Tag Archives: Business

Beware The Ghost Of Antitrust’s Past

By David Kully – The source of the increasing concentration in many markets, in the view of some commentators, was a shift that began in the 1970s in how antitrust enforcers and the courts view the role of antitrust enforcement.

At that time, economists in the “Chicago School” led an evolution away from concern about protecting small competitors from larger competitors to a current enforcement paradigm that emphasizes “consumer welfare” and calls for intervention by the government only if a merger or alleged anticompetitive practice is likely to harm consumers – through higher prices, lower output, poorer quality products or services, or diminished incentives to innovate. This shift, according to critics, made antitrust enforcers less likely to go to court to block large mergers or take on monopolies, with the result being the concentrated marketplaces we see today.

The nostalgia for the antitrust enforcement of the past, however, ignores important concerns about an approach predicated on attacking large firms merely because of their size. The evolution in antitrust thinking that began with the Chicago School was driven by economic research establishing that some mergers and certain practices that antitrust law previously forbade offer tangible benefits to society. Critics offer no countervailing basis to believe that these benefits would not be lost if we were to revert to past thinking. more> https://goo.gl/rt1ZSQ

Deficits In Trade And Deficits In Understanding

By Omar Al-Ubaydli – To see why the current trade deficit is benign, we need to understand the relationship between trade and the dollar’s value. Greenbacks are like any commodity in that the more people want to possess them, the higher their price. People acquire dollars primarily for two reasons: buying American goods and investing within the United States.

If the United States is importing more than it exports, then American consumers are exchanging dollars for foreign currencies to buy foreign goods more than foreigners are doing the reverse, meaning that foreigners are accumulating lots of dollars that they’re not using to buy American goods.

So why has America been recording a large, persistent trade deficit, and why isn’t the dollar devaluing? It’s due to the second major difference (from 1970s): The investment-based demand for foreign currencies—which we momentarily set aside—has ballooned. People no longer exchange currencies just to buy foreign goods.

Consequently, the dollar no longer corrects trade imbalances. more> https://goo.gl/L1VHHr

There’s No Good Way to Kill a Bad Idea

By Olivia Goldhill – If you’ve ever found yourself unable to halt someone else’s idiotic plans once they were already in motion, you’re not alone. Whether you’re a politician trying to make congress see sense or simply a manager trying to halt an atrocious team-building plan, there’s simply no foolproof way to kill a terrible idea.

Russell Blackford blames the momentum behind bad ideas on cascade effects. Yes, individuals are prone to making poor decisions for emotional or biased reasons (known as “cognitive heuristics”) and this irrationality is part of the problem. But there’s also a broader sociological issue, in that others’ opinions carry a huge amount of weight in influencing our views. A cultural consensus—even without proper evidence—can form pretty quickly.

If one person convinces a second, says Blackford, then a third person will be far more likely to agree with the majority view. more> https://goo.gl/9nJRpk

21st-century propaganda: A guide to interpreting and confronting the dark arts of persuasion

By Gideon Lichfield – The belief, or rather hope, that humankind is ultimately rational has gripped Western politics at least since Descartes, and inspired such 19th-century optimists as Thomas Jefferson and John Stuart Mill. “Where the press is free, and every man able to read, all is safe,” Jefferson famously wrote.

But in recent years we’ve learned much about the human mind that contradicts the view of people as rationally self-interested decision-makers. Psychologists have established that we form beliefs first and only then look for evidence to back them up.

Research has turned up apparent physiological and psychological differences between liberals and conservatives, and found evidence that these differences have ancient evolutionary origins. It has identified the “backfire effect,” a.k.a. confirmation bias, in which people hew to even more strongly to an existing belief when shown evidence that clearly contradicts it.

Other research has looked at the habits of highly effective propagandists such as China, Russia, and alt-right icon Milo Yiannopoulos.

The main takeaways: truth, rationality, consistency, and likability aren’t necessary for getting people to absorb your viewpoint. Things that do work: incessant repetition, distractions from the main issue, sidestepping counterarguments rather than refuting them, using “peripheral cues” to establish credibility or authority, and antagonizing people who dislike you in order to get the attention of people who might like you. more> https://goo.gl/ddOwca

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What is human capital?

BOOK REVIEW

The Death of Homo Economicus, Author: Peter Fleming.
The Road to Serfdom, Author: F A Hayek.

By Peter Fleming – Back in the 1960s, Friedman envisaged a society in which we’d all be wealthy, thriving entrepreneurs. What we got in reality was a pay cut, reduced holiday or sick leave, a chronic skills deficit, credit-card debt and endless hours of pointless work. If anything, the story of human capital theory in Western economies has been about divesting in people, not the opposite.

That’s because it was born within an extreme period in 20th-century history, when many believed that the fate of humanity was hanging in the balance. It should therefore be approached as such, a rather eccentric and largely unrealistic relic of the Cold War.

Only in that highly unusual milieu could mavericks such as Hayek and Friedman ever be taken seriously and listened to. In the face of communist collectivism, the Chicago school developed a diametrically opposed account of society, one populated by capsule-like individuals who automatically shun all forms of social cohesion that isn’t transactional.

These loners are driven only by the ethos of self-serving competitiveness. Blindly attached to money. Insecure and paranoid. No wonder we’re so unwell today. more> https://goo.gl/hLM2ey

How Norway Proves Laissez-faire Economics Is Not Just Wrong, It’s Toxic.

By David S. Wilson, Dag O. Hessen – For most of human existence, until a scant 10 or 15 thousand years ago, the human ladder was truncated. All groups were small groups whose members knew each other as individuals. These groups were loosely organized into tribes of a few thousand people, but cities, provinces, and nations were unknown.

Today, over half the earth’s population resides in cities and the most populous nations teem with billions of people, but groups the size of villages still deserve a special status. They are the social units that we are genetically adapted to live within and they can provide a blueprint for larger social units, including the largest of them all – the global village of nations.

Modern nations differ greatly in how well they function at the national scale. Some manage their affairs efficiently for the benefit of all their citizens. They qualify at least as crude superorganisms.

Other nations are as dysfunctional as a cancer-ridden patient or an ecosystem ravaged by a single species. Whatever teamwork exists is at a smaller scale, such as a group of elites exploiting the nation for its own benefit.

The nations that work have safeguards that prevent exploitation from within, like scaled-up villages.

The nations that don’t work will probably never work unless similar safeguards are implemented. more> https://goo.gl/r9OigY

How Online Shopping Makes Suckers of Us All

By Jerry Useem – Simply put: Our ability to know the price of anything, anytime, anywhere, has given us, the consumers, so much power that retailers—in a desperate effort to regain the upper hand, or at least avoid extinction—are now staring back through the screen.

They are comparison shopping us.

“I don’t think anyone could have predicted how sophisticated these algorithms have become,” says Robert Dolan, a marketing professor at Harvard. “I certainly didn’t.” The price of a can of soda in a vending machine can now vary with the temperature outside.

“Many moons ago, there used to be one price for something,” Dolan notes. Now the simplest of questions—what’s the true price of pumpkin-pie spice?—is subject to a Heisenberg level of uncertainty.

Which raises a bigger question: Could the internet, whose transparency was supposed to empower consumers, be doing the opposite?

This could be seen as the final stage of decay of the old one-price system. What’s replacing it is something that most closely resembles high-frequency trading on Wall Street. more> https://goo.gl/0XGx4d

From Netflix to rented homes, why are we less interested in ownership?

By Ian Leslie – Instead of owning things, we are renting experiences. The proliferation of mobile apps enables us to source or supply whatever we want, for short periods, more easily than ever before.

The “sharing economy” is not about sharing, however. I encourage my three-year-old daughter to share her toys with her little brother; I don’t suggest that she charge him an hourly fee for doing so. A better name for it is the Paygo (pay-as-you-go) economy.

The Paygo economy combines two intertwined phenomena: the rise of renting and the decline of stuff.

A world in which we own less and rent more is not necessarily one in which consumers are empowered. You never really own the electronic versions of a book or a film – you can’t lend them to a friend or sell them on – because the publisher retains its rights over them. Even our photos aren’t ours any longer: they are owned by corporations that scrape them for data that can be sold.

The Paygo economy is changing our relationships with each other and with ourselves. more> https://goo.gl/AL6Ms1

The White House Unveiled a Tax Reform Plan. It’s Not Really a Plan

By Alex Altman – The proposal, which the White House promised would be the “the biggest individual and corporate tax cut in American history,” was strikingly short on details, from how much the goodies President Donald Trump is dangling would cost to how his Administration plans to patch the hole it would blow in the budget.

That’s an especially pressing question given how zealous many Republican lawmakers have been in the recent past about keeping legislation revenue-neutral.

The Committee for a Responsible Federal Budget estimated the plan could cost between $3 trillion and $7 trillion. Its base-case estimate, $5.5 trillion, would be 20% of U.S. GDP. “Even if tax cuts could generate more growth than estimated,” the group wrote, “no plausible amount of economic growth would be able to pay for a substantial portion of the tax plan.”

Even if a true tax-reform package isn’t in the offing anytime soon—the last reform of the tax code took place more than 30 years ago—Trump’s party has the power to simply slash rates this year.

That would juice the U.S. economy as Republicans head into a difficult election cycle in 2018. Which, to Trump, may be as good a goal as any. more> https://goo.gl/PRuvyB

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How to Avoid a Tech Counterrevolution

By Leonid Bershidsky – It’s easy to laugh at a juice squeezer produced by a relatively small startup, whose real competence is in making fancy fruit-and-vegetable packets. It’s not really problem-solving tech; it’s a money-raising gimmick.

The problem is deeper though. Musk, a slicker marketer than Zuckerberg, talks about initially releasing a technology that would help people with brain damage — from strokes, for example.

Facebook is talking about “sharing thoughts,” hitting precisely on the most worrying aspects of the nascent technology: Who wants to share uncensored thoughts, especially with a company that collects information about its users without explaining to them exactly what is harvested? Who wants to give a machine built by a corporate entity access to one’s brain?

Tasks that desperately need automation and tech solutions are narrow. Thinking smaller and applying resources and energy to narrow, specific problems could be a good chance to build trust before it disappears entirely. more> https://goo.gl/MEm63N