This marketing of products is perhaps one of the biggest reasons many feel uneasy about the modern economy and by extension finance. Are we being induced into buying something we do not want or need? Continue reading “How the Media Changes Our Minds”
The US is the oft-cited innovator. But upon closer inspection, it seems it is only the technology sector, and more specifically Silicon Valley, where the US is the undisputed innovator. So could China create the equivalent of Silicon Valley? To answer this, we need to understand the roots of Silicon Valley. Continue reading “Can China Innovate? (2min read)”
The official verdict on the 2008 crisis in the US-government commissioned 663-page “The Financial Crisis Inquiry Report” was :
“ While the vulnerabilities that created the potential for crisis were years in the making, it was the collapse of the housing bubble—fueled by low interest rates, easy and available credit, scant regulation, and toxic mortgages— that was the spark that ignited a string of events, which led to a full-blown crisis in the fall of 2008.”
Most of us think more about how to earn money than how to spend it. Implicit within this is the assumption that “the more money I earn, the happier I’ll be”. But there has been extensive research that shows that the way you spend money can make as much, if not more, difference to your happiness than how much you earn. An excellent academic paper from a few years ago summarises the findings as follows: Continue reading “8 Principles Of Spending Your Way To Happiness In 2016”
Even savvy people who see through the above forms of advertising may succumb to more subtle versions. The most prevalent one is the nexus of news, media and advertising. Headlines are taken up by fear-inducing stories of murders, wars in far-off lands and the “despicable” lives of politically-weak sections of society.
Words in their various guises have been thought to be the primal force of humanity for thousands of years:
“In the beginning, there was the Word, and the Word was with God and the Word was God” (Gospel of John, 1:1)
“The Lord said, “If as one people speaking the same language they have begun to do this, then nothing they plan to do will be impossible for them. Come, let us go down and confuse their language so they will not understand each other.” ( Genesis 11:6)
“And He taught Adam all the names…And (remember) when We said to the angels: “Prostrate yourselves before Adam.”(Quran 2:31)
In essence, words create a reality of their own; they set the context to which all will act within. Think about how “freedom-fighter”(eg Mandela) sounds compared to “terrorist” (eg Mandela), or how “entrepreneur” sounds compared to “wheeler-dealer”. Who decides which of the pair is used sets the tone of any subsequent discussion. Continue reading “In the beginning, there was the Word…”
The talking heads on TV give such a convincing story about what the future holds that its hard not to believe them. But pinning them down to a time-frame and discrete future event is often next to impossible, so you can never determine whether they were right or wrong. When such talking heads are pinned down, their track-record turns out to be very poor, according to Philip Tetlock in his latest book “Superforecasting: The Art and Science of Prediction“. This makes sense as they are picked more for their entertainment value, than their track-records.
Another excerpt from my book. Any feedback welcome! This bit is about derivatives:
What these examples [Great Depression, breakdown of Bretton Woods, the creation of the euro and 2008 crisis] show is that systems work for a while, but never endure. There is a constant need to reform, tinker and experiment. And with the world becoming ever more complex, institutions need a way to lock in some form of certainty. Derivatives can provide that. By far, the most common derivative is the interest rate swap, which allows one to switch from floating interest rates to a fixed interest rate (or vice versa). Your mortgage uses this! Continue reading “What To Do In A Complex World? (2 min read)”
With the dominance of market thinking, it is hard to argue against the exchange of some good or service between two consenting adults of money. However, Michael Sandel, Harvard Professor of Government, argues in “What Money Can’t Buy” that there are limits.
To give a sense of how pervasive markets are, he outlines the types of things that can now be bought and sold:
A prison cell upgrade ($82 a night)
The services of an Indian surrogate mother to carry a pregnancy ($6,250).
The right to immigrate the US ($500,000)
The right to shoot endangered rhinos ($150,000)
Stand in line overnight in Capitol Hill to hold a place for a lobbyist to attend congressional hearing ($15-$20 per hour)
Buy the life insurance policy for an elderly person, pay the premiums and then receive the death benefit when they die.
I attended the annual Power Shift conference at Oxford’s Said business school earlier this week. It’s led by the excellent Professor Linda Scott and focuses on women and the world economy. While there was so much great content, here are the 4 things that stood out for me:
1) There’s an app to tell you how women-friendly a business is! Amy-Willard Cross has come up with an awesome app called the “Buy Up Index“(available on iPhone and Android). You type in a company and it grades the company across four categories: employees, ads, leadership and other. I typed in “Nike” and found that they score an “A” overall. They got “A”s for all categories except ads, where they got a “B” (let down by their Hurley brand, which mainly shows male surfers). Check it out. Continue reading “4 Things I Learnt About Women Recently (2min read)”