Synthetic happiness

If someone said you could ‘manufacture’ utility (or the ‘happiness’ gained from consuming a good) without actually consuming it, would you believe them? If all of us had this ability, what would happen to the global economy?

Psychologist Dan Gilbert talks about synthetic happiness, and how paraplegics and lottery winners can both become equally happy after a set time. He also describes a series of experiments based on how being given a reversible choice can dramatically change our happiness levels, and provides evidence on how all of us can manufacture happiness.

Pushing it too far?

It’s common knowledge that the Hong Kong property market is one of the most heated up ones in the world, despite the recent slump, and in 2016, the 13-year cycle of this market is expected to peak. The rental yield at 2.7% remains higher than the mortgage rate at 2% – providing support. While China’s recent stock market crash stirred a debate, a significant number of well – known investors feel that since housing is a long-term investment, market volatility will not greatly affect it. But that’s a whole other debate.

The scarcity of land in Hong Kong is a pressing issue for the CEO, Leung Chun-ying, and his government. Their solution? Land reclamation in tiny Victoria Harbour. Since the 1850s, more than 60 square kilometers of land has been reclaimed, and with ongoing discussion of a third runway for Hong Kong International Airport, the will to reclaim land doesn’t seem to be swayed by the dozens of petitions signed by the Society for Protection of the Harbour or the various other organisations who have tried to stop this from happening. Their arguments include the risk of losing the white Chinese dolphin and irreversible marine pollution. A few others believe that ‘the shortage of housing is real but that is because of the deliberate manipulation of the governement’, i.e a lot of land is tied up in the vast land banks of private developers that the government conveniently fails to notice.

The opportunity cost to saving the dolphins and the harbour? Only the 50% of the Hong Kong population struggling to buy a house, an extra 200,000 flights a year, and the possibility of the property market skyrocketing in the near future. A simple 126 hectare project has the potential to house 115,000 people, but small projects like these are being shut down due to the lobbying of NGOs such as Greenpeace. The economics of the property market are simple – a short supply and exceedingly high demand leading to exorbidant prices. The government’s position is clear – the shortage of land is directly linked to a sharp decrease in land reclamation – and this has to be solved through pouring more concrete into the harbour day by day.

It’s all a game of conscience – would you struggle to afford a house or allow clear blue water to turn into a murky brown, but rest peacefully into a home that doesn’t tear apart your pocket?

Economics always wins!

Stephen Hawkins recently said “We cannot quite know what will happen if a machine exceeds our own intelligence, so we can’t know if we’ll be infinitely helped by it, or ignored by it and sidelined, or conceivably destroyed by it”. Humans need not apply

If we take the positive perspective and assume that AI will aid humans and that we are smart lazy beings, what will we do when the “bots” takeover the world?

Do you live to work or rather do you work to live?

 

Bottoms up!

social entrepreneurs

Tl;DR (too long; didn’t read): Introduce the importance of inclusive growth at more fundamental levels instead of hoping for a trickle down affect to occur.

A recent article on the world economic forum coming from the social entrepreneurs delegation about how leaders should tackle problems of equality and drive inclusive growth was published. Directions and strategies to accomplish such goals include only three:

  • Make inclusive growth an explicit part of your agenda
  • Infuse your executive teams with a “can do” attitude
  • Contribute your core expertise and assets

This is a direction in the right step but to me it seems all lacking.

The social entrepreneurs delegation is directing this at leaders most of them CEOs. While targeting the private sector is effective, should it really be for those at the top? The CEOs that attended the conference in Davos were those who were willing to take steps in the right direction but they are far and few. While other absent companies may be working towards the same goals, I believe that such efforts which are directed to the ones at the top may be effective but progress will most likely be minuscule in the grand scale of things. Too many economic participants may fail to see the benefits of inclusive growth which is more sustainable than other forms of economic growth. If we are to boost the general standard of living it is more favourable for more equality though such should not be forced by government intervention otherwise it could lead to unnatural and unstable circumstances should a government decide to change it’s policy. In other words, inclusive growth should be driven by private individuals as it is more likely that such actions will spread quicker than if it were by government intervention simply due to the fact that more people will realise the benefits than if it were imposed.

Besides my laissez-faire rant, how can we go about achieving this. As I said this article is targeting those in leadership positions who have been in the game for a large amount of time. But will their attitudes and efforts trickle down fast enough? I do not think so.

The best solution in my opinion is to introduce these concepts into the education of economics. If they were to be included in the syllabi of schools and universities then surely these ideas would be more prevalent within society therefore more efforts to achieve inclusive growth are likely to be undertake. For such a concept that is being pushed by the social entrepreneurs delegation instead of targeting the CEOs, they should focus on schools and universities that teach economics at a higher level as well as raising awareness through publicly friendly  lingo where such theories and strategies will be more accessible. Only then would inclusive growth would be pushed at a faster rate. That is not to say that the previous efforts are in vain but what the latter would act as a catalyst to ensure that there will be more efforts for inclusive growth.

Disclaimer: I am no expert in economics or advertising, these are ideas which I thought of while sitting on the toilet.

Trade Blocs

Check this out for a better explanation of the types of trade blocs. At about the 1:05 mark, is where the types are discussed with increasing scale of integration, i.e. from Preferential Trade Agreements to Economic Union to Full Integration.

Growth, Meritocracy, Apple(s) and Mangoes? – Let’s talk about that…

I wasn’t really sure which article to choose so I put them all in this post…

Growth – 

UK economy records fastest growth since 2007

The UK’s economy grew by 2.6% last year, the fastest pace since 2007 and up from 1.7% in 2013, official figures have shown. That was a slowdown from 0.7% growth recorded in the previous three months. Economists were mixed over whether the loss of momentum in the final quarter might be temporary or prolonged.

“The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic,” he said. – This is probably due to the implications of globalisation which resulted in the shift towards a more tertiary sector domination and thus de-industrialisation.

The services sector grew by 0.8% in the quarter, but construction contracted by 1.8%. Manufacturing grew by just 0.1%, its worst performance since the start of 2013.

Tuesday figures mean the UK was among the best-performing of the all the major economies in 2014. The IMF forecasts UK growth of 2.7% in 2015. However, Samuel Tombs, of consultancy Capital Economics, has predicted growth of 3%.

“With the recent halving of oil prices providing a timely boost to households’ discretionary spending power, credit still becoming cheaper and pay growth on an improving trend… the best days of the UK’s recovery may still lie ahead,” he said.

How significant do you think is the slowdown in the British economy, given that the dominant service sector is still booming, but construction is shrinking and manufacturing almost back to flat-lining? – Read the article to find out

http://www.bbc.com/news/business-30999206

Meritocracy – 

This article is probably less relevant to the course material, but in line with a discussion we had about inheritance and meritocracy in an earlier lesson, thus quite interesting. It basically offers a different angle to the argument based on statistical evidence.

“…More than ever before, America’s elite is producing children who not only get ahead, but deserve to do so: they meet the standards of meritocracy better than their peers, and are thus worthy of the status they inherit.”

http://www.economist.com/news/briefing/21640316-children-rich-and-powerful-are-increasingly-well-suited-earning-wealth-and-power

Apple – 

US technology giant Apple has reported the biggest quarterly profit ever made by a public company.

Apple reported a net profit of $18bn (£11.8bn) in its fiscal first quarter, which tops the $15.9bn made by ExxonMobil in the second quarter of 2012, according to Standard and Poor’s.

Apple’s impressive results represent a significant shift towards the massive untapped potential of China.

With a strong line-up of devices entering the final quarter, it was able to reap the fruits of its deal with the world’s biggest mobile network, China Mobile.

Currency woes

Apple’s revenue grew to $74.6bn in 2014 – a 30% increase from a year earlier.

However, on a conference call to discuss earnings, Mr Cook complained of “fierce foreign exchange volatility”, which added Apple to a growing list of US firms who have been hurt by the strong dollar abroad.

Apple said that currency fluctuations shaved 4% from its first-quarter revenue.

http://www.buzzfeed.com/tomgara/heres-how-big-apple-is#.ahX9p1zG3

http://www.bbc.com/news/business-31012410

Mangoes

Ban on Indian mango imports to EU to be lifted. “Today’s decision demonstrates the marked improvements India has made to its export system and it is important that these standards are maintained so that trade can continue and UK plant health remains protected,” – Increase in quality of the mangoes due to the protectionist measures and thus a potential increase in consumer surplus when the ban is lifted.

Even though India sells only a fraction of its mangoes abroad, Europe is a significant market for the industry. PRofits were more than halved after prices came down. Exports fell from $307.4m between April and November in 2013, to $291.4m in the same period last year.

However, imports of four other products – aubergines, bitter gourds, snake gourds and patra leaves – remain suspended subject to sustained improvements in plant pest control.

http://www.bbc.com/news/business-30898966


 

World Commodities Map

An interesting image to preview next week’s patterns of trade. – Every Country’s Highest Valued Exports

http://www.businessinsider.com/every-countrys-highest-valued-export-2014-5