Archive for the ‘Economics – macro, micro etc’ Category

Vítor Constâncio, Vice-President of the ECB: 34 years as a central banker!

May 24, 2018

Nice interview of Vítor Constâncio, the VP of ECB. He spent 34 years of his professional life as a central banker. He was twice the Governor of Central Bank of Portugal from 1985-86 and 2000-10.

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When new forms of money were backed by units of labour, energy..

May 23, 2018

Superb piece by Prof Robert Shiller, He says there is nothing new about bitcoin at all. People have always been excited about inventing new forms of money backed by different things:

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When Amazon acquired Whole Foods and cultures collided (Lessons for Flipkart??)

May 17, 2018

Michael Blanding discusses a case study in HBSWK.

This is all so familiar. One company acquires another and then cultural issues follow:

From the very start, Amazon made its name on being fast, cheap, and efficient—using data to drive its product mix and enforcing strict employee discipline to squeeze out cost savings to pass on to its customers.

Whole Foods, on the other hand, always prided itself on its personal touch, empowering individual stores—even individual employees—to make decisions about products that emphasize high quality, healthy, and local foods. That decentralization, however, caused enormous inefficiencies that drove up prices to the point where critics referred to the store as “Whole Paycheck.”

The acquisition was initially met positively by Wall Street, amid hopes that Amazon’s data-driven mindset might be just the thing to enable Whole Foods to scale up and add more stores while maintaining its employee-empowered culture.

That’s not quite what happened. “A lot of it from our perspective was centered on a culture clash,” says Campbell. “Whole Foods has a very high-empowerment kind of culture, so these  ‘draconian’ standards, telling people where to put things on the shelves and the loss of autonomy, employees were feeling angry from that.”

The new inventory system was actually something Whole Foods had started to implement before the Amazon deal, pressured by activist shareholders who had seen the grocer’s stock and sales margins slipping for two years. “This is not a story where there is a good guy and a bad guy,” says Campbell. “It’s a story about what the limits are to scaling this high-empowerment model, and what are the limits to a model where it’s all about standardization and data.”

This could be interesting as Walmart has recently acquired Indian e-retailer Flipkart. I don’t know culture at Flipkart so can’t say whether there will be clashes. But don;t be surprised if one does see them in future…

Greenland’s ice provides a detailed account of the Roman empire’s economy

May 17, 2018

Fascinating to read this account by Jason Daley.

Researchers are analysing icecaps to figure minting activity in Roman empire:

e know a lot about the Roman Empire. Not only did famous Romans like Julius Caesar write about their own accomplishments and plaster their names and works on public buildings, historians also chronicled the rise and fall of the powerful civilization. But sometimes it’s hard to know how the average person in the Empire was doing—while Caesar was off conquering Gaul, was the economy good? During the Year of the Four Emperors, when intrigue and infighting rocked the empire, was the government still minting money? As Katie Langin at Science reports, researchers recently found some insight locked in Greenland’s ice cap.

Besides the power of the legions, Rome’s might lay in its wealth, the cornerstone of which was a silver coin known as a denarius. Producing the silver needed to mint all those coins meant smelting silver ore, which produced a lot of lead pollution. Since the 1990s, researchers have realized that the lead pollution produced by smelters across the Empire drifted 2,800 miles and left traces in peat bogs in Scotland and the Faroe Islands and in ice cores from Greenland’s ice cap. But those layers were imprecise and could not give a year-by-year reading of how much silver was being produced.

Using new techniques, however, historians and ice core experts have been able to take a closer look at the ice, slowly melting the cores to get 12 lead measurements per year from the length of the Roman Empire, roughly 1100 B.C.E. to 800 C.E. The 1,900-year chronology mirrors many of the ups and downs of the Empire, as described by historians past and present. The research appears in The Proceedings of National Academy of Sciences.

Nicholas Wade at The New York Times reports that ice cores from Greenland are hard to get, and it can take years to carefully drill through all the ice to reach bedrock. Luckily, ice core expert Joseph R. McConnell—ironically of the Desert Research Institute in Reno—knew of a core that had to be abandoned and was able to convince the core’s drillers to let him analyze a section dating between 1235 B.C.E. and 1257 C.E.

….

In general, the smelting activity rises and falls with Rome’s civil wars and disease outbreaks. The levels finally drop to pre-Roman levels during the Antonine Plague of 165 to around 180 C.E. and they do not recover for another 500 years. It also plummets during the Plague of Cyprian in the 3rd century. “We found that lead pollution in Greenland very closely tracked known plagues, wars, social unrest and imperial expansions during European antiquity,” McConnell says in the release.

 

What can business owners learn from Austrian Economics?

May 17, 2018

Fernando Monteiro D’Andrea says there are 7 lessons:

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How Italian mayors hoard parking penalties ahead of elections..

May 11, 2018

Whichever the election, expect politicos to behave in similar manner. When elections appear near, they become more liberal with taxes and fines.

Prof. Emanuele Bracco of  Lancaster University has a piece arguing the same. Italian Mayors become more liberal towards parking fines around election time:

Mayors elected with a small margin of victory issue almost one euro per capita less in fines, and cash in about 50 euro cents less than those who won elections with a wide margin. Mayors who barely won their seat don’t seem to want to disappoint those precious marginal voters and put their own re-election at risk.

Mayors in their second (and last) term in office are slightly more strict. By law they cannot run for a third term, so perhaps they feel more free to charge drivers. They know they won’t pay an electoral cost as a result.

Last, we look into the third way to pinpoint political budget cycles, by comparing mayors nearing the end of their term in office with those who have just been elected. The former issue roughly the same amount of fines as colleagues at the beginning of their term, but they cash on average 18 euro cents per capita fewer per year. This may not seem very much, but would account for about 1.5m Euros in a year for municipalities such as Milan or Rome. The closer the elections, the more lenient they get in chasing undisciplined drivers. They seem to be trying not to bother drivers just as they are deciding how to cast their vote.

The moral of the story is that if your mayor fears for their re-election you’re less likely to get a ticket for your parking indiscretions. You’re also less likely to be chased for payment if you do get one. But of course, you’d never park where you shouldn’t anyway, regardless of when the next election is. Would you?

Trust voters especially Italians to fully take advantage of these election liberties..

Germany’s deep-rooted obsession with saving – a brief history

May 9, 2018

Prof. Imko Meyenburg of Anglia Ruskin University on history of savings culture in Germany:

Saving has a long history in German society. The first savings bank opened in 1778 in Hamburg. By 1836, there were more than 300 of these savings banks operating in the then German Confederation, allowing Germans to save their hard earned income for some interest.

There is plenty of evidence in the exhibition that the concept of saving was established as a virtue from this period, through the Weimar Republic, which followed World War I, then in the Nazi era and after World War II on both sides of the Berlin Wall. Saving became an essential part of the country’s tax planning, welfare provision and social policies.

The legacy of this virtue has made Germans the top savers in the world. Households consistently saved more than 8% of their disposable income over the last two of decades, according to OECD data. The last time UK households came close to the German savings rate was in 1995. Two decades later, in 2015, German savers keep an equivalent of 9.96% of their disposable income in the country’s 400 savings banks, while the British were merely at 0.16%.

Looking at total savings of households, companies and the government (gross domestic savings) in these two countries, the gap is equally large. In 2015, German’s gross domestic savings were at 27.2% while in the UK figure shows merely 15.3%.

Hmm..

In an era of smartwatches, one couple wants to revive Bengaluru’s history of watchmaking

May 4, 2018

Nice feel good piece. A couple has established Bangalore Watch Company to restore the city’s watchmaking history:

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Everyone knows about Karl Marx, but what about Friedrich Engels?

May 4, 2018

The year 2018 is the 200th birth anniversary of Marx. Several article are being written about the man and whether his ideas made any impact.

But how about also discussing the role of Engels who was the key behind Marx’s ideas? Prof Terrell Carver of Univ of Bristol in this piece:

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Dilip José Abreu: an elegant and creative economist

May 3, 2018

Prof Rohit Lamba of Penn State Univ profiles work of Prof. Dilip Abreu, game theorist at Princeton Univ:

In the small but growing pantheon of economic legends from India, history will arguably place Dilip José Abreu front and centre. You may not have heard of him yet, but that is because like many classical academics he does not seek the limelight. The depth of his work, though, inspires awe among students, Nobel whispers among peers, and if we are lucky, eventually a Bollywood incarnation.

What makes people cooperate with others against their own immediate interests? Which institutions encourage cooperation or reinforce conflict? How do societies with diverse goals implement acceptable policies? Why does a financial bubble sustain even when everyone may know there is a bubble? These questions, their elegant answers, and more crown the Abreuvian legacy.

He grew up in South Bombay/Mumbai and questioned everything:

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Indian Antecedents to Modern Economic Thought

April 30, 2018

This paper by Prof Satish Deodhar of IIM Ahemdabad was doing the internet rounds.

The history of economic thought begins with salutations to Greek writings of Aristotle and Plato. While the fourth century BCE Greek writings may have been the fount of modern economic thought that emerged in Europe starting 18th century CE, there has been a general unawareness of the economic thinking that emanated from the Indian subcontinent. Preclassical thoughts that had appeared in Vedas dating a millennium prior to the Greek writings had culminated in their comprehensive coverage in the treatise Arthashastra by Kautilya in the fourth century BCE.

In this context, the paper outlines various ancient Indian texts and the economic thoughts expressed therein, delves on the reasons why they have gone unnoticed, brings to the fore the economic policies laid down by Kautilya, shows how these policies exemplify pragmatic application of the modern economic principles, and brings out in bold relief, the contribution of this Pre-Classical literature in the history of economic thought.

This all has been known atleast amidst a few people. However, much of Indian economic thought is reduced to a few quotes here and there. Most of economics academia based in India, has been reluctant to teach these ideas in classrooms and encourage research on the same. This is a huge challenge which has to be overcome.

Learning colonial history via cemeteries…

April 30, 2018

Fascinating piece by Siddharth Bhatia in Wire.

He points to how one can learn history from cemeteries and points to Surat’s ignored cemetery:

To get an idea of how Company officials saw themselves, one just has to head to the English cemetery in Surat. Obelisks, cupolas, pillars, many of them clearly inspired by Moghul architecture-they are all here, 250 years after they were erected by fond relatives and friends to commemorate the great and the good of the East India Company.

There is no dearth of graveyards of the British in different parts of India – from Park Street in Kolkata to Sewri in Mumbai and many other places where the British were based. Many of the graves have elaborate statuary and fancy memorials in graveyards, but hardly anything rivals the large and ornamental mausoleums of Surat. It is as if, like the great Pharaohs of Egypt, the officials, especially based here in the 17th century, wanted to leave behind structures that would inspire awe and wonder for centuries.

But as Shelley wrote about Ozymandias, King of Kings, it was a delusion. Today, the English cemeteries lie forlorn and neglected, the once important names obliterated – literally – and long forgotten, all the hubris and the pride gone.

Situated in Katargam, an old part of Surat, the cemetery remains neglected, with a sole caretaker from the Archeological Survey of India (ASI) manning the place. Only architecture students and tapophiles (tombstone tourists) visit the cemeteries and, very occasionally, someone from abroad tracing their genealogy comes by. But for anyone interested in colonial history, it can be very rewarding.

How the burials were show of power:

Many of those are buried here, including George Oxenden, the first Company governor of Bombay Presidency, his brother Christopher, and the second governor successor Gerald Aungier, said to be the man who laid the institutional foundations of the seven islands to transform the area into a town. The tomb is unmarked, but most historians now agree it is his. Both are handsome structures, with a dome and staircases leading to an upper level.

There are several others, the marble plaques faded, and quite a few unmarked, small graves, totalling over 400. The graves of those who died in the 19th century are far more modest – by this time the Company had moved its headquarters to Bombay,

The Dutch too had come to Surat, setting up a directorate there in 1616. They were traders and established a small base in the town. There was competition between the two European trading powers and rivalry also in building grand tombs.

The Dutch cemetery is walking distance from the English one; it is smaller but has no dearth of large mausoleums, the biggest one being that of Hendrik Adrian Baron Van Reede, a director of the Dutch East India Company who died in December 1691. “His grandiose mausoleum was intended to rival and eclipse that of his rivals the Oxendens,” says a board in the graveyard. It has a cupola and a gallery above supported by “handsome” columns below. The tomb was adorned with escutcheons and paintings, which have long since gone, though the walls and roof still retain floral designs.

In a small portion of the Dutch cemetery lie many stone plaques that are the graves of the handful of Armenians who lived here at one time, as traders. The caretaker says occasionally someone will come and specifically ask to see Armenian graves.

Hmmm…

But is anyone really interested in knowing about history, especially much reviled colonial history? Around the graveyards, are new residential buildings, small businesses and a busy flyover; how long before the inevitable pressures of the modern world once and for all wipe out this vestige of another time?

Here is an interview of Prof. Keith Eggener of University of Missouri who has studied evolution of cemeteries in US.

World reserve currency: From Dollar to e-SDR

April 27, 2018

Andrew Sheng and Xiao Geng in this piece say time is ripe to push e-SDR or digital SDR as reserve currency:

A key hurdle for the SDR has always been the geopolitical interests and priorities of the reserve-issuing central banks (not just the US, but also the eurozone, China, Japan, and the United Kingdom). But the advent of cryptocurrencies may offer another way: the private sector can work directly with central banks to create a digital SDR to use as a unit of account and store of value.

Such an “e-SDR” would, in a sense, be the quintessential reserve asset, because it would be fully backed by reserve currencies, in the IMF-determined ratio. The supply of e-SDRs would be completely dependent on market demand.

Of course, to enable a gradual shift from the US dollar to an e-SDR as the dominant international reserve currency, a sufficiently large e-SDR-denominated money market would need to be created. To that end, a politically neutral body, owned by the private sector or central banks, should be established to issue the asset. Participating central banks and asset managers would then have to swap their reserve-currency holdings for e-SDRs.

Once the private sector comes to view the e-SDR as a less volatile unit of account than individual component currencies, asset managers, traders, and investors could begin to price their goods and services, and value their assets and liabilities, accordingly. For example, the Chinese government’s massive Belt and Road Initiative could be conducted in e-SDRs. In the longer term, an international financial center, such as London or Hong Kong, could spearhead experimentation with e-SDRs using blockchain technology, with special swap facilities being created to make the asset more liquid.

I am not sure whether e-SDR matters much here. How much of SDR is physical anyways? It is an accounting identity and has been in so called digital form since inception.

One also does not think cryptocurrencies are making any headaways given most central banks and governments opposing them.

The real question is not e-SDR or SDR. It is whether SDR can be created a reserve currency. There was never much support for it earlier and same stands true today as well.

Income Inequality in France, 1900-2014

April 18, 2018

Thomas Piketty along with two more researchers figures inequality in his own country:

Bertrand Garbinti, Jonathan Goupille-Lebret & Thomas Piketty combine national accounts, tax and survey data in a comprehensive and consistent manner for France, to build homogenous annual series on the distribution of national income by percentiles, from 1900 to 2014, with detailed breakdown by age, gender and income categories over the 1970-2014 period. Their new series deliver higher inequality levels for the recent decades, because the usual tax-based series miss a rising part of capital income. Growth incidence curves look dramatically different for the 1950-1983 and 1983-2014 periods. They also show that it has become increasingly difficult to access top wealth groups with labor income only. Next, gender inequality in labor income declined in recent decades, albeit fairly slowly among top labor incomes. Finally, they compare the evolution of income inequality between France and the US.

It has some interesting charts which show the evolution of inequality. US has much higher inequality than France..

Cultural differences in monetary policy preferences

April 17, 2018

An interesting paper by Prof. Adriel Jost of Univ of St Gallen and Swiss National Bank.

The monetary policy preferences of a population are often explained by the country’s economic history. Based on Swiss data, this paper indicates that while different language groups may share the economic history, they demonstrate distinct monetary policy preferences. This suggests that distinct monetary policy preferences among the populations of different countries may be determined by not only their economic histories but also their distinct cultural background.

The author tries to figure the differences using several tests and datasets. For instance: (more…)

Women in Marathons: From being objected to becoming key for marketers..

April 16, 2018

Superb piece by Carly Drake PhD Candidate in Marketing, University of Calgary.

She tells the story of a Kathrine Switzer whose participation in the 1967 Boston Marathon was objected:

On an April morning in 1967, Kathrine Switzer ate a late breakfast of bacon, eggs, pancakes and toast. The Boston Marathon wasn’t due to begin until noon, so she had plenty of time to get to the starting line.

When the time came, she pinned the number 261 to her chest and started running through the Boston streets with her boyfriend, coach and friend in tow. Then, in a surprising contrast to the crowd’s cheers, she was attacked by a race official who’d noticed her ponytail and lipstick.

At this time, the Boston Marathon was a men’s-only race, and Switzer wasn’t exactly welcome in the field. After Switzer’s boyfriend warded off the race official by tackling him, Kathrine (registered as K. V. Switzer) crossed the finish line. Her efforts helped make the sport of endurance running more welcoming to women in the decades that followed.

“I wasn’t running Boston to prove anything,” she later wrote. “I was just a kid who wanted to run her first marathon.”

This month — 51 years after Switzer’s run — more than 10,000 women from around the world will compete in the Boston Marathon. The 42.2 kilometre (26.2 mile) run requires competitors to meet strict entry requirements, which means these women are some of endurance running’s fastest professional and recreational athletes.

As a marketing scholar, I study how gender and the body are represented in contemporary advertising. So, while the athletic world shifts its attention to Boston’s runners, I’m thinking about what those runners see in their social media newsfeeds or in the pages of the running magazines piled upon their nightstands.

She pores through advertising campaigns to encourage women to run:

In my research, I’m examining a sample of nearly 60 advertisements taken from the January/February 2017 issues of Runner’s World, Women’s Running and Canadian Running. So far, I’ve learned that Switzer’s run has left a complicated legacy in advertisements targeting female endurance runners.

Specifically, the advertisements celebrate women’s physical and mental strength and, in so doing, support women’s participation in the endurance running subculture. Yet these advertisements can also share a negative sentiment when they tell women exactly how they should look and behave.

Many of the advertisements glorify chasing the “ideal” running body — tall, lean and muscular — through unhealthy diet and exercise habits.

In the end, despite 50 years of Switzer, nothing much has changed:

Interpreted alongside the story of Switzer’s run, these advertisements are reminders that bodies are a part of history. Situated within an endurance running subculture that initially wasn’t quite sure how it would deal with the “woman problem,” these advertisements are evidence that female endurance runners are still bound by regulations.

While they are free to enter competitive races, the advertisements communicate that women’s success and value are tied to a certain training regime, body type and style of gender expression.

This focus on the body is a hallmark of the neoliberal ideology that colours Western public life more broadly. In neoliberal thinking, a “good” consumer makes the autonomous, rational choices that lead to physical fitness. Not only is fitness assumed to be more attractive, it benefits the state by saving on the economic costs of obesity.

Studying these advertisements, then, is an important task because advertisements tend to shape — and are shaped by — social norms, giving them a place of power in consumers’ lives.

What runners are seeing in the media can tell us a lot about what it means to be a runner today. If we know nothing else about these runners, we know that there are a lot of them. A year ago, Switzer ran the Boston Marathon on the 50th anniversary of her debut run. At 70 years old, she was the 9,856th woman to cross the finish line.

Because advertisers have no shortage of female endurance runners with which to communicate, it behooves them not to take another 50 years to change the conversation.

Hmm…

It is really nice to learn about different types of research people are doing…

For home price trends in London, check the Tokyo listings…

April 16, 2018

The key reason behind sub-prime crisis spreading across US was how home price trends became similar across the country.

In its new research, IMF points how the home price trends are becoming similar across the world:

If house prices are rising in Tokyo, are they also going up in London? Increasingly, the answer is yes.

In recent decades, house prices around the world have shown a growing tendency to move in the same direction at the same time. What accounts for this phenomenon, and what are the implications for the world economy? These are questions that IMF economists explore in Chapter 3 of the latest Global Financial Stability Report.

Our study of 44 cities and 40 advanced and emerging-market economies shows that the growing integration of financial markets plays an important role. As a result, housing markets in one country are more sensitive to swings in another. Policy makers should pay attention, because the heightened tendency for house prices to move in tandem may signal greater odds of an economic slowdown.  An economic shock in one part of the world is more likely to affect housing markets elsewhere.

Why is this happening?

  • Interest rates: The world’s major central banks have kept interest rates unusually low for a long time in a bid to stimulate growth. That has produced a ripple effect of low borrowing costs, including cheap mortgages, across the globe, which has helped push up prices.
  • Institutional investors, private equity firms, and Real Estate Investment Trusts have been increasingly active in major cities such as Amsterdam, Sydney, and Vancouver as they seek out higher returns.
  • Wealthy individuals have also snapped up properties in major financial centers in search of safe places to invest their money (and perhaps to live). One result: because the wealthy prefer high-end properties, their investments push up prices in expensive neighborhoods in places like New York and London at the same time.
  • Economic growth: In addition to financial factors, coordinated movements in the real economy contribute to the phenomenon. In 2017, growth picked up in 120 economies, accounting for three-quarters of world GDP. It was the broadest synchronized growth surge since 2010. Economic growth is a major driver of demand for homes, and hence prices.

All of this suggests that house prices are starting to behave more like the prices of financial assets, such as stocks and bonds, which are influenced by investors elsewhere in the world. In countries that are more open to global capital flows, prices of both homes and equities tend to be more synchronized with global markets.

 

High-denomination Banknotes in Circulation: A Cross-country Analysis

April 13, 2018

Interesting research by Gordon Flannigan and Stephanie Parsons of Reserve Bank of Australia in the central bank’s revamped Bulletin.

They try to see the reasons behind demand for High Denomination notes in Aus, Canada and UK:

In Australia, Canada and the United Kingdom, the number of high-denomination banknotes in circulation has increased at an above-trend rate in recent years. Evidence suggests that overseas demand might be a common driver of this elevated growth. Increased domestic demand for both transaction and store-of-value purposes may also have contributed, as well as responses to changes in government and central bank policies. This research was undertaken with assistance from members of the Four Nations Distribution Working Group, in line with the group’s objective to explore banknote-related topics that are directly relevant to the member central banks.

The overseas demand is mainly from Asian countries:

A key source of overseas demand for AUD 100 and CAD 100 banknotes appears to be Asia. Liaison with the cash industries in Australia and Canada suggests that there has been an increase in the proportion of AUD 100 and CAD 100 banknotes shipped to Hong Kong and Singapore. For example, in the five years to 2016 it is estimated that 80 per cent of foreign shipments of CAD 100 banknotes were destined for Hong Kong, compared with 60 per cent in the previous five years. Further, it is estimated that shipments of CAD 100 banknotes to Hong Kong accounted for about 5 per cent of all CAD 100 banknotes on issue in 2016, significantly increasing growth in banknotes in circulation in that year. Similarly, partial data from the Australian cash industry suggest that shipments to Hong Kong and Singapore in 2016 were equivalent to about 6 per cent of all AUD 100 banknotes in circulation. The link between Asian demand and GBP 50 banknotes in circulation is less clear. GBP 50 banknotes are primarily demanded by foreign exchange wholesalers abroad, consistent with an overseas store-of-value motive (Fish and Whymark 2015). However, because the British pound is a more prominent reserve currency, offshore demand is likely to be more widespread across countries.

Hmm..

Lots of other ideas and regressions in the study.

It was also interesting to note how government policies in Australia are creating speculation around High denomination notes:

Since peaking in late 2016, growth in demand for AUD 100 banknotes has declined considerably (Graph 4). This may partly reflect heightened uncertainty among consumers and businesses about the future status of AUD 100 banknotes following the Australian Government’s announcement in December 2016 of the formation of the Black Economy Taskforce (BETF). This taskforce aims to investigate and identify where regulations and policies could be introduced to reduce activity occurring outside the tax and regulatory system (excluding illegal or criminal activities). The BETF convening announcement included, among many other options, a discussion around strong demand for AUD 100 banknotes and identified the use of cash as an area to be investigated, generating intense media interest. This announcement coincided with heightened public interest in the future of high-denomination banknotes following decisions in some jurisdictions to withdraw the legal tender status of some high-denomination banknotes (India and Venezuela) or to discontinue production and issuance (euro area).

Daily lodgements of AUD 100 banknotes into cash depots increased sharply after the BETF announcement (Graph 7). It may have been that the BETF announcement, and associated media speculation about the future of AUD 100 banknotes, contributed to uncertainty among the general public and prompted some to spend AUD 100 banknotes that were previously held as a store of value. Liaison with the cash industry has indicated that the increase in lodgements has been evident across a broad range of retail customers, has occurred in most states and has been concentrated in capital cities.

 

Banking on a ‘shithole’: US-led racial capitalism in Haiti began long before Trump

April 13, 2018

Prof. Peter James Hudson in  this post writes on how City Bank (Citibank now) profited from racial ideology and economic policy to secure control of Haiti’s finances and banking.

In nut shell, so badly named shithole countries have been very lucrative for Wall Street players for a long time.

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How the Quakers became unlikely economic innovators by inventing the price tag

April 12, 2018

We tend to associate economic developments with big theories and big bang reforms. But dig into economic history and you realise how small things matter much more. Infact, we take several things for granted today but when they were introduced sometime in history they created a revolution of sorts. For instance bar codes, shipping containers and so on.

Add price tags to the list as well. This video tells us how Quakers ended up inventing the price tag. The circumstances were unusual driven by morality and opposition to frequent price changes:

Belying its simplicity and ubiquity, the price tag is a surprisingly recent economic development. For centuries, haggling was the norm, ultimately developing into a system that required clerks and shopkeepers to train as negotiators. In the mid-19th century, however, Quakers in the US began to believe that charging people different amounts for the same item was immoral, so they started using price tags at their stores to counter the ills of haggling. And, as this short video from NPR’s Planet Money explains, by taking a moral stand, the Quakers inadvertently revealed an inefficiency in the old economic system and became improbable pricing pioneers, changing commerce and history with one simple innovation.

Superb stuff…

 


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