December 6, 2012
In 2001, Jim O’Neil of Goldman Sachs coined the term “BRICs” to designate the leaders among developing economies: Brazil, Russia, India, and China. And for a decade the moniker served, as these four countries grew hell bent for leather.
But two of the BRICs have hit the skids…
One notes that the two decelerating economies are those of the two more democratic states in the quartet… which raises the question: are Russia and China pulling away from Brazil and India in a fundamental way, or is it simply easier for more authoritarian governments to create the illusion of continued real growth when in fact the fundamentals are weakening?
FWIW, my bet is on the latter. See, for instance, The Moscow Times‘ “How Putin is Turning Russia into One Big Enron” and Michael Pettis’ “A fat guy starts a marathon and injects himself with crystal meth a few miles in. That’s China right now.“
September 9, 2012
A guest post from (Roughly) Daily…
Recently, The Economist took a look at the fines being levied against corporations found guilty of crimes. Their assessment was rather bleak:
The economics of crime prevention starts with a depressing assumption: executives simply weigh up all their options, including the illegal ones. Given a risk-free opportunity to mis-sell a product, or form a cartel, they will grab it. Most businesspeople are not this calculating, of course, but the assumption of harsh rationality is a useful way to work out how to deter rule-breakers.
In an influential 1968 paper on the economics of crime, Gary Becker of the University of Chicago set out a framework in which criminals weigh up the expected costs and benefits of breaking the law. The expected cost of lawless behaviour is the product of two things: the chance of being caught and the severity of the punishment if caught*…
The always-amazing David McCandliss at Information is Beautiful has put the issue into graphic perspective.
We’ve gathered and visualized the biggest corporate fines of the last seven years, not just as raw amounts, but also as a percentage of each company’s profits. That way you can see for yourself if the punishment was painful or puny…
*Becker had created the model as a framework for considering appropriately-discouraging penalties for malfeasance. He was horrified later to learn that it was being taught by business school colleagues as a decision aid.
As we contemplate crime and punishment, we might recall that it was on this date in 1950 that the first television show with a recorded “laugh track” (The Harry McCune Show) aired in the U.S.
CBS TV engineer Charlie Douglass, the “father of the laugh track”
November 1, 2011
A guest post from (Roughly) Daily…
THE KAUFFMAN FOUNDATION conducts a quarterly survey of economics bloggers (you can see the third quarter results here). It tends to focus on current economic conditions and policy questions, but the fourth-quarter questionnaire contained something a little different: a challenge to capture the state of the economy in haiku. The results are sublime…
Indeed. Consider the stylings of Reuters’ Felix Salmon:
No one has a job
And they’re not paid much
Or the musings of Professor Stephen Karlson:
Intermodal loadings increase
Trade conflict looms without cease
Occupy Wall Street
Or this, from Robert Cringely:
Econ guys, gentle souls
Think policies guide markets
Jail time is better
Or the only-too-culturally-appropriate contribution of Amol Agrawal:
When Japan fell in 1990s
They were lectured by the world economists
Time for Japanese to smile
… more at “The economy in haiku .”
As we think in seventeen syllables, we might recall that it was on this date in 1993 that the Maastricht Treaty came into effect, formally establishing the European Union (EU)… and laying the groundwork for the Eurozone– the European Monetary Union and the creation of the Euro– and thus for the painful pecuniary pageant that is playing out on the Continent today…