I would like to give a big shout out to the creative minds that produced this video.
Here is the intro: In Fear the Boom and Bust, John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there's a "boom and bust" cycle in modern economies and good reason to fear it.
See the YouTube Video HERE!!
To aid the appreciation:
Hayek won the Nobel Prize in Economics in 1974 for his "pioneering work in the theory of money and economic fluctuations and penetrating analysis of the interdependence of economic, social and institutional phenomena." Most importantly, Hayek wanted government to provide limited takes and leave the rest to the free markets. He viewed the free price system, not as a conscious invention (that which is intentionally designed by man), but as spontaneous order, or what is referred to as "that which is the result of human action but not of human design". Thus, Hayek put the price mechanism on the same level as, for example, language. Finally, Hayek believed that government intervention distorted the price system that was required for sustainable economic growth. Reference
Keynes is credited with being the father of intervention. He advocated that governments, using fiscal and monetary policy, can smooth the business cycle. In times of recession, deficit financing by governments could increase aggregate demand and stem the worst of the bust. He thought this necessary since the full employment assumptions of free market theorists was a special case. He took the Great Depression as the case and point. Keynes never won a Nobel Prize because he died (1946) before the first price in economists was awarded (1969). Reference
What are the "animal spirits" Keynes speaks of: "Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits - a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities." (reference)
Saturday, April 3, 2010
Thursday, November 19, 2009
When you die, what will happen to your hockey cards?
If you are a long-term planner, you might have already formally decreed your wishes so the government will not be the one dividing up your hockey cards among your friends. For the rest of us, single or married, young or young at heart, is going to the trouble and expense of making a will worth it?
Recently, the Globe and Mail did a quick online plug for the law profession on why we need a will. They said: "When you get married, you become financially tied to another human being. At this point, people consider buying life, as well as critical illness and disability, insurance. Honeymooners might also need travel insurance. Writing a will may not be romantic, but it’s a task newlyweds can’t ignore if they want to protect each other in the event of a tragedy." Well, that sounds like there are very grave consequences to not having a will for newly weds and the rest of us. So, I had to get to the bottom of this.
As I further read the article, it did point to some important situations where a will would be helpful in distributing your wealth. For example, if you want to prevent family feuds, if you want your spouse and kids to share your insurance money, or if you want to make sure King's gets some cash and Danny-boy will likely spend it all on a new BMW (OK that was not in the article but it should have been...). Also, if you want to give money to a charity or your alma mater (did I already say that?). According to this article, I gathered that: If YOU want will get a lot of utility in knowing who gets what (i.e. if you want to ice someone out), then a will is for you. If you don't care, let the government (and your family) figure it out when you die. But, is there grave consequences for newly weds if they don't get a will?
Because I don't have a will, I want to know: If I die tonight, what happens? The answer (from what I can tell): my wife get everything in both our names, the government will likely give her the rest. At the very least, a hand written document (some lawyer is surely going to yell at me to saying that), signed and witnessed is one step in the write direction. Having someone carve your wishes in stone is the gold standard and you are improving your changes of making your wishes clear - this is the benefit. The cost is in terms of time (hard to quantify) and the fees (anywhere from $250-$1000). So, weighting the costs and benefits: Is it worth it? When you are lying in bed ask yourself: Should I pay to save others some grief and to have a say over my stuff when I die?
My view: I think the person who benefits from the will should pay to have it done. If they don't want the trouble, they might very well pay for you to write it up. It seems to me that the benefit to the individual whose stuff will be up for grabs is far less than the benefit to those who have to clean-up the mess once they die, I think I need to start a company called: getyourparentsawill.com - if you know what I mean.
So, this holiday season, preferable at the dinner table with everyone around, decide who is going to pay - if your parents don't have a will you might consider making an offer. Of course, you can always ask for that Wendel Clark Rookie Card you have always had your eye on in the process.
Helpful link I used: HERE I am not a lawyer and can't give legal advice, so please take this for what it is: An economist talking about wills.
Recently, the Globe and Mail did a quick online plug for the law profession on why we need a will. They said: "When you get married, you become financially tied to another human being. At this point, people consider buying life, as well as critical illness and disability, insurance. Honeymooners might also need travel insurance. Writing a will may not be romantic, but it’s a task newlyweds can’t ignore if they want to protect each other in the event of a tragedy." Well, that sounds like there are very grave consequences to not having a will for newly weds and the rest of us. So, I had to get to the bottom of this.
As I further read the article, it did point to some important situations where a will would be helpful in distributing your wealth. For example, if you want to prevent family feuds, if you want your spouse and kids to share your insurance money, or if you want to make sure King's gets some cash and Danny-boy will likely spend it all on a new BMW (OK that was not in the article but it should have been...). Also, if you want to give money to a charity or your alma mater (did I already say that?). According to this article, I gathered that: If YOU want will get a lot of utility in knowing who gets what (i.e. if you want to ice someone out), then a will is for you. If you don't care, let the government (and your family) figure it out when you die. But, is there grave consequences for newly weds if they don't get a will?
Because I don't have a will, I want to know: If I die tonight, what happens? The answer (from what I can tell): my wife get everything in both our names, the government will likely give her the rest. At the very least, a hand written document (some lawyer is surely going to yell at me to saying that), signed and witnessed is one step in the write direction. Having someone carve your wishes in stone is the gold standard and you are improving your changes of making your wishes clear - this is the benefit. The cost is in terms of time (hard to quantify) and the fees (anywhere from $250-$1000). So, weighting the costs and benefits: Is it worth it? When you are lying in bed ask yourself: Should I pay to save others some grief and to have a say over my stuff when I die?
My view: I think the person who benefits from the will should pay to have it done. If they don't want the trouble, they might very well pay for you to write it up. It seems to me that the benefit to the individual whose stuff will be up for grabs is far less than the benefit to those who have to clean-up the mess once they die, I think I need to start a company called: getyourparentsawill.com - if you know what I mean.
So, this holiday season, preferable at the dinner table with everyone around, decide who is going to pay - if your parents don't have a will you might consider making an offer. Of course, you can always ask for that Wendel Clark Rookie Card you have always had your eye on in the process.
Helpful link I used: HERE I am not a lawyer and can't give legal advice, so please take this for what it is: An economist talking about wills.
Tuesday, November 17, 2009
What, so I took a short break ... again
Dear Blog,
Sorry, I have not been givin' you da love. It was not you, it was me. You see, time is costly and the marginal benefit of another post was low.
I have not forgotten you. I will return.
CE
Sorry, I have not been givin' you da love. It was not you, it was me. You see, time is costly and the marginal benefit of another post was low.
I have not forgotten you. I will return.
CE
Friday, March 13, 2009
A must see: Jon Stewart and Jim Cramer
I will be share this with my class next week and I think it is a must see:
PLEASE CLICK HERE !
P.S. I know that I have failed many of my readers in that I have not explained the turmoil well enough. What can I say, teaching and working has been more intense than ever. Unsurprisingly, recessions are not good for a economist's workload.
PLEASE CLICK HERE !
P.S. I know that I have failed many of my readers in that I have not explained the turmoil well enough. What can I say, teaching and working has been more intense than ever. Unsurprisingly, recessions are not good for a economist's workload.
Sunday, January 11, 2009
Pulling new rabbits out of the marco bag
In a matter of months, the focus and discussion of macro economists has done almost a 180 degree turn; peak oil talking-heads have taken a brake and fiscal stimulus is headed our way on Tuesday. What a perfect time to be teaching!
The first two teaching experiences I was able to use the textbook as a current/up-to-date source; the 'digging deeper' and 'focus boxes' fuelled our discussions of timely issues. Now, the text seems old and uninteresting. Two years ago this would have added a bit more work and cause some pain, but now, it is like wind in my sail.
Yes! I am happy to be teaching again! In the first lecture I told my class that I expected all of them to drop everything (other courses), take more economics courses and join us. Why? Because we will need their help! It seems that the global economy provided enough events in the past 6 months to keep a millions economists working for a career or two (example: here ).
A Brief History: In the throws of the depression, a member of the Canadian House of Commons stood-up and said: "What about these experts on the political economy, have they nothing to offer us? Nothing at all?" For decades, economists were held in lower social esteem. Then enter J.M. Keynes and crew, the social welfare state followed, and we slowly but surely gained some steam (every respectable company had a Chief Economist by 1972!). And then: Stagflation of the 1970s took hold. Economists were once again scrambling to find answers and once again we struggled to provide solutions to the economic ills.
Today: I have written recently that I think there has been a rise in economics's popularity but, once again, we are at risk of being put into the path of tomatoes and other like items if we cannot muster solutions. Now, the world is watching and we are banking on our tool kits to get us out of this!
After 18 years of expansion, the Canadian policy makers are being put to the test and it is exciting to be training young minds at such a time.
The first two teaching experiences I was able to use the textbook as a current/up-to-date source; the 'digging deeper' and 'focus boxes' fuelled our discussions of timely issues. Now, the text seems old and uninteresting. Two years ago this would have added a bit more work and cause some pain, but now, it is like wind in my sail.
Yes! I am happy to be teaching again! In the first lecture I told my class that I expected all of them to drop everything (other courses), take more economics courses and join us. Why? Because we will need their help! It seems that the global economy provided enough events in the past 6 months to keep a millions economists working for a career or two (example: here ).
A Brief History: In the throws of the depression, a member of the Canadian House of Commons stood-up and said: "What about these experts on the political economy, have they nothing to offer us? Nothing at all?" For decades, economists were held in lower social esteem. Then enter J.M. Keynes and crew, the social welfare state followed, and we slowly but surely gained some steam (every respectable company had a Chief Economist by 1972!). And then: Stagflation of the 1970s took hold. Economists were once again scrambling to find answers and once again we struggled to provide solutions to the economic ills.
Today: I have written recently that I think there has been a rise in economics's popularity but, once again, we are at risk of being put into the path of tomatoes and other like items if we cannot muster solutions. Now, the world is watching and we are banking on our tool kits to get us out of this!
After 18 years of expansion, the Canadian policy makers are being put to the test and it is exciting to be training young minds at such a time.
Thursday, December 11, 2008
Giving to the alma mater: Why?
Do you give money to your alma mater? If not, does it have anything to with your experience at the school? For Canadians, despite their fond experiences at Canadian universities and colleges, they don't give back to their alma mater; and, perhaps, it's not obvious why one should.
In Canada, students enter a post-secondary institution under the following assumptions: I and/or my family pay tuition and taxes fund the rest; once I finish paying tuition, my obligation is fulfilled. By contrast, American schools strike a much different deal with their students upon admission: You pay tuition now, but give more later (implicitly: based on your success). From the first day students set a foot on Harvard campus, they know that alumni have given so they could have excellent experience; and, once they graduate, they are expected to (and about 60% do) give what they can to keep the excellent experience going. In Canada, the best participation rates are near 30% (Trinity College at UofT and Mount Allison take this lofty ranking), while the average is close to 10% - which is 50% less than top US schools.
In summary, I argue that Canadians and Americans differ in the type on the agreement upon admittance with their students. On average, 90% of Canadian university graduates don't feel that it is necessary to donate to their university's annual fund because they don't think that giving after graduation was part of the deal (so to speak). Economic incentives help re-enforce this belief because, perhaps for many, the 'perceived' benefits to getting a degree are given at graduation with no strings attached; I say 'perceived' because the returns to education is not the piece of paper but the benefits realized throughout one's working life (for example, a higher salary or happiness in a profession). From what I understand, American schools help counter act this attitude by social pressure if you don't give (someone might show-up at your place of employment).
Why do I give? At the University of King's College, the New Academic Building was raised a few years ago with no government funding to cover the $9 million bill. From a very small University community (1120 students currently), this was a huge effort. To everyone involved, it was clear that if they believe in the institution, they wanted to keep it alive, and they appreciated that others gave before them so they could have the King's experience. The obligation I feel comes from two factors: (1) I believe in the institution; that is, I want it to live on; and, (2) because I had a great experience as a result of others giving to the university, it is now my turn to give back.
Finally, let me clarify a misconception. Giving to the alma mater's annual fund is not about the amount of money collected, but the number of alumni giving. In the US, the participation rate in the annual fund is used to recruit top talent because it says: "people who came to this place found it of such value, they give back in thanks". Not surprisingly, big donors often ask about participation rates because they want to know if the experience is of value.
The motto of the Wardroom 30th Anniversary Renovation Campaign - an alumni led project to renovate the campus bar at King's is:
"Those who came before us gave so we could party, and now we give to keep the party alive!" - perhaps it should be shortened to "Keep the party alive!"
King's Alumni or anyone else can give online: www.ukings.ca/donate - tax receipts are given for anything over $10.
Wednesday, December 10, 2008
A description of recent events: The Black Sawn Drive ...
Sorry I have been away. I have been very busy with some recent volunteer work (at the University of King's College ) and, because of my position, it is difficult to provide guidance on the post-Lehman Brothers intensification.
However, there has been some great research produced of late. Most interestingly, the article (dated November 20th) by a group of researchers at Desjardins (article here!) said that puts into perspective why many of us have been left speechless:
"In the past month, investors have observed two events so rare that, when last witnessed, Franklin Roosevelt was midway through his second term as President of the United States—only eight single-day rallies in the S&P 500 have exceeded 10% since 1928, with the 11.58% gain on October 13 representing a ‘10.06-sigma’ event, and the 10.79% rally on October 28 being a similarly unthinkable 9.34 sigmas.
As rare as these events may seem, they are not nearly rare enough (at least according to the normal distribution). To put the recent experience in context, daily returns exceeding 7.5 standard deviations should only occur roughly once every 33 trillion trading days; to have observed even a single such event, the universe would have to have been approximately 10x older than it actually is!"
It is a great time to be an economist. These are historic times that will change the way we think about the world, models and how we evaluate risk. After all this is said, I am really looking forward to teaching again in a few weeks. More postings to come.
However, there has been some great research produced of late. Most interestingly, the article (dated November 20th) by a group of researchers at Desjardins (article here!) said that puts into perspective why many of us have been left speechless:
"In the past month, investors have observed two events so rare that, when last witnessed, Franklin Roosevelt was midway through his second term as President of the United States—only eight single-day rallies in the S&P 500 have exceeded 10% since 1928, with the 11.58% gain on October 13 representing a ‘10.06-sigma’ event, and the 10.79% rally on October 28 being a similarly unthinkable 9.34 sigmas.
As rare as these events may seem, they are not nearly rare enough (at least according to the normal distribution). To put the recent experience in context, daily returns exceeding 7.5 standard deviations should only occur roughly once every 33 trillion trading days; to have observed even a single such event, the universe would have to have been approximately 10x older than it actually is!"
It is a great time to be an economist. These are historic times that will change the way we think about the world, models and how we evaluate risk. After all this is said, I am really looking forward to teaching again in a few weeks. More postings to come.
Sunday, September 7, 2008
Google Inc.: I salute you!
Google Inc. turns 10 years today and I think a part of all of us should celebrate with them.
As almost everyone knows, this internet giant was started by two Standford University students with little more than a couple of CPUs and a desire to create something better. The secret to their success is also just as well known: amazing working conditions for their staff, a motto to "do no evil", they think big, and never settle for the status quo. They never stand still. (Yesterday's Globe and Mail had a great story on Google's contributions with a cool timeline of the company.)
Hats off to Google Inc.! Thank you for keep blogger, gmail, google analytics, and the new and improved search engine free. Free! Amazing!
Sunday, August 31, 2008
Are even the rich changing behaviour?
A couple years ago, I engaged in an rather intense discussion with a friend of mine about the future of oil prices. He holds the view of the classic peak oil theorist . The height of our debate was when I claimed that people will change behaviour and prices would come back down. He disagreed, stating that the world is hooked on oil and there is little room for change.
Now, a few years later, prices have continued to rise more (and much to my surprise). Although I continue to have egg on my face, I remain optimistic.
What is proping up my optimistic view? Well, for one, Sean "Diddy" Combs is even changing behaviour ... WATCH IT HERE (warning: course language)!! Because the artist formally known as "Puff Daddy" can't afford the $250K fuel bill for his private jet, he is once again flying commercial and calling out to "his Saudi Arabian brothers and sisters" to lend him some oil.
Now, a few years later, prices have continued to rise more (and much to my surprise). Although I continue to have egg on my face, I remain optimistic.
What is proping up my optimistic view? Well, for one, Sean "Diddy" Combs is even changing behaviour ... WATCH IT HERE (warning: course language)!! Because the artist formally known as "Puff Daddy" can't afford the $250K fuel bill for his private jet, he is once again flying commercial and calling out to "his Saudi Arabian brothers and sisters" to lend him some oil.
Thursday, August 21, 2008
Speculation in the oil market
As a follow-up to my previous posting on speculation (a.k.a betting the farm on a hope and a prayer), the world learned a little bit more about how much oil speculation was driving prices ( See the true story here.)
Today's news came one month after the U.S. Interagency Task Force on Commodity Markets released an interim report saying record oil prices were the result of fundamental supply and demand factors. The Commodity Futures Trading Commission made an unusual request last month for data from Vitol Group, a private Swiss energy company that regulators thought was helping industrial firms get the oil they needed, according to The Washington Post. The commission discovered, however, that the Vitol would be better described as a speculator, trading oil contracts to turn profits rather than assisting companies that actually needed oil delivered for their operations ( CNN Money).
So what is the big deal? Well, think "Dot-Com Bust" or the story of how one natural gas trader lost $3 Billion on price speculation (his punishment: he got fired and had to take his $100+ million he made in the previous year from bonuses because he was such a good speculator ...).
Speculation can create asset bubbles - large run-ups in asset values that quickly fall; taking huge amounts of wealth to the grave in the process. Even if there is never a bubble, it can create wild swings in prices. Most importantly when we are taking about oil or rice, the price acceleration hurts some of the poorest people on the planet and it often wipes-out the wealth (sometimes the cash socked away for retirement) of those who had nothing to do with the decisions that were made (just ask the employees of Bear Stearns).
Comments? Thoughts? Additions? Anything going on up there? Does anyone read this thing?
Today's news came one month after the U.S. Interagency Task Force on Commodity Markets released an interim report saying record oil prices were the result of fundamental supply and demand factors. The Commodity Futures Trading Commission made an unusual request last month for data from Vitol Group, a private Swiss energy company that regulators thought was helping industrial firms get the oil they needed, according to The Washington Post. The commission discovered, however, that the Vitol would be better described as a speculator, trading oil contracts to turn profits rather than assisting companies that actually needed oil delivered for their operations ( CNN Money).
So what is the big deal? Well, think "Dot-Com Bust" or the story of how one natural gas trader lost $3 Billion on price speculation (his punishment: he got fired and had to take his $100+ million he made in the previous year from bonuses because he was such a good speculator ...).
Speculation can create asset bubbles - large run-ups in asset values that quickly fall; taking huge amounts of wealth to the grave in the process. Even if there is never a bubble, it can create wild swings in prices. Most importantly when we are taking about oil or rice, the price acceleration hurts some of the poorest people on the planet and it often wipes-out the wealth (sometimes the cash socked away for retirement) of those who had nothing to do with the decisions that were made (just ask the employees of Bear Stearns).
Comments? Thoughts? Additions? Anything going on up there? Does anyone read this thing?
Friday, August 8, 2008
Til Debt Do Us Part: food for the financial soul
Til Debt Do Us Part is the one and only reality TV show I enjoy. For savers, it is probably does not peak their interest (unless it makes them feel good). But, for everyone else, a weekly "o'no-you-don't, Mr&Mrs-spend-thrift" might help keep you from over spending - it is like watching a horror movie. This show should also be part of every marriage prep-course.
Here is the shtick: (The show claims that) "Money is the number one cause of failed marriages. Rare is the couple that agrees on how the pot should be divided and the bills paid. Most families are in debt, and with debt come family arguments, tears, tantrums and marriages on the verge of divorce. To save families from the doldrums of debt, each episode of Til Debt Do Us Part follows financial wizard Gail Vaz-Oxlade as she helps families go from red to black by getting to the root of their destructive spending habits." The show's website calls Gail a "financial wizard" but she is more like the over consumption destroyer. Although I would love to see if the 50+ couples she has helped have kept their new regimes, my speculation takes nothing away from the show's power.
Why is this show amazing to watch? It gives people easy to follow tips to get their financial house in order. Although Gail does over blow the situation sometimes, I think that she does a good job of scaring everyone within listening range with her classic "if you continue spending this way, you will be in debt by [really-big-number-here] in 5 years" - I get the shakes even thinking about it. So why is this so helpful? It forces couples to add their bills subtract it from their income, and then talk about it. Most couples don't want to talk about their debt, let alone take steps to curb their spending and plan for the future ("I hate saying "no" to Jim = I would rather the bank take our house"). No really, it happens more often than you think. So, how does one get their financial house in order? The show provides some work sheets online ( here ) and a 12 step program ( here ). This 12 step program may seem over simplified to some of you, but if you read the show's comment section, it has helped a lot of people. Personally, I think people fear Gail coming to their house to talk to them about their daily Starbucks and pint of Guinness (Oh wait, might be just me).
Although this show appears on Slice, all four seasons (50+ episodes) can be viewed online ( click here and then click Full Episodes).
Here is the shtick: (The show claims that) "Money is the number one cause of failed marriages. Rare is the couple that agrees on how the pot should be divided and the bills paid. Most families are in debt, and with debt come family arguments, tears, tantrums and marriages on the verge of divorce. To save families from the doldrums of debt, each episode of Til Debt Do Us Part follows financial wizard Gail Vaz-Oxlade as she helps families go from red to black by getting to the root of their destructive spending habits." The show's website calls Gail a "financial wizard" but she is more like the over consumption destroyer. Although I would love to see if the 50+ couples she has helped have kept their new regimes, my speculation takes nothing away from the show's power.
Why is this show amazing to watch? It gives people easy to follow tips to get their financial house in order. Although Gail does over blow the situation sometimes, I think that she does a good job of scaring everyone within listening range with her classic "if you continue spending this way, you will be in debt by [really-big-number-here] in 5 years" - I get the shakes even thinking about it. So why is this so helpful? It forces couples to add their bills subtract it from their income, and then talk about it. Most couples don't want to talk about their debt, let alone take steps to curb their spending and plan for the future ("I hate saying "no" to Jim = I would rather the bank take our house"). No really, it happens more often than you think. So, how does one get their financial house in order? The show provides some work sheets online ( here ) and a 12 step program ( here ). This 12 step program may seem over simplified to some of you, but if you read the show's comment section, it has helped a lot of people. Personally, I think people fear Gail coming to their house to talk to them about their daily Starbucks and pint of Guinness (Oh wait, might be just me).
Although this show appears on Slice, all four seasons (50+ episodes) can be viewed online ( click here and then click Full Episodes).
Wednesday, August 6, 2008
How to strike it rich in the love market
In honour of the first ever "The Economics of Sex and Love" course that will be taught at Dalhousie University this year, I would like to draw your attention to Lessons in Love, by Way of Economics . Needless to say, like the enrolment number of this Dalhousie class reflects, economists have been very successful at finding ways to popularize our discipline - let's call it: "Freakonomizing". Yes, that's a verb not a noun.
In this NY Times article, Ben Stein's proposes 8 lessons to mastering your return in the love market. I find some of his economics confusing, so I have cut and pasted a few gems and provided a bit of my own interpretation below for my dear readers.
1.) Stein's number #1 rule seems to be: Success in the love market takes smart investing and a long-term view. There are three Stein Love-vestment tips: (a) The returns in love situations are roughly proportional to the amount of time and devotion invested. If you invest caring, patience and unselfishness, you'll get those things back if the person loves you too(and if you don't ...): (b)Once you find that you are in a junk relationship, sell immediately. High-quality bonds consistently yield more return than junk, and so it is with high-quality love;(c)Research pays off. Diversification in love is impossible, so it’s necessary to do a lot of research on the choice you make. Get and give exclusive licensing rights to maximize returns.
2.) The returns on your investment should at least equal the cost of the investment and keep your expectations rational. If you are getting less back than you put in over a considerable period of time, sell-sell-sell. But remember, it is a long-run game. Stein says: The impatient day player will fare poorly without inside information or market-controlling power. He or she will have a few good days but years of agony in the world of love. To coin a phrase: Fall in love in haste, repent at leisure. (Stein's phrase - I will take no credit for that).
As we all know, the love market is a complex beast. I agree with Stein's recommendations to invest conservatively (say no to junk), do your research, take a long-term view, but because we have to put all our eggs in one basket (to make a real run at it), it means that we run the risk of losing it all if we take the plunge. While there is a market for those who believe you can buy happiness , nothing superficial and shallow lasts.
Did this post make you think of David Lee Roth too?
In this NY Times article, Ben Stein's proposes 8 lessons to mastering your return in the love market. I find some of his economics confusing, so I have cut and pasted a few gems and provided a bit of my own interpretation below for my dear readers.
1.) Stein's number #1 rule seems to be: Success in the love market takes smart investing and a long-term view. There are three Stein Love-vestment tips: (a) The returns in love situations are roughly proportional to the amount of time and devotion invested. If you invest caring, patience and unselfishness, you'll get those things back if the person loves you too(and if you don't ...): (b)Once you find that you are in a junk relationship, sell immediately. High-quality bonds consistently yield more return than junk, and so it is with high-quality love;(c)Research pays off. Diversification in love is impossible, so it’s necessary to do a lot of research on the choice you make. Get and give exclusive licensing rights to maximize returns.
2.) The returns on your investment should at least equal the cost of the investment and keep your expectations rational. If you are getting less back than you put in over a considerable period of time, sell-sell-sell. But remember, it is a long-run game. Stein says: The impatient day player will fare poorly without inside information or market-controlling power. He or she will have a few good days but years of agony in the world of love. To coin a phrase: Fall in love in haste, repent at leisure. (Stein's phrase - I will take no credit for that).
As we all know, the love market is a complex beast. I agree with Stein's recommendations to invest conservatively (say no to junk), do your research, take a long-term view, but because we have to put all our eggs in one basket (to make a real run at it), it means that we run the risk of losing it all if we take the plunge. While there is a market for those who believe you can buy happiness , nothing superficial and shallow lasts.
Did this post make you think of David Lee Roth too?
Monday, July 28, 2008
Open Table: The future of dining in Halifax?
My friends at Cuzoogle recently wrote Open Table . What's the deal? You choose the date and time, and this website tells you what restaurant has a table open for your party. Currently 50 Canadian cities have restaurants using this web-booking site. And why not? From the perspective of the restaurant, it's labour saving - the host can concentrate on the customers there in person and the reservations are made with accuracy. And, perhaps on the margin, it will make it easier for their customers to books a table and attract new customers if this web-booking becomes popular. For the consumer, you can search the local restaurant scene in seconds at the last minute (which is much easier than searching the yellow pages and calling).
Currently, Halifax only has two restaurants on signed-up (Onyx and the Cut Steakhouse). I hope they can add a few of my favorites! . Getting a critical mass of restaurants in each city is going to be a big challenge for this website - do you think they have promoters in Halifax? Maybe I should call the Herald or The Coast! Without a large number of already popular restaurant favorites on this list, the website will not survive in Halifax or any city because the benefit to the consumer depends on it! But I like the business case. We currently buy books, movie tickets and almost everything else online, why not book a dinner for 2 online.
Thursday, July 24, 2008
On Das Kapital: One of the greatest books of all time
Thanks to Mad Jenny’s recent post, "Globe and Mail's 50 Greatest Books" has grabbed my attention. What defines a great book? The Globe and Mail's view is that "a book is not simply a searchable database, and a great book is adjudged a great book over time by virtue of offering things — astonishing ideas, unforgettable characters, imaginative sublimity, glorious prose — that cannot be got elsewhere, and that tell us something new about the human (or other) condition." So far two economists have made the list of the 50 best: Adam Smith's Wealth of Nations and Karl Marx's Das Kapital. I covered selected readings from these works when I was at the University of King's College (the latter as part of a special lecture series entitled "The Future of Marxism"). With respect to Smith, his contribution needs no introduction. The G&M article on it is interesting and worth a read. I think it correctly points to Smith's genius and often misunderstood concept of the "invisible hand" - Smith did not think markets alone would solve the all world's problems (more on Smith in a future posting).
What stirred me to blog about this today? Mad Jenny asked why Das Kapital has made G&M 50 greatest books of all time list. Why? Here is my letter to my dear friend:
Dear Mad Jenny,
In response to your question regarding the worthiness of Das Kapital on the G&M top 50 list, I have the following thoughts. Given the terms set-out by the G&M, Das Kapital is easily in the top 50 because, simply put, it offers a unique perspective into the human condition. Das Kapital marks the beginning of a new order in political approach and moral thought about how our economic system affects (if not solely responsible for – according to Marx-) our human condition. Marx believed that it was the capitalist system is responsible for greed, and huge and ever growing inequality in wealth he observed in the world. As you know, this kind of critic can only be found in Marx and it is still contributing today. In addition to his obvious contributions to sociology and modern philosophy, Marx was, in one way, one of the first modern economist. How so? Marx spent many years reading and analyzing government blue books to understand the economy; which is something now thousands of economists do everyday.
In my view, many are quick to point-out that Marx's failures - he did not predict the rise of the middle class and the welfare state - but no one else did either. And, after people cite line and verse from Marx's more famous works (for example, "from each according to their ability, to each according to their need"), they quickly discount his contribution to economics and his influence on our own thoughts about society and morality. In addition, he, next to Hayek and Keynes (both should make the list), had great influence on how societies were run in the 20th century and they were instrumental in shaping world history.
I am not a Marxist, nor do I confess to be an expert on his works. But, Marx's best and only completed work in his life time, Das Kapital, is one of the greatest books of all time because of its analysis of the human condition and its influence on world history.
I know this was somewhat generalized and vague, but I hope you are convinced.
Yours,
Canadian Economist
Monday, July 21, 2008
Seeing Paris on the Cheap: Where to Eat and More
I travelled to Paris a few weeks ago to attend a conference at Université Paris-Sorbonne (Paris IV) and my wife and I were on a tight budget. We wanted to enjoy Paris's best eats and see some of the attractions we missed on our previous visits, without having to declare personal bankruptcy when we returned home. Here are some lessons we learned from meandering around the famous French capital.
Eating: The ethnic food in Paris provides the best value for money. The restaurant business in Paris is very competitive and only the best survive. And, since non-traditional Parisian food sells at a discount, it has to be popular to survive (hint: busy=good). If you are into, or have never tried lamb couscous, here are two recommendations: (1) Chez Jaafar, 22, rue Sommerard, Latin Quarter, and (2) Chez Omar, 47 Rue de Bretagne, Le Marais ( a review ). Avoid tourist trap Rue de la Huchette, or as the French all it "bacteria alley". Besides not knowing its alias, many foreign tourists who eat here are under the impression that this is the celebrated Latin Quarter. A shame. In this case, busy with other tourists.
Sleeping: Hotels in Paris are very expensive and often booked well in advance during the peak summer season. Going to Paris in April or October seem the ideal times to visit. We used www.vacationinparis.com to rent a apartment for 6 days ( see here ). It was small, but in a nice location and was only $94US per night, which for July is a good rate. A more centrally located place is Hotel Paris Rivoli (many reviews here . The rooms are a bit small, but the location is great (near St. Paul's Metro). When checking into a hotel, always see the room first and check for signs of bed bugs (yes, I am very serious).
Notes to the first time travelers to Paris:
(1) Read a good travel guide: we love the Lonely Planet. It is well written and has a fairly good map. It's not perfect, but one of the best.
(2) Unlike Canada, this old city is not friendly if you have mobility issues. There are many stairs, and older buildings (including hotels and apartments) don't elevators. If you have mobility problems, plan extra time and make sure to ask the usual questions before booking.
(3) Don't act like a typical American tourist: (a) Before ordering something or asking a question, always begin with "Bonjour Madam/Sir". (b) Gratuities are included in the price of your meal (most servers get paid (often 15%) no matter how the meal goes from your perspective). So don't double tip (although many believe this is the only reason the French let Americans into their country).
(4) Don't keep all your money in one place, lock your luggage, and hold your purse close to your body. Your white sneakers, fanny-pack, map or guide book, and incessant stop-point-and-click, blows your cover too easily making you easy prey.
Thursday, July 10, 2008
Attention Zoom Airlines: Replace your calculator!
For the second time in three years, I selected Zoom Airlines to get me and my wife to Paris. If you booking in advance, the trip from Toronto or Montreal is fairly cheap (even in today's high oil price environment) - including the extra trip from Halifax, they had the best price. I think this discount airline has great service; however, thier in flight service pricing makes me scream!
Let me explain: The announcement comes over the speaking on the flight: "You can purchase a headset for $6CND or 4€". This is fine; since the current exchange rate is somewhere near $1.60 per euro, it is cheaper to pay in Canadian Dollars. And then it happened: "You can also purchase a blanket for $5 or 4 €". WHAT? How does this make any sense? And they said it like it was no big deal. I was floored. They go to all this effort to round to the number 4,5, and 6, but then use two different implided exchange rates?
Dear Zoom Airlines: Please choose an single exchange rate for inflight service. As far as I am concerned, exchange rates are not item specific!
Sincerely,
Canadian Economist.
Let me explain: The announcement comes over the speaking on the flight: "You can purchase a headset for $6CND or 4€". This is fine; since the current exchange rate is somewhere near $1.60 per euro, it is cheaper to pay in Canadian Dollars. And then it happened: "You can also purchase a blanket for $5 or 4 €". WHAT? How does this make any sense? And they said it like it was no big deal. I was floored. They go to all this effort to round to the number 4,5, and 6, but then use two different implided exchange rates?
Dear Zoom Airlines: Please choose an single exchange rate for inflight service. As far as I am concerned, exchange rates are not item specific!
Sincerely,
Canadian Economist.
Monday, July 7, 2008
Top 25 Emerging Artist: Works by Emily are on display in Toronto
Art work from an emerging young artist are similar to an undervalued stock: buy it and hold. The benefit on holding art in your portfolio is that it also gives a visually based utility. Here is how to have a look into 25 Canadian emerging artists.
This year, Fido and the historic Distillery District in Toronto are getting together to celebrate and support a shared commitment to arts and culture (some details here . This partnership comes in the form of the largest outdoor projector screen in Toronto. The projector is located in the Distillery District’s Pure Spirits Patio (also known as the Fido Spot).
After having carefully reviewed numerous excellent submissions, several of Emily's paintings were selected to be part of the slideshow that will run daily at the Distillery District during the month of July. The entire slideshow will be comprised of pieces from only 25 artists. Congratulations Emily!
I understand that Emily's work is being shown at:
Pure Spirits Oyster House and Grill Patio
Distillery District
55 Mill Street
Emily's work can be view on this "a work in progress" blog .
This year, Fido and the historic Distillery District in Toronto are getting together to celebrate and support a shared commitment to arts and culture (some details here . This partnership comes in the form of the largest outdoor projector screen in Toronto. The projector is located in the Distillery District’s Pure Spirits Patio (also known as the Fido Spot).
After having carefully reviewed numerous excellent submissions, several of Emily's paintings were selected to be part of the slideshow that will run daily at the Distillery District during the month of July. The entire slideshow will be comprised of pieces from only 25 artists. Congratulations Emily!
I understand that Emily's work is being shown at:
Pure Spirits Oyster House and Grill Patio
Distillery District
55 Mill Street
Emily's work can be view on this "a work in progress" blog .
Thursday, June 12, 2008
Tagged, pinned, and forced to confess.
The well regarded McWooby has tagged me. I was shocked, because asking me to share five things that people don't know about me is hard (I don't really have a overwhelming sense of privacy - I'm a blabbermouth). Let me try:
1.) Most people know that I cheer for the Leafs, but they might not know that I now find the vast majority of memorabilia terribly tacky (no posters, bar chairs or stickers, please); on the other hand, no one has the right to sell or dispose of my McDonald's hockey card collection or my autographed Rick Vive picture.
2.) Although I have loved Tim's coffee for years, I have been switching to fair trade organic every chance I get. But I did have a Tim's today.
3.) I believe that there is a most efficient way to travel from A to B and that any conversation about how C is better is non-sense.
4.) I am rarely silent, and I avoid white noise.
5.) I am currently drinking some brandy, but just because I have some. I drank everything else in the house.
End of confession.
1.) Most people know that I cheer for the Leafs, but they might not know that I now find the vast majority of memorabilia terribly tacky (no posters, bar chairs or stickers, please); on the other hand, no one has the right to sell or dispose of my McDonald's hockey card collection or my autographed Rick Vive picture.
2.) Although I have loved Tim's coffee for years, I have been switching to fair trade organic every chance I get. But I did have a Tim's today.
3.) I believe that there is a most efficient way to travel from A to B and that any conversation about how C is better is non-sense.
4.) I am rarely silent, and I avoid white noise.
5.) I am currently drinking some brandy, but just because I have some. I drank everything else in the house.
End of confession.
Understanding Happiness
For the first time in months I was able to have a relaxing Saturday morning (ok, it was two weeks ago now ...). I was neither so exhausted from the week nor rushing around to complete my list of tasks. I hope to have more mornings like this, if I can do it. You see, dear reader, it was not that I had an easy 5 X 9-to-5 or that the honey-do-list was finished, I just decided to stress less.
With a coffee in hand, I enjoyed Saturday's (May 31st) Globe and Mail. In particular, Margaret Wente wrote an article entitled: "The happiness ... gap" . As the title suggests, Margaret filled this week's commentary by given a punchy review of "Gross National Happiness", by Arthur Brooks (a political scientist, not an economist but we will not hold that against him ... much). The gap referred to in the title is about the happiness gap between US conservatives and liberals that has now lasted for at least a generation (note: this is not Canadian data and comparisons are limited, but ...). The conclusion that Brooks draws is that this gap is driven by marriage and religion. Although I believe that the book may be a stirring read (in other words, it might really make you mad! Like where is the economics eh?), I loved the way this article reads.
Let me share two parts of the article with you, and I hope you will read the rest:
The intro:
"Here's a bit of bad news for all my latte-loving, liberal-leaning friends who believe that jobs in retail stink, traditional religion is for morons, and income inequality has made society a lot worse off. You're a miserable bunch. "
A highlight:
Beyond marriage and religion?
"There's another factor, too, which, he argues, centres on world view. Conservatives generally believe that people who work hard can get ahead and be successful. They believe success is in their own control. Liberals are more inclined to believe in collective solutions to social problems – and that people's success depends on factors outside their control. 'I compared poor conservatives with rich liberals,' he told me. 'Ninety per cent of poor conservatives say that hard work and perseverance can overcome disadvantage. But only 65 per cent of rich liberals believe that.'"
What to take away from this article?
1.) Money (alone?) does not produce happiness (there is only marginal-to-no return beyond the median wage - aka having a decent security).
2.) The equality of opportunity is important to everyone (yeah education!).
3.) Happiness is U-shaped in terms of age (44 year old men cry like babies).
4.) Give away your money and time to find happiness.
Please share you thoughts.
Appendix: What about Canadians?
My favorite Canadian on this topic is John Helliwell. See this G&M article from last fall with some great economic analysis (ok, I can't resist sharing this): "Using Canadian survey data and some mind-numbing arithmetic, Helliwell and UBC colleague Haifang Huang were able to put a cash value on the effect of job satisfaction on general happiness. That number varies along a bell curve. But take, for example, a single employee who rates her job satisfaction a nine out of 10, and who makes $65,000 a year. Imagine some work-culture corrosion triggers a one-point drop in her job satisfaction. It would take an extra $30,000 a year to compensate for the negative effect this would have on her general happiness."
With a coffee in hand, I enjoyed Saturday's (May 31st) Globe and Mail. In particular, Margaret Wente wrote an article entitled: "The happiness ... gap" . As the title suggests, Margaret filled this week's commentary by given a punchy review of "Gross National Happiness", by Arthur Brooks (a political scientist, not an economist but we will not hold that against him ... much). The gap referred to in the title is about the happiness gap between US conservatives and liberals that has now lasted for at least a generation (note: this is not Canadian data and comparisons are limited, but ...). The conclusion that Brooks draws is that this gap is driven by marriage and religion. Although I believe that the book may be a stirring read (in other words, it might really make you mad! Like where is the economics eh?), I loved the way this article reads.
Let me share two parts of the article with you, and I hope you will read the rest:
The intro:
"Here's a bit of bad news for all my latte-loving, liberal-leaning friends who believe that jobs in retail stink, traditional religion is for morons, and income inequality has made society a lot worse off. You're a miserable bunch. "
A highlight:
Beyond marriage and religion?
"There's another factor, too, which, he argues, centres on world view. Conservatives generally believe that people who work hard can get ahead and be successful. They believe success is in their own control. Liberals are more inclined to believe in collective solutions to social problems – and that people's success depends on factors outside their control. 'I compared poor conservatives with rich liberals,' he told me. 'Ninety per cent of poor conservatives say that hard work and perseverance can overcome disadvantage. But only 65 per cent of rich liberals believe that.'"
What to take away from this article?
1.) Money (alone?) does not produce happiness (there is only marginal-to-no return beyond the median wage - aka having a decent security).
2.) The equality of opportunity is important to everyone (yeah education!).
3.) Happiness is U-shaped in terms of age (44 year old men cry like babies).
4.) Give away your money and time to find happiness.
Please share you thoughts.
Appendix: What about Canadians?
My favorite Canadian on this topic is John Helliwell. See this G&M article from last fall with some great economic analysis (ok, I can't resist sharing this): "Using Canadian survey data and some mind-numbing arithmetic, Helliwell and UBC colleague Haifang Huang were able to put a cash value on the effect of job satisfaction on general happiness. That number varies along a bell curve. But take, for example, a single employee who rates her job satisfaction a nine out of 10, and who makes $65,000 a year. Imagine some work-culture corrosion triggers a one-point drop in her job satisfaction. It would take an extra $30,000 a year to compensate for the negative effect this would have on her general happiness."
Tuesday, June 3, 2008
The tables have been turned
Now that all of students' marks have been finalized, I got my grade yesterday. It was not a review from the department chair, but rather from my students. The university asks students to fill out a standardized survey to provide feedback to faculty in conjunction with written comments. So, how did I do and what did I learn?
How did I do?
Find those alphabet letters (or other childhood fridge magnets) and post it on the fridge, I got a "G" or a "E" (a good to excellent rating). Yes! Better than expected. Out of the eight categories, I received an good to excellent rating, and matching most of the department mean scores. Yes, this was a pleasant surprise and, needless to say, much better than my first review. The best result, both in terms of above the department average and giving me the warm fuzzies, was students' response to: "The instructor showed genuine concern for students." = 70% of respondents said excellent.
What did I learn?
The lowest category was "The instructor was fair and reasonable in evaluating and marking student work". Now this seems somewhat in contrast to the above listed result, but it does suggest that I need to do a better job communicating my strategy. But wait! I have already told you about my complex insensitive structure ... (see earlier post). On second thought, this was done by students before they received their final marks, and I always wait to the end to adjust my grades (if required). Over the next few months I will find time to review my comments and these scores to improve my teaching. My next class starts in January 2009 (it will be here before we know it!).
Appendix: www.ratemyprofessor.com
I have been notified that I now appear on this infamous website ...
How did I do?
Find those alphabet letters (or other childhood fridge magnets) and post it on the fridge, I got a "G" or a "E" (a good to excellent rating). Yes! Better than expected. Out of the eight categories, I received an good to excellent rating, and matching most of the department mean scores. Yes, this was a pleasant surprise and, needless to say, much better than my first review. The best result, both in terms of above the department average and giving me the warm fuzzies, was students' response to: "The instructor showed genuine concern for students." = 70% of respondents said excellent.
What did I learn?
The lowest category was "The instructor was fair and reasonable in evaluating and marking student work". Now this seems somewhat in contrast to the above listed result, but it does suggest that I need to do a better job communicating my strategy. But wait! I have already told you about my complex insensitive structure ... (see earlier post). On second thought, this was done by students before they received their final marks, and I always wait to the end to adjust my grades (if required). Over the next few months I will find time to review my comments and these scores to improve my teaching. My next class starts in January 2009 (it will be here before we know it!).
Appendix: www.ratemyprofessor.com
I have been notified that I now appear on this infamous website ...
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