Blended Value
By Kevin
Into the Blender!
Just when people are lambasting financial institutions and entities like hedge funds, Jed Emerson who coined the concept of 'Blended Value', suggests that these financial entities can play a positive social role. Fast Company had an interview with him about this in 60 seconds.
As reported on Economist Online, Jed thinks that hedge funds which focuses on fundamentals mirrors sustainably investing, meaning that they would act to move capital to places where they are used properly and for good of the society.
Trading according to rigorous fundamental research can often mirror sustainable investing, which seeks to profit by taking into account social and environmental factors, he says. Fundamental hedge funds are far more likely than other investors to try to identify a firm’s off-balance-sheet exposures, of which a growing proportion may be “environmental or social liabilities present in a market or company but not explicitly accounted for in traditional numeric valuation or mainstream investor analysis”.
He makes an important point about 'Shorting', which The Economist goes on to discuss. As a matter of fact, the market is kind of biased towards growth and that should be the case since the economy is usually growing but then if people are not rational enough to sell, then there has to be short-sellers who are rational enough to sell but don't have the shares in the first place. This way, buying and selling would reflect a more fundamental value. This is of course, an ideal - prices hardly reflect any reality in moments. But at least we know that the bulls and the bears are almost right the same number of times (half of the time each; which reflects dynamism of the market). And so there's no way we should have anything against them.
Con-nect-working
By Kevin
Start the Chatter
Social networks have been rising for some time now. And while they initially started out as mere toys for youngsters, there have been talks of higher degrees of commercialization, how these networks will change the lifestyle of people, and so on. Now that the change has taken place somewhat, it makes sense for The Economist to tabulate some of the impacts these networks have brought in.
To begin, these networks have definitely became an important way people communicate; however mundane or skimpy each little piece of content may be, they are viewed by many people within your network and it broadcasts bits of information about you that couldn't have been captured in the yesteryears. This is true for the comments you cast, the status messages you post, the photos and videos you uploaded and all the social games that you play. Although online social networks remain essentially much like a bulletin board (except viewership ability of contents are more strictly controlled and with richer content) and thus does little to enrich people's ability to do real networking, it does a wonderful job at augmenting our real relationships.
This strong link with the real world is a great strength for online social networks. Websites are viewed as corporate facades that give little information about the reality of the companies. On the other hand, the pages for these firms on social networking sites are viewed as better avenues for firms to communicates with their customers. Likewise, a corporate site announcement of a promotion the company is offering does less to boost sales compared to a tweet which might have much more followers.
That is the free advertising service that sites like Twitter and Facebook might offer, which brings us to the question of how money is being made on such networks. A peach of an opportunity, an article in The Economist special report on social networks gives us an idea what are the businesses that taps into the plumbing of social network connections and thriving. For all the talk about connecting with friends, being entertained by your online pets, or having a good laugh from the video your friend has shared, businesses might be the greatest benefactor of this trend.
Culture & Phones
By Kevin
Indian Torch
Trapped on our little island of Singapore, we hardly wonder what our handphones are capable of; here in Singapore we typically use it to text, call, surf, as a phone book to retrieve contact details of people, a personal organizer and even a camera. Singaporeans makes extensive use of their phones and our preferences are varied, a reflection of our melting pot of diversity. And as the briefing in the latest issue of The Economist shows, mobile phones are indeed a great reflection of the culture of the people using them.
The article mentioned a couple of interesting quirks about people using mobile phones around the world:
Japanese use their phones to text and surf intensively because using phones to make or receive calls on board trains and some other public places are thought to be extremely rude.
Spaniards reject voicemail because they think it's rude not to receive calls from others when they call, even when the receiver is busy with matters.
Chinese will interrupt conversations to receive calls because they are afraid to that they'd miss a business deal; at the same time they use knock-offs handphones that often have extensive functions, even capable of using two SIM cards.
Americans are willing to endure limited cellular coverage; perhaps fearing the hassle involved in changing operators.
Italians, Greeks and Finns would switch operators if they find their coverage limited and yet are fearful of the effects of electro-magnetic radiation, which probably is more ubiquitous than in America.
Indians use mobile phones as torchlights.
Africans usually use 'beeping' (ie. give the person a ring) to contact people and signal them to call back when they're low on pre-paid credits.
Indeed, mobile phones are changing everyone's lives everywhere; one just needs to know the name given to these devices in different societies and cultures to understand their importance. In fact, Iraqis thought more highly of the proliferation of mobile phones as a result of the American invasion than their supposed liberation.
Sites & Wares
By Kevin
Macheist rocks!
It's been a while since ERPZ featured any Lifehack Tools and lately, I've found quite a lot of useful stuff so it would be great to share with readers and GTD enthusiasts.
Dropbox – File sharing/synchronization, online storage tool. Extremely useful for people with multiple computers and files to be shared between them.
Macheist – Mac Community that raise funds for charity and give you lots of great Mac Ware at amazing prices (sometimes free too).
Ninite.com – Multi-Apps installer; allows you to choose from a list of important "must-install" applications to be installed all at once on your computer. Especially useful when you just get a new computer or formatted your PC and want to have your favourite softwares installed fast.
Growl – Mac Notification tool, it’s basically an alert programme that seamlessly integrate with your mac and several other popular programmes.
Picnik – In case you haven't realised, there's are web-based image-editing tools and Picnik just happens to stand out particularly because it is speedy and extremely user friendly.
Quicksilver – It's not easy to describe what Quicksilver does exactly but it's basically a graphical shell that allows you to perform stuff on your Mac more quickly.
Package for the Week
By Kevin
Hidden from sight
Reads for this weekend are here. Farhad Manjoo muses whether anyone would be able to stop facebook. From expanding, that is. The site has really amassed a huge group of user in a short time and people have been wondering if it would be able to generate revenue and such. Truth is, Facebook has really changed the stuff we do online quite very much and helped the Internet leap ahead as a tool for social networking.
Daniel Gross wrote about his tour to China's most important dam and muses over his inability to find a chocolate bar there. He got Slate.com readers to send in excuses for not being able to find a chocolate bar in China. Examples included:
"Your quest for chocolate at the Three Gorges would be like me looking for Chinese dumplings at the Hoover Dam," wrote one Beijing resident.
Jokes aside, for your watching pleasure, check out Shashi Tharoor's recent talk on TED.com about soft power, with particular reference to India.
Reading Habits
By Kevin
Piling Up
As books in my home piles up and I am increasingly unable to keep up with finishing the stacks of library books I borrow almost on a weekly basis, I can't help but write something about reading habits; the selection of reading materials, how to go about reading them and what sort of benefits you should be expecting. More importantly, I have to explain what sort of problems you should avoid.
There is way too many means to categorize books but they fall into 'fiction' and 'non-fiction' generally. I am a strongly non-fiction person but I'm not going to ramble on the merits of non-fiction and such. The thing about non-fiction is that they are generally not attention-sustaining for long and that means things can get boring very quickly and you'll have to be able to sustain your interest in the book. Fiction, on the other hand is usually flowing smoothly from one chapter to next most authors have decided that a page break between them would be way too disruptive.
Fiction
Self-sustaining Fiction
Therefore, choose fiction when you need to entertain yourself and prefer to use up less energy paying special attention to what the author has to say. The descriptive words of fiction will just diffuse into your mind as images (accurately perceived or not) and the storyline will flutter pass you with its ups and downs. If the fiction is good, you'll find yourself emotionally drawn towards the characters and their circumstances. Your attention, in other words, would be naturally occurring, something that requires little efforts because the ease of visualization and imagination facilitates the involvement in the contents of the fiction. At times, skipping a couple of paragraph won't even cause you to miss out on anything in the story. And if you're lucky, the story is probably beautiful, like The Time Traveler's Wife by Audrey Niffenegger or abstract and deep with loads to learn about like Life of Pi by Yann Martel.
These books are best read while babysitting a passive kid who loves to play on his own, when you're trying to skive from work at your workplace, while waiting for your boss in the conference room before a meeting (especially for bosses who don't require you to look busy) and more. Fictions are generally treated as entertainment and plenty of people read them on board buses and trains just to make the journey to work or anywhere else shorter. Unless your English is pathetic relative to the standard of text you've chosen, the process of reading fiction can be rather mindless. Of course, there are more exciting and information packed fiction like the ones Dan Brown writes and some others with such long list of characters you'll be better off jotting down on paper who is who.
Non-Fiction Pop
Loaded with Info Tidbits
Non-fiction popular books are a good choice for those willing to give up a little more attention and energies to entertain oneself while also picking up loads of interesting information about the world that you would otherwise ignore. These books are hard to read in presence of friends who wants to strike a conversation with you but immensely entertaining when you're along in the MRT (for Singaporeans, subway for Americans and the tube for Brits), on-board buses or in a cafe sipping coffee. Now these are the books I'll read most of the time, especially in the area of my interests - Economics! The tidbits of information you gained from these books are going to take you a long way through conversations with different sorts of people, an array of writing works you might engage yourself in or just topics you can cook up and share at a family dinner. Robert H. Frank's series of 'Economic Naturalist' books are great for both students of Economics and the general audience. Of course, I would recommend Tim Harford as well given the many entries with links to his blog and books. Popular science books works the same way - Richard P Feynman have been writing them in the 90s, when the ordinary folks became amused by scientific experiments of all sorts and everyone were hungry for knowledge (at least in most of the Western World). Books on social trends by Malcolm Gladwell and James Surowiecki would probably interest you greatly in the same way.
I usually call these books coffee table books because they're best read when you've spare time for leisure stuff but don't want to be too active. It's best suited as a companion in Starbucks besides the Cappuccino you'll buy. It's fine reading on trains, cars and buses as well but you will have to be a little more interested in case you decide to doze off.
Non-Fiction Reference/Study
Finally, there's the non-fiction serious books that would require undivided attention with serious note-taking. For me, these are economics reference books, heavier books on business and management as well as some textbooks. These are the books that would take up loads of your time just with wondering what a certain paragraph or line means. And these are best reserved for reading in quiet places and when you have plenty of time.
Read these on a table, with a notebook and a pen or pencil, preferably with a technical terms dictionary with you. A highlighter might sometimes come useful. Ensure that the lighting is good around you so that it keeps your eyelids wide open and prepare a good hot drink with a coaster on the table beside you - you're unlikely to be leaving the table any time soon anyways.
You probably have the most to gain from the last type of books, Non-fiction References or Study sort of books but that is the kind of materials you read the least. Fortunately, there is a range of other sort of reading materials you can start on - The Economist, Fortune, The New Yorker, Time, Newsweek, and many more. These are a cross between the Non-fiction Pop with the Non-fiction Reference and will offer you enriching information without the need to take particular notes and such. Well, with so many choices, choose something you like in each category and get down to cultivating a habit to read!
Planned Reading
One key problem is getting into the trap of wanting to read everything and I often reach that stage of walking into the library hunting for books even when I have loads of them at home unread. There's something satisfying about being able to borrow a book you hope to read and anticipating its contents. So as far as possible, try to plan your reading. Limit active reading materials to a few (it's usually about 5 for me, which is quite a lot; they include a latest issue of The Economist and Fortune, 2 Non-fiction Pop books and a serious Non-fiction book or motivational book).
Don't Force Yourself
If a book is way too high level for you, just drop it. It's not worth the time. When you realise that a writing uses too much references and terms you know nuts about, it's better you go read up on them before getting back to your book/article. You'll gain little finishing a book cover to cover when you don't understand it; worst, you risk losing interest in the issue. It is better to read materials with a little bit of difficult stuff but coupled with loads of friendly information and those that you're interested in; they act as bridges to lead you to higher level materials.
Having said all that, one need not get too technical about reading at the end of the day - when you happen to lay you hands on the materials, just read it!
Towards Multi-lateralism
By Kevin
Trading to the winds
Multi-lateral trade is something where what seem like a step forward is argued to be a step back. Bilateral deals were touted as the alternative to no trade since rounds of multi-lateral trade talks often ends in disagreements - the idea that something is better than nothing. The Economist have argued otherwise, warning that these bilateral FTAs signed in Asian countries are in danger of eroding the potential of a world trade agreement.
There were theories about trade diversion and trade creation derived from bilateral or limited multi-lateral agreements and those interested can read more to understand how bilateral agreements compare badly with a global multi-lateral trading system. Unfortunately, the real world is not purely about economic costs and benefits. The other intangible costs with respect to politics and diplomatic relations.
Pumping Up & Down
By Kevin
One is Enough
In the recent financial page of The New Yorker, James Surowiecki, talks about central banks' overly enthusiastic fears of inflation. He even included notes for this particular column on his blog, to demonstrate how inflation hawks have been crying out loud. There is just something peculiar about the way we economic agents treat price changes - we are always too nonchalant about it or way overboard when fearing it. There will always be 2 camps of people in the economy, one group with huge fears of inflation, making a whole lot of noises when monetary policy is expanding and credit is loosening while another bunch would find deflation looming in the same economy and decry tightening of government expenses in the economy. And because these people almost always seem to be some sort of economist or economics-trained characters, this phenomenon seems to demonstrate the two-handedness of economists so frowned upon by Harry Truman.
The fact is that price changes are incredibly impossible to foresee although classical economists believes that price changes can be calculated by looking at the general system of the economy. Their famously simplistic equation of PQ = MV (Price, Quantity, Money, Velocity). PQ represents the national income, commonly measured using the GDP. And classical economist always seem to believe that output is max-ed out (that is no excess capacity) and that velocity of the cycling of money is more or less consistent and so money supply almost definitely mean price increases. In other words, monitor the money supply of the economy, the policies of the central bank and we'll know the price changes.
Alas, the real world isn't that simply since the velocity of money is dependent on the circumstances of the economy. In a recession, the build up of reserves in banks and the savings of consumers inevitably mean that consumption is slowing and the velocity of money reduces. Likewise, when output is not maximized and there is still plenty of excess capacity, the increase in money supply can translate into real growth (that is the Keynesian idea of a stimulus that boost aggregate demand and create real growth in short run). So we can't be sure the effect of policies on prices exactly; usually we believe that there's an influence on both output and prices.
At the end of the day, I guess pumping up is safer than going down given the fact that our policy tools to combat inflation is way sharper than for deflation. In any case, these price changes usually only gets wild when there's something wrong about the fundamentals of the economy (lacking diversity of markets, overly dependent on a single market, growth guided by short-run policies and so on).
Demography Upgrade
By Kevin
End of Baby Boom?
My study of Geography in Junior College days in the topic of Demography started off with the concept of Demography Transition. We live in this age when we have countries at each stage of the demographic transition, a very unique time where social and economic circumstances have made population structures of every nation/region so different. There are generalizations to be made in the relationship between economic development and population structure so I'm pleasantly surprised by news conveyed in the recent Economist article, 'The baby bonanza'.
The notion that Africa is advancing in Demographic Transition is something great. Our studies of Africa often centers around vicious cycle of high population leading to stress on resources, lack of capital accumulation resulting in lack of development that invariably result in continuing high fertility and thus high population. Advancement in Demographic Transition through the reduction in fertility is an important second step for Africa after the introduction of drugs and medical care that have helped to reduce their mortality rates. The economist article emphasized on the idea of demographic dividend and whether the continent (which have been left behind by the rest of the world all too often) would be able to take advantage of this opportunity to develop and climb up the economic ladder as well.
The article mentioned how urbanization played an extremely important role in the reduction of fertility and the formation of cities, may after all, be the greatest innovation mankind came up with for now. Those in H2 Geography now probably can see more connections between the topic of population with that of urbanization and make useful connections or explanations for case studies they've been dealing with. Perhaps, cities, with the concentration of people and the spreading of knowledge (an idea introduced to me in Tim Harford's Logic of Life) would foster the pragmatism that ultimately reduce fertility to 2.1 or even below.
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