• 'How Much is Enough?' Authors on Keynes, Work-hours, and Wealth

    Earlier this month, the Carnegie Council hosted Robert and Edward Skidelsky, the father and son co-authors of How Much is Enough?: Money and the Good Life.  Among other topics, the Skidelskys discussed the somewhat counterintuitive finding of their research that by pushing ourselves so hard to attain the things we want, we may not really move in the direction of "the good life," but rather away.  Here's a short excerpt in which Lord Robert Skidelsky--who is also a biographer of John Maynard Keynes--talks about Keynes's prediction in 1930 that technological advancement would bring about massive wealth and very short workweeks.    A prediction, Skidelsky says, has turned out to be half right.  

    Watch the more of the discussion here.  

  • The Earth's Economic Center of Gravity is Shifting: McKinsey Global Institute Report on Rising Cities and Consumer Class Growth in Emerging Markets

    Global economic growth over the next decade will be driven largely by growing cities in emerging economies, according to a fascinating new report from the McKinsey Global Institute, titled Urban world: Cities and the rise of the consuming class.  Of the 600 cities that the report cites as the most important drivers of the global economy, 440 are in emerging economies.  And while McKinsey Global projects the "City 600" will account for 65% of global growth by 2025--rising some $30 trillion over that span--the 440 cities in emerging economies will account for nearly half of all global growth on their own.  Also, the report projects that we will see 1 billion new consumers from these 440 cities.  McKinsey Global calls this development "the most significant shift in the earth’s economic center of gravity in history." From the report:

    The incomes of these new consuming classes are rising even faster than the number of individuals in the consuming classes. This means that many products and services are hitting take-off points at which their consumption rises swiftly and steeply. By 2025, urban consumers are likely to inject around $20 trillion a year in additional spending into the world economy. Catering to the burgeoning urban consumer classes will also require a boom in the construction of buildings and infrastructure. We estimate that cities will need annual physical capital investment to more than double from nearly $10 trillion today to more than $20 trillion by 2025, the lion’s share of which will be in the emerging world.

    This huge sum of consumption and investment could inject more than $30 trillion of annual spending into the world economy by 2025—a powerful and welcome boost to global economic growth. But there will be challenges, too. Rapidly urbanizing emerging economies and their increasingly wealthy consumers are already driving strong demand for the world’s natural and capital resources. The global investment rate and resource prices have jumped and could rise further.

    Cities can be part of the solution to such stresses, as concentrated population centers can be more productive in their resource use than areas that are more sparsely populated. But if cities fail to invest in a way that keeps abreast of the rising needs of their growing populations, they may lock in inefficient, costly practices that will become constraints to sustained growth later on. How countries and cities meet this rising urban demand therefore matters a great deal. Beyond the direct impact of the investment, their choices will have broad effects on global demand for resources, capital investment, and labor market outcomes.

    Read the full report here.  

    You can also explore the City 600 and the economic of cities globally with a new interactive map from the McKinsey Global Institute.  Click here.  

     

  • The Case for Green Growth as Central to Economic Growth

    The Economist's globalisation editor, John Parker, says that the cost of the environmental damage that comes with economic growth and rapid industrialization of China's cities comes to about 9% of China's GDP.  That is why, as he discusses with Economist international editor Edward Lucas, that China, and other emerging markets, don't have the option of growing first then cleaning up later.  Parker wants us to think of green growth as a recognition that "the environment is like a form of capital," and he argues that it must be a central part of economic growth programs in China and other emerging economies.

  • Planet Money: Where Immigrants in America Work

    Here is another helpful graphic from Planet Money's Graphing America series.  Lam Thuy Vo helps us step away from the politics of immigration for a moment and look at where immigrants are actually working.  Foreign-born workers make up 1/6 of the workforce.  But where they come from seems to have some bearing on the fields they in which they are likely to work. For example, over a third of all workers born in Africa are in the education/health care/social services sector.  What else stands out to you in the below graphic?

    See the full-size graphic, and read Lam Thuy Vuo's post on where immigrants work here.  

  • Stockton, CA Set to Become First Large U.S. City to Declare Bankruptcy, Likely Not the Last

    The city of Stockton, California is set to file for bankruptcy today.  While Stockton is not the first U.S. city to go bankrupt following the Great Recession, it is the first large city--Stockton has 300,000 residents--to do so.  As Diana Marcum of the Los Angeles Times reports today, the story of Stockton mirrors that of other cities, and even homeowners, over the last decade.  

    How Stockton found itself so mired in debt can be seen everywhere in the city's core. There is a sparkling marina, high-rise hotel and promenade financed by credit in the mid-2000s, mere blocks from where mothers won't let their children play in the yard because of violence.

    During the economic boom, this working-class city with pockets of entrenched poverty tried to reinvent itself as a draw to Bay Area refugees and a popular site for conventions. It offered generous city employee pension plans and benefits.

    Vast housing tracts of two-story homes were built at the city's edges. Private citizens, like the city, bought on credit. Those neighborhoods would soon have among the highest rates of foreclosures in the nation.

    Indeed, when the bust came, few places fell as hard as Stockton. The city has the second-highest rate of foreclosures in the country and the second-highest rate of violent crime in the state. 

    CBS News followed up on the story this morning as well, pointing out that Stockton may just be the first of many large cities to follow the path of smaller cities like Central Falls, RI and declare bankruptcy:

  • EU Summit or Global Summit?: Moisi on Why Emerging Market Leaders Must Watch Europe Closely

    The markets, or rather investors, are waiting for the EU summit to begin this week, in hopes that there will be some clear signs of what policies Europe's leaders will try next to avert a deepening debt crisis.  Business and policy leaders in emerging economies will be watching closely as well.  At Project Syndicate, Dominique Moisi says there is no room for schadenfreude now.   In the past, emerging market leaders may have pointed to Europe's woes to stress their own success, they must be careful not to look at the situation without taking any pleasure from a crisis that is hampering their own growth.  

    Until recently, Europe was a sort of mirror that confirmed for the major emerging economies the spectacular nature of their own success. They could contrast their high growth rates with Europe’s high levels of debt. They could oppose their “positive energy” with the pessimism dominating European minds. They were only too willing to advise Europe to work harder and spend less, as legitimate pride mingled with an understandable desire to settle historical scores and attenuate their legacies of colonial submission and humiliation.

    But, today, emerging countries are growing very concerned with what they rightly perceive as the serious risks to their own economies implied by excessive weakness in Europe, which remains the world’s trade leader. Moreover, Europe’s malaise threatens many of these countries’ political stability as well, given the close connection – especially in China – between the legitimacy of existing arrangements and the continuation of rapid economic growth.

    If the crisis in Europe were to cause annual GDP growth to fall below 7% in China, 5% in India, and 3% in Brazil, these countries’ most vulnerable citizens would be hardest hit. They were never part of the “culture of hope,” based largely on material success, that played a key role in these countries’ success. If social inequalities were to reach new heights, their frustration and resentment could manifest itself fully.

    In that case, Europe could suddenly become a very different mirror for emerging countries, revealing, if not accentuating, their own structural weaknesses. And that is why, just as Europe must save the Greek economy or Spain’s banks at all costs, emerging countries must do whatever they can to contribute to the rescue of the European economy. As Europe has learned, the longer one waits, the higher the cost – and the lower the chance of success.

    Read Emerging Markets’ Europe Problem here.

  • Case-Shiller: Home Prices Rise in April

    After a seven month slide, home prices rose 1.3% in April, according to the latest S&P/Case-Shiller Home Price Indices release.  Home prices rose in 18 of the 20 metro areas that make up the 20-city composite index.  Only New York (-0.1%) and Detroit (-2.1%) had drops from March.  On an annual basis, prices dropped 2.2% for the 10-city composite index and 1.9% for the 20-city composite. Here's a look at the long term trend:

    From the release:

    “With April 2012 data, we finally saw some rising home prices,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “On a monthly basis, 19 of the 20 MSAs and both Composites rose in April over March. Detroit was the only city that saw prices fall, down 3.6%. In addition, 18 of the 20 MSAs and both Composites saw better annual rates of return. It has been a long time since we enjoyed such broadbased gains. While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign. The 10-City and 20-City Composites each rose by 1.3% for the month and posted annual rates of return of -2.2% and -1.9% compared to April 2011, better than the -2.9% and -2.6% annual rates seen in March 2012.

    “We were hoping to see some improvement in April. First, changes in home prices are very seasonal, with the spring and early summer being the most active buying months. Second, while not as strong and we believe less reliable, the seasonally adjusted data were also largely positive, a possible sign that the increase in prices may be due to more than just the expected surge in spring sales. Additionally, the last few months have seen increased salees and housing starts amidst a lot of talk of better housing markets, so some price gains were anticipated."

    Read the full release here.

    Meanwhile, with prices down for most of the year, housing sales have picked up.  The Census Bureau reports that sales of new single-family homes reached a two year high in May.  Read the release here

  • India as 'Global Hub' of Innovation

    Nirmalya Kumar, professor of Marketing at the London Business School, says there is a reason that global corporations are no longer just outsourcing manufacturing and entry-level jobs to India, but are now sending management positions there as well.  India, Kumar argues, is helping to lead global innovation.  He highlighted entrepreneurship and innovation in India in this recent TedX Talk:

  • OECD: Canada's high standard of living dependent upon increased productivity

    Let's look north, for a moment.  In its latest report on Canada's economy, the OECD credits Canadians with effectively "weather[ing]" the storm during the global economic crisis.  The OECD gives Canadian policymakers high marks for a "timely macroeconomic response."  And Canadian banks are cited for being more stable and prudent than their respective neighbors to the south.  But the report gives some warnings, as OECD evaluators cite "sluggish" productivity as a cause for concern. 

    Canada’s overall productivity has actually fallen since 2002, while it has grown by about 30% over the past 20 years in the United States. At the same time, income has shifted towards the resource-rich western provinces, while the regional economies of Ontario and Quebec are still adapting to increased external competition resulting from the high exchange rate.

    “Canada is blessed with abundant natural resources. But it needs to do more to develop other sectors of the economy if it is to maintain a high level of employment and an equitable distribution of the fruits of growth,” said Peter Jarrett, one of the authors of the study and the head of the Canada division at the OECD Economics Department.

    The OECD identifies two key priorities for meeting this long-term challenge. First, Canada needs to boost innovation. Canada has world-class research institutions and provides strong public support to business investment in research and development (R&D). However, the business sector devotes only about 1% of GDP to R&D, compared with 2% in the U.S. and more than 2.5% in Japan, Korea and some of the Nordic countries. Canada remains a low performer on business investment in R&D, even when the large share of natural resource production is taken into account.

    Here's a look at productivity in Canada relative to the US over the last three decades:

    Read a summary of the report here.

    For access to the Economic Survey of Canada (subscription required), click here.

  • Ritholtz: Home Prices Vulnerable as "Foreclosure machinery ramps up"

    In his Sunday column for the Washington Post, Barry Ritholtz takes us through a brief history or banks and foreclosures over the last two years.  After a review of robo-signings and other questionable-at-best practices brought about a slowdown in foreclosures--which followed an unprecedented increase in foreclosures--bankers seems to have fixed some of their procedural issues.  "It takes a while for the creaky, wheezy, inadequate machinery of processing defaulted mortgages to rumble back to life," Ritholtz writes.  But now it has.  And Ritholtz expects it will make waves through home prices overall:

    That fortuitous set of circumstances appears to be over. Current foreclosure filings — default notices, scheduled auctions and bank repossessions — increased in May by 9 percent, according to the RealtyTrac monthly foreclosure report.

    Distressed homes tend to sell for about 20 percent less than non-distressed sales.

    The voluntary foreclosure abatement not only reduced the number of foreclosures, but also created the appearance of improving home prices. In reality, it was merely temporarily removed low-price, distressed properties from the overall pool of homes for sale.

    This was right on cue. With the abatements over, foreclosure starts are creeping up again. As the foreclosure machinery ramps up, the negative ramifications they bring will expand. More distressed sales, lower prices and increasingly tough comparable appraisals are likely over the next 12 months.

    To give you an idea of what is in store, consider this amazing statistic, courtesy of Laurie Goodman, housing analyst at Amherst Securities: 2.8 million Americans are 12 months or more behind on their mortgages. That degree of delinquency leads to an overwhelming percentage of foreclosure starts. It is reasonable to expect that 95 percent of these will end up as a foreclosure, distressed sale or walkaway.

     

    Read Foreclosure machinery creaks back to life here.

  • Marketplace Whiteboard: The Problem with Spain

    Paddy Hirsch tells us that Spain is causing big problems because, to put it simply, Spain is so big.  At least compared to dear old Ireland.  And to help us get our heads around the damage that Spain's debt crisis could cause fellow EU nations (and the global economy, for that matter), Hirsch wants us to think of Spain as a homeowner:

  • The Economics of Bank Robberies

    It turns out that bank robberies are a bad idea--and not just from a moral perspective.  It turns out that the takings are not so great.  British researchers Barry Reilly,  Neil Rickman and  Robert Witt were fortunate enough to get access to some rarely released data from the British Bankers' Association.  And they used that data to get at the real economics of bank robberies, for the robbers and for the banks.  They published their findings in Significance Magazine (we learned of their work through Flowing Data).  From the authors:

    The return on an average bank robbery is, frankly, rubbish. It is not unimaginable wealth. It is a very modest £12 706.60 per person per raid. Indeed, it is so low that it is not worth the banks' while to spend as little as £4500 per cashier position at every branch on rising screens to deter them.

    A single bank raid, even a successful one, is not going to keep our would-be robber in a life of luxury. It is not going to keep him long in a life of any kind. Given that the average UK wage for those in full-time employment is around £26 000, it will give him a modest lifestyle for no more than 6 months. If he decides to make a career of it, and robs two banks a year to make a sub-average income, his chances of eventually getting caught will increase: at 0.8 probability per raid, after three raids or a year and a half his odds of remaining at large are 0.8×0.8×0.8=0.512; after four raids he is more likely than not to be inside. As a profitable occupation, bank robbery leaves a lot to be desired.

    It is worth noting that the criminals themselves seem to have learnt this. Robbing banks is no longer what you could call the crime of choice. Bank robberies and attempted bank robberies have been decreasing, in both the USA and the UK; in the UK, robberies from security vans are on the increase. Security vans offer more attractive pickings. Our framework provides a way of thinking about this, partly by allowing us to look at the expected value of committing a robbery, but also because it effectively introduces a competing product into the robbers' "product space" and asks them to think about which will generate more proceeds.  

    The lesson of which would seem to be: successful criminals study econometrics. Statistics can help in all walks of life.

    Read Robbing Banks: Crime does pay --  but not very much, and take a look at the authors' formula for determining the costs of robbing a bank (per participant) here

  • Potential Global Impact of Unchecked Euro Crisis

    There were a lot of issues on the docket as G20 leaders met in Mexico this week: a Pacific trade pact, investment in developing countries' infrastructure, discussions on options in Syria.  But Europe's looming economic dangers took center stage.  Europe's leaders appear to have come to some basic agreements following the meetings, as EuroNews reports.  We will now wait and see what form these verbal agreements take in action, because, as Brookings Senior Fellow for Global Economy and Development Domenico Lombardi reminds us, what they decide will have global implications:

  • Fed Lowers GDP Projections, Puts More Funds Toward Operation Twist

    The Federal Reserve opted against more dramatic monetary policy measures during its June meeting--like another round of quantitative easing, for example.  Instead, the Fed will be putting an additional $267 billion toward its "Operation Twist" program.  The aim is to keep borrowing costs down.  Fed Chair Ben Bernanke did say that, with projected growth for the U.S. economy now lower than what the Fed was projecting back, that members of the Fed are "prepared to do what is necessary."  And that could mean further monetary stimulus measures in the future.  

    Here are the projections for overall GDP growth and unemployment from the at the conclusion of the Federal Open Market Committee June meetings today:

    From the release:

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

    The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

     

    Read the full FOMC release here.  

  • Planet Money: My Big Austere Greek Wedding

    The Planet Money team has a knack for asking the right questions.  This week, they are taking an issue that everybody is talking about--Greece's debt crisis--and exploring it in a way that gets at some core dilemmas.  What if Greece does what Angela Merkel and others want and in exchange goes through decades of pain?  Is that a wise economic policy for Greeks?  For Europe?  And what does it mean for a couple that is getting married this week?

  • Jeff Frankel's Proposal for Long Term Answer to the Euro Crisis: Eurobonds

    European bankers and policy makers remain focused on the debt crisis.  Jeff Frankel points out that they have a big challenge.  It is hard to "commit today to fiscal rectitude in the future," Frankel says, while successfully fixing the urgent crises in Greece and Spain.  One solution might very well be setting up bonds that are EU bonds instead of separate member-nation bonds.  Frankel:

     

    The creation of a standardized Eurobond market would bring a boost to help a reform plan come together, badly needed in light of the damage that years of failed euro summits have done to official credibility.  Even when the euro was at the height of its success five years ago, it suffered from lack of a counterpart to the US Treasury bill market.  Bonds are issued by the 17 member governments.  This fragmentation has hindered European financial integration and impeded any bid by the euro to rival the US dollar as international reserve currency.  Central banks in China and other big developing countries are still desperate for an alternative form in which to hold their foreign exchange reserves, an alternative to holding US government securities, that is.   US Treasury bills pay extremely low interest rates, and the value of the dollar has been on a negative downward trend for 40 years (even since President Richard Nixon took the dollar off gold and devalued in 1971).   Despite all of Europe’s problems, a Eurobond would be attractive to central bankers and other portfolio investors around the world, both to achieve higher expected returns than on US treasury bills and to diversify risk.

    But that latent global demand for Eurobonds will not come to the table unless they are by design backed up with solid economic and political fundamentals.

    An interesting proposal.  And one that faces many hurdles in the political arena.  Frankel goes on to suggest a particular type of bond that he thinks is most likely to work:

    The version of Eurobonds that might work is almost the reverse of the Germans’ Redemption Fund proposal.  It goes under the more colorful name of “blue bonds,” originally proposed two years ago by Jacques Delpla and Jakob von Weizäcker at the think tank Bruegel.   Under this plan, only debt issued by national authorities below the 60% criteria could receive eurozone backing, be declared senior, and effectively become Eurobonds.  These are the “blue bonds” that would be viewed as safe by investors.  When a country issued debt above the 60% threshold, the resulting junior “red bonds” would lose eurozone backing.   The individual member state would be liable for them.  This proposal structures the incentives “right side up.”

    The blue bonds proposal has been extensively debated in Europe.  As usual in such controversies, many participants in the euro debate fixate on one evil or the other –moral hazard or austerity — and fail to grapple with practical proposals to balance the two.

    As I see the plan, the private markets could make the judgment as to whether a country was in the process of crossing the threshold, even before the final statistics were available, and therefore whether default risk on the new red bonds required an interest rate premium.  If private investors judged that the new debt had genuinely been incurred in temporary circumstances beyond the government’s control (say a weather disaster), then they would not impose a large interest rate penalty.  Otherwise, the sovereign risk premium mechanism would operate on the red bonds, much as it does among American states, and much as it did in Italy, Greece and the others before they joined the euro.   Similarly, if the ECB after 2000 had operated under a rule prohibiting it from accepting as collateral the debt of SGP-noncompliant countries, the entire euro sovereign debt problem might have been headed off early in the decade.

    Read the full post here

     

  • How to Run a "Disciplined Innovation Experiment," from Vijay Govindarajan

    For those of us who need help failing quickly--or rather trying new things and learning from what does not work, here's a short, helpful video from Reverse Innovation expert Vijay Govindarajan.  Gonvindarajan is a big believer in setting up experiments in order to find new ways of doing things.  We look at this approach as taking a bias toward action: stop talking and wondering what will work and just try something.  From Harvard Business:

  • McKinsey Quarterly: Understanding the 'Full Supply Circle'

    With increasing demand for resources and raw materials, variable costs for manufacturing are rising as a percentage of overall costs, according to a new report from McKinsey & Co.  One Chinese steel company has seen its variable costs grow to make up 90% of overall costs, according to McKinsey researchers.  This places a premium on companies being able to find new ways routes to supplies.  For many manufacturers this should mean launching "resource-productivity initiatives," like energy saving and re-use and recycling plans.  McKinsey researchers have put together an infographic to show the need to reconsider the traditional supply-chain model:

    Companies should first focus on activities within their operations, where they can exercise the most control; they can turn their attention later to activities that require the cooperation of other organizations, customers, or other stakeholders. Specifically, companies should prioritize the activities that offer the greatest potential for impact given their position on the production circle.

    Upstream manufacturers. Companies that are focused primarily on transforming materials into inputs used by other companies should start by optimizing production for resource productivity. Such companies have the most to gain by reducing the amount of material or energy they use in production. Indeed, the operations of mining companies are often as much as 10 times more energy intensive than the operations of companies that use their products. As a second step, manufacturers should prioritize waste recovery, which can enable them to secure access to materials through activities such as recycling and reuse.

    Downstream manufacturers. Companies focused primarily on making components or final products should start by optimizing their products in order to use materials more efficiently. These companies will gain most by designing products to reduce material requirements, minimize energy consumed while using them, and ensure they are optimized to be recycled or reused at the end of their life cycle. Downstream companies can also benefit from reducing the energy required to manufacture their products, but this may be a second priority, since the operations of downstream players are not as energy intensive as those of upstream players.

    Waste-management companies. Companies that handle waste materials—including those that collect, process, and manage waste—should start by optimizing processes and developing new markets for material reuse. They should develop the sorting and collection technologies and capabilities necessary to mine the highest-value materials from the general waste stream at the lowest possible cost. They should also develop business models to help other companies with their material-sourcing and reuse strategies.

    You can access the full infographic here, and read the full article here.   

  • The Economist's Greg Ip on a Potential "Fiscal Cliff" at the End of 2012

    U.S. policymakers have a lot on the calendar for the rest of the year.  Of course, elected officials will be spending most of the time on the campaign trail.  But the due date is coming for a lot of provisions--tax cuts, an automatic spending cut, some stimulus measures.  If nothing is done and all these fiscal measures are triggered by the calendar, it could mean a hit to the economy.  The Economist's Greg Ip predicts the "fiscal hit to the economy" to be "about 5%."  Ip and Ryan Avent discuss this "fiscal cliff" in a short interview for The Economist:

  • Tablets as Shopping Tool, Consumer Spending Remote Control

    We are always on the lookout for data that might help us better understand how consumer behavior is shifting in the digital age.  Now eMarketer has some interesting numbers on tablets, predicting 20% market penetration by the end of 2012.  And further predicting that over half of American Internet users will use tablets by 2015.  This is not simply a tech story, but a business story and a marketing story as well.  The first tablet users are, almost by definition, spenders.  And they appear to use their tablets to buy, buy, buy.  From eMarketer:

    eMarketer quotes Catherine Boyle, senior analyst and author of the new report, “Tablet Shopping Fuels ‘Couch and Pillow’ Commerce" on tablets as shopping portal:

    “Tablets are the boutiques of the online shopping world. Their tactile nature encourages consumers to hold the device close to their bodies. In turn, the tablet delivers a personal, even intimate, shopping environment that enables consumers to connect on a deeper level with what they see on their screens,” said Boyle.

    That deeper connection is what differentiates tablet shopping experiences from those on other digital platforms. If a website experience on the tablet falls short of expectations, retailers are likely to feel it in the bottom line—35% of tablet owners surveyed by Compuware in February said poor web experiences on the tablet made them less likely to visit that website on any platform. Nearly the same percentage said they would be less likely to purchase from that company in general.

    Read Tablet Shopping Growing, but Retailers Must Keep Up here.

  • GE Data Visualization on Where Americans Work

    You may understand that Americans are working less in the manufacturing sector and more in the health sciences field than in the past, but GE puts that, and other changes in how and where Americans are working, into context with a new graphic visualization.  Working with the design firm Periscopic, GE compiled jobs data over the last 50 years to produce this:

    Go to the interactive data visualization explore the data on your own.  Click here.  

  • Putting the Help in 'How can I help you?'

    There is some evidence to suggest that retailers that pay their low-level workers more, end up profiting more down the road.  Freakonomics host/co-author Stephen Dubner reports on that finding, and provides other interesting insights into what pays off for retailers in this conversation with Marketplace's Kai Ryssdal:

  • Amartya Sen: "History of economic thought has been woefully neglected"

    Via Mark Thoma, Kasey Dufresne, writing at the Open Economics blog, alerted us to an interesting interview that we missed--an interview that is sure to be a good conversation-starter.   Ahead of the Institute for New Economic Thinking conference, Handelsblatt reporters Olaf Storbeck and Dorit Heß interviewed Amartya Sen and asked the Nobel Laureate for his views on the state of economics in academia and among policy makers.  Sen said that he is "disappointed by the nature of economic thinking."  From the interview:

    Handelsblatt: In which ways do you think new economic thinking is necessary and how should it look like?

    Sen: I think we need a bigger, more integrated view that economists tended to look for, in the past. We have to see the totality of the concerns that make human beings want a good economy. The kind of economic thinking that I would like to see pays a lot more attention to issues of human freedom. What I have in mind is real freedom, not just formal liberties but also what kind of lives people manage to achieve, what they can do with their lives, and what help of the state they need for more substantive freedom. The basic question economists should ask themselves is: What can we do to have a decent society where people get much more freedom to live the kind of lives of which they would have reason to be proud and happy.

    You make a lot of references to old economic thinkers like Smith, Keynes and so on. However, if you look at the current economic research that is published in the journals and taught at universities, the history of economic thought does not play a big role anymore…

    Yes, absolutely. The history of economic thought has been woefully neglected by the profession in the last decades. This has been one of the major mistakes of the profession. One of the earliest reminders that we are going in the wrong direction has come from Kenneth Arrow about 30 years ago when he said: These days, I get surprised when I find the students don’t seem to know any economics that was written 25 or 30 years ago.

    Is there any hope that this trend can be reversed?

    Yes, I’m quite optimistic in this regard. I get the impression that this seems to be getting corrected right now. I’m particularly delighted that the corrective has come to a great extent from student interest. I’m very struck by the fact that at the university where I teach – Harvard – the demand for more history of economic thought has mostly come from students. As a result there is a lot more attempt by the department of economics as well as history and government to look for the history of political economy. Last year, along with my wife Emma Rothschild, I offered a course on Adam Smith’s philosophy and political economy. It drew a lot of interest and we got some of the finest students at Harvard.

    Read the full interview here.
  • Nobel Laureate Elinor Ostrom, 1933-2012

    Elinor Ostrom passed away yesterday at the age of 78.  In 2009, Ostrom, a professor of political science at Indiana University, became the first woman awarded the Nobel Prize in Economics when she was recognized for her work on the "tragedy of the commons."   

    Here is Ostrom giving a lecture on the work that earned her the Nobel Prize (h/t SCPR):


    Video streaming by Ustream

    Read the Los Angeles Times obituary for Ostrom here

  • OECD Report: Start up Faster Recovery by Encouraging Entrepreneurship

    "Start-up rates in most countries are slowly bouncing back toward their pre-crisis levels," according to new data from the Organisation for Economic Cooperation and Development.  The number of startups basically dropped off a cliff in 2008 all across OECD countries. But while most countries are seeing the rate of new business creation recovering slowly, there are some exceptions.  France, for one.

    France has shown the most spectacular increase in new businesses, due to introduction of a simplified start-up procedure (“regime de l’auto-entrepreneur”). Australia and the United Kingdom have reported robust growth in business creation in late-2011 and Norway has grown steadily, but the number of newly created enterprises remains below its pre-crisis level in most countries surveyed, according to the report. 

    Access the data from the report, or read the report (subscription required) here.