En del säger att den ekonomiska utvecklingen under den senaste tiden har varit bättre än väntat. Andra menar att den har varit sämre. Vad man dock kan konstatera är att om världen ska komma på fötter igen måste vi fortsätta att handla varor och tjänster.

Det är mycket prat om miljö och klimat. Dessa ting är så klart viktiga, men de måste också balanseras mot människors levnadsstandard. Det fungerar inte att argumentera för att vi ska minska konsumismen samtidigt som vi bara ska handla närproducerat, inte åka bil, minska energiförbrukningen, inte köpa produkter som drar för mycket elektricitet och inte åka flygplan.

Vad ska människor försörja sig på om man inte får arbeta inom transportsektorn (hejdå piloter, lastbilschaufförer, rederieägare, taxibolag), detaljhandeln (hejdå försäljare av leksaker, kläder, möbler, mobiltelefoner, TV-apparater), livsmedels- och restaurangbranschen (hejdå kaffeförsäljare, fiskare, chokladtillverkare och alla företag som inte producerar sin mat i Sverige), industrin (hejdå ni som arbetar på Volvo, Vattenkraft och ABB), och så vidare.

Välstånd och välfärd är inget annat än resultatet av produktiviteten. Så är det bara. Därför är det bara högre avkastning och effektivare (eller mer) arbete som kan göra så att människor får det bättre ställt. Dessutom är det viktigt att tänka på att den snabbaste utvecklingen görs genom att involvera hela världen – tänk Adam Smith, David Ricardo, division of labour och specialisation – och därför blir tjafset om att minska transporterna löjligt såväl som kontraproduktivt.

Det snabbaste och bästa sättet för mänskligheten att utrota fattigdomen och utveckla miljövänlig teknik är genom att handla mer. Köp julklapparna med gott samvete!

Simon Hedlin Larsson

* Adam Smith corrected me last week for calling the football match between Bahrain and New Zealand a test. Can someone enlighten me as to when a match between two national teams is a test and when it isn’t?

* 99 then out – how frustrating for Daniel Vettori.

Philosophen hinterfragen den Sinn der Arbeit: Ist der „Wert Arbeit“ tatsächlich überholt? Oder ist er heute zur Strukturierung der Persönlichkeit sogar notwendiger denn je? „Paris-Berlin, die Debatte“ sucht nach Antworten zur Kultur der Arbeit jenseits der gängigen Arbeitslosen- oder Ein-Euro-Job-Diskussionen.

Ist der Mensch tatsächlich für die Arbeit geschaffen? Oder besteht die Gefahr nach der alten Parole: Sein Leben vergeuden, um seinen Lebensunterhalt zu verdienen? Sind diese Fragen überhaupt noch aktuell, wo doch die Arbeit als Wert an sich und als Unterpfand der menschlichen Würde betrachtet wird? Die Arbeit als Wert ist jedoch ein geschichtliches Phänomen, das erst Ende des 18. Jahrhunderts aufgetaucht ist.

Die Arbeit im heutigen Verständnis erfuhr in der Antike keine Wertschätzung. Auch verändert sich die Einstellung zur Lohnarbeit, zum Arbeitsmarkt überhaupt. In Deutschland gibt es beispielsweise ein Manifest der „glücklichen Arbeitslosen“. In Frankreich wurde vor ein paar Jahren das Buch „Bonjour paresse“ (etwa: Es lebe die Faulheit!) von Corinne Maier zum Bestseller.

Vor diesem Hintergrund stellt sich auch die Frage nach der Schaffung von Werten. Misst sich denn der Reichtum einer Gesellschaft einzig am Pro-Kopf-Einkommen? „Paris-Berlin, die Debatte“ versucht, die kulturelle Dimension von Arbeit zu erfassen, der sozialen Komponente von Arbeit gerecht zu werden und den Begriff von Arbeit neu zu füllen, der über reine Erwerbstätigkeit hinausgeht.

Liegt die dazu passende Utopie vielleicht genau in jenem Bereich zwischen der Befreiung von der Arbeit und der Erfüllung in der Arbeit? Paris-Berlin diskutiert mit Daniel Tyradellis, Philosoph und Kurator der Ausstellung: „Arbeit. Sinn und Sorge“ im Hygienemuseum von Dresden.

Adam Smith, one of the fathers of modern Economics, laid the foundations upon which most of our society rests, in monetary terms. He also speaks of creative destruction, meaning that from times to times a wave of destruction strucks the economy removing the inefficient companies and opening space for newer, more efficient ones.

Contrary to the beliefs of the owners of the closing companies, this actually does good to the general public and society as a whole, allowing us to pay less for the same/better services due to the removal of the already mentioned inefficiencies. By working for the self benefit, one usual works for the benefit of the society as a whole. Working to improve our business by making it more efficient allows us to remove unnecessary spending, thus making the prices go down, maintain general profit margins and allowing one company to sell more than their not so efficient rivals. To the consumer there’s a net gain, allowing him to pay less for the same product. This is a part of what capitalism really is.

But and what happens to the owners of the closing companies? They have their money invested on the company, workers they have to fire, wives to tell the bad news, etc. A typical familiar drama.

The suffering of the few for the greater good…

It is commonly assumed by the public that Communism (also called “Marxism”) was created by the German philosopher Karl Marx. Nothing could be further from the truth. In reality, a young Marx joined the already existing Communist movement and, after publishing several works on the subject of Communism and Capitalism (a term he coined), he became such a central figure that the term “Marxist” became synonymous with the term “Communist”. In much the same way Adam Smith did not create Capitalism but rather created the authoritative work on Capitalism (The Wealth of Nations) and yet is still considered the “founder” of Capitalism.

So who did create Communism?

Like most things in life, there is no short and simple answer. Communism, or at least the primitive ancestor of Communism has existed for thousands of years. At the dawn of man, humans lived in tribes, working together for survival. What one man killed was food for everyone, the spear or hammer made by one person could be used by another. The concept of private-property did not evolve until much later in human history- the reason being that selfishness and individualism simply could not mesh with the harsh realities of the time. One human could not survive on his own, the tribe as a whole could not waste time and energy on creating twenty individual hammers for the twenty men of the tribe when one could be shared just as easily. At the same time, the shared property (combined with the need for everyone to pull their own weight) eliminated any chance of a class system evolving. Without any difference in wealth or workload, society was more or less egalitarian.

So what happened?

As humans became more settled and as the barter system emerged (to be discussed in a later post), shared-property died slowly out and the class system arose. While today the vast majority of hunter-gatherer, pastoral, horticulturalist, and nomadic people groups still live in classless, shared-property systems, the majority of the world’s population began moving away from this system after the establishment of permanent agricultural communities. By the fall of the Roman Empire, most of the world’s people groups practiced Capitalism in some form. It was not until 1516 when Thomas Moore, one of Henry VIII’s closest advisers, published his work Utopia that the concepts of shared-property and classlessness were reintroduced into society (albeit merely as subjects of intellectual discussion). Only in the early 1800s were the concepts developed into actual political/economic theories. Henri de Saint-Simon, a member of the French aristocracy, created several works on the subject and while never implementing them in any major way, laid the foundations for what would become known as the Communist movement. It was not until 1848 when two young Prussian authors named Marx and Engels published their collaborated work The Communist Manifesto that Communism (or “Socialism”- at the time the two words were more or less interchangeable) became a concrete theory. Between the two men’s works, the entire Communist philosophy was created, though it was not implemented until 1871, when Parisian Socialists revolted against the imperial French government and established a short-lived attempt at a Communist government until the Commune (revolutionary government) was wiped out by the French military. While Communist philosophy spread across much of the Western world, there were no major attempts at Communism (baring the establishment of Amish, and later, Hutterite, communities- which are closer to the primitive classless/shared-property practices of various tribal societies). There was a brief attempt at Fabianism (a British Socialist movement), however it quickly devolved into a philosophy, rather than a physical attempt at the implementation of Communism. It was in Russia in 1917 that the first major attempt at a Communist revolution (since the 1871 revolution) took place. The Bolsheviks (the Russian Communist party and revolutionary movement), led by Vladimir Lenin, overthrew the Russian monarchy and the feudal system. After Lenin’s death in 1923, a split ensued that left the USSR divided between the followers of Leon Trotsky (creator and commander of the Red Army and Lenin’s second-in-command) and the followers of Joseph Stalin (the General Secretary of the Communist party). Stalin, despite the efforts of Trotsky and his followers, assumed control and eventually exiled Trotsky in 1929. Under the despotism of Stalin, the USSR, while maintaining the facade of Communism, devolved into a semi-Socialist dictatorship (Trotsky referred to it as a “deformed workers’ state). While Trotskyism grew in popularity in the West, the general Communist movement was marred by the atrocities committed by Stalin and the imperialists policies pursued in Eastern Europe after his death. In China, Mao Zedong led what is generally considered to have been a Communist revolution, but the later policies of Mao have caused many other Communists to doubt whether China could be counted as true Communist country since the mid 1950s. While the revolution itself is considered to be beneficial, the vast majority of modern Communists hold that contemporary China is no more a true Marxist country than Stalin’s USSR (this opinion is viciously opposed by Maoist factions of the Communist movement). While Communism was quickly becoming popular in the third-world (due largely to Western neo-colonialism) the next major advancement of Communism occurred in Cuba after Fidel Castro and Che Guevara defeated the dictator Batista. Once again Communists are split on the subject of whether Cuba may be considered a true Marxist government- much like China, there is popular that the revolution was a positive event but the movement is split on whether Cuba did or did not devolve into another deformed workers’ state. Indeed, the same could be said for almost every country where a Communist revolution has taken place (though almost all Communists are united in believed that North Korea is not a true Communist country). While the collapse of the USSR in 1990 has led many to believe that Communism has been defeated, the Communist movement is technically as active as it ever was.

In short, the history of Communism is far from simple. Much of its history can be interpreted depending on your sympathies and opinions.

Then again, the same could be said for any aspect of history.

Author’s Note: Since Communism isn’t merely an economic or political or social theory but rather a combination of all three, you can see how describing the theory itself- let alone its history- is a massive undertaking that could easily fill a book. Considering my space and the attention span of the reader is sorely limited, I have been forced so skim over the major events of Communist history. Don’t be ticked off at me if I missed some (though if I have something that might be wrong, please correct me).

…every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.

From Wiki:  In economics, the invisible hand, also known as the invisible hand of the market, the term economists use to describe the self-regulating nature of the marketplace, is a metaphor first coined by the economist Adam Smith in The Theory of Moral Sentiments. For Smith, the invisible hand was created by the conjunction of the forces of self-interest, competition, and supply and demand, which he noted as being capable of allocating resources in society. This is the founding justification for the laissez-faire economic philosophy.

My thoughts for this post came about in the most immediate sense from Will Wilkinson: a post at his blog Will Wilkinson, entitled Now Let us Praise Results-Facilitating Virtue, dated 20th November 2009. Wilkinson is an economics and public policy commentator, with a background in philosophy.  He is responding to an blog post where the George Mason economist Tyler Cowen praises one of his colleagues, Robin Hanson, who responds in his own blog by arguing for the importance of praising consequences of individual actions, rather than the individual concerned.  Links to all of that in Wilkinson’s post.  What Wilkinson gives in reaction to all that is a beautiful little essay on character, virtue, and advantages to the economy.  As he explains, ‘virtue’ as an idea in ethical though refers to the character traits which the good individual forms and which benefit society.  What Wilkinson emphasises is the collective economic benefits of individuals in the society with virtue.

Since for non-philosophers ‘virtue’ amy seem like something to do with abstract moralising, it is worth explaining that ‘virtue ethics’ refer mores to a cultivation of individual excellence which serves the ‘virtuous’ individuals and society as a whole.  Virtue on this account is really more to do with strength and constancy of character, rather than giving priority to the demands of external moral obligations.  The Antique tradition of virtue was taken up in Medieval Christian philosophy, most notably in the thought of Thomas Aquinas; and at that point it maybe acquires a sense of moral imposition, though that is something of a brutal generalisation.   That antique sense of virtue has been increasingly discussed in philosophy since the 1950s, along with an increasing recognition that it was still very present in  18th and 19th Century philosophy.

For a very handy summary of Aristotle’s ethics by a leading commentator, Roger Crisp, go this podcast posted at the Faculty of Philosophy, Oxford University.  For an equally admirable summary of some later developments in Antique ethics, around Seneca and Stoicism, click here for a link to a recent podcast of am interview of Rick Benitez conducted by Alan Saunders for his PhilosophyZone radio show.

The virtue ethics tradition, as mediated by the Antique Stoics, was a major influence on Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations, as well as in his ethical treatise, The Theory of the Moral Sentiments.  For a great discussion of this click here for a pdf of Deirdre McCloskey’s paper ‘Adam Smith, the Last of the Former Virtue Ethicists’.  McCloskey is a professor of economics, history, English and communications at the University of Illinois, Chicago, which gives an idea of the way that she integrates different areas of the humanities and social sciences.  McCloskey points out that Smith’s philosophy and economic thought are shaped by Stoicism and theories of the virtues, and not just the virtue of prudence.  She also has a very good sketch of how economists, and the culture in general, lost sight of this kind of integration until philosophers revived Antique virtue theory.

One possible fault with McCloskey’s analysis is in the title, in its suggestion that Smith was the last of the virtue theorists.  This has some justification if we think of how Smith’s thought is distinguished from what was then the emergent moral school of Utilitarianism which very definitely looks at ethics from the point of view of the consequences of actions, and not quality of character.  However, there is at least one major candidate amongst late 19th Century philosophers for the label of virtue ethicist, Friedrich Nietzsche.  We can see his philosophy as a return from theories of external moral excellence to a theories of individual excellence.  That’s a rather large question I can’t deal with here, but an excellent brief summary of why Nietzsche might be considered a virtue theorist can be found in Lester Hunt’s paper ‘The Eternal Recurrence and Nietzsche’s Theory of Virtue’, click for the pdf.

I expect to return to these issues very soon in relation to Benedict de Spinoza and Michel Foucault.

In my global marketing strategy class the other day, instructor David Thomsen showed two pretty shocking videos in discussing public relations. One was on the Bhopal disaster of 1984. The Bhopal gas tragedy is the worst industrial disaster in human history, leaving 8,000 dead within hours of the gas leak in the Indian city, 25,000 dead since the disaster, hundreds of thousands adversely affected by the chemicals, continuing side effects on humans and other animals, and environmental damage that persists today. The “compensation” the video talks about was less than $900 per injured person. Union Carbide, the corporation responsible for the leak, denied any culpability. The Dow Chemical Company later bought them in 2001. The CEO of the company at the time, Warren Anderson, was charged with homicide and manslaughter. He left the country and fled to the United States, where he currently resides, and refuses to appear before Indian courts.

The second video was a report by Australia’s Channel 7 revealing that Nike, a corporation marred by its human rights violations and despicable working conditions in Third World countries, continued to engage in forced labor practices in sweatshops in Malaysia as late as 2008. Note this is after they claimed to have cleaned up their act.

There is a simple reason these types of actions, and others like them, occur, which is what’s called the profit motive. When profit-maximization is the creed, what happens to people is only incidental. There is a whole generation of businesspeople who have been influenced by the work of people like Milton Friedman and Ayn Rand, whose principle message is that the only socially responsible (and indeed morally right) action is to maximize self-interest by way of profits. These ideas are justified by ethical egoism, a morally bankrupt and vacuous theory that says the only morally right actions are actions that maximize the acting agent’s self-interest. That’s what’s called “the moral economy.” The right, in their usual perversion of Smithian theory, always tries to defend this on economic grounds, appealing to what they refer to as “the invisible hand,” a term meant to describe the unintentional benefit to society that corporations bring about through acting in their self-interest. Adam Smith, of course, only used the term once in his The Wealth Nations and only as a “casual metaphor” for risk-adverse merchants wary of foreign exchange who inadvertently help their own countries. Smith, like many of the other great anti- and pre-capitalist Enlightenment thinkers, denounced greed and selfishness. As most serious scholars of Smith recognize, Smith never saw the “invisible hand” as a reality or “law” of markets. As Joseph Stiglitz puts it, “the reason that the invisible hand often seems invisible is that it is often not there.”

As ethical egoism posits to us, there is a certain calculus all moral agents are supposed to undertake in their actions. Namely, they are to ascertain which actions will ultimately lead to profit maximization and undertake those actions. For Union Carbide, that meant denying responsibility for the worst industrial disaster in human history and paying its victims an inconsequential and truly unjust fraction of its coffers. For Nike, that meant finding the cheapest source of labor and exploiting them in the worst kinds of ways—that is, until they’re caught. And while these might indeed be the profit-maximizing choices, surely nobody agrees they have improved the lot of all. When we ignore the rights of people and the laws that regulate acceptable behavior (as, indeed, ethical egoism asks us to do when it is profitable), the necessary result is an abject and deplorable world. The fact that the far-right advocates the abolition of regulations intended to safeguard against such massive injustices from ever happening is justified, they say, by a certain euphemism they call “market democracy” (the idea that ordinary market participants, like you or me, can shape business behavior—but you more than me, because I’m poor). The sobering reality: Dow’s revenues in 2008 totaled more than $57.5 billion, and over $16.6 billion for Nike.

So long as corporations continue to operate within the framework of this “moral economy,” justified by Friedman, Rand and others, we will continue to witness the tragedies and corruption that we hear about on an everyday basis. What is needed instead, at the most minimal level, is a better consideration for those other than the self, as advocated in theories like stakeholder theory, and better regulations and stiffer penalties to ensure “profit over people” (what Smith described to as “the vile maxim of the masters of mankind”) does not become the norm.

Where does it come from?  It was the question that motivated Adam Smith when he wrote “The Wealth of Nations” and it is a question that came back to my mind when I started reading “The Worldly Philosophers” by Robert Heilbroner, a book that I highly recommend.

Adam Smith is widely credited with the founding of modern economic thought when he published “The Wealth of Nations” in 1776.  As Heilbroner points out this is relatively late when compared with the length of all human history.  Why so late?  He suggests that human civilization has survived through the ages through 3 methods: tradition, authoritarianism, and markets.  The first two being the most dominant through history and markets being a relatively new phenomenon.

It was through markets that Adam Smith and his generation saw the first rapid accumulation of wealth.  Not through the conquering of new lands, coming across a rich vein of gold, or through theft but by adding value in a free market.  Smith took it upon himself to answer the question of where wealth comes from.

The assumption that Smith made before answering the question is important and it is an assumption that is often lost today.  It was that poverty is the natural state of man and wealth the exception.  In Smith’s time it was an entirely safe assumption to make but today, at least in the industrialized west, the assumption is made that wealth is the natural state and poverty the exception.

Today we take wealth for granted since we have grown up with it and have never really known a world without it.  I am not stating that this is true on an individual level, most everyone has experienced a time of unemployment, I am writing of an aggregate level.  We forget that we come into this world naked and completely dependent on our parents for survival and it is only by our hands or by our minds that we accumulate wealth.

The danger in taking wealth for granted is that we are more apt to waste it or erect policies and institutions that limit its accumulation.  Or even worse encourage policies that forcibly take it away so it can be redistributed in order to solve “poverty”.  If we truly want to solve poverty then we should think about wealth, its creation, and its accumulation.

El hecho de que tan sólo 4 de los 21 países que han anunciado a día de hoy el nombre de su aspirante para integrar la futura Comisión Europea hayan elegido como candidata a una mujer ha levantado una considerable polvareda entre altas funcionarias y eurodiputadas de la Unión. No están solas. A su reivindicación se han sumado también compañeros, y, juntos, han comunicado la intención de bloquear al Ejecutivo que ha de surgir del Tratado de Lisboa. El hecho ha puesto en tela de juicio la escrupulosa igualdad que, se decía, inspiraba institucionalmente a los organismos de la Unión Europea. Desde diversos sectores se preguntan con más o menos inquietud el por qué de esta distribución de poder en un continente en el que, según sostienen algunos -y mucho me temo que algunas- en materia de igualdad, estaba todo hecho.

Las cifras, sin embargo, desmienten semejante afirmación. En el funcionariado de la Administración comunitaria, el número de mujeres desciende notablemente en las escalas intermedias y en los puestos considerados del alto funcionariado, su presencia se recorta drásticamente. Una vez que se da esta situación y teniendo en cuenta que son hombres quienes distribuyen el poder y, para más señas, conservadores, por no hablar de políticos que se limitan a devolverse favores unos a otros en los nombramientos, las consecuencias son predecibles.

Las mujeres suponen aproximadamente el 53% de la población de todos los países de la Unión Europea, sin embargo, las políticas de igualdad brillan por su ausencia o se limitan a cuatro gestos simbólicos. La composición de parlamentos, asambleas, gobiernos locales y otros órganos representativos institucionales, así como los consejos de administración de las empresas, no atiende a ningún criterio de paridad, a excepción de cinco países de la Unión, entre los que se encuentra España. El Ejecutivo de José Luis Rodríguez Zapatero es, de hecho, el único que mantiene una paridad absoluta, 50 a 50, y que posee un mayor número de mujeres al frente de los ministerios. Datos como éstos son los que deberían hacer que la ciudadanía española fuera por el mundo con la cabeza bien alta.

La noticia aparecida hoy en los diarios y a la que nos referimos, debería de terminar de enterrar para siempre otro mito del neoliberalismo y que ha resultado ser tan falso como la vigencia en nuestros días del modelo económico de Adam Smith. El avance hacia la igualdad de género no se produce por arte de magia ni por ningún tipo de mano invisible que regula los mercados y las relaciones entre las personas. Es un insulto a la inteligencia, es ilusorio de todo punto, pensar que el dominado puede deshacerse del yugo del dominador por el mero hecho de poseer eso que los neoliberales llaman “libertad”, una libertad que no es tal, ya que no es igual aquella de la que puede gozar alguien en posición de privilegio que aquella de la que puede disponer una persona sujeta a una serie de condicionantes económicos y sociales desde la cuna.

De la misma manera que la presente crisis económica ha demostrado la necesidad de regular seriamente los mercados financieros y las relaciones laborales, también ha venido a mostrar meridianamente cómo en los momentos complicados la igualdad entre personas se convierte en una cuestión siempre aplazable y nunca abordada. Por tanto, al igual que los derechos laborales y sindicales no vinieron por obra y gracia de la patronal, es necesario movilizarse y legislar con una voluntad política clara en favor de la igualdad real, efectiva y plena entre mujeres y hombres. Lo ocurrido en la UE se podría haber evitado, a buen seguro, mediante un sistema de cuotas. Es evidente que este sistema no es la panacea -como ninguno lo es- y que tampoco podemos quedarnos estancados en esto pero es, sin duda, y como puede comprobarse con los datos en la mano, un instrumento muy útil para comenzar a normalizar la presencia de las mujeres en los ámbitos de poder, para llevar a cabo eso que se conoce como empoderamiento de las mujeres.

Hay personas que insisten en que las cuotas pueden ser un coladero de mediocres, refiriéndose seguramente, entiéndase, al peligro de que ocupen puestos mujeres poco preparadas; a mí, sinceramente, me preocupa mucho más el número de mediocres, medradores y malintencionados que sólo durante todo el siglo pasado han ocupado puestos en parlamentos y ministerios de todo el mundo por no reparar -o no querer hacerlo- en la otra mitad de la especie humana.

“What is more unexpected is that it is China that has an appetite for the father of modern capitalism, while the West is rediscovering Marx.”  Telegraph.co.uk

David Davis

China looks to Adam Smith….

Well, we shall have to see. There’s lots of Police with guns there, and phalanxes of goose-stepping regiments of the People’s Army. But it’s hopeful.

Why do totalitarian armies do the goose-step? It makes them look like poncy twats, and it’s no effing use in the mud.

Stuff I’m Reading this Morning…

Templeton’s Mark Mobius sees another 40% gain for the BRIC nations.  (Bloomberg)

What Are The Best Hedge Funds Buying?  Including John Paulson, Steve Cohen, Steve Mandel.  (PragCap)

The emperors drop some crumbs: Goldman and Buffett’s plan to help small businesses.  (Barron’s)

10 Most Annoying Things About This Recession.  (TheDisciplinedInvestor)

What’s Icahn up to with MGM?  (DealBook)

The shortest summary of the life of Adam Smith you’ll ever read.  Good stuff.  (EconomistsView)

Brian Moynihan was grilled yesterday in the House, didn’t represent the BAC very well.  (NYP)

$80 oil could mean big trouble to American families.  (Fortune)

Has the legendary Shangri-La just been found?  (NationalGeographic)

Adam Smith

David Ricardo

2. An economist is someone who gets rich explaining others why they are poor.

3. Economics-everything we know in a language we don’t understand.

4. In Canada there is a small radical group that refuses to speak english and no one can understand them. They are called separatists. In USA they have the same kind of group. They are called economists.

5. On the first day God created the sun – so the Devil countered and created sunburn. On the second day God created sex. In response the Devil created marriage. On the third day God created an economist. This was a tough one for the Devil, but in the end and after a lot of thought he created a second economist!

6. Value of Human Capital:

Engineers and scientists will never make as much money as business executives. Now a rigorous mathematical proof that explains why this is true:

Postulate 1: Knowledge is Power.
Postulate 2: Time is Money.

As every engineer knows,
Work
———- = Power
Time

Since Knowledge = Power, and Time =Money, we have
Work
——— = Knowledge
Money

Solving for Money, we get:
Work
———– = Money
Knowledge

Thus, as Knowledge approaches zero, Money approaches infinity regardless of the Work done.

The Less you Know, the more money you Make!

Karl Marx

These deep thoughts of colleague economists were originally collected by Hiroyuki Kawakatsu

Everything has been thought before, but the problem is to think of it again.
-Goethe

Concepts without perceptions are empty; perceptions without concepts are blind.
-Kant

Mathematics has no symbols for confused ideas.
-George Stigler

All models are wrong but some are useful.
-George Box

Far better an approximate answer to the right question, which is often vague, than an exact answer to the wrong question, which can always be made precise.
-J. Tukey

The paradox is now fully established that the utmost abstractions are the true weapons with which to control our thought of concrete fact.
-A. Whitehead

In the long-run, there’s just another short-run.
-Abba Lerner

Life can only be understood backwards, but it must be lived forwards.
-Kierkegaard

Someone once said about partisan analysts that they use economic data the way a drunkard uses a lamppost: for support rather than illumination. Or as Disraeli put it, there are three kinds of lies: lies, damn lies, and statistics.
-Paul Krugman

Theories are testable where they are least needed, and are not testable where they are most needed.
-Charles Manski

If you torture the data long enough, Nature will confess.
-Ronald Coase

There are two things you are better off not watching in the making: sausages and econometric estimates.
-Edward Leamer

Doing econometrics is like trying to learn the laws of electricity by playing the radio.
-Guy Orcutt

Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.
-Charles Goodhart

Time series regression studies give no sign of converging toward the truth.
-Phillip Cagan

Any time series regression containing more than four independent variables results in garbage
-Zvi Griliches

Forecasting is like trying to drive a car blindfolded and following directions given by a person who is looking out of the back window
-Anonymous

Keep in mind the three most important aspects of real data analysis: compromise, compromise, and compromise.
-Edward Leamer

John Maynard Keynes

A good empirical study requires three components:
1.A concise and sensible theoretical framework that is related to the questions to be asked,
2.Reasonably good data, and
3.An experiment or an event or a set of circumstances that give the data a chance to answer the questions asked. In short, the model needs to be identifiable from the data at hand.
-Zvi Griliches

Sino Siya? Guess! Secret

AND MY FAVORITE:
TEN THINGS TO DO WITH A GRADUATE ECONOMICS TEXTBOOK
1. Press pretty flowers.
2. Press pretty insects.
3. Use it as paper weight on your already overcluttered desk.
4. Leave out in obvious places to impress uninformed undergraduates.
5. Mail to the White House as an intimidation tactic.
6. Give it a walk-on part in a boring European existentialist play.
7. Just throw the damn thing away.
8. Leave out for the rain and other forces of nature to reckon with.
9. Read it (ha ha ha), and weep.
10. Get a refund from bookstore so you can buy weekend’s beer supply

Yesterday, Paul Rosenberg published an intriguing situationist piece at Open Left about the context and meaning of Adam Smith’s “invisible hand.”   Here are some excerpts.

* * *

What if Adam Smith’s “invisible hand” argument doesn’t mean what we think it means?  What if it doesn’t mean that everything else but the “free market” can and should be ignored?  What if if Smith actually depended on social and historical context in order to make his argument in the first place? What if it was an argument deeply dependent on what . . . The Situationist blog calls “the situation”?

In fact, that’s exactly what happened!

Recently, Berkeley economist Brad DeLong posted

“Yet Another Note on Adam Smith’s ‘Invisible Hand’: What It Is and What It Is Not”, in which he points out that the phrase “invisible hand” only occurs once in the whole of Adam Smith’s The Wealth of Nations. He then quotes a good-enough chunk of text to give the full context in which the phase occurs-an argument that merchants prefer to ship goods through their home port, even though it costs more (even needlessly unloading cargo), and thus produce much the same result as mercantilism in promoting domestic economic activity.

* * *

It is within this context-the argument above-that Smith writes, “By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain; and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

* * *

In this passage, Smith is overtly talking like a behavioral economist, rather than a more orthodox “rational actor” or related sort of practitioner.   However, there’s an even deeper intellectual departure here, since his entire argument is based on a particular set of social institutions, expectations, past experiences and resultant practices, all of which contribute to his particular predilections that silently shape what is rational to him.

* * *

We recommend the article in its entirety, which you can read here.  For a sample of related Situationist Ayn Rand’s Dispositionism: The Situation of Ideas,” “Posner on Keynes and the Economic Depression,” “Conference on the Free Market Mindset,” “Juliet Schor on the Situation of Consumption,” “Economist Stephen Marglin Thinking about Thinking Like an Economist.”

10. Peter the Great
Politics

Peter I’s rule as Czar saw many changes in Russia in the early 1700’s which would extend over the next couple hundred years. Russia was brought into the modern realm under Peter’s hand and went through much reformation to do so. Peter the Great expanded Russia greatly and strengthened their presence in Europe. Because of Peter, Russia was able to grow into the superpower it would eventually become, a superpower which would shape the fabric of world politics greatly.

9. Edward Jenner
Biology

Edward Jenner is the father of immunology and has had a major influence on medical advancements. During his time, small pox was ravaging the population. Jenner developed the vaccine which would hold the bugs at bay and set a whole new path for vaccination and medicine and would also lead to the eradication of small pox worldwide.

8. Maximilien Robespierre
Politics

One of the major events of the twentieth century was the bloody and violent French Revolution, a turning point from the feudal times of old to the fulfillment of the Enlightenment movement. One of the most influential figures in this great revolution was Maximilien Robespierre. Robespierre was unyielding in leading the fight against the monarchy, and his Reign of Terror left an indelible mark upon history.

7. Wolfgang Amadeus Mozart
Music

Mozart is one of the most popular musicians in world history. He was the very definition of a child savant and made huge leaps and bounds in terms of classical music. He was an eccentric character and a celebrity of his time. His impact upon music, one of the great threads of any cultural fabric, is almost incalculable.

6. Leonhard Euler
Mathematics

Mathematicians have had a huge impact on the evolution of science and technology all throughout history. Some of these mathematicians are so important that their names are heard over and over again’ their thoeries and formulas used everywhere in math. Euler is one of those mathematicians. His discoveries in math are far-reaching; from calculus to geometry to graph theory. He is one of the greatest mathematicians in recent centuries.

5. George Washington
Politics

I stated previously that the 18th century is marked by two major events, one of which being the aforementioned French Revolution. The other of course is the American Revolution of the 1770’s where the United States separated from the British Empire. George Washington is the man who commanded the American forces against the British troops and would become the first president of the United States of America. America’s significance would only grow out of the Revolutionary War more and more each decade, and Washington was the man who first and foremost founded this nation which would grow into one of the greatest super powers the world has ever seen.

4. Immanuel Kant
Philosophy

Kant’s ideas in the 18th century are still some of the most powerful and influential ideas today. Kant was a leader of the Enlightenment movement through his ideas on reason and ethics. His ideas would be the basis for the two major revolutions of that time and he created a shift in philosophical thinking, influencing almost all who came after.

3. Thomas Jefferson
Politics

Thomas Jefferson is considered the driving force behind the USA’s Declaration of Independence and one of the fathers of democracy. The United States have become perhaps the most powerful and influential superpowers in history and its ideas of a free society have permeated throughout the world. Jefferson’s legacy, and the legacy of the other founding fathers of America, is still felt every day all around the world, whether it is through the democratic realms of other nations or through opposition of that great ideal.

2. James Watt
Innovation

Watt’s invention f the steam engine is one of those inventions which, quite simply put, change the world. This invention kicked off the Industrial Revolution, which would grow throughout the next century and would dominate the entire world, creating all sorts of population, industry and technological growth at an exponential scale. It could also be argued that the steam engine kicked off the greater accessibility of transportation, leading to the ’shrinking’ of the world which we know today.

1. Adam Smith
Economics

Adam Smith is the father of modern economics. His book The Wealth of Nations has become a road map for economics throughout the industrial revolution all the up until present day. Smith’s ideas about money and how it is used and distributed within our societies are vastly influential as money is usually behind almost everything that we do. For his massive contribution to helping us understand the driving force behind the progress of society, namely the economy, Smith is the most influential person of the 18th century.

From the Telegraph:

What is more unexpected is that it is China that has an appetite for the father of modern capitalism, while the West is rediscovering Marx.

Smith’s first masterpiece, the Theory of Moral Sentiments, has been translated into Chinese for the first time, and Chris Berry, professor at Glasgow University, where Smith wrote the book, will next week deliver lectures on it at Fudan University in Shanghai.

China’s Premier, Wen Jiabao, has said he often carries the work – which preceded his more famous work The Wealth of Nations – in his suitcase when he goes abroad. Prof Berry said the earlier book emphasised the importance “not only [of] their material prosperity but also their moral welfare”.

As a follow up to my last post on The White Collar Reality here is a simple Slide Share presentation as a thought starter of why it matters, and what is happening. This is a snippet from the syllabus at Startup School.

CLICK HERE TO OPEN THIS CHAPTER