Bellerbys Economics - Mr Stephenson

Sunday, December 24, 2006

The Corporation - for free!

One of the most interesting Economics movies of 2006 is now available for free legal download. "The Corporation" has been made available by its director here:

The movie uses the techniques of Behavioural Economics to look at how multinational companies behave as they get bigger. It reaches the startling conclusion that left to their own devices, corporations demonstrate the same type of pathological behaviour only found elsewhere in gangsters, the criminally insane and American presidents.

Of course, Economics students will look at the movie in a balanced way - do the economies of scale created by large corporations, for example, increase economic well-being more than the negative externalities that they sometimes create? But overall, this is a gripping movie and very relevant to the section in Module 5 on corporate governance that we begin in January.

Another good movie circulating at the moment is Spike Lee's "When the Levees Broke" which looks at the aftermath of the New Orleans flood of 2005. There are interesting issues here related to inequality, government failure, externalities, global warming and so on. Well worth a look for all economists. More details can be found here:

When watching the movie, however, bear in mind that - terrible though the New Orleans disaster was - it was very small compared to the tsunami that struck Indonesia, Thailand and Sri Lanka on December 26th, 2004 - a disaster in which 224,000 people died.

Thursday, December 07, 2006

Business Channel

The Business Channel has now launched on Freesat 547. This is a very valuable resource for all Business and Economics students bringing together a wide range of business-related TV shows from the last five years in a convenient packaging format. Strongly recommended.

Wednesday, December 06, 2006

United Nations University - Wealth & Inequality - Module 5

The UNU is based in Tokyo but operates largely as a virtual university, offering courses aimed particularly at developing countries.

A new report by the UNU, considered one of the most comprehensive to date, shows that 2% of the people in the world own 50% of its wealth - in effect, we have created a super-rich elite of 120 million people, located mostly in the USA, EU and Japan, but members of whom can be found in just about every country in the world. The report further concludes that the bottom 50% of the world - that's 3 billion people - own just 1% of the world's wealth.

But the most interesting aspect of the report is the way it illustrates sharply the difference between Income and Wealth. Income is current, wealth is accumulative.

For example, some of the poorest people in the world - in terms of wealth - are to be found in the USA and UK. This is because wealth is defined as net assets (what you have - what you owe). Sadly, mnay people in the USA and UK are deeply in debt because of house mortgages, credit card spending and so on. And yet, their levels of income and consumption are of course very high - compared to the average person worldwide.

So does wealth matter? Well, it does and it doesn't. It does because having high positive wealth means you get to control more of the world's resources and development (allocative efficiency). Low negative wealth means you could be in trouble if you get sick, lose your job and so on - the safety net provided by the state then becomes crucial. A poor state safety net could mean that people in high income countries could suddenly fall into destitution and dysfunction much more quickly than people in low income countries where the social safety net (family, village) may sometimes be stronger.