Category Archives: Economic development

Why Wall Street Isn’t Useful for the Real Economy

By Lynn Stout – In the wake of the 2008 crisis, Goldman Sachs CEO Lloyd Blankfein famously told a reporter that bankers are “doing God’s work.” This is, of course, an important part of the Wall Street mantra: it’s standard operating procedure for bank executives to frequently and loudly proclaim that Wall Street is vital to the nation’s economy and performs socially valuable services by raising capital, providing liquidity to investors, and ensuring that securities are priced accurately so that money flows to where it will be most productive.

The mantra is essential, because it allows (non-psychopathic) bankers to look at themselves in the mirror each day, as well as helping them fend off serious attempts at government regulation. It also allows them to claim that they deserve to make outrageous amounts of money.

According to the Statistical Abstract of the United States, in 2007 and 2008 employees in the finance industry earned a total of more than $500 billion annually—that’s a whopping half-trillion dollar payroll (Table 1168).

Let’s start with the notion that Wall Street helps companies raise capital. If we look at the numbers, it’s obvious that raising capital for companies is only a sideline for most banks, and a minor one at that. Corporations raise capital in the so-called “primary” markets where they sell newly-issued stocks and bonds to investors.

However, the vast majority of bankers’ time and effort is devoted to (and most bank profits come from) dealing, trading, and advising investors in the so-called “secondary” market where investors buy and sell existing securities with each other.

In 2009, for example, less than 10 percent of the securities industry’s profits came from underwriting new stocks and bonds; the majority came instead from trading commissions and trading profits (Table 1219).

This figure reflects the imbalance between the primary issuing market (which is relatively small) and the secondary trading market (which is enormous). In 2010, corporations issued only $131 billion in new stock (Table 1202).

That same year, the World Bank reports, more than $15 trillion in stocks were traded in the U.S. secondary marketmore than the nation’s GDP. more>

How a Decade of Crisis Changed Economics

By J. W. Mason – Has economics changed since the crisis?

As usual, the answer is: it depends. If we look at the macroeconomic theory of PhD programs and top journals, the answer is clearly, no. Macroeconomic theory remains the same self-contained, abstract art form that it has been for the past twenty-five years.

As Joan Robinson once put it, economic theory is the art of pulling a rabbit out of a hat right after you’ve stuffed it into the hat in full view of the audience.

Many producers of this kind of model actually have a quite realistic understanding of the behavior of real economies, often informed by firsthand experience in government. The combination of real insight and tight genre constraints leads to a strange style of theorizing, where the goal is to produce a model that satisfies the methodological conventions of the discipline while arriving at a conclusion that you’ve already reached by other means. It’s the economic equivalent of the college president in Randall Jarrell’s Pictures from an Institution:

About anything, anything at all, Dwight Robbins believed what Reason and Virtue and Tolerance and a Comprehensive Organic Synthesis of Values would have him believe. And about anything, anything at all, he believed what it was expedient for the president of Benton College to believe. You looked at the two beliefs, and lo! the two were one. more>

Updates from ITU

ITU brings new clarity to 5G transport
ITU – 2018 has seen the launch of a major ITU drive to define the requirements of IMT-2020/5G systems as they relate to transport networks, the extremely high-capacity optical networks that form the ‘backbone’ of the ICT ecosystem.

These 5G transport projects have built strong momentum, drawing on the expertise of a wide range of working groups within ITU’s standardization expert group for ‘transport, access and home’, ITU-T Study Group 15.

The baseline for this work was established in February 2018 with the release of an influential ITU Technical Report placing emerging 5G radio requirements in the context of their demands on transport networks.

The second version of this Technical Report was agreed in October 2018. Download the report… more>

Economics as a moral tale

By John Rapley – Think of human development as a long journey.

At the beginning, we live at the mercy of nature. Dependent on its bounty, we pray for rains and freedom from natural disasters and plagues. At the end of the journey, nature lives at our mercy.

We use science and technology to release new wealth and remake the planet. Today, as humans implant themselves with microchips, install artificial organs and plan Mars colonies, we even aim for a ‘singularity’ that will lift us out of nature once and for all.

Economists began to compose the narrative of this odyssey, from subjection to dominion, in the 1700s. Once it became apparent that Europe had broken with millennia of stasis to begin a long period of rising growth – the same through which we are still living – political economists abandoned philosophical reflection to draft roadmaps to development.

Two broad types emerged. One approach described the walk, the other the walker. The first presumed that the context in which we made the journey – the natural environment, the institutions, the culture, the legal and political systems – determined the direction of the path. In this model, the government bore responsibility to build the path so that it could accommodate as many people as possible.

The second approach took a more individualist perspective. It presumed that the walker determined his or her own success in the journey. It concentrated on the moral, intellectual and physical attributes it believed an individual needed to advance. In this model, the task of the government was to sweep aside obstacles impeding the gifted few from embarking on their personal journeys – restraints that ranged from restrictions on labor mobility to usury laws. Thus liberated, gifted individuals would beat the path to prosperity. more>

Updates from Ciena

Fiber densification without complexity the goal of two new Ciena platforms
By Helen Xenos – Providing a first-class experience is the primary driver of densification – allowing network providers to deliver higher capacity connectivity to retain content quality even with the advent of new high-capacity applications. Ease of deployment and operations is also critical, with the quick roll out of network resources giving end-users have faster access to the latest digital services they rely on.

While network providers are starting to see this is the destination they must get to, the question is how?

Today, Ciena comes ready to enable network providers to adapt to these evolving networking requirements with two new products –  the 6500 Reconfigurable Line System (RLS) and the 8180 Coherent Networking Platform.  With these new products, Ciena is tackling fiber densification challenges head on to drive a better customer experience in metro and long-haul Data Center Interconnect (DCI), cable access modernization, and 4G/5G infrastructure builds.

The 6500 Reconfigurable Line System (RLS) is a programmable, open, modular line system that scales to support the highest bandwidth requirements of metro and long-haul datacenter interconnect (DCI) as well as cable access applications. more>

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How Universal Basic Income Solves Widespread Insecurity and Radical Inequality

By Daniel Nettle – Today should be the best time ever to be alive. Thanks to many decades of increasing productive efficiency, the real resources available to enable us to do the things we value—the avocados, the bicycles, the musical instruments, the bricks and glass—are more abundant and of better quality than ever. Thus, at least in the industrialized world, we should be living in the Age of Aquarius, the age where the most urgent problem is self-actualization, not mere subsistence: not ‘How can we live?’, but ‘How shall we live?’.

Why then, does it not feel like the best time ever?

Contrary to the predictions of mid-twentieth-century economists, the age of universal wellbeing has not really materialized. Working hours are as high as they were for our parents, if not higher, and the quality of work is no better for most people. Many people work several jobs they do not enjoy, just to keep a roof over their heads, food on the table, and the lights on. In fact, many people are unable to satisfy these basic wants despite being in work.

Big problems require big ideas.

Our current generation of politicians don’t really have ideas big enough to deal with the problems of widespread insecurity and marked inequality. Big ideas come along every few decades. The last one was about forty years ago: neoliberalism, the idea that market competition between private-sector corporations would deliver the social outcomes we all wanted, as long as government got out of the way as far as possible.

Our current politicians propose to deal with symptoms piecemeal—a minimum-wage increase here, a price cap there, rent-control in the other place; tax credits for those people; financial aid to buy a house for those others. At best we are dealing with one symptom at a time. Each piecemeal intervention increases the complexity of the state; divides citizens down into finer and finer ad hoc groups each eligible for different transactions; requires more bureaucratic monitoring; and often has unintended and perverse knock-on effects.

A Universal Basic Income (UBI) is a regular financial payment made to all eligible adults, whether they work or not, regardless of their other means, and without any conditionality whatever. Receiving it is a fundamental entitlement that comes with being a member of society: people can know that it will always be there, now and in the future. more>

A New Political Narrative For Europe

By Massimiliano Santini – In August, Bono, lead singer of U2, wrote an editorial on Europe in which he pointed out that it may not be romantic or sexy but Europe is “much more than just a geography… [its values and aspirations] go to the core of who we are as human beings, and who we want to be. That idea of Europe deserves songs written about it, and big bright blue flags to be waved about.”

Today, many Europeans do not share that visionary idea of Europe. Instead, they feel more represented by a narrative that has portrayed the European project as a bureaucratic monolith, ruled by an élite of technocrats who are focused on their self-preservation rather than people’s real interests. People view Europe as the villain: an antagonistic force imposing harsh rules that must be respected for their own sake. But where does this narrative come from?

A new type of clear, succinct, and engaging political narrative ought to mix and match existing policy solutions and offer a vision of the world that helps people interpret the present and envision the future with hope, as opposed to nostalgia. more>

Updates from Siemens

Manufacturing Execution System
Siemens – Siemens’ Manufacturing Execution System (MES) ensures that quality and efficiency are built into the manufacturing process and that they are proactively and systematically enforced.

The Manufacturing Execution System connects multiple plants and sites, and integrates easily with equipment, controllers, product lifecycle and enterprise business applications, quality management and laboratory management systems, and many other applications. The result is complete visibility, control and optimization of production and processes across the enterprise.

Benefits of Siemens Manufacturing Execution System:

  • Proactive Control & Quality
  • Granular Enterprise Visibility
  • True Continuous Improvement
  • Brand Risk Reduction
  • Improved Profit Margin

more>

Updates from Ciena

5 Ways DCI Growth is Driving New Innovations in Transport Networking

By Kent Jordan – Data center interconnect (DCI) is at the heart of new global business models, cloud adoption, and digital content delivery and services. Cloud, ICP, and colocation operators are dominating DCI sales, and DCI is becoming more crucial for other industries as well.

According to the Equinix Global Interconnection Index, global interconnect bandwidth is forecast to grow to over 8,200T by 2021, which is substantially higher than last year’s projection.

Telecommunications, manufacturing, and banking are all expected to be large contributors to total interconnect bandwidth by 2021. Smaller traffic areas, such as wholesale, retail, and healthcare, are also expected to grow at double-digit rates leading to the need for higher capacity services over time.

Purpose-built, compact, modular systems have sprouted up, offering massive scalability to enable global deployments while reducing operational expenses related to data center space, power, and cooling. These systems offer modularity and pay-as-you-grow scalability for lower traffic scenarios, so enterprises can cost-effectively scale connectivity for cloud services and applications. more>

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Updates from Siemens

Aerospace and Defense Verification Management
Siemens – Our aerospace and defense verification management solution helps companies achieve faster time to certification by providing a single, integrated environment that ensures all product verification events, whether simulation modeling and analysis or physical tests, are driven by requirements, planned and executed in the correct sequence, link individual tests and analyses to necessary resources and provide full traceability.

For commercial aircraft development and certification and military development and qualification, increasing global competition puts contractors under pressure to win new orders and to deliver on time and at cost. Aerospace and defense companies must also demonstrate, in an auditable and efficient manner, that program requirements are achieved through successful test definition, simulation, planning and execution.

Successful product launches and customer acceptance require manufacturers to verify that product requirements have been fulfilled throughout the design and development of the product. more>

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