Category: A Rationale
Posted by: Admin
The most general and the most pervasive way I make sense of the world is through economics. Concepts inspired by the great economic thinkers and philosophers applied to business and life. Here are their stories and my stories......
See also my blog Eye2theLongRun
See also my blog Eye2theLongRun
This paper analyses who pays and who wins from CSR..... (thanks to NZBR)
Who exactly benefits from CSR
Who exactly benefits from CSR
19/06: The "big problem" summarised
Gary Becker.... from a WSJ interview
Bad legislation, maintained by self-seeking interest groups. Back in 1982, I remind Mr. Becker, the economist Mancur Olson published a book, "The Rise and Decline of Nations," predicting just that trend. Over time, Olson argued, interest groups would form to press for policies that would almost invariably prove protectionist, redistributive or antitechnological. Policies, in a word, that would inhibit economic growth. Yet since the benefits of such policies would accrue directly to interest groups while the costs would be spread across the entire population, very little opposition to such self-seeking would ever develop. Interest groups—and bad policies—would proliferate, and the nation would stagnate.
Olson may have sketched his portrait during the 1980s, but doesn't it display a remarkable likeness to the United States today? Mr. Becker thinks for a moment, swiveling toward the window. Then he swivels back. "Not necessarily," he replies.
"The idea that interest groups can derive specific, concentrated benefits from the political system—yes, that's a very important insight," he says. "But you can have competing interest groups. Look at the automobile industry. The domestic manufacturers in Detroit want protectionist policies. But the auto importers want free trade. So they fight it out. Now sometimes in these fights the dark forces prevail, and sometimes the forces of light prevail. But if you have competing interest groups you don't end up with a systematic bias toward bad policy."
Mr. Becker places his hands behind his head. Once again, he reflects, then smiles wryly. "Of course that doesn't mean there isn't any systematic bias toward bad policy," he says. "There's one bias that we're up against all the time: Markets are hard to appreciate."
Capitalism has produced the highest standard of living in history, and yet markets are hard to appreciate? Mr. Becker explains: "People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we're always up against a kind of in-built suspicion of markets. There's always a temptation to believe that markets succeed by looting the unfortunate."
Bad legislation, maintained by self-seeking interest groups. Back in 1982, I remind Mr. Becker, the economist Mancur Olson published a book, "The Rise and Decline of Nations," predicting just that trend. Over time, Olson argued, interest groups would form to press for policies that would almost invariably prove protectionist, redistributive or antitechnological. Policies, in a word, that would inhibit economic growth. Yet since the benefits of such policies would accrue directly to interest groups while the costs would be spread across the entire population, very little opposition to such self-seeking would ever develop. Interest groups—and bad policies—would proliferate, and the nation would stagnate.
Olson may have sketched his portrait during the 1980s, but doesn't it display a remarkable likeness to the United States today? Mr. Becker thinks for a moment, swiveling toward the window. Then he swivels back. "Not necessarily," he replies.
"The idea that interest groups can derive specific, concentrated benefits from the political system—yes, that's a very important insight," he says. "But you can have competing interest groups. Look at the automobile industry. The domestic manufacturers in Detroit want protectionist policies. But the auto importers want free trade. So they fight it out. Now sometimes in these fights the dark forces prevail, and sometimes the forces of light prevail. But if you have competing interest groups you don't end up with a systematic bias toward bad policy."
Mr. Becker places his hands behind his head. Once again, he reflects, then smiles wryly. "Of course that doesn't mean there isn't any systematic bias toward bad policy," he says. "There's one bias that we're up against all the time: Markets are hard to appreciate."
Capitalism has produced the highest standard of living in history, and yet markets are hard to appreciate? Mr. Becker explains: "People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we're always up against a kind of in-built suspicion of markets. There's always a temptation to believe that markets succeed by looting the unfortunate."
The new iPhone 4 is deliberately pitched and to be marketed as the result of combined design principles drawn from the arts as from the geek end of technology. CEO Steve Jobs has often spoken of this concept - and to some extent it is evident in various Apple products. It appears though to have been taken to a new level in a stringly commercial sense in the upcoming release....
From ZNET....
Leading up to the launch of the iPhone 4 (Techmeme, live coverage, gallery, all Apple posts), run by the iOS since it powers the iPhone, iPod touch and iPad, there were whispers everywhere about the Android’s turbo-charged innovation cycle, the end of iPhone envy and how other smartphones from the likes of HTC were closing the gap.
Now it wasn’t like the iPhone was becoming a commodity device, but you could see some parity on the horizon. Even Sam Diaz got over his iPhone envy. Enter Apple CEO Steve Jobs who was having none of that talk. Jobs talked about the mix between technology and liberal arts. The emphasis is on technology as an art form.
From ZNET....
Leading up to the launch of the iPhone 4 (Techmeme, live coverage, gallery, all Apple posts), run by the iOS since it powers the iPhone, iPod touch and iPad, there were whispers everywhere about the Android’s turbo-charged innovation cycle, the end of iPhone envy and how other smartphones from the likes of HTC were closing the gap.
Now it wasn’t like the iPhone was becoming a commodity device, but you could see some parity on the horizon. Even Sam Diaz got over his iPhone envy. Enter Apple CEO Steve Jobs who was having none of that talk. Jobs talked about the mix between technology and liberal arts. The emphasis is on technology as an art form.
06/06: The Beat Goes On....
French Connection: The Eurozone Crisis Worsens Sharply
By Peter Boone and Simon Johnson
The big news is France. With sentiment worsening across Europe, France has lost its relative safe haven status – credit default swap spreads on French government debt were up sharply today.
The trigger – oddly enough – was Hungary’s announcement that its budget is worse than expected (blaming the previous government; this is starting to become the European pattern) and in the current fragile environment discussed yesterday, this relatively small piece of news spooked investors. But these developments only reinforced a trend that was already in place.
It did not help that the Irish Minister of Finance announced Ireland has 74.2bn euros of guaranteed bank loans, bonds, and systemic support falling due between now and Oct 1. This is around 55% of GNP. It sounds like everyone backed by the Irish government had the “clever” idea to roll over their debts to just before the guarantees expire.
The big losers are Portugal-Ireland-Italy-Greece-and-Spain as always, but Belgium is now in the line of fire, and France is clearly under pressure. The spread between French and German credit default swaps (measuring the relative probability of default) is up – yesterday this was 40 basis points, today it stands at 44 (up from just 5 basis points at the end of 2009; most of the increase is since mid-March, with a sharp acceleration recently). French bonds have become illiquid, with wide bid-ask spreads; not what is supposed to happen in a safe haven. This is going to make the French angry – watch for more market slanders from top French politicians over the weekend; you know they would just love to ban trading in something.
Earlier today the French Prime Minister came out with a quote for the ages:
“I only see good news in parity between euro and dollar”.
Be careful what you wish for – such statements will drive the Germans crazy as they see further evidence that inflation lovers are clearly winning influence and might just gain control at the European Central Bank (ECB).
By Peter Boone and Simon Johnson
The big news is France. With sentiment worsening across Europe, France has lost its relative safe haven status – credit default swap spreads on French government debt were up sharply today.
The trigger – oddly enough – was Hungary’s announcement that its budget is worse than expected (blaming the previous government; this is starting to become the European pattern) and in the current fragile environment discussed yesterday, this relatively small piece of news spooked investors. But these developments only reinforced a trend that was already in place.
It did not help that the Irish Minister of Finance announced Ireland has 74.2bn euros of guaranteed bank loans, bonds, and systemic support falling due between now and Oct 1. This is around 55% of GNP. It sounds like everyone backed by the Irish government had the “clever” idea to roll over their debts to just before the guarantees expire.
The big losers are Portugal-Ireland-Italy-Greece-and-Spain as always, but Belgium is now in the line of fire, and France is clearly under pressure. The spread between French and German credit default swaps (measuring the relative probability of default) is up – yesterday this was 40 basis points, today it stands at 44 (up from just 5 basis points at the end of 2009; most of the increase is since mid-March, with a sharp acceleration recently). French bonds have become illiquid, with wide bid-ask spreads; not what is supposed to happen in a safe haven. This is going to make the French angry – watch for more market slanders from top French politicians over the weekend; you know they would just love to ban trading in something.
Earlier today the French Prime Minister came out with a quote for the ages:
“I only see good news in parity between euro and dollar”.
Be careful what you wish for – such statements will drive the Germans crazy as they see further evidence that inflation lovers are clearly winning influence and might just gain control at the European Central Bank (ECB).
Category: Environmental
Posted by: Admin
"Some good news is that, using government-scientists’ maximum estimate of the amount of oil spilled daily (25,000 barrels) into the Gulf of Mexico from BP Deepwater, this spill today ranks as only the ninth largest accidental oil spill in world history. To become the largest accidental oil spill in world history, it would have to continue spilling unabated, at this maximum-estimated rate of spillage, for another 94 days. (Using the mid-range estimate of daily spillage – 18,500 barrels daily – BP Deepwater would have to spill unabated for another six days [as of May 29] even to break into the top ten, and then another 134 days beyond that to become the world’s largest accidental spill.) Yet how frequently is news of this fact, which gives necessary context, spread by the mainstream media?
Even better news is the declining frequency of major oil spills. Some evidence of this healthy trend is the fact that the average time that elapsed between each of history’s top ten accidental oil spills prior to BP Deepwater was 26 months. But the amount of time between the most recent of these top-ten spills (which occurred in September 1994) and the BP Deepwater spill is 187 months. How many Americans today hear of this happy trend?"
From Don Boudreaux.... Cafe Hayek.
Even better news is the declining frequency of major oil spills. Some evidence of this healthy trend is the fact that the average time that elapsed between each of history’s top ten accidental oil spills prior to BP Deepwater was 26 months. But the amount of time between the most recent of these top-ten spills (which occurred in September 1994) and the BP Deepwater spill is 187 months. How many Americans today hear of this happy trend?"
From Don Boudreaux.... Cafe Hayek.
This morning President Obama stated, flatly "This BP's fault and BP will pay the costs (of clean up compensation etc)".
This statement says a great deal about:
- one of the most common mistakes made by non economists
- just how attractive rhetoric rather than analysis is for politicians
And it's so simple.....
This statement says a great deal about:
- one of the most common mistakes made by non economists
- just how attractive rhetoric rather than analysis is for politicians
And it's so simple.....
Category: Regulation
Posted by: Admin
Example of "bold" regulation of new financial products.....
"For example, before 1996, certain initial public offerings of stocks were subject to merit review in certain states, where the state decided if a security is a "bad" investment and thus not appropriate to be offered to its citizens. In fact, this is exactly what happened to Apple Computer when it first went public in 1980. Massachusetts prohibited the offering of Apple shares because they were "too risky," and Apple did not even bother to offer its shares in Illinois due to strict state laws on new issues. What if federal bureaucrats had had the power to impose their judgment on a "risky" financial product (such as an IPO) on a nationwide scale, or every state followed Massachusetts' lead?"
From Marginal Revolution
"For example, before 1996, certain initial public offerings of stocks were subject to merit review in certain states, where the state decided if a security is a "bad" investment and thus not appropriate to be offered to its citizens. In fact, this is exactly what happened to Apple Computer when it first went public in 1980. Massachusetts prohibited the offering of Apple shares because they were "too risky," and Apple did not even bother to offer its shares in Illinois due to strict state laws on new issues. What if federal bureaucrats had had the power to impose their judgment on a "risky" financial product (such as an IPO) on a nationwide scale, or every state followed Massachusetts' lead?"
From Marginal Revolution
22/04: Values matter...
The next fall of Rome
Schoolchildren around the world learn that European history starts with Athens and Rome. In future times, they will also be taught that the end of modern Europe began in the same places.
The European welfare state model hit the buffers in Greece’s fiscal crisis. Universal cradle-to-grave care for everyone as practised by consecutive Greek governments will never return. Not because European politicians would not want to provide it but because such promises can no longer be paid for. Greece’s current budgetary near-death experience only foreshadows what most of Europe will suffer in the coming years.
Schoolchildren around the world learn that European history starts with Athens and Rome. In future times, they will also be taught that the end of modern Europe began in the same places.
The European welfare state model hit the buffers in Greece’s fiscal crisis. Universal cradle-to-grave care for everyone as practised by consecutive Greek governments will never return. Not because European politicians would not want to provide it but because such promises can no longer be paid for. Greece’s current budgetary near-death experience only foreshadows what most of Europe will suffer in the coming years.
Category: Law and Economics
Posted by: Admin
The logic here takes a little thought... but it is correct and often overlooked (courtesy Don Boudreaux at Cafe Hayek)
Why assume that greenhouse-gas emissions are an externality that ought to be internalized?
PERC’s Terry Anderson and I were talking recently and Terry pointed out that the concept of ‘externality’ implies a prior property right. For example, if I have a right to sleep soundly at night in my home, then noise created by my neighbor that penetrates into my nighttime bedroom is indeed a negative externality on me.
But if I choose to try to sleep on a bench inside of a jazz club, the jazz-club’s music will keep me awake but it is no externality imposed on me. The reason, of course, is that the jazz club has a right to stage musical performances within its premises – a right that supercedes my right to sleep in that club.
So who’s to say that each Chinese person’s right to the fruits of economic growth are superceded by each non-Chinese person’s (or even each Chinese person’s) right to be free of whatever increased health risks might result from continued economic growth in China?
Why assume that greenhouse-gas emissions are an externality that ought to be internalized?
PERC’s Terry Anderson and I were talking recently and Terry pointed out that the concept of ‘externality’ implies a prior property right. For example, if I have a right to sleep soundly at night in my home, then noise created by my neighbor that penetrates into my nighttime bedroom is indeed a negative externality on me.
But if I choose to try to sleep on a bench inside of a jazz club, the jazz-club’s music will keep me awake but it is no externality imposed on me. The reason, of course, is that the jazz club has a right to stage musical performances within its premises – a right that supercedes my right to sleep in that club.
So who’s to say that each Chinese person’s right to the fruits of economic growth are superceded by each non-Chinese person’s (or even each Chinese person’s) right to be free of whatever increased health risks might result from continued economic growth in China?
