Tag Archives: Capital

The Future of Work — 3 Mega-Trends

By Graham Brown-Martin – Technology is just part of a broader spectrum of human activity and social change is driven by society rather than machines, that is, we have agency to act independently and make free choices.

The path of innovation and its social consequences are almost entirely shaped by society as a result of numerous social factors such as culture, politics, regulatory mechanisms and economic arrangements. The latter one is particularly apposite given the post-WWII obsession with neoclassical economics, as taught in most universities.

Political decisions supported by economic frameworks have excluded citizens from the discourse and, as a result, are now unraveling across the western world. It turns out that the things we value most are the things that are difficult or impossible to measure.

This obsession for economics and measuring what could be measured and ignoring what it couldn’t gave us global agencies such as the World Bank, IMF and OECD.

But these organizations have been unable to apply their frameworks, wedded as they are to a single metric of GDP, to the worlds most pressing challenges such as climate change, increasing population or growing inequalities, rather they have exacerbated them. more> https://goo.gl/DywzVb

The future of the open internet — and our way of life — is in your hands

By Quincy Larson – So far, the story of the internet has followed the same tragic narrative that’s befallen other information technologies over the past 160 years:

  • the telegram
  • the telephone
  • cinema
  • radio
  • television

Each of these had roughly the same story arc:

  1. Inventors discovered the technology.
  2. Hobbyists pioneered the applications of that technology, and popularized it.
  3. Corporations took notice. They commercialized the technology, refined it, and scaled it.
  4. Once the corporations were powerful enough, they tricked the government into helping them lock the technology down. They installed themselves as “natural monopolies.”
  5. After a long period of stagnation, a new technology emerged to disrupt the old one. Sometimes this would dislodging the old monopoly. But sometimes it would only further solidify them.

And right now, we’re in step 4 the open internet’s narrative. We’re surrounded by monopolies.

The problem is that we’ve been in step 4 for decades now. And there’s no step 5 in sight. The creative destruction that the Economist Joseph Schumpeter first observed in the early 1900s has yet to materialize. more> https://goo.gl/dFd7MK

The dangers of ultra-long-term bonds

By Judd Gregg – The dollar is the key to world commerce. It is used by most nations as their reserve currency. It is essentially other countries’ insurance against their governments pursuing profligate fiscal policy.

This fact would possibly make the sale of 50- or 100-year U.S. bonds acceptable in the world market. But it should also give us significant pause.

If we want our currency to be the reserve currency of choice around the world, then we need that currency to be respected.

If we start issuing general obligation bonds that have 50- or 100-year terms, we will inevitably call into question the long-term integrity of our nation’s fiscal house. Financing current expenses for 5, 10 or even 30 years may be an accepted practice, but to go out 50 or 100 years is not. more> https://goo.gl/t5bjEg

Updates from GE

Charged Up: GE Shows Investors Its Energy Playbook
By Tomas Kellner – The acquisition of Alstom’s energy assets delivered $1.5 billion in synergies in 2016, $300 million above GE’s original five-year target for Alstom synergies, GE’s Chief Financial Officer Jeff Bornstein told investors at a conference in New York held by GE’s Power and Renewable Energy businesses last week. “Alstom makes us more competitive,” Bornstein said. “It broadens the service base and creates long-term incremental value.”

Jobs, cash, costs and software were the key themes at the conference. Bornstein said GE Oil & Gas was now “applying the same methodology” to its planned merger with Baker Hughes. “The businesses are very complementary,” he said. “It’s going to be a merger of equals.” Bornstein said he was “highly confident” the deal would “deliver a lot more value than $1.6 billion” in synergies by 2020, the target the companies released when they announced the deal last October.

Bornstein also talked about the need to speed up the shrinking of GE’s $25 billion in “structural costs,” which are funding support functions, R&D, corporate operations and other expenses. more> https://goo.gl/z07MkD

Adequate Housing: Global Financial Institutions Hold the World to Ransom

By Aisha Maniar – Global real estate is valued at around USD 217 trillion, representing 60% of all global assets.

At a recent press conference, the UN Special Rapporteur on the Right to Adequate Housing, Leilani Farha, stated that “Residential real estate is valued at $USD 163 trillion or more than twice the world’s total GDP.” She added, “Imagine if that capacity was harnessed for the realization of the right to housing instead of speculation and profit.’

In presenting a new hard-hitting report on 1 March, which “focuses on the “financialization of housing” and its impact on human rights”, Farha stated that “Housing has lost its currency as a human right” and “has been financialized: valued as a commodity rather than a human dwelling.”

The housing crisis, which “has not often been considered from the standpoint of human rights,” is global.

Many Western governments have adopted a “let them eat cake” response to the crisis. Rather than address the question of affordable and adequate housing, governments have acquiesced to market forces, with the governments of the UK and Ireland, for example, seeing a solution in building more private homes, to the benefit of developers, even though many properties lie empty in both states.

The Australian government continues to grant tax concessions to developers. more> https://goo.gl/5vYwcy

The Blockchain Will Do to the Financial System What the Internet Did to Media

By Joichi ItoNeha NarulaRobleh Ali – Even years into the deployment of the internet, many believed that it was still a fad.

Fast forward two decades: Will we soon be seeing a similar impact from cryptocurrencies and blockchains?

There are certainly many parallels. Like the internet, cryptocurrencies such as Bitcoin are driven by advances in core technologies along with a new, open architecture — the Bitcoin blockchain. Like the internet, this technology is designed to be decentralized, with “layers,” where each layer is defined by an interoperable open protocol on top of which companies, as well as individuals, can build products and services.

Like the internet, in the early stages of development there are many competing technologies, so it’s important to specify which blockchain you’re talking about.

The internet and its layers took decades to develop, with each technical layer unlocking an explosion of creative and entrepreneurial activity.

Early on, Ethernet standardized the way in which computers transmitted bits over wires, and companies such as 3Com were able to build empires on their network switching products.

The TCP/IP protocol was used to address and control how packets of data were routed between computers. Cisco built products like network routers, capitalizing on that protocol, and by March 2000 Cisco was the most valuable company in the world.

In 1989 Tim Berners-Lee developed HTTP, another open, permissionless protocol, and the web enabled businesses such as eBay, Google, and Amazon. more> https://goo.gl/LCuZG0

Exponential growth devours and corrupts

By David Heinemeier Hansson – It’s through this exponential lens that eating the world becomes not just a motto for software at large, but a mission for every aspiring unicorn and their business model. “Going viral” suddenly takes on a shockingly honest and surprisingly literal meaning.

The goal of the virus is to spread as fast as it can and corrupt as many other cells as possible. How on earth did such a debauched zest become the highest calling for a whole generation of entrepreneurs?

It used to be that successful, upcoming companies would show a prudent mix of present-day profits and future prospects, but such a mix is now considered old-fashioned and best forgotten. Now it’s all potential, all the time.

Because the core assumption is that growth is always good, growth is always unlimited, and if you’re not growing you’re dying. Swim or sink, no wading.

Which is why growth is now everything and residual value is nothing. In fact, the latter can be outright harmful to the former. When you’re being priced on the hopes and dreams of potential, reality can be a dangerous and undesired competitor. Best just to appeal to the exponential curve and let the imagination roam free. An epic capital gains score awaits! more> https://goo.gl/HWN3au

Updates from Chicago Booth

What happened to your goals?
By Alice G. Walton – The problem with big resolutions is that motivation tends to wane over time, says Chicago Booth’s Ayelet Fishbach, who studies motivation and decision making. People start out strong, but then reality sets in as they realize it’s easier to set goals than to carry them out.

Research by Fishbach and others can help people salvage failed goals, or achieve new ones.

Every endeavor has a starting point and an end point, which can be as specific as meeting a work deadline in one week or as general as losing weight. One reason many people fail to reach their objectives, says Fishbach, is that they tend to set goals that are difficult or even impossible to achieve, or too general. Making them more concrete and achievable—goals you can envision yourself completing—may yield better results.

Yet effective targets should be ambitious. As long as the goal is within reach, the more you expect from yourself, the more you’ll achieve, as people often respond to a challenge by working harder. more> https://goo.gl/drSWPY

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Will President Trump derail the U.S. economy?

By George L. Perry – The stock market should like these economic proposals for several reasons.

Lower tax rates directly raise after-tax profits. Faster expansion from the fiscal push means higher profits. And reducing regulations cuts costs and raises profits. Banks, which are a clear target for deregulation, also benefit from higher interest rates that raise lending profits. No surprise their stocks have been the best performers in the market rally.

he impact of these budgetary policies in the longer run are more murky.

Today’s Congress is likely to give the Administration most of what it asks for. And one big risk in this is that budgetary projections will be made based on dynamic scoring that assumes the programs produce large increases in productivity growth, and so project unrealistically fast growth in the economy’s potential output and revenues.

The CBO and Finance Committee make professional assessments of these supply-side effects in estimating future budgetary impacts of tax changes. But the Administration will push for more generous estimates of future revenues that will make the tax and budget proposals more palatable at present.

This will only put off dealing with long-run budget deficits and a rising ratio of debt-to-GDP that is projected as the population ages. The adverse effects of swelling debt will be someone else’s problem at some future time. more> https://goo.gl/th1nzJ

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Trump is right to criticize NAFTA—but he’s totally wrong about why it’s bad for America

BOOK REVIEW

The Mexican Shock, Author: Jorge Castañeda.

By Jeff Faux – Will he deliver on this pledge? No.

But the reason is not, as the conventional economic wisdom has it, because outsourcing work to low-wage countries is the inevitable result of immutable global forces that no president can reverse.

The problem for American workers is not international trade, per se. America has been a trading nation since its beginning. The problem is, rather, the radical new rules for trade imposed by NAFTA—and copied in the myriad trade deals signed by the US ever since—that shifted the benefits of expanding trade to investors and the costs to workers.

Trump is right that the 1994 agreement with Mexico and Canada displaced US jobs—some 850,000, most of which were in manufacturing. But he is wrong in his claim that American workers lost out to Mexican workers because US negotiators were outsmarted. The interests of workers were never a priority for either American or Mexican negotiators.

NAFTA was the first important trade agreement that reflected the dramatic realignment of economic class interests across national borders. The globalization of corporate finance, production, and marketing has disconnected the interests of investors and workers throughout the world. more> https://goo.gl/anxVjL