The Unreality of Economics

Most academic writing by economists strikes me as further and further away from the realities of life.

I wonder if one reason why our discipline's understanding of real-world economics is so poor is that we are still stuck at looking at "national economics". Even our so-called "macroeconomics" stops at the national dimension.

Our ruling paradigms are "country competitiveness" and other such non-realities

In the real world, however, there are awkward facts such as the following:

- "national" currencies may be largely held by countries other than those which originated them

- "national debt" may not be to the nation, principally

- companies are registered for legal reasons in Country "A" but have as employees, and are owned by (and therefore distribute their profits to), people from many countries - in many cases, the *majority* of owners and employees may not be from the country in which the company is registered

- similarly, people within Country "A" are usually employees of companies "belonging" to many other countries

- investors from Country "A" rarely have all their investments in that country; indeed, the richer they are, the more likely they are to have their investments in several countries

- Central Banks are constantly making "their own" judgements regarding interest rates and money supply, but these judgements tend to be in the "light" of the judgements that other such entities are making

- the perceptions and actions of currency traders in "other" countries can raise or depress the exchange value of "the" currency more than the judgemetns and actions of the Central Bank in question, or indeed more than the judgements and actions of all the most important Central Banks in the world.

I will find it helpful to have my attention drawn to what body of our literature takes as its *starting* point the fact that global economics and global business is all there is, now - though these are of course complicated by inconvenient legal realities such as "countries". Sphere: Related Content

How stupid is the market becoming? - 2

Earlier this year, I blogged on the above subject in relation to the company, BrainStore, arguing that BrainStore's marketing was ridiculous.

The CEO, Markus Mettler, upset with my Blog (specially as I am a small shareholder), wrote to me (partly) as follows:

"Prabhu: did you realize, that the flower mailing not only contained a vacumized tulip but also contained a DVD with a 30 (!) minute TV report (3 SAT, Nano special) on BrainStore with a case study? I'll gladly send you a copy if you should not have seen it yet.

"Prabhu: did you feel the power of the message "It's possible" in the silk print we sent at Christmas in 2004? It's a message against all the "It won't work, it's to expensive, we have tried it before, never will this fly" etc (that stops innovation and creativity). The "It's possible" message has been in Newspapers (all over)

"Prabhu: did you see the symbolism in the broom? Make room for new ideas. Get rid of the dust blocking your innovation. With a twinkle in our eyes...

("So) we are not at all out for effects. We're not impressed be "Sauglattismus" - a beautiful Swiss German word. We are very focused on common sense, (since) common sense (is) in fact (what) drives us. The search for the essence, the simple, the surprising and yes, the polarizing".

(please note that the bits in brackets are my attempts to make the English smooth or comprehensive when I shorten the CEO's letter to me)

Dear Markus: I must be much less imaginative than I thought! Mea culpa... Sphere: Related Content

The Economist magazine on Milton Friedman

You may have noticed The Economist's Obit on Milton Friedman, which was "Milton Freed Man".

The following would have been my letter to the Editor, if I had got around to it in time:

SIRS - Your unthinkingly fulsome praise of Milton Friedman is inappropriate, even for an obituary.

Friedman did not "free man". Rather, he freed the rich to become even richer - at the cost of the US as a nation, at the cost of increasing the gap between the rich and the poor, and at the cost of worsening the environment:

* The aggressive ascendancy of Friedmanism and its allies has resulted in the growing gap between the rich and the poor that has been highlighted more than once by The Economist itself.

* The influence of Friedmanism and its allies has resulted in the trade and other imbalances that now imperil the United States as a country (though no one there seems willing to face that fact).

* Much more dangerously, Friedmanism and its allies are worsening the climate chaos that bedevils the future of the whole of humanity.

Will Keynesianism be able to rescue us from those triple dangers? Perhaps from the first danger, though I have my doubts about that possibility.

In any case, the second and third dangers cannot be overcome except by new global agreements and legislation – which Friedman so chafed against, even at the national level.


Prabhu Guptara
Weinfelden, Switzerland Sphere: Related Content

"Tackling Poverty: The Roles of Business, Government, and NGOs"

For my article, "Tackling Poverty: The Roles of Business, Government, and NGOs", please go to:
http://www.ethix.org/article.php3?id=346 Sphere: Related Content

Prizes and such matters

"Crispin" from www.mysmallboat.info writes to me as follows:

"I have been thinking about "prizes" recently and their ability to stimulate advances or maybe even to work for good. I was wondering what would be the most beneficial outcomes that could be advanced by creation of a small number of prizes? Any thoughts? It would make an interesting post."

I couldn't find an e-mail ID for you or any Feedback form on your website,Crispin, otherwise I would have sent this to you. But then others would not have the pleasure(?) of seeing my response to you...!

Anyway, prizes: certainly, they provide recognition, and that is good. One probably needs to distinguish between the satisfaction and encouragement that prizes provide to a recipient, and the public encouragement of the relevant activity.

The former happens in any case (I think and hope!). The latter is a more complicated matter, because it is linked with the question of publicity.

Having served on a jury or two, I am very aware of all the hard work that goes into selecting a prize winner - sometimes, collectively, the jury will have put in as much effort as the prize-winner! Not to mention the work put in by the organisers or the work put in by the individual(s) who earned the money that funds the prize.

However, all that effort (i.e. doing the work that is being recognised in the first place, as well as the work done by others) amounts to little more than individual satisfaction if there is no resulting publicity. And that is an enormous issue today.

If you endow the largest prize in any field, you are more or less guaranteed to get some publicity.

Small prizes can and do win publicity, but you have to be that much more inventive and creative if you want to get the attention of the media. You may want to look carefully at what the Booker Man Prize for Literature, or what the Nobel Prize Committee does, if you want some pointers regarding how best to win publicity. Yes, that does take a lot of money, but not only money....

So go ahead and endow a number of small prizes, Crispin. They will spread the cheer and satisfaction around to the winners in any case. If you want additionally to encourage the related activity as a whole, on the other hand, go either for a single large prize or make sure that you put enough time money aside for the specific purpose of organising the effort of getting media attention - which is not as simple a matter as merely buying advertising.

BTW, in my view, the USA should get the prize for creating the largest number of prizes (they seem to have prizes for everything). The UK, Northern Europe and Canada come more or less equal second. The non-Reformed parts of the world remain pretty poor in the number of prizes they offer. Sphere: Related Content

Old Age or "Mature Age" or "Ripe Age" or...

At a conference last week, a fellow-participant struggled when he wanted to say the almost instinctive phrase "yound and old".

What he struggled about was the word "old".

He did not want to offend the "oldies" present, so hesitatingly tried "mature", then "ripe"...

I was the second oldest person in the room, so I quickly reassured him that, in every traditional culture, old age was respected not scorned, and that I, at least, had not succumbed to the modern illusion that one can be young forever.

The lie-merchants include many marketing experts, scientists and technologists, who are in the business of selling us the make-believe that we can be young forever.

There is a time to be we are born, and a time to be young, a time to be a professional, and a time to be a coach, a time to die and a time to grow old.

This life is only a moment. The life that comes after this, is for eternity.

I have no qualms about old age or about death, since Jesus the Lord offers each person the life by which one can grow old gracefully, and by which death becomes the door to enter happiness eternally.

Happy is the individual who knows how to grow old gracefully, and happy is the individual who has come to understand how to die in the knowledge that death is going to open the door to a life of eternal happiness rather than eternal regret. Sphere: Related Content

On "Calaspia", or Kids and Career Choices

When my twin boys' first novel, "Conspiracy of Calaspia", was published one day before their 18th birthday last week, it was a bit like history.

The twins have been working away on their novel (the first of a series of seven novels they've planned, actually) from the age of eleven.

The younger twin, Jyoti, particularly impressed me with his desire to write because he would rather write than sleep, or eat, or play football. He always worked with the older twin, Suresh, because they did everything together - though Suresh has always had other interests too.

When Jyoti decided that he wanted to quit school to become a full-time writer, I was in a quandary because he was only 14.

On one hand, I have always loved literature (and writing). "Always"? Well, not quite. To be precise, from the age of about 14. Later in life, for a time, I even tried to switch careers and become a full-time writer.

On the other hand, I therefore know how tough it is to make a living as a writer. As a father, ought I not to discourage a young boy from making a mistake which he might regret later as the realities of life hit him? Ought I not to even disallow him to be a writer? At the very least, should I not be cautious and suggest that he at least finishes a first university degree - if necessary in literature - before committing himself to any career?

In the end, the family tradition won out. First, at least from my grandfather's time, the tradition has been to encourage individual interests: when my father wanted to depart from our traditional caste-related focus on business, my grandfather paid for him to go to Oxford to study in order to become a professor (he became one of the first Indian graduates in English from Oxford, in 1933). When my father died, with the result that we had almost nothing and my mother had to work day and night in order to bring us up, even then my mother always encouraged me to follow my own interests, however "uneconomic" and "non-career related" they seemed. The great bane of life today is that kids are bored. People don't know what to do with their lives. So if a child has an interest in anything, however "stupid", we should feed that interest, not squash it. Second, our family have been businessfolk for at least the last two thousand years. We ought to know how to calculate risks and when to take risks. In my view, the world has changed fundamentally in the decades since my own teenage years. Today, in any reasonably developed part of the world, you can make a sort of living working at almost any profession, however lowly. However, you can also "make it big" in any profession, if you are the best in the world, or among the best in the world, in that profession. The historic Hindu and Roman Catholic and Tribal-world distinction between "noble" and "ignoble" professions has been broken by the Protestant Revolution. We are all Protestants now when it comes to our daily lives, whether or not we believe in the essential beliefs of Protestantism or are even aware of them: Luther's attitude (or the Bible's attitude) has come to prevail, and every profession is now regarded as more or less equally worthwhile. Though it may still be difficult to be the world champion at road sweeping, you can make as many millions from being a world-class car driver, singer or cook as you can from being the world's top economist, doctor or engineer (these last three being the favoured professions in my teenage years, and most Indian parents still "push" their offspring towards such professions). In other words, the risks are much lower that children will make a disaster of their career if they follow their passions, than if they follow the herd and somehow struggle with their boredom more or less passably.

A straw in the wind was that Jyoti published an article in the Wall Street Journal at the age of fourteen, becoming the youngest known writer to have done so, and I must say that influenced my judgment.

Then, in one of our discussions, Jyoti came with the clincher. He pointed out that if I was willing to support him through, say, ten years of being bored and having to struggle at things in which he was not interested before he could start trying to make a living by his writing, did it not make more sense for me to support him through ten years of an apprenticeship at something to which he is totally committed?

All that sounds terrible "rational" and "ordinary". I was constantly praying that God would guide him and guide my wife and myself as we discussed these matters, so that we would know from God in our hearts the right decision. After all, we are not accidents in a universe that came into being by chance. We are the results of God's deliberate creation and each of us has a specific purpose for which we are born. At least, that is what Jesus taught.

Finally, I agreed that if Jyoti proved that his dedication to writing could create the motivation to study on his own to finish his "O" Levels successfully, then he could really stop going to school and become a full-time writer.

Jyoti did buckle down to studying on his own (not without struggles), eventually doing creditably at his "O" Levels. So he took to full-time writing.

Two years later, the result is "Conspiracy of Calaspia", the first of the Insanity Series. It is thoroughly enjoyable reading. I think they handle the genre of fantasy surprisingly well. Their writing style and their sensitivity to words is better than that of many other published writers who are very much older as well as "established". And the twins have a philosophical point of view which should make the series increasingly interesting for those who have the interest to follow it. Sphere: Related Content