Bellerbys Economics - Mr Stephenson

Thursday, July 19, 2007

How To Get Rich

"How can I get rich?" one of my students asked me yesterday. Well, not by asking a poorly-paid teacher for advice might be one answer. Another might be "It depends what you mean by being rich" - teachers are all rich people because they share their lives in a fulfilling environment and so on.

But of course, we all know he meant, "How can I make money?"

There are long-term standard solutions - negotiating the property and securities markets for example. There are easy solutions - get born in a rich country, preferably to a rich family.

For more immediate, practical advice, I would recommend "How to Make Millions with your ideas" by Dan Kennedy. Dan starts in the same way as we do in the Bellerbys Business Club by saying there are four basic ways to make money:

* Make and sell
* Buy and sell
* Provide a service
* Organise an event

What Dan then does is put his own particular spin on the deal by focussing on the information age; developing value-added products; saving people time and reducing people's costs.

He uses practical examples eg. he knew an ex-criminal. This ex-criminal knew all the different ways an employee could steal products from a store. He wrote some material and was selling this to store managers for $50 a go. Dan worked with him - expanded the document into two sets of course material - beginners and advanced; developed a one-day course built around the material for store managers; made a DVD version of the lecture, developed his direct marketing technique. The 'course' now sold for $1250, an investment that the store managers would reclaim within about six months from reduced theft - everyone was happy. Dan's friends sales rose from $30,000 a year to $300,000.

One of the most honest books is Felix Dennis 'How to Get Rich'. Unlike others, Felix - a self-made multi-millionnaire - points out that what you need most of all is commitment. He also points out that if you are starting from nothing, as he did, it's really not going to be easy. BUT, if you keep working and follow some basic rules which he explains, your effort and vision can often pay off.

We had a student here two years ago who made some money selling beauty products on e-bay. She bought them in Lithuania from a local well-established company and sold them to customers
in the UK and US at a very high profit margin. Another student, a friend of hers, caught on to the idea, and started selling ornamental clocks from Tatarstan. In both cases, the secret was that they didn't buy the products until they had found the customer - they even arranged for the producer to dispatch the products direct to the customer. Unfortunately, they had to close their businesses in order to study for their exams - so schoolwork stopped them getting rich - there's a moral there somewhere....

If you would like to read the books mentioned above, Pat - our ever-helpful librarian - would be pleased to order them for you.

If you have any business ideas of your own, I would be pleased to help you get started through the Bellerbys Business Club, part of our ever-expanding student development programme!

Wednesday, July 18, 2007

Radio Economics

Podcasting in both audio and video is growing rapidly as a medium. Very soon now, in the new Bellerbys Supercentre, we'll be able to push these feeds through the interactive whiteboards in many of the classrooms - we could start the lesson by listening to leading US economist, Paul Krugman and maybe finish by hearing some archive recordings of John Maynard Keynes himself - why listen to Mr Stephenson when you can learn from the best in the world who ever lived!

For the time being, however, you can still catch up with them through the web. Radio Economics is one of the best of the new ones and can be found here:

Their podcast on the future of Russia from Columbia University is especially good and raises the same questions we have discussed in Module 6 (new module 4) - is Russia diversifying rapidly enough away from oil and gas; taking enough steps to reduce inequality; using its new wealth for supply or demand-led policies and so on.

Don't forget you can also download podcasts on to your ipod - so you can hear them on the move if you want.

Another useful site is:

Of course, Economics podcasting is still pretty much in its infancy and I haven't found a really good Russian, British or Chinese site yet - perhaps one of you would like to start one through the Bellerbys Business Club (BBC)? If you would, let me know and we'll see what we can do! If nothing else, it would certainly look good on your UCAS form!

Tuesday, July 17, 2007

Fiscal Policy - Weird Taxes

Welcome to my new groups - I know we're going to have a good time together in Summer Term 2!!

We' ve started with government policy options and fiscal policy in particular. As Oliver Wendell Holmes put it, "Taxes are the price we pay for civilisation."

But not all taxes have been equitable, easy to collect or transparent, as Adam Smith would have liked. In Alabama, for example, you have to pay a tax on a pack of playing cards provided it contains 'not more than 54 cards' - so make sure you always buy a pack with an extra joker in it.

In the UK, we have to pay what is - in effect - a tax on watching television. It's called the TV licence and it's not cheap either, being around £120 a year.

But there have been even stranger taxes in the past. In the UK, in the 18th century, there was a tax on windows. In France, there was a candle tax. Peter the Great in Russia taxed souls (actually an early form of poll tax) and beards (!) and the Roman emperor, Nero taxed urine (I'm not quite sure how they measured that!)

For a very comprehensive round-up of the arguments surrounding taxation, you should visit Wikipedia here:

Monday, July 16, 2007

Roaring Dragon

China's economy will overtake Germany this year to become the world's third biggest economy behind the US and Japan.

For economists, keeping up-to-date with news from China is vitally important - what affects China, affects the world.

For non-Chinese speakers, there are many sites you can use for this - one of the best is China Daily:

For a more detailed analysis of news and events, you really can't beat the China Economic Review:

One of the most interesting groups in recent years is the Chinese Economists Society:

This consists of mostly Chinese economists from China, Taiwan and elsewhere who have been very influential in opening up lines of communication in recent years.

Of course, it's raw data that really makes economists excited (we're a strange breed!) and the best site for this is Chinability:

It seems to consist of hundreds of charts on every topic - and they all point upwards!! It was from this site that I learned of the rapid expansion of Xi'an civil aircraft company - if I was Boeing, I'd be getting really worried at this stage - especially with the recent launch of the ARJ21 regional jet in China.

Sunday, July 15, 2007

Reith Lectures - Jeffrey Sachs

Each year, the BBC hosts a series of lectures on world issues. This year, it focussed on globalisation (module 6/new module 4)

The lectures were given by Jeffrey Sachs, one of the world's most influential economists in the field of development economics. He is Director of the Earth Institute at Columbia University. He is most famous for the concept of 'shock therapy' - the rapid switch from a command to a market economy as witnessed in Poland and Russia in the 1990s. Whilst, in the long term, it could be argued that this has been successful - it did in the short-term lead to massive social disruption, the loss of capital-intensive industries and hyperinflation. Other countries, such as China and Vietnam, have adopted alternative routes towards market-oriented economies.

More recently, Professor Sachs has argued - most famously in his book, "The End of Poverty" that poverty in Africa can be overcome by massive directed aid from the west. Others disagree, arguing that asymmetric protectionism is the best route out of poverty.

All good stuff, eh? No wonder that a group of economists together is called an argument of economists.

You can find out more about Jeffrey Sachs here:

And you listen to all the Reith lectures here:

Thursday, July 12, 2007

Dollar Crisis

As predicted in our Economics lessons for quite some time now, the dollar has continued to decline and yesterday the pound broke through the £1 = $2 marker.

So, what's caused all this? Perhaps underlying the problem has been the enormous levels of consumer debt in the US over the last five years - much of this borrowing has been spent on imports creating a current account deficit well in excess of the normally acceptable level of 3% - much has also been spent on fuelling a house price boom.

For many years, the Chinese, Japanese and Germans collected dollars in payment for their exports to the US - usually in the form of bonds. However, as the underlying weakness of the US economy became more apparent, they began to try to offload these dollars onto world markets. In addition, countries are relying less on the dollar as the international currency for oil purchases.

Increased supply and decreased demand have resulted in the fall in the price of the dollar.

However, in some ways, this might just be seen as a correction - it seems likely that the dollar has been overvalued for some time and is now sinking towards its true level.

In the long term, this may be of some help to the US economy which has been struggling to compete in many industrial sectors of late and has been slipping towards protectionsim. A weaker dollar will make it easier to export after the J-Curve effect has kicked in.

You can read more about this here from the Washington Post:

Paul Krugman, one of the world's leading economists, has a good article on the current problems here:

This article also looks at the problem in the wider context of the domino effect (for example, China will not want to see the dollar fall too much as it currently holds a lot of dollars in its foreign currency reserve) and also in the general area of monetisation - perhaps there's simply not enough money in the world - so many banks are holding non-performing debt worldwide that it's slowing down the velocity of money - so (gulp!) let's print a bit more!

Wednesday, July 11, 2007

Let's All Go To The Movies!!!

Some great Economics movies around at the moment.

Firstly, there's 'Black Gold' which looks at the problems facing coffee producers. Remember the agricultural paradigm? That's a situation where demand is fairly constant - usually the case with most agricultural products - we can only eat three meals a day - but supply increases with improved technology. As the supply curve shifts to the right, prices fall and farmers find themselves struggling at the margin of just staying in business on poverty wages.

If you go to see 'Black Gold' at the Duke of York's cinema in London Road on Thursday, July 19th, you can get some FREE ethical coffee from the bar. Doors open at 6pm

Another movie worth seeing on Saturday/Sunday 14th/15th July is 'Fast Food Nation' at 1.30pm at the Duke of York's. This movie stars Bruce Willis and is about a fast food chain which discovers cow dung in its burgers. As the company investigator unravels this problem (in a very humourous way) he begins to discover more and more about the fast food industry and the social and economic effects of the business on modern America. I'm not normally a Bruce Willis fan but in this movie, he is truly excellent.

Tuesday, July 10, 2007

Bill Gates Dethroned!

According to 'Fortune' magazine, Bill Gates is no longer the world's richest person. That honour now goes to Carlos Slim from Mexico - perhaps best known as being the owner of America Mobil - the mobile phone giant that dominates the whole of South America. His fortune is now estimated at about $68 billion - that's billion, not million.

Bill Gates, meanwhile, is stuck down around $59 billion.

Russia, meanwhile, has 53 billionnaires - the world's fastest growing number - the richest of all being Chelsea owner, Roman Abramovih on $19 billion. Others include Suleiman Kerimov 14.4bn, Vladimir Lisin (steel tycoon), 50, has assets valued at $14.3bn, Vladimir Potanin (metals), 46, is worth $13.5bn, Mikhail Prokhorov (metals), 41, is valued at $13.5bn and Oleg Deripaska (aluminium), 39, is worth $13.3bn.

India has the most billionnaires in Asia with steel giant Lakshmi Mittal worth $32 bn in first place. The other Indians in the list include Mukesh and Anil Ambani of Reliance, Wipro chief Azim Premji, Bharti Group chairman Sunil Mittal and Aditya Birla Group chairman Kumar Mangalam Birla.

China and Hong Kong together have a total of 41 billionaires. Huang Guangyu, 37, the founder of Gome Appliances, worth an estimated $2.3bn (£1.2bn), has topped the latest China rich list.