m saying -- I`ll learn....CHARLIE ROSE: And you have not been precise, and your assumptions are flawed.

RAY DALIO: Oh it`s so essential, right. There`s -- the -- the number one principle at our place is that if something doesn`t make sense to you, you have the right to explore it, to see if it makes sense.

I don`t want people around who do things that they don`t -- they don`t think makes sense because I`m going to have not-thinking people.

(CROSSTALK)

CHARLIE ROSE: Right.

RAY DALIO: So that they have not only the right, they have obligation. Don`t walk away thinking something`s wrong.

CHARLIE ROSE: Failure teaches you more than success?

RAY DALIO: Of course. One of my favorite books is "Einstein`s Mistakes."

CHARLIE ROSE: Right. And because it showed you that even Einstein, the most brilliant person of the century in common judgment made mistakes?

RAY DALIO: The great fallacy of all -- I think of all of mankind practically -- I mean that`s a big statement -- but the great fallacy is that people know more than what they do and there`s a discovery process and so when you look at -- that`s the process for learning.

The process for learning is to say "I don`t know." Like, I`m -- I`m totally comfortable being incompetent. If I -- if I -- I like being incompetent. I don`t mind being an incompetent. If I don`t -- how -- how much can you be competent about?

And so that whole notion of do you like learning? Do you like finding out what`s true and building on it without an ego? And that becomes the problem. How many statements do you listen to people that begin "I think this, I think that," where they should be asking "I wonder."
Ray_Dalio  interviews  truth-clarity  philanthropy  stress-tests  Charlie_Rose  truth-telling  Bridgewater  hedge_funds  deleveraging  organizational_culture  economics  unknowns  pretense_of_knowledge  Albert_Einstein  mistakes 
january 2012 by jerryking
Exporting I.P.
May 14, 2007 | The New Yorker | James Surowiecki.
business  copyright  economics  trade  intellectual_property  free-trade 
october 2011 by jerryking
The economics of working out - The Globe and Mail
PREET BANERJEE
Globe and Mail Update
Published Tuesday, Aug. 23, 2011
exercise  fitness  gyms  economics  workouts  cost-consciousness 
august 2011 by jerryking
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