Tuesday, August 15, 2017

Chronicles: On Our Political and Economic CrisisBook Review: Chronicles: On Our Political and Economic Crisis by Thomas Piketty


I have read the most famous book
  Capital in the Twenty-First Century by Thomas Piketty
Capital in the Twenty First Century by Thomas Piketty and a good number of his academic entries but this compendium of essays is a revelation into his mind. I think, it is difficult to disagree with the subject of the essays especially as these articles were published after the great recession of 2008. Understandably, most of the essays are about the failure of European bureaucrats to assess the situation correctly and apply the right policy responses. No doubt, Thomas Piketty is a very perceptive and the complex nexus of the politics and economic choices of the European Union.

The two main themes of the book relate to his argument for the mutualization of the debts of countries in the Eurozone on the one side, and the need for higher taxes on wealth to support the existing social safety nets in France and most of Europe. debt mutualization is an imperative for Eurozone countries because a single currency means the interest rates on public debt should converge. the absence of this convergence leads to the dd situation where Greece and Spain face different rates than France and Germany.

The more controversial proposal is that which proposes that taxation of endowments and wealth should be raised because the existing fiscal policy favours passage of wealth to people who do not have to work, unlike those who are employed. Piketty argues that higher taxes on wealth would be ensured if countries collaborated on disclosures of wealth held by their citizens across borders. While the argument that society faces a trade off between taxation of labour and capital is real, I am less convinced by the implicit assumption that a large state is inherently preferable.

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Thursday, April 30, 2015

Thoughts on The Fight of The Century

The domain of professional sports is most interesting because these athletes make the job look so easy that their supporters sometimes forget to be objective. In the next couple of days, the city of Las vegas will host a major boxing event pitting Floyd Mayweather Jr. and Manny Pacquiao. Both have fans and critics in large numbers but this fight has its own underlying story. It may make sense for the promoters to refer to this upcoming match as the "fight of the century" but thats hyperbole because the century is still too young.

Because this fight has been so long in coming, the punditry claims that Floyd Mayweather Jr. has ducked the his opponent for fear of losing. Despite the firm belief by Floyd Mayweather's detractors, I find this claim unconvincing because the same pundits claim that he is too interested in making money. So why would he have avoided a big payday like this for so long?

About the fight, I wager that Floyd Mayweather Jr. will prevail over Manny Pacquiao. My reason is just because I trust the analysis by real boxing analysts and thinkers and not people whose commentary starts with the deserved criticism of Mr. Mayweather's unsavoury behaviour. But the fundamental error of these analysts is to assume that floyd's indiscipline in personal relations translates into his behaviour in the ring. This analysis by fivethirtyeight.com goes through the data and comes to the conclusion that the odds favour Mayweather Jr.

I will update this post soon after the match is over and provide my impressions of what was the difference between the boxers would be.


Tuesday, October 14, 2014

Visit to The Smithsonian Zoological Park

Earlier today, I made a quick trip to the Smithsonian National Zoological Park in Washington DC. As readers may have guessed already, my purpose was to catch sight of the giant pandas that are the main attraction at this fine zoo.

The photo to the right of this blog post shows the phone camera image of one of the giant pandas resting outside the shelter.  Granted, the picture is a manifestation of my lack of skills in photography together with use of a phone without an attached zooming lens but I am still proud of it because it was my first sight of this highly regarded mammal from China.

If as stated, the government of the People's Republic of China cautiously gives the panda partly to strengthen diplomatic skills links, then my cursory assessment is that it is an unqualified success.

First, while I am not an American citizen, it became clear to me that the families and groups visiting the zoo considered sighting of the panda as the highlight of the visit. In addition, the children who were here were excited at encountering animals generally but the AsiaTrail, that culminates with a sighting of the giant pandas was the busiest of them all. Panda diplomacy is very smart politics. oOne hopes that this will help these animals to survive for many more generations.

The curious thing was that entry to the the Smithsonian National Zoological Park does not require payment. Instead, there are notices all around stating that the park is maintained through private donations and coupled with evidence of bequests from corporations and families. A second source of funding is the sale of the map of the park and items in the shops. This presents an interesting model because one would consider that the rarity of the panda would almost make it very lucrative to charge for entry. The economics of pricing for entry to this zoo is helped by the panda and the bequest that supported the establishment of the park to begin with.   

Sunday, July 06, 2014

A Prize Would Speed Up Search for Malaysia Flight 370

Three months ago, a Malaysian Airlines plane carrying more than 200 passengers and flying between Kuala Lumpur and Beijing lost contact with flight controllers and failed to arrive at destination. Since then, there has been a multi-country search on both sides of the destinations with no success. As it stands now, the plane is missing and there is no clue about what happened to the aircraft and its passengers.

Understandably, the relatives of the missing passengers together with individuals do not believe official claims that this plane is missing and that nobody has found it. This state of affairs presents a fertile ground for all manner of conspiracy theories about what happened to the plane, its cargo and final resting place. All this is not helped by another statement such as that covered in this NYT piece stating that the search area has been changed once again. In short, the level of confidence in official statements and whether a proper search is being made in good faith is low.

I am not too familiar with flight science and therefore unable to find reason to distrust official statements from the airlines and the malaysian government. It is clear to me that many more people in that government are just as clueless but issue statements with more confidence than is warranted.

To my mind, the insurers of this airline together with the government would be best served to crowd source the finding of the aircraft. The incentive for them would be to display their own good faith and support that with a monetary incentive to ask teams of engineers and meteorologists who understand flight science to either find or suggest the final point of the fuselage. With these parameters broadly drawn, I am sure that a prize of up US$ 10 million would be placed out there to be claimed by the first team that provides the most useful answer or identifies the location of the flight.

This approach would serve the Malaysian Airlines and the government well because it would buttress their claim that there is no conspiracy to cover up the accident and provide relief to waiting families. The sum suggested here is affordable for both the airline, its insurers and the government of Malaysia. With that prize established, the governments that are assisting in the search could continue to conduct searches based on the best information at their disposal.

Tuesday, May 27, 2014

Quote of the Day

"Wise management includes making the best use of scientific, technological and artistic knowledge". Becky Norton Dunlop

Tuesday, October 22, 2013

A New Way to Invest in Athletes

Sports franchises are understandably peculiar businesses because they rely on a fan base that is often based on a city or place of residence.  The most important assets for most teams are the players who are the performers and therefore crate a fan base for merchandise sales, tickets and additional publicity. For that reason, it is understandable that with the exception of a few such as the Green Bay Packers, the trend is that most franchises are held as corporations with shareholders.

As the most visible and important assets held by teams, the franchises are used to negotiating with athletes as such with the help of their managers. It is sensible to ask the question whether this is still the most efficient way for athletes to bear the risks of their careers in professional sports. Arian Foster, a football athlete with the NFL's Houston Texans is a pioneer in the diversification of risks by floating shares in his person as an athlete. As covered here, the athlete has sold shares in his personal brand by promising to distribute a portion of future incomes to individuals who invest in him today.

What the athlete has done is to assure himself of a level of income and asks those who have confidence that he will be successful in the future to but futures in his career. In addition, this share purchase comes with a facility that enables holders to trade that stock over time. While the story overwhelmingly concentrates on the risks that come from the possibility that an athlete may be injured and thereby lead to losses for the owners, I am inclined to think that all those risks would be built into the cost of the shares to ensure that the pricing is appropriate.

Unlike the author who thinks that this activity will be a niche investment for die-hard fans, I think that this is a legitimate form of market creation that provides opportunities for real gains and losses too. injury aside, there will be fine investments of this kind just as there will be poorer one too. its just about who can make the well-informed bet. 

Monday, October 07, 2013

David and Goliath: First Impressions

David and GoliathDavid and Goliath by Malcolm Gladwell
My rating: 5 of 5 stars

To my mind, while it is an easy read, this book represents the most complex idea that Malcolm Gladwell has attempted to communicate. The first chapter is written well and it makes it look like it will always be easy to apply the David and Goliath metaphor throughout. It is not easy and that may explain the harsh judgement of critics. As usual, the author uses a deceptively simple metaphor to explain phenomena starting from war, crime, education attainment and social change. Few authors are capable of making such a tactical tour de force and in pushing such a wide circle, it is possible that some claims will be incredulous. Still, hard earned money well spent if you one chooses to read this book.  


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