Daron Acemoglu, professor of MIT, answers a big question, "what makes us rich?".
He says incentive is the key role in what makes us rich or poor:
People need incentives to invest and prosper; they need to know that if they work hard, they can make money and actually keep that money. And the key to ensuring those incentives is sound institutions — the rule of law and security and a governing system that offers opportunities to achieve and innovate. That's what determines the haves from the have-nots — not geography or weather or technology or disease or ethnicity.
Put simply: Fix incentives and you will fix poverty. And if you wish to fix institutions, you have to fix governments.
Very simple answer!
Tuesday, November 24, 2009
Monday, November 23, 2009
Welcome, Anonymous!!
Recently, (it's about you, right?) an anonymous has come to my blog and post the same comment. Of course, I like to be given some comments on my blog. I always welcome you, but if you like, please read it out and then give your comment on it.
Of courese, you disagree with me and if so, I hope you'll give me the disagreement. At any rate, just I wish you enjoyed this small blog a lot.
Of courese, you disagree with me and if so, I hope you'll give me the disagreement. At any rate, just I wish you enjoyed this small blog a lot.
Tuesday, November 10, 2009
Soshokukei Danshi
One article in NY times tells about the Japanese men and caught my eye:
Two phrases have been coined to describe them: soshokukei danshi or “herbivorous males,” and Ojo-man – or “girly men.”
Definitions vary, but the new herbivores could be described as metrosexuals without the testosterone. Although most of them are not homosexual they have in common a disdain for the traditional accoutrements of Japanese manhood, and a taste for things formerly regarded as exclusively female. Girly men have no interest in fast cars, career success, designer labels and trophy women. Instead, they hold down humble jobs, cultivate women as friends rather than conquests and spend their free time shopping at small boutiques and pursuing in Japan what is regarded as a profoundly feminine pastime: eating cakes.
Seeking to tap into this market, Japanese manufacturers have launched underwear, cosmetics and clothing designed to appeal to herbivorous males – including bras for men and lacy male tops.
...Masahiro Yamada, a professor of sociology at Chuo University, Tokyo, believes that the new demographic is the result of economic decline: most young men in Japan simply cannot afford fast cars and designer labels, he says. Yamada also worries about the effects of soshokukei danshi on Japan’s shrinking population, noting that almost half of Japanese men aged 20–34 are unmarried and that nearly 30 percent of these have never had a girlfriend:
“I worry that herbivorous boys are the future of Japan. … As young Japanese men become more timid and more averse to taking risks, it will affect the energy and vitality of the society.”
According to a July 2009 article in The Japan Times, go-getting “nikushokukei joshi” – or “carnivorous women” – have emerged as a counterweight to soshokukei danshi.
Two phrases have been coined to describe them: soshokukei danshi or “herbivorous males,” and Ojo-man – or “girly men.”
Definitions vary, but the new herbivores could be described as metrosexuals without the testosterone. Although most of them are not homosexual they have in common a disdain for the traditional accoutrements of Japanese manhood, and a taste for things formerly regarded as exclusively female. Girly men have no interest in fast cars, career success, designer labels and trophy women. Instead, they hold down humble jobs, cultivate women as friends rather than conquests and spend their free time shopping at small boutiques and pursuing in Japan what is regarded as a profoundly feminine pastime: eating cakes.
Seeking to tap into this market, Japanese manufacturers have launched underwear, cosmetics and clothing designed to appeal to herbivorous males – including bras for men and lacy male tops.
...Masahiro Yamada, a professor of sociology at Chuo University, Tokyo, believes that the new demographic is the result of economic decline: most young men in Japan simply cannot afford fast cars and designer labels, he says. Yamada also worries about the effects of soshokukei danshi on Japan’s shrinking population, noting that almost half of Japanese men aged 20–34 are unmarried and that nearly 30 percent of these have never had a girlfriend:
“I worry that herbivorous boys are the future of Japan. … As young Japanese men become more timid and more averse to taking risks, it will affect the energy and vitality of the society.”
According to a July 2009 article in The Japan Times, go-getting “nikushokukei joshi” – or “carnivorous women” – have emerged as a counterweight to soshokukei danshi.
Wednesday, November 04, 2009
Next Recession
Roubini predicts that another recession is coming.
...rising fiscal deficits in most economies are now pushing up the yields of long-term government bonds. Some of the rise in long rates is a necessary correction, as investors are now pricing a global recovery.
But some of this increase is driven by more worrisome factors: the effects of large budget deficits and debt on sovereign risk, and thus on real interest rates; and concerns that the incentive to monetize these large deficits will lead to high inflation after the global economy recovers in 2010-11 and deflationary forces abate.
The crowding out of private demand, owing to higher government-bond yields – and the ensuing increase in mortgage rates and other private yields – could, in turn, endanger the recovery.
As a result, one cannot rule out that by late 2010 or 2011, a perfect storm of oil above $100 a barrel, rising government-bond yields, and tax increases (as governments seek to avoid debt-refinancing risks) may lead to a renewed growth slowdown, if not an outright double-dip recession.
...But much of the rise in asset prices is not justified, as it is driven by excessively optimistic expectations of a rapid recovery of growth towards its potential level, and by a liquidity bubble that is raising oil prices and equities too fast too soon. A negative oil shock, together with rising government-bond yields – could clip the recovery’s wings and lead to a significant further downturn in asset prices and in the real economy.
...rising fiscal deficits in most economies are now pushing up the yields of long-term government bonds. Some of the rise in long rates is a necessary correction, as investors are now pricing a global recovery.
But some of this increase is driven by more worrisome factors: the effects of large budget deficits and debt on sovereign risk, and thus on real interest rates; and concerns that the incentive to monetize these large deficits will lead to high inflation after the global economy recovers in 2010-11 and deflationary forces abate.
The crowding out of private demand, owing to higher government-bond yields – and the ensuing increase in mortgage rates and other private yields – could, in turn, endanger the recovery.
As a result, one cannot rule out that by late 2010 or 2011, a perfect storm of oil above $100 a barrel, rising government-bond yields, and tax increases (as governments seek to avoid debt-refinancing risks) may lead to a renewed growth slowdown, if not an outright double-dip recession.
...But much of the rise in asset prices is not justified, as it is driven by excessively optimistic expectations of a rapid recovery of growth towards its potential level, and by a liquidity bubble that is raising oil prices and equities too fast too soon. A negative oil shock, together with rising government-bond yields – could clip the recovery’s wings and lead to a significant further downturn in asset prices and in the real economy.
Monday, November 02, 2009
EMH Is Wrong?
Modern economists are always criticized for mainly 2 hypotheses: (1) REH and (2) EMH. The reason is easy. These hypotheses seem to be fictional, not real.
(1) REH
Rational Expectation Hypothesis - It is a very important idea in modern macroeconomics and originated from John Muth. Shortly, it says that the economic equilibrium we reach is determined by what we "expect" for the future economic behavior. That means our economy is the mirror of our expectation.
(2)EMH
Efficient Market Hypothesis - It is a very essential idea for modern financial theory and originated from Eugene Fama. Briefly, it states that the prices of securities reflect all known information that impacts their value. The hypothesis does not claim that the market price is always right. On the contrary, it implies that the prices in the market are mostly wrong, but at any given moment it is not at all easy to say whether they are too high or too low.
Many people claim that EMH is the main culprit of the Crisis, but Prof. Jeremy Siegel says in reply that the fact that automobiles today are safer than they were years ago does not mean that you can drive at 120 mph.
A small bump on the road, perhaps insignificant at lower speeds, will easily flip the best-engineered car. Our financial firms drove too fast, our central bank failed to stop them, and the housing deflation crashed the banks and the economy.
(1) REH
Rational Expectation Hypothesis - It is a very important idea in modern macroeconomics and originated from John Muth. Shortly, it says that the economic equilibrium we reach is determined by what we "expect" for the future economic behavior. That means our economy is the mirror of our expectation.
(2)EMH
Efficient Market Hypothesis - It is a very essential idea for modern financial theory and originated from Eugene Fama. Briefly, it states that the prices of securities reflect all known information that impacts their value. The hypothesis does not claim that the market price is always right. On the contrary, it implies that the prices in the market are mostly wrong, but at any given moment it is not at all easy to say whether they are too high or too low.
Many people claim that EMH is the main culprit of the Crisis, but Prof. Jeremy Siegel says in reply that the fact that automobiles today are safer than they were years ago does not mean that you can drive at 120 mph.
A small bump on the road, perhaps insignificant at lower speeds, will easily flip the best-engineered car. Our financial firms drove too fast, our central bank failed to stop them, and the housing deflation crashed the banks and the economy.
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