Bellerbys Economics - Mr Stephenson

Economics Graduates

2008-04-24T16:10:00.002+01:00

Economics has a poor reputation - 'the dismal science' it is sometimes called - and that makes those of us who practise it, dismal scientists - probably in both senses of the phrase.

But is that really true? Let's just look at some of the exciting people who have qualified with an Economics degree:

Firstly, there's Mick Jagger of the Rolling Stones, who grabbed his degree from the LSE. Then there's (gulp) Arnold Schwarzeneggar, action movie hero who went on to become Governor of California - the Governator.

Then there's BBC presenter and everyone's Blue Peter favourite Konnie Huq, who's a Cambridge graduate like our very own chief-exec, James Pitman.

Then there's Tiger Woods, possibly the world's greatest ever golfer, who graduated from Stanford. Scott Adams, the creator of Dilbert - the cartoon series is an economics graduate. Australian actress Cate Blanchett graduated from Melbourne University - and also actors Gene Kelly, Paul Newman and George Wendt ('Norm' in 'Cheers').

That's not a bad crew to be a member of!!

Cleaner Profits from Cleantech

2008-04-18T12:58:00.003+01:00

Cleantech is a word you will start to hear more and more about. Although there may be some disagreements as to the causes, most people now accept that global warming is real and is going to get worse over the next ten years.

So what should you be investing in if you want to profit from this? Cleantech companies will provide the answer. There are four different categories emerging:

The first area is low-grid technology - the technology that helps households and businesses to reduce their energy usage. Every business in the country is now scrambling to appoint Carbon Reduction Officers or some such - and so contracts can be easily gained for things like environment-control systems software; demand-management lighting and so on. This may be considered the microeconomics of greenhouse gas reduction

The second area is in the macroeconomic sphere with governments arbitrarily plucking figures from the air and setting targets like a 25% reduction in greenhouse gases by 2020 (USA). This has led to a boom in big technologies like carbon sequestration (collecting CO2 emissions from factory chimneys and feeding them underground) and clean-coal technologies (the Chinese are big in this area.)

The third area is alternative energy sources - solar of course, fuel cells and perhaps biofuels (although that brings its own problems). Geo-thermal technologies are another and with EarthEnergy investing heavily in this in Cornwall, it could lead to a revival of that country's fortunes.

Finally, the fourth area is CO2 conversion therapies - filtering CO2 from the air and converting it into chemicals such as methanol that can be stored more easily and may have alternative uses, including fuel cells.

We used to say 'Where there's dirt there's money' in this country - but perhaps now we should change it to 'Clean technology provides clean money."

Children's Economics University

2008-04-03T05:52:00.002+01:00

The Warsaw School of Economics, much more progressive than the LSE in the UK and rapidly developing a world-class reputation, has recently launched a Children's Economics University. It is aimed at gifted children in the 11-13 age range. They attend six lectures a term on a Saturday morning each term. The lectures are fun-filled with role-playing, economics games, quizzes and so on. The best student at the end of the course wins a laptop.

What a great idea for the United Nations group at Bellerbys to adopt. With so many gifted economists in the group, the students could run the lectures themselves and the 'Bellerbys School of Economics' could be open to local state school children who show potential in this area.

Let me know what you think!

Bio-Economists

2008-03-31T09:18:00.002+01:00

There has long been a school of economists who describe themselves as Physical Economists and who seek to relate the principles of Physics to Economics. A simple example of this is their concept of kinetic money (money that is in circulation) and potential money (money stored in a bank).

But now, we seem to be developing a new branch of economists who might describe themselves as Bio-Economists. A research team from Imperial College interested in population control recently proposed that in competitive environments, evolution slowed down. They looked at rates of evolution amongst populations of birds to support this hypothesis. Sure enough, in environments where many different species of birds existed, each species found its own niche and was very reluctant to then evolve beyond that.

How similar this is to the concept of perfect competition in Economics. In theory, businesses are so busy competing, that they don't have time to innovate. A quick survey of any high street will demonstrate that once businesses have found their niche (kebab shops, estate agents, clothes shops, bookshops, coffee bars), virtually every high street begins to look the same and businesses do not innovate away from that. Is it the case then that we could expect more innovation from oligopolistic structures where there is non-price competition? A situation where businesses are able to bear risk as an economy of scale and seek to develop new product markets? It's an interesting thought.

I look forward to exploring more Bio-Economics with you in the future - is the Market a living organism? Discuss.

China's New Economic Head

2008-03-17T15:13:00.002Z

China's new economic head is Wang Qishan. Zhou Xiaochuan will be keeping his job as Head of the Bank of China but will now presumably report to Mr Wang as China's central bank does not have independence from the Government.

Wang Qishan's key task will be the fight against inflation (now 8.3%) which he hopes to achieve without reducing economic growth by smoothing out 'bumps' in the supply-side of the economy.

Wang's reputation is impressive. He was number 2 to Zhu Rongji in the 1990s. Mr Zhu is still revered as the mastermind of China's economic miracle, rescuing an economy that was collapsing in 1994 with inflation at 27% following a period of rapid demand-side growth in the wake of the Tiananmen incident. Wang Qishan is also a popular former mayor of Beijing and a former governor of the Chinese Construction Bank, one of China's big four banks that specialises in large infrastructure projects. He also happens to be chairman of the organising committee for the Beijing Olympics - a very busy man!

Impotent Central Banks

2008-03-12T09:38:00.003Z

The Central Banks of the OECD countries have clubbed together to inject trillions of dollars into the banking system once again because they are worried about the crisis of confidence the banks are showing in lending money to each other - an essential part of the 'liquidity' of the system - getting money to where it's needed most quickly - a form of allocative efficiency.

However, with so many banks and financial institutions carrying high-risk debt in a way that can hardly be described as transparent, everyone is being ultra-cautious.

But the central banks' action is very limited. They can't print new money (risk of inflation already too high), they can't buy back treasury bills or government stock in bulk (they'd have to pay way over the market value) so loans to banks are their only option.

It's unlikely the banks will jump with glee at taking on more debt.

The only real solution will be if the rich Arab nations or the sovereign wealth funds of China and Russia start investing in the west - which brings us back to yesterdays' posting!!

Islamic Finance May Save the World

2008-03-11T12:36:00.002Z

All economics students will know by now that the credit crunch in the US last summer has created a great meltdown in the world's financial markets - a meltdown caused by too much easy credit being issued at high interest rates and then that debt being packaged and repackaged by various financial instruments and sold from bank-to-bank at increasing profit margins around the western world - a house of international finance built on spreading quicksand.

It's the USA that has suffered the most, although other countries have also suffered such as the UK with the Northern Rock disaster. Observing the economic wreckage of the US, many countries have taken steps to protect themselves from a crashing dollar - not the least of which are the Arabic oil nations who met in Bahrain in February, reaching the decision to sell more of their oil for more stable Euros.

The Arab oil nations have come out of the situation in the best possible light. Firstly, oil prices continue to rise as demand increases and supply remains fixed (now $107 a barrel) so their coffers are full. In fact, they have about one trillion dollars to play with (that's twelve zeros). Also, Islamic law has prevented the sovereign wealth funds of the Arabian peninsula from investing in the kinds of financial chicanery that the western world indulges in. The concept of sukuk says that investment must be transparent (roads, railways, products etc) and therefore hedge funds, equity houses and so on find it very difficult to attract money from the gulf. In addition, by the way, the concept of haram prevents Islamic firms from investing in alcohol, tobacco, arms trading, pornography and gambling - which can also be applied to hedge funds. Islamic funds can only invest in things that provide social benefit.

The concepts of mudaraba and musharaka promote the idea of investment leading to mutual ownership and cooperation. So, an Islamic bank will invest in a business in order to gain a share of that business rather than taking interest on a loan. Also, Islamic investment is more concerned with functionality than strict profit-and-loss in a financial sense. So, an Islamic company would see nothing strange in building a college in order for a British educational company to come and use it to educate the citizens in their country. Money is seen only as a tool to an end, not an end in itself.

And now, the big investment funds such as DIC in Dubai are looking for such investments in the west - such an influx of money may provide the stability that the world economy needs in order to see it through the current crisis.

Folk Market

2008-03-10T16:37:00.003Z

I recently came across a stock market for horses. People buy and sell shares in horses in exchange for a percentage of their earnings on the racetrack or in stud.

Immediately, I thought 'What a great idea for people!' There are many extremely clever young children in areas like Southern India or Bangladesh who could never afford a good education - what a waste to society! Instead, we could identify these children through a maths and logic competition and then people could buy shares in them - folk shares - the shares paying for their education. In exchange, the investor would get an appropriate percentage of their earnings later in life for a limited period (let's say a 25 year bond given at 10 years old would provide payback between the ages of 25 and 35)

The 'bond' could also be bought and sold on a folk market, the price going up-or-down as their school results and reports started to come in.

It's an idea.

World's Richest Person

2008-03-06T16:37:00.002Z

It's that happy time of year again when we get to look at the Forbes rich list to see who is the World's richest person. In 2008, the top ten are:

Warren Buffett (US): $62bn
Carlos Slim (Mexico): $60bn
Bill Gates (US): $58bn
Lakshmi Mittal (India): $45bn
Mukesh Ambani (India): $43bn
Anil Ambani (India): $42bn
Ingvar Kamprad (Sweden): $31bn
KP Singh (India): $30bn
Oleg Deripaska (Russia): $28bn
Karl Albrecht (Germany): $27bn

How appropriate that we are doing inequality at the moment! Warren Buffett's earnings last year, for example ($10 billion) is equivalent to the earnings of HALF THE WORLD's population - the poorest half of course - the richest half earn a bit more than that.

So, Warren Buffett earned the same as 3,ooo,ooo,ooo people last year. But Warren is a nice guy and when he finally cashes in his chips, his money will be going to charity.

Bill Gates we all know, of course, and Carlos Slim owns most of the mobile telephone companies in South America. Lakshmi Mittal practically owns the world's steel industry.

Mukesh and Anil Ambani run Reliance Industries who make most of the world's textiles. KP Singh owns a good deal of Indian real estate - he's the world's richest estate agent. I predict that as the Indian economy expands, he may soon become the world's richest man.

Ingvar owns IKEA and Karl owns Aldi - the leading German supermarket chain. Finally, Oleg Deripaska practically owns all of the Russian aluminium industry.

By the way, the world's youngest billionnaire is 23-year-old Mark Zuckerberg, the founder of Facebook. You see, all you need is one good idea - now where did I leave my design for the rotating bowler hat............

Universal Sustenance

2008-03-04T08:10:00.002Z

One of the disadvantages of doing the A-level Economics course in the UK is that it is almost entirely about western capitalist economics. Of course, there's a good reason for this in that this form of Economics is now prevalent throughout the world.

However, there are other approaches that can be taken to the universal economic problems of what to produce, how to produce it and who we are producing it for. Within the course, we take a very brief look at the command economics prevalent in the Soviet Union and mid-century China, but one economic train of thought that is almost completely ignored is the Islamic concept of universal sustenance.

Let's look at oil for example. Because of the strong capitalist tradition of property rights, it is assumed that natural resources belong to the country which just happens to sit on top of them - so the Middle East states and Russia own most of the world's oil. They get rich because it is a scarce resource - other countries with huge populations, such as Bangladesh get poor because they have to pay huge prices for this oil.

The Islamic concept of universal sustenance, however, argues that natural resources belong to everyone in the world and should be shared fairly. The concepts of Justice (Al-Adl) and Indemnification (al-Ihsan) in the Koran require a delicate and fair balance with regard to the production, consumption and distribution of resources, goods and services in the economy. In particular, Al-Ihsan requires a genuine concern for the poor and downtrodden in society.

Following the teachings of the Koran, we might suggest that a world commission be formed to marshal our natural resources that benefits all citizens of the world fairly. This would also tie in with the Islamic concept of trusteeship - an alternative to ownership. Under trusteeship, for example, a rich man might not own his house outright, but would be holding it in trust for the next generation. If more of us considered land and property in this way, it might make us less energetic in our desire to use up all the world's natural resources in about three generations time!

So what does this all mean? Well, apart from anything else, I guess it means we can learn a lot of interesting things if we listen to what our fellow students from many different cultures are trying to explain to us - as I did.

As Harvard economist Dani Rodrik says in his new book - "One Economics, Many Recipes".

Behavioural Licence

2008-02-15T16:34:00.002Z

Traditionally, the way we deal with demerit goods - such as petrol, alcohol and tobacco is through taxation. Higher prices deter people from using that product and so social welfare increases.

But in many ways, taxation can be very ineffective -demand for merit goods is extremely inelastic - even when taxes are high - such as the nearly 70% tax on wine in the UK.

Why is this? The main reason is 'tax illusion' - the consumer doesn't really appreciate the level of tax on the product and simply assumes the price he pays is the 'correct price' for the product. There are other factors involved - the percentage of overall income represented by the purchase, the level of private benefit assumed by the user, whether the product is bundled with other products - eg a celebration - and so on.

A new idea suggested by the London School of Economics is that licensing may be a more effective solution. Take tobacco consumtion for example. If smokers had to buy a licence - let's say £50 before they were allowed to buy cigarettes from a shop, that might deter many from doing so. If a motorist had to pay a licence of £1000 before being allowed to buy pertrol, the use of public transport might suddenly increase. If the licence had to be purchased every year, there could be a fairly substantial dropping off in the use of merit goods.

There are drawbacks of course. In essence, this is a 'poll tax' that would hurt poorer people more than the rich, promoting inequality. It might lead to illegal stores selling contraband tobacco or petrol. It could lead to arbitrage with people travelling to France and Ireland to buy stocks for re-sale (or maybe people would just buy through e-bay, making the scheme difficult to enforce.

It's an interesting idea, however, and perhaps worthy of further public debate.

Banana Wars

2008-02-11T07:58:00.000Z

The 14-years-old banana war between the USA and the EU appears to be coming to an end with the WTO finding in favour of the USA.

What's it all about? Well, back in the 1970s, the EU agreed with 71 small African, Caribbean and Pacific nations a set of rules for tariffs that would give them preferential treatment with regard to products vital to their economies - such as bananas.

Now only 7% of the EU's imported bananas come from these countries so it doesn't seem like a big deal really. The preferential tariff, however, is vital to the nations concerned. Exports to the EU soak up nearly all of their products and without the preferential treatment, the small, rocky farms of the Caribbean islands could not compete with the vast banana growing savannahs of south america. This new ruling will be devastating for their economies.

The South American banana plantations are owned by the big American corporations such as Chiquita and UFS who moved into the area about a century ago and bought up just about everything. They can't really be too worried about the business but it is more a question of principle from their point of view. The US government seems happy to go along with what they are saying, probably because they have no direct interest in the caribbean islands.

The EU may lodge an appeal against the decision which will take another two years but it does look as though the tide is turning against them in this case.

The South American bananas, by the way, are the big tasteless ones - the small tasty ones (about to disappear) are the ones from the Caribbean.

Ukraine in the WTO

2008-02-06T15:23:00.000Z

Our Ukrainian students will be pleased to hear that the Ukraine joined the WTO today in a ceremony attended by President Viktor Yushenko.

This will mean that every other country in the WTO must treat the Ukraine now as an equal member - so if it imposes a 30% tax on Japanese cars, it must have a 30% tax on Ukrainian cars and so on.

Also, as a member of the WTO, the Ukraine will not be able to increase tariffs in future - only reduce them. The world is slowly moving towards a tariff-free trading system - although it will of course be many years, centuries perhaps before all trade barriers were removed - even assuming that this is desirable.

The Ukraine is hoping that membership of the WTO will increase GDP by an extra 3% a year for the next three years in addition to its normal growth rate of about 6%. This is a welcome bonus for a country that has a low per capita GDP (around $7,000 per head).

Generally, however, Ukraine's economy is in good shape - due to high world prices for steel and wheat, it's two key exports. Inequality is low in the country and educational standards remain high. The one big weakness at the moment is inflation which is running at 12% with little sign of it being brought under control.

The other problem that Ukraine has is population leakage - the population is falling by about 300,000 a year - largely due to Ukrainians leaving the country for better paid jobs elsewhere.

What's next for the Ukraine? Should it turn west towards the EU - or east towards the Federation? Only time will tell......

Heterodox Economics

2008-02-05T07:32:00.000Z

The title sounds like a magical curse or something - but in fact, it's the latest fashion in Economics.

For much of the 1980s, economics was dominated by the Washington Consensus - a broad swathe of what might be described as libertarian or monetarist economics which believed that small government was best, free trade was paramount, businesse knew best. Based on the Chicago school of economics, this had a strong theoretical basis and was related to the earlier works of economists such as Hayek in the 1930s where economics and politics were closely linked and Hayek saw the more libertarian economics he was proposing as a way of combating the destructive nationalist forces sweeping Europe at the time.

This facade began to crack in the early 1990s when it became clear that purely monetarist interpretations of the economy were making the boom-bust of the economic cycle worse, causing immense damage and social conflict during the downturn - and when the free trade policies of the IMF and World Bank were discovered to be destructive to developing countries with weak governance and capacity, the consensus began to crack further.

This led to the pre-eminence of supply-side policies as a way forward and in the last couple of years to the development of a view that different countries should develop in different ways, building on the best of their traditions and resources - so China has developed by following through on government-led strategies (the Beijing Consensus); Russia and Kazakhstan by building their economies around their energy resources; India through a form of chaotic creativity and so on. This is the heterodox view of econmic development.

Leading proponents of this view centre around Harvard and MIT and include the late Robert Heilbronner, Paul Krugman, Dani Rodrik and Thomas Palley and Joseph Stiglitz, the former head of the World Bank, and Larry Summers

But these views are not necessarily new - as always in Economics, ideas often resurface after decades - much of what is currently being said echoes the views of earlier economists such as Thorsten Veblen and Joseph Schumpeter.

Russian Oil Wealth Spilling out all Over

2008-02-01T07:44:00.000Z

With Russian foreign exchange reserves climbing rapidly due to rising oil prices, the Russian government has been wondering what to do with it all - of course, it could use some of it to subsidise more Russian students at Bellerbys.......perhaps someone should mention this to them.

Meanwhile, it has decided to divide some of it into two new funds - one for investing in structural development in Russia itself (a good supply-side policy) and another $32bn fund for investments overseas. By doing this, it hopes to secure the long-term future of Russia - in the same way that the Arab nations have succeeded in doing over the last thirty years.

In addition to this, Russia's soon-to-be new president, Dmitry Medvedev has been urging Russian companies to buy overseas companies - for much the same reason and also as a way of integrating Russian businesses and the Russian business class more into the world economy prior to Russia joining the WTO in September, or thereabouts.

Gazprom is held up as a shining example of what can be achieved. In recent weeks alone, Gazprom has negotiated significant deals to create energy hubs in Bulgaria, Serbia and Kyrgyzstan, extending its energy-supply dominance (particularly in the field of natural gas) over most of southern Europe and eastwards into China.

Russia's GDP grew by 8.1% last year but with inflation running at 12% not everything is rosy - the main cause of inflation being too many oil revenues being pumped too quickly into the economy. However, foreign direct investment in Russia is increasing (Peugeot announced it would build a new factory in Russia this week) and that is a good sign for the future.

Swings and Rounabouts

2008-01-31T13:29:00.000Z

About a year ago, the Chinese government was under a lot of pressure from the US government who argued that the renminbi was undervalued.

"Not true," said the Chinese, "It's the dollar that's overvalued."

Since then, the dollar has devalued by about 20% and today's announcement that interest rates in the US will be reduced to 3% suggests that the dollar will fall even further. (So sell your dollars now before it's too late). So the Chinese were probably right after all.

This is probably a very sensible market correction and will help to make the US economy more competitive - although it will mean Americans getting used to the idea that they are not as rich as they thought they were - and it will almost certainly lead to higher inflation and higher interest rates later - but that will be under the next presidency. President Bush will at least be able to leave the presidency saying he had ridden out recession and the economy was booming (yes, booming as in bomb).

One side effect of this is that it will continue to reduce the real value of the Chinese government's foreign exchange reserve - still mostly held in dollars which the Chinese government will not be able to shift quickly enough.

It's all a matter of swings and roundabouts as we say here.

Vietnam Inflation

2008-01-30T09:26:00.000Z

Vietnam's economy is booming at 8.5% economic growth this year - but a good deal of this growth appears to be coming from easy access to credit. The main problem is that with interest rates at 8.25% but inflation at 14%, there is absolutely no incentive to save - in fact, it makes sense to borrow as the real value of your loan will shrink with inflation.

Consequently, borrowing last year increased by 37% - and believe me it wasn't spent on Vietnam's still rather shaky infrastructure. At the same time, inflation has been fuelled by rising food prices (wheat, pork), the price of imported oil (nearly all of Vietnam's oil has to be imported) and the extra borrowing has also fuelled house price inflation.

Aggregate demand shifting to the right; and aggregate supply shifting to the left - is not a pretty combination.

The Vietnamese government has promised to increase interest rates further - but it probably needs to do more than this - for a start, it could make it much easier to do business in the country. Instead of having to obtain a licence to start a business (a long drawn out procedure involving many visits to officials), it could make it a natural right for any Vietnamese to start their own business (or even more than one business) whenever they want to. This will increase the supply of goods and services dramatically - in fact, it's probably the most basic supply-side policy of all.

Flipping A-Levels

2008-01-28T08:04:00.000Z

McDonalds has just been granted Awarding Body status by the Qualifications & Curriculum Authority. This means they will be able to introduce their own nationally-recognised qualifications up to A-level standard (called level 3 by the government) within the National Qualifications Framework.

They plan to start by introducing a Shift Manager qualification that may be the equivalent of an A-level. This is part of a wider government strategy to broaden the range of qualifications available to students within a framework recognised by all employers and educational institutions such as universities.

Signup now for your Ronald McDonald advanced clown course!!

Behavioural Economics

2008-01-25T09:07:00.000Z

Classical economics assumes that people make rational choices based on supply and demand, competition, accessability and so on - economists often refer to this perfectly rational person as homo economicus.

However, in reality we know this is a myth. People often make totally irrational choices (especially when it comes to marriage!) and the rapidly growing field of behavioural economics attempts to analyse the reasons behind this irrational behaviour - in other words to see how rational it can be.

Game Theory can apply to this field like any other. One interesting game is called The Ultimate Game. In this game, there are two people. One person is given £10 and is asked to divide the money between himself and the other person. If the second person agrees with the division, it's fine. However, if the other person does not agree, nobody gets any money.

Reason tells us that if the first person offers the second person £1 and keeps £9, the second person should agree - because after all, both people gain by this. However, in experimental conditions, 93% of people rejected this offer. The minimum that a majority of people would accept was between £3 and £4. Why is this? I'm afraid I don't know - I'm one of the 7% that would have accepted!

A second game is this: If I ask someone the likely probability of throwing a 4 on a dice, most people with any background in Maths would say 1 in 6. However, in experimental conditions, people were told that the last three times the dice had been thrown (and that it was a fair dice) the number 4 had come up. When asked what number would come up next time, nearly 50% said 4.

A third area is in marriage. Ideally, the rational way to choose a marriage partner is to go out with maybe 10 or 20 (or a 100) different girls over a period of time - and then choose the best one - but just you try explaining that to them. Instead, you have to choose your marriage partner heuristically - meaning it has to be the last one you go out with.

Behavioural economics has enormous implications for sales and marketing (fashion fads and so on) but equally so for trading. George Soros once wrote that the moment he realised that traders behaved with a 'pack mentality' on the stock market and not a rational mentality was the day he realised he would soon be rich.

A good book on this subject is "Irrationality" by Stuart Sutherland and the wikipedia entry is also pretty good:

http://en.wikipedia.org/wiki/Behavioral_finance

Crazy Guy Alert!

2008-01-21T09:32:00.000Z

President Bush's pressure to introduce a $150 billion tax rebate to reduce the risk of recession in the US is almost exactly NOT the response that economists would have liked. It is a Keynesian response rather than a supply-side response.

It will increase aggregate demand leading almost certainly to even higher inflation than the current 4% in the US. This in turn will almost certainly lead to higher interest rates and further damage.

There are only two realistic ways in which the $150 billion could be financed - either by reducing the US foreign exchange reserves which stand at $188 billion and which are probably a bit higher than necessary in the modern world - or by borrowing overseas. The latter (and more likely) route will lead to a further fall in the dollar - so if your parents have dollar accounts somewhere - tell them to bail out now. This will also displease the Chinese government who also hold most of their foreign exchange reserves in dollar bonds - the sooner they invest this money in British businesses like Bellerbys, the better for them, that's what I say!

Of course, it's good that the President plans on giving the tax rebate to lower middle income families as they are more likely to spend the money on domestic products than richer people - but that's not much of a compensation in the grand scheme of things.

There is a third way it could be financed - by reducing the $700 billion defence budget - but most of that is already committed to maintaining a US presence overseas.

Leading Chinese Economist Tipper for World Bank

2008-01-18T09:08:00.000Z

Justin Yifu Lin, China's leading economist (and mentioned in this blog a couple of weeks ago) is being tipped for the job of Chief Economist at the World Bank.

Justin is the founder of the Chinese Centre for Economic Research and is professor at Beijing University and also Hong Kong Institute of Science & Technology. He has a degree in Marxist Political Economy from Beijing and a PhD from Chicago. He has twice won the Sun Yefang Economics Prize - China's top award

Justin was actually born in the province of Taiwan but swam the straight to the mainland in 1979 in search of a better life.

He is the author of eight books, including "The China Miracle - Economic Reform & Development" considered to be the most significant analysis of China's development miracle. The World Bank, conscious of China's increasing influence in African development, will no doubt be reading this very closely. Justin has recently been involved in helping China develop its tenth five-year plan which puts increasing emphasis on IT development, a pet topic of his.

He is also a member of the Copenhagen Consensus, a grouping of economists who work together to analyse the greatest problems facing mankind and seek to offer the best economic solutions

Masala Economics

2008-01-16T09:00:00.001Z

Today's mix of exciting Economics news includes the following:

The German government has introduced a ban on most forms of online gambling. Is this even possible, I ask myself - Germany doesn't have a national firewall in the same way that China has - and even the Great Firewall of China is easily breached by those who know how. The Economics of Gambling is a fascinating subject - so much so, that Salford University actually has a degree in Gambling & Leisure Management. The velocity of money is very important when looking at online gambling - the quicker that money changes hands (expenditure) the faster the economic growth - so you can increase GDP quickly by making it easy for people to gamble. But on the other hand, concepts such as demerit goods and allocative efficiency also come into play - is the development of a gambling industry a good use of money? Let's hear your comments!

It's the Detroit motor show this week and it's Chinese car manufacturers who are making all the news with a wide range of extreme concept cars - one of the most interesting is the Tang Hua from Li Shi Guang Ming Automobile - it looks like a boiled egg. Other impressive cars about to enter the US market are the 4x4 from Chamco which should do well and a convertible from BYD Auto (Build Your Dreams). This could be the start of a good decade for Chinese car manufacturers - now they are in the WTO, they compete on equal terms with Japan, Korea and other Asian manufacturers. Also, in a sign of increasing globalisation, Chamco are considering opening a factory in Indonesia - to take advantage of cheaper labour costs!!

It's good to see China and India coming closer together with the visit of Manmohan Singh to China this week. However, there is still one problem on the horizon: By 2030, both India and China will be importing more oil than the USA - so energy competition is going to become a fascinating topic over the next 20 years! There are alternatives to oil of course - nuclear, wind, biomass, CCT (clean coal technology) and so on - but each of them also brings problems of their own and they are not likely to make up more than 30% of any nation's supply (other than France and Japan) by 2030 - so oil will remain king. You can find out more about this fascinating area of world development in the Bellerbys Brighton Exam Hall on Wednesday, January 23rd at 7.30pm as we play host to LSE and WTO economist Philippe Legrain in a session open to Bellerbys students and the general public - free tea and biscuits will also be provided.

The Diminishing Marginal Returns of Economic Growth

2008-01-15T09:27:00.000Z

Many Bellerbys students progress to Warwick University, which in many ways has been the spiritual home of progressive economic thought for a couple of decades - the new economics that tries to look beyond the narrow confines of a blind rush towards ever greater economic growth as measured in monetary terms - GDP.

Professor Andrew Oswald is one of the UK's most widely read economists and will become a familiar figure to many of our students as they progress through higher education.

As we begin Module 5 of the A-Level, it's interesting to look at his views on the Diminishing Marginal Returns of economic growth. We all know that as you increase your investment in the factors of production, the marginal return you receive from this investment rises at first and then begins to diminish for a number of reasons (the land available to cultivate gets poorer, the quality of the new staff employed will diminish as you recruit from a shrinking pool and so on).

Businesses overcome this problem by making a 'quantum leap' in their use of the factors of production - perhaps by switching investment from labour to more efficient capital (a new machine) or to a cheaper source of labour, or to a country with less environmental regulation perhaps and so on.

Prof Oswald suggests that the dash for economic growth follows this pattern for a whole country. At first, economic growth obviously has major benefits - reducing absolute poverty, providing electricity and clean water and so on - but does society then reach a stage where the returns from economic growth begin to decline - greater pollution, congestion, stress and unhappiness. If so, what do we do about that? It's not really posssible to stop economic growth - so perhaps the solution is to redefine economic growth in terms of other variables - shift the target as our equivalent of a quantum leap. The French President Sarkozy has also begun to think along these lines and has appointed two leading economists - Joseph Stiglitz, formerly of the World Bank and Amartya Sen, leading development economist, to try to produce a new index that puts happiness and well-being at the heart of economic policy in France - a quantum leap in perception you might say - should Britain do the same? Please read Dr. Oswald's views on this here:

http://www.newstatesman.com/200801140008

Ta-Ta! to Expensive Cars

2008-01-10T10:02:00.000Z

News coming in from India about Tata's new car - the Nanocar.

Firstly, it demonstrates a further step in India's development as a major economic superpower - still about 10 years behind China and with some institutional weaknesses that China has avoided - but nevertheless moving in the right direction.

It also demonstrates the importance of world-class companies to the Indian economy, often controlled by a small number of key families - the Hinduja family empire, the Mittal steel empire and the Tata motor company.

The new Nanocar sells for less than £1500. Luckily for western car manufacturers, India is not yet a member of the WTO. If India were a member of the WTO, it would be difficult to keep the Nanocar out of western markets - the tariff would have to be the same as that on - say - Japanese or Korean cars. It's likely that the Nanocar would soon come to dominate the small car market worldwide.

You can find out more about it here:

http://news.bbc.co.uk/1/hi/business/7180396.stm

Even so, a number of trade agreements exist between India and the rest of the world, so the Nanocar will start to filter into other markets fairly quickly - the Chinese car manufacturers may be a bit worried about this.

Environmentalists may also be worried. Even though the Nanocar is very fuel-efficient, the sheer volume planned for production will increase pollution, congestion and world demand for oil - pushing up prices even further.

But of course, you can't turn the clock back. Supply-side economists understand that increased oil prices will promote innovation in the field of alternative forms of energy - although a good deal of work is being done to develop energy sources from biofuels, hydrogen cells and further back in the chain, work is even progressing on fission and fusion reactors, solar energy, geothermal sources, wind and wave sources. Unfortunately, it may take some years for any of these to come to fruition.

Civil Aerospace

2008-01-04T07:26:00.000Z

One of the most expensive markets is the civil aerospace market. For many years, this was dominated by Boeing, the US aircraft company, which at one stage had 75% of the world wide-bodied market. In the last 20 years, however, this has fallen to 50% as the EU's Airbus consortium has clawed back market share.

But the future is looking a bit shaky for this cosy duopoly. Recently, President Putin ordered the creation of a single Russian aerospace consortium as part of his policy of creating national champions that can compete in world markets. The merged company, to be called the United Aircraft Corporation, will combine Sukhoi, MIG, Tupolev, Irkut, Ilyushin and Yakovlev under one authority. At first, they will only produced regional aircraft, but they are ambitious and hope to re-enter the wide-bodied market within the next 10 years now that the Ilyushin-96 is being phased out.

China is also gearing up to enter the market. The regional jet ARJ-21 will begin service later this year and the Chinese authorities have merged together the civil aviation company (AVIC-1) andf the military aviation company (called I believe AVIC-2) to form one company with the aim of producing a wide-bodied craft by 2020.

Meanwhile, we should not lose sight of Embraer, the profitable Brazilian manufacturer who also concentrate on regional jets. They are also not short of ambition.

Global Economic Thought

2008-01-03T08:32:00.000Z

One of the most interesting developments in Economics in the last ten years has been the rise of global economic thinkers.

Many names spring to mind - Joseph Stiglitz, nobel laureate and former head of the World Bank: Jeffrey Sachs, professor of Economics at Columbia University; Joschka Fischer, former German foreign minister; Chen Yuan of the all-powerful China Development Bank; David Daokui Li from Tsinghua University and Justin Yifu Lin of Beijing University and the World Bank.

Many of these are now gathered together in an enterprise called Project Syndicate which seeks to give them a monthly column to sir their views. You can see it here:

http://www.project-syndicate.org/commentary/stiglitz86

Meanwhile, the Wall Street Journal has produced its list of the top 10 most influential Chinese economists. They are:

Qian Yingyi, Lang Xianping, Lin Yifu, Zou Hengfu, Wu Jinglian, Zhang Weiying, Li Daokui, Chen Zhiwu, Tian Guoqiang and Zhang Wuchang.

One of the problems that Chinese economists have is that they are not published in the traditional western journals as often as they would like and so rarely feature in top lists of economists worldwide - hence, the Wall Street Journals attempt to create a separate list.

The most impressive group of Malaysian economists can be found at the Universiti Utara's School of Economics - here:

http://www.uum.edu.my/se/bi/index.html

Many would argue that Malaysia has been the greatest success story in East Asia. Fifty years ago, it was left ethnically-divided and impoverished by a retreating British administration. Since then, it has virtually eliminated poverty, created a strong industrial and financial sector and still remains one of the most equal societies in the world.

There are many world-class Russian economists, of course. Amongst the most interesting are Elvira Nabiullina, the new Finance Minister, following in the excellent footsteps of German Gref. Elvira is an ethnic Tartar and has a brilliant mind - she is just what Russia needs at this crucial stage of its development as it seeks to diversify its small business sector and to integrate more fully into the world economy by joining the WTO in September 2008.

Buy Renminbi Today - Do it Now!!

2007-12-13T08:28:00.000Z

For some time, many economists have argued that the renminbi has been undervalued.

Of course, this has produced benefits for China - allowing it's exports to grow rapidly to the point where it is now the industrial engine of the world - and also allowing it to attract massive levels of investement providing growth, jobs and opportunities for its people. The biggest prize of all has been the lifting of 400 million people out of absolute poverty in the last fifteen years alone.

However, just recently this policy has hit some problems - including criticism that China is standing on one leg (exports) and not two legs (exports and domestic consumption). Also the fairly rigid link to the dollar has helped to fuel inflation within the economy - as the dollar fell, the renminbi fell with it, making imports more expensive. Added to this, the increase in domestic consumption in the last year has made inflation worse as at least some of this consumption has been on increasingly expensive imports.

So, suddenly, it looks like the rules of the game may change a little. Zhou Xiaochuan, the chairman of the Chinese Central Bank has said today that he experts a significant increase in the value of the currency very soon as a way of reducing inflation and taking the pressure off interest rates. This is very likely to happen at the end of this week's US-China economic summit - a good time to make it look like the Chinese have been listening carefully to American advice (when in fact it's in the best interests of the Chinese to make the change at this point!). It will help to improve US-Chinese relations.

So this is today's big tip - buy renminbi today!! You can do this through many of the online dealers - here's one at random, but there are many others:

http://www.cbfx.com/

or through your local bank.

US Current Account Deficit

2007-12-12T15:06:00.000Z

The US current account deficit for 2007 looks like a Fantasy Factory horror movie - it could well be around $680bn. That's a little less than last year's $700bn but still represents around 6.5% of US GDP. That's really an unsustainable level in the long term - most economists might argue that up to 3% is probably okay.

What's really worrying is that this is the figure about six months AFTER a major fall in the value of the US dollar - we would be expecting the J-Curve effect to have worked its way through by now - and exports to be rising and imports falling - so what's gone wrong.

Oil is the answer. The US now imports most of its oil and the price of this has risen to about $95 a barrel. This is a good example of a long-term Marshall-Lerner condition. This states that the trade balance will not improve if the sum of the price elasticities of exports and imports is less than one. The problem the US has over its oil imports is that the PED is VERY inelastic - you just try dragging an American out of his car and making him walk.

What's the solution to this? Well, another devaluation probably won't help - although it may well come as people continue to lose confidence in the US economy; a long-term drive towards alternative energy might help a little; but the real solution will be more investment in supply-side policies. This probably means that labour costs in the US must fall further in the short-term. Increased immigration from Mexico might help in this respect. This would be a very sensible economic platform for a candidate to stand by in the coming presidential election :>

United Russia

2007-12-04T08:06:00.000Z

Even allowing for the fact that the results may have been tweaked a little bit, there's no doubting that United Russia's victory in the Russian election was impressive and based to a large extent on the general popularity of President Putin.

What's more interesting to economics students perhaps is that it provides confirmation for the 'Singapore Solution' that Russia has adopted under Putin's reign as its business and economics model. This is an economic system where government and big business are largely indistinguishable - with Government providing the infrastructure that business needs in order to develop. In exchange, big business operates in the best interests of the economy and the nation as a whole.

This is not entirely unique to Russia of course - the Chinese economy is developing in a very similar way - and the basic tenets of government-directed economic development, but with smaller businesses being free to develop and progress on the margins of the economy (sometimes called the Beijing Consensus). This may turn out to be the elusive third way between capitalism and communism that New Labour dreamed about when they came to power - but without apparently having the economic skills to bring it about.

This has been remarkably successful in Russia in the last seven years with economic growth averaging 7-8% a year every year. The Russian budget deficit is in fact a surplus of around 7% of GDP, there is virtually no public debt and a huge stablilisation fund is being used to buy shares in companies worldwide to ensure long-term revenue flows - and also to take money out of the economy as inflation is still running at 10% (too much oil money boosting demand).

There are still weaknesses, however - corruption is high and the business environment for small businesses is too restrictive with many regulatory barriers. These will be the two main targets of the new government in the next four years - the big question is, who will be Prime Minister?

RFID - Really Fried

2007-11-26T04:44:00.000Z

This one's not strictly Economics - except in the general sense that everything is Economics - but with Bellerbys about to launch an exciting new Management Computing Systems Foundation course in 2008, my mind's been hovering in that area just recently.

Who knows what RFID is? It stands for Radio Frequency Identification Device - and it's going to be the big new thing in our new security conscious world - buy shares in RFID companies now!!

A school in Doncaster is testing the system. Every student has an RFID chip - flat and no bigger than half a thumbnail - embedded in their uniform. A series of wall-mounted scanners around the school can read them. So, the staff know where you are at any moment - 'Now we're really fried,' as one quote put it. The chip can store information in real-time - like when you're late or absent - as staff have hand-held monitors (like the tricorder in Star Trek - cool!) that can interact with the chip.

The chip can hold almost infinite amounts of information about you - your current grades, subjects, personal details, medical stuff, perhaps even financial details (though hopefully this would be locked from anyone except the bank and cashpoint). You wouldn't need to carry money anymore, it would just be deducted from the credit on your chip as you passed the scanner in the canteen.

In shops, we wouldn't need checkout staff either. Each product would have printed on it a 'Do you want to buy me?' section and your thumbprint will register a purchase by pressing against the hidden chip in the packaging, which would then deduct it from your own chip (by this stage, the chips will be embedded under your skin - don't worry it's painless - and anyway, it would probably be done at birth, so you wouldn't remember).

With webcams in every classroom, your image could be beamed to your parent's mobile whenever they want to see what you're up to - won't that be fun!

Here's a serious Economics question - evaluate the introduction of RFID chips in terms of the five areas of efficiency that we have studied - there's a (small) prize for the best answer. What's the prize? Well, here's a clue - this one doesn't come with fried fish.

Sick as a Parrot

2007-11-23T07:41:00.000Z

It's not just Steve McLaren, the luckless or possibly hapless England football manager who will be feeling sick as a parrot this morning as he collects his P45 from the FA - many British businesses will also be feeling a tad frustrated at England's failure to qualify for the European championship finals. The team played with all the cogency and coherence of the Kazakh reserve team - they deserved to lose.

According to the Coventry Business School (who have many vacancies available for a January start by the way - both undergraduate and postgraduate) England's exit may cost British business as much as £2bn - severely reducing aggregate demand in the UK economy next June.

Firstly, there are shirt manufacturers - all those England football shirts are now valueless. Ironically, mine turned up in the post today - the day after our exit - after having been held up somewhere in the postal strike. C'est la vie! As I walked home from New Bellerbys yesterday, I also noticed Sport & Ski now had England shirts on sale for £20, reduced from £35 the day before. They'll be lucky to sell them at 20p! And as for the new England reserve strip due out in January - well, all I can say is that Nike must be kicking themselves for having bought up England shirt manufacturers Umbro a couple of weeks ago - not exactly the deal of the century. (Note to all data mining software: the key words here are: 'Sell Nike shares now')

Then there are the pubs and clubs - no packed pubs during the long summer evenings with roaring fans, drinking contests and open wallets. The tour companies will also suffer as hundreds of thousands of fans suddenly cancel their trips to Austria for the the finals. (On the other hand, non-soccer playing tourist centres like India and Thailand, might suddenly find more tourists arriving.)

And then there are the plastic flag manufacturers - what will become of them? Perhaps now's a good time to ask for a quote for a Bellerbys plastic flag?

The advertising industry will suffer as prices will plummet for slots during the half-time breaks at the championship in the UK......and with less people watching, the TV industry will also suffer generally.....and with less adverts being watched, businesses as a whole may make less sales - who knows how far aggregate demand will fall. As the UK enters a period of slower growth, the England loss couldn't have come at a worse time. Steve McLaren's tactical ineptitude may make him personally responsible for the collapse of the UK economy. I hope he's happy now.

Booksellers will gain, however, as English people, driven to distraction by the sense of humiliation at our absence from the tournament - our hopes trampled into the dust by countries my wife has never even heard of - try to lock out the world for a couple of weeks by reading a good book. One I recommend is "The Economics of Sport & the Media" by Claude Jeanrenaud - ask the librarian to get it for you. She'll be pleased to do so.

UK Inflation

2007-11-22T04:16:00.000Z

The UK has two major ways of measuring inflation - now called CPI and RPI. The Government's prefered measure is CPI and currently rests at 2.1%, a little above the Bank of England's target of 2%. Normally, in this situation, the BoE would increase interest rates a little to slow down the economy - but it hasn't done so for a number of reasons:

Firstly, they are already very high at 5.75% for the base rate - this is damaging our trading position - last month saw a record current account deficit at £-4.7bn. The high interest rate also incidentally inflates our purchasing power, making us look richer in world terms than we really are - as the Americans found to their cost fairly recently when the currency value went through a sharp correction.

Secondly, it already looks as though there are problems in the economy that will make it slow during the next year - the collapse of Northern Rock, the rippling effect of the credit crisis in the US and the nervousness this is creating on the stock market and in banks' lending decisions.

Thirdly, the high levels of debt in the UK - now above £1 trillion - equal to the whole GDP of the UK, is likely to affect retail sales in the new year.

So, the BoE is trapped. It knows it should raise interest rates but it can't do it. Meanwhile, the RPI - the other measure of inflation - has risen to a dangerous 4.2%. Most economists would argue that once inflation pushes above 4%, money illusion fails and people begin to notice. They then start agitating for pay rises and this can then lead to other forms of economic disruption.

The next year will be an interesting one for the UK economy.

Is Brazil the new Kazakhstan?

2007-11-12T10:25:00.000Z

News of the discovery of major oil reserves off the coast of Brazil has certainly gladdened a few hearts in this large South American country - it now finds itself in much the same position as Kazakhstan ten years ago - about to become self-sufficient in terms of oil - and very soon now, it will be earning large sums of money from selling its oil abroad.

It will take a little while of course - as it did in Kazakhstan - about 10 years worth of investment perhaps - but the signs are good.

But is Brazil going to be the new Kazakhstan. Well, probably not - the two societies are at the moment, very different. Kazakhstan has one of the world's lowest Gini coefficients, suggesting it is one of the world's most equal societies, whereas Brazil is one of the world's most unequal societies.

Brazil is much bigger with a population of 187 m (and growing by about 2% a year) whereas Kazakhstan has only 15m and a stable population. However, they both share similar rates of economic growth and have similar levels of oil reserves (about 40 years worth at current production levels).

Brazil have the world's best football team and Kazakhstan has possibly the worst - like the old joke - eleven young men in search of a goal.

What is certain is that - like Kazakhstan - the influence of Brazil on the world stage should now begin to grow significantly and we will all be hearing a lot more about the Brazilian economic miracle as the profits begin to filter through the different levels in the economy - provided the rich in Brazil aren't allowed to take all their profits overseas of course.

Bad Moon Rising

2007-11-08T07:21:00.000Z

As the native Americans might have said - there's a bad moon rising over the US economy.

In fact, it could be argued that there are three bad moons rising - Alan Greenspan, Warren Buffet and now George Soros. All three of these economic heavyweights have spoken out over the last few days about the state of the US economy. After years of easy-credit, largely financed by the Chinese government and Japanese and German banks, the chickens have now come home to roost - the housing market is on the verge of collapse and the volume of bad debts has increased to hundreds of billions of dollars, severely damaging Citigroup, the biggest US bank and bringing poor old Northern Rock in the UK to the verge of bankruptcy.

Last week it was Warren Buffet and now yesterday, George Soros recommended to all his followers that they should dump their dollar assets as quickly as possible (I hope the Chinese government is listening - and if your parents have dollar accounts, tell them to switch to Euros, yen or spaghetti or something). Of course being George, he will then hoover up the cheap dollars later and hope to make a killing but that's just his job. Remember, George made a billion dollars (not a million, a billion) when he drove the pound out of the ERM on Black Wednesday nearly fifteen years ago - but that's another story. (And don't think I've forgotten that part of that billion was some of my taxes - grrr!)

So who is George Soros? Well, probably one of the top five most influential investors in the world today - not just because of his own considerable fortune (the world's 80th richest person) but also because of the enormous investment fund he controls. He was born in Hungary in 1930. His first name was Georgy Schwartz. His family were Jewish in origin but were secular in belief. However, when the Nazis took over Hungary in 1944, these fine distinctions didn't mean very much - so George's father sent him to England. He graduated from the LSE in 1952. He moved to the USA in 1956 and slowly worked his way up through the investment houses until he was able to start his own fund in 1970.

Apart from Black Wednesday, George was also largely responsible for the Asian economic crisis of 1997 when he advised his followers to start dumping the Thai baht (ring any bells?) The Malaysian Prime Minister called him a vampire who sucked the blood of the people. Of course, the US economy is much, much, much stronger than the Thai economy in 1997 - but even so...

George is a lifelong Democrat - remember his family suffered under Nazism - and he has used his great fortune to promote democracy in Eastern Europe since the 1970s, supporting many human rights movements in the region, including Charter 77 and Solidarnosc. More recently, he has supported education, recently donating $100 million to the development of an internet structure for Russia's regional universities. He is also an active supporter of Mohammed Yunus' Grameen Bank which provides microcredit to poor farmers in Bangladesh and India.

He has fought tirelessly against George Bush and is an active supporter of Hilary Clinton for the next presidency.

Philosophically, he argues that investment markets are not perfect markets as suggested by economic theory but suffer from reflexivity - a herd instinct. The secret of success in the markets is in judging when the herd instinct has gone too far in one direction and then betting against it. He also argues that this applies to other areas of life - that people are mimetic and would rather 'go along' with the general view than take a stand when they have to - this is why humanity has suffered from philosophies, governments and 'common wisdoms' that are simply irrational - and eventually cost money. Well, it seems to have worked for him so far - so why not think about it and let me know your views?

Have a good day in the education market!

Petrochina - World's no.1

2007-11-07T08:07:00.000Z

Investors are still reeling from the launch of Petrochina on the world's stock markets on Monday - mostly in Shanghai and Hong Kong.

Incredibly, the company was valued at $1 trillion - the world's first trillion-dollar company - and incidentally making it the world's eleventh-biggest economic unit after Brazil! This valuation is more than twice as big as any other company in the world.

Questions are already being asked about whether this can possibly be a true valuation. It will have been inflated by the usual first-day bubble effect of institutional investors trying to bull the market to make a quick killing - added to this is the mid-term bubble we are seeing in the Chinese stock markets - Shanghai has doubled so far this year - this can't go on forever - but no one wants to jump ship whilst the bubble continues to rise, this is always the problem. However, it's worth noting that super-investor - and the world's third richest man, Warren Buffet - SOLD HIS SHARES in Petrochina late on Monday, after having made $3.5billion profit on an earlier investment of $0.5bn. Perhaps he knows something we don't.

However, the underlying factors for Petrochina look strong - good oil stocks, high levels of investment in new fields in Africa and protected from domestic competition at home.

So, overall, it's likely that the valuation may slip a little over the next couple of weeks - but should remain strong for the mid-term.

More than anything, this event has signalled once again the shift in the world economy to the East with China now having two strong stock exchanges in Shanghai and Hong Kong and a number of smaller active stock exchanges in the south.

Economics Jokes

2007-11-01T04:09:00.000Z

One of my friends suggested that teaching Economics must be a bit boring - what on Earth can he mean when there are so many fantastic Economics jokes around:

1) Tony Blair and George Bush were meeting at a summit. 'George,' says Tony - with the microphone accidentally left on, 'I've got a big problem. I've got 100 spin doctors but I'm convinced one of them is telling the truth, but I can't tell which one,'

'So what,' says George, 'I have to listen to 100 economists every day and only one of them is telling the truth. The trouble is, it's a different one every day.'

2) A woman is told by her doctor she has only one year to live. 'What should I do?' she asks. 'Marry an economist,' he replies. 'Will he be able to cure me?' she asks. 'No,' the doctor replied, 'But it'll make the year seem a lot longer.'

3) How many economists does it take to screw in a lightbulb?

The answer is 10 + 1 student.

That's one economist to construct a model of the event; one to complete a regression analysis, one to calculate the input factors, one to evaluate the externalities, one to supervise the student whilst he screws in the lightbulb and five to argue about the range of possible outcomes when the switch is thrown.

4) People came from kilometres to see
The two economists who agreed to agree
But oh what anguished cries there were
When we saw both economists concur
That one and one always make three

5) If you rearrange the letters in Economics, you get Comic Nose

6) What is an IMF economist? Someone who gets rich by explaining to others why they are poor.

7) Economics - the knowledge of everything in trapped in a language that no one understands

8) It's said that President Theodore Roosevelt, a great bear of a man - who talked straight and stood taller than most - once asked for a one-handed economist. 'Why's that?' his advisor asked, 'Because all the ones I have now keep saying.....on the one hand, such-and-such is true....but on the other hand.....'

9) What do Business Studies graduates say in their first job? 'Do you want french fries with that, sir?'

10) A 30-year-old economist visited his old college. His old teacher was handing out exam papers. 'Hey!' said the economist, 'That's the same paper I did ten years ago!' 'Yes,' said the teacher, 'But now the answers are different.'

About Economics

2007-10-29T05:17:00.000Z

About.com is a Canadian website (I think) which has struggled for sometime to find its right place in the Internet community. For a long time, it acted as a kind of mirror-site to Wikipedia, but more recently it has adopted a metalink approach with carefully chosen moderators creating some very useful areas for themselves from the main body of the site.

One of the best of these is Mike Moffatt's Economics area. His front page acts as a link to two economics textbooks - which in fact lead you to dozens of related articles - all at the appropriate standard for our A-level and Foundation students:

http://economics.about.com/b/a/137072.htm

Remember how we've said it's very important for you as an A-level student to get involved in the subject - you won't get an A-grade if you just take notes in class. You don't study Economics, you become an Economist.

Mike's blog is also worth looking at:

http://economics.about.com/

Russian Bear Rising

2007-10-26T09:28:00.000+01:00

With economic growth of 7% a year, the Russian economy should double in the next 10 years probably moving Russia from ninth to fifth position in terms of PPP. The economic growth is being created by both demand and supply factors.

Certainly, in terms of supply, major investment in oil and gas pipelines and the development of new gasfields to the north - in conjunction with Norway's Statoil - and in Siberia with the major Sakhalin-2 project, the country is experiencing a major investment boom.

On the demand side, revenues from oil and gas supplies, because of massive increases in price, are creating inflationary pressure within the economy as the money cannot be spent intelligently fast enough!! The government has tried to slow down the increase in the money supply by creating a development fund for the country - aimed at investing in medium-sized businesses - but at the moment there aren't enough of them to take advantage. Inflation is now 10% and continues to be a problem for the government. In response, they have imposed a price freeze on many food projects - but all Economics students know what the outcome of that will be.

The relationship with the EU is also a difficult one. The EU needs Russia's gas in particular but is reluctant to allow Gazprom to invest in the EU energy industry when EU energy businesses are not given free access to Russia in return. There is a summit this week between the EU and Russia which may go some way to relieving this problem. One piece of positive news is that Russia has now agreed to accept WTO rules regarding tariffs and access and that does bring it closer to joining that organisation which may make it a more reliable trading partner in the future.

http://en.rian.ru/
http://english.pravda.ru/
http://www.itar-tass.com/eng/

China Moves into Third Place

2007-10-25T15:57:00.000+01:00

By some estimates, China will move into third place in terms of world GDP by the end of November when it overtakes Germany. It's already in second place in terms of PPP. Economic growth in China is 11.5% - higher than the Government's target of 10%. Economic growth of 11.5% means the economy is doubling in size about once every six years - in other words, if it continues at the current rate, the average Chinese person will be four times richer just twelve years from now.

But not everything is rosy in China at the moment - inflation of 6.2% is a big problem, brought about by a fall in supply of pigs through blue tongue disease and increased consumption, initially prompted by the Government itself when it promoted a 'two legs, not one' policy this time last year in an effort to move away from over-dependence on exports. But the fall in the value of the yuan - with its continuing link to the dollar - has in fact made exports even cheaper, fuelling surging demand in that area too.

A combination of growing interest rates, increased pork production and a rise in the exchange rate should see the overheating and inflation ease off in the next year. Certainly, the Chinese economists steering the economic miracle, such as Li Xiaochao, seem to have the problems firmly in their sights. The supply-side is likely to continue to be the engine for China's growth with China still being the best place to invest for manufacturing economies. For the first time ever, China contributed more to world economic growth last year than the United States - and it will be the same this year.

GDP - end of 2006 - $tr

1 United States 13,201,819
2 Japan 4,340,133
3 Germany 2,906,681
4 China 2,668,071
5 United Kingdom 2,345,015
6 France 2,230,721
7 Italy 1,844,749
8 Canada 1,251,463
9 Spain 1,223,988
10 Brazil 1,067,962

PPP - End of 2006 $tr

1 United States 13,060,000
2 People's Republic of China 10,210,000
3 Japan 4,218,000
4 India 4,164,000
5 Germany 2,632,000
6 United Kingdom 1,928,000
7 France 1,902,000
8 Italy 1,756,000
9 Russia 1,746,000
10 Brazil 1,655,000

Make Money From Chocolate

2007-10-24T13:22:00.000+01:00

That's what 15-year-old Louis Barnett is doing. He started at 11-years-old making chocolate for his friends from a single toggle press - one bar of chocolate at a time. Now, he's starting his own factory and supplying Tescos and Sainsburys. He even employs his own parents. Read the BBC news article here:

http://news.bbc.co.uk/1/hi/england/shropshire/7059552.stm

If you want to try it yourself, you can get the equipment here:

http://www.comparestoreprices.co.uk/childrens-cooking-accessories/unbranded-charlie-and-the-chocolate-factory-chocolate-maker.asp

Keep up to date with all the latest chocolate news here:

http://www.chocolatereview.co.uk/news.asp

If you have wondered why girls love chocolate so much - this article might help:

http://news.bbc.co.uk/1/hi/health/6558775.stm

Finally, don't forget the Bellerbys Business Club (BBC) - your Business Studies will be pleased to help you work through the problems in starting your own business or enterprise. Remember, there are four basic ways of running a business:

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

When you have an idea of what you'd like to do, come and talk to us about it.

Tesco & Disney

2007-10-23T09:26:00.000+01:00

The news that Tesco will soon launch a whole new range of 'healthy' foods carrying Disney cartoon characters - including fresh fruit, yoghurts and breakfast cereal - is an example of co-branding. It increases the inelasticity of the products as children use their 'pester power' to force their parents into buying the correctly branded product.

Examples of co-branding have always existed of course - breakfast cereals, for example, often carry marketing material for children's TV series and the like. However, the difference here is the scale of the agreement. Not only are whole new areas of produce going to be rebranded and repackaged - but this deal also gives Tesco the opportunity to extend its placement in Disney enterprises worldwide - only a matter of time before Donald Duck Tesco yoghurts are on sale in Disney World Florida.

It's also a neat way to remove the stigma that is often associated with own-brand supermarket products. The glamour od Disney begins to attach itself to the Tesco brand name, again increasing value-added appeal.

Other current examples of co-branding include Nike's link with iPod; the ubiquitous Prada mobile phone which is in fact produced by LG Electronics in South Korea; and the NBA Youtube channel, which is technically a microsite within Youtube - but which heralds the dawn of the chaos of Youtube perhaps beginning to be organised into sellable channels for quick downloads to video iPods.

Nobel Prize for Economics

2007-10-16T03:48:00.000+01:00

Of course, we all know that there isn't really a Nobel prize for Economics - but there is an equivalent organised by the Swedish central bank which carries equal status to the original prizes.

This year's winners are: US economists Leonid Hurwicz, Eric Maskin and Roger Myerson.

They've won the prize for their work on economic mechanisms. These are markets, usually infrastructure, monopoly or oligopoly markets which are complex in nature and where it is difficult - often because of the capital investment required - for a market to function normally. Examples might include the railways, the energy market, the NHS, education, water and so on.

In many societies, these would traditionally be run by government, but increasingly governments have believed that social welfare can be maximised by introducing market elements into their operation.

The difficulty is identifying how these macro-markets work on a micro-scale and what level and type of regulation increases social welfare. This is where our three economists come in, applying mathematical models from game theory to the types of markets above which essentially concern competing interest groups at different levels of the organisation.

Thanks Ross!

2007-10-12T12:59:00.001+01:00

From Ross Wainwright, our colleague in Australia, comes this extremely useful link from Monash University, providing an online tutorial to writing good essays in Economics:

http://www.monash.edu.au/lls/llonline/writing/business-economics/economics/2.xml

There are many more online economics tutorials - such as this one from South Carolina:

http://hadm.sph.sc.edu/COURSES/Econ/Tutorials.html

MIT has put all its lecture notes online - you may find some a bit hard, but at least it'll show you where the subject is going:

http://www.google.co.uk/search?hl=en&q=online+tutorial+economics&meta=

Top of the Class

2007-10-11T08:30:00.000+01:00

Who is China's richest person?

According to Forbes magazine, it is 26-year-old Yang Huiyan from Hong Kong whose father owns Country Garden Holdings. Huiyan has been working for her father as a property developer in the booming Shanghai property market. It's unclear yet whether the recent credit restrictions in Shanghai will damage her position this year. Meanwhile, however, she is worth a staggering $17 billion (yes, that's billion not million - nine zeros everyone), giving her a DAILY income of $3 million.

Her father, now 53 and taking a backseat in the company, started life as a bricklayer in Guangdong province.

In second place is last years's winner, Zhang Yin, another woman, and the owner of the Nine Dragons Paper company. She is worth $10 billion.

In third place is Xu Rongmao of the Shimao Group which builds luxury estates - in fact, he's a billionnaire who builds homes for millionnaires!

Notice how investing in property is a pretty safe way to get rich - or at least as safe as it can be. Firstly, you save money by not paying rent; then as the property value rises, you can borrow more money to invest in more property. Also, you can use your property value as surety against a bank loan which will allow you to invest in even more property - or a business. Finally, there's the very lucrative re-insurance business where you use the value of your property as a guarantee against insurance deals - it's unlikely it will be ever required but you get paid a dividend for providing the service.

Development Economics

2007-10-09T04:53:00.000+01:00

As we start to move towards the end of Module 6 - International Trade and Development Economics - news arrives of the planned creation next month of a South American Development Bank. Created by the members of Mercosur - Venezuela, Brazil, Argentina, Bolivia, Uruguay, Paraguay and Ecuador - this will be a direct rival of the World Bank.

The World Bank and the IMF were the two economic structures created at the Bretton Woods conference in 1944 as the western world sought to create a new stable world economic order. However, both have been criticised in the last 20 years for following too closely the 'Washington Consensus' and pushing developing countries into adopting free market policies which may not be appropriate to their particular stage of development.

Countries that have been most successful in lifting people out of poverty, such as China and Vietnam, have on the contrary followed quite centralised development policies focussed on health, education, export-orientation and infrastructure development - before opening up to a more free market approach.

The South American Development Bank - and the recently launched Federal Development Bank in Russia - seeks to follow the planned development of Asian countries (sometimes called the Beijing Consensus). Time will tell how successful they will be, but the launch of the bank does indicate a further decline in the influence of the World Bank, still struggling to emerge from recent corruption scandals and struggling to reassert its moral authority in the developing world.

There is conflict, however, between Brazil and Venezuela. They have different cultural traditions and both are fiercely proud of their position - seeing themselves as the leader in South American politics. Brazil is closer to Washington and recently signed an important deal to export ethanol to the US.

One interesting aspect of the new Bank is the idea to create 'stateless' money - in effect, a new currency that does not belong to any one country but can be trusted and used throughout the continent. This money would be issued as credits for development projects and could be drawn on and transferred through the banking system - a virtual economy of its own. The IMF uses a similar system of credits but IMF credits are always backed by US dollars. The BancoSur idea takes this one stage further - it's just an idea at the moment, it will be interesting to see how it develops and how it interacts with existing currencies.

http://www.venezuelanalysis.com/news/2341
http://www.greenleft.org.au/2007/701/36427

Minimum Wage

2007-10-03T04:29:00.001+01:00

Many students have been asking me recently about where they can get a job. In most cases, your visa allows you to work part-time during term time and full-time during the holidays.

The easiest way in the UK to get a job is simply to walk into an establishment and ask for one - sometimes you will see a notice on the window of a shop or cafe, saying something like 'Staff Required' or 'Part-Time Vacancies'. The favourites for most students are Asian restaurants, McDonalds/Burger King and big shops such as Primark.

If you work in a small business, remember that they must pay you Minimum Wage. We helped one student last year claim back money he was owed from a Chinese restaurant. We did this with the help of the local Trading Standards Officer. If you have tax taken from your wages, you can probably claim it back again at the end of the year from the local tax office (Brighton 2) using the P5 form.

Here are the new Mimimum Wage Rates:

The adult rate for the statutory minimum wage will go up from £5.35 to £5.52 and from £4.44 to £4.60 for 18 to 21-year-olds. The rate for 16 and 17-year-olds will increase from £3.30 to £3.40 an hour. The annual holiday will rise from 20 to 24 days a year, for people who work five days a week, and will rise again to 28 days from April 2009.

If you work in a restaurant, it's important to remember that under UK law, the owner cannot include any tips that you get as part of your pay - this is a gift from the customer to you and it has nothing to do with the business.

Remember the holiday rate - because if you only work for a business for a short period - let's say three months - and you haven't had any holiday, then they must pay you for the holiday that they owe you - for three months, that would be six days extra pay.

Born To Shop

2007-10-02T14:49:00.000+01:00

This is the 100th entry on this blog - and what better way to celebrate it than with a game.

It's an Economics game called the Ultimatum Game - it's a part of Game Theory (Module 5). This is how it works. One player is given £100. He is told that he must share some of that money with a second player. However, if the second player rejects the deal, no one gets anything.

Now logic tells us that if player 1 offers player 2 even as little as £5, he should accept it - because after all, he's getting something for nothing.

However, people are not rational agents (goodbye, most of economic theory). Actual research shows that if player 2 feels that the deal is unfair, he will usually reject the deal as a way of punishing player 1 for treating him badly. This has confused Economics professors for some time.

Enter MIT researcher Dave Cesarini who has been working with twins in Sweden. He first of all discovered that identical twins responded more often in the same way to the same offer in the game than fraternal (non-identical) twins. This led him to suspect that genetics had something to do with the way we make economic choices.

His research has expanded with the help of other Swedish researchers to the point where it now appears clear that genetics does have a larger influence than logic on the way we bargain, choose and trade in Economics.

So, you see, it's not your fault if you spend all your parents' money in H&M, Zara and Top Shop - you were simply born to shop.

The £50 Laptop

2007-09-28T15:33:00.001+01:00

Today sees the launch of the £50 laptop project - called the One Laptop Per Child machine (OLPC).

Apart from anything else, it demonstrates the way in which mobile phone technology, palmtops and handheld devices are all merging into a single portable device that even a child can use.

The XO laptop is a Linux-based device with built in wi-fi. This means that data can be transferred through the air from one device to another. If any one laptop is close to an internet hotspot, then all the laptops within range of each other have access to the internet. A typical range is about 1oom - so it's possible to daisy-chain access to the internet over a wide area with each laptop acting as a router for the others.

The laptop uses free open source software which covers all the usual applications - it even has a built-in digital camera - and the word processor is MS-Word compatible.

What will be the economic effects of this? Well, the explosion of mobile phone technology in Africa in recent years has been partly responsible for an increase in GDP averaging 5% a year across the continent as a whole. Even better improved communications may accelerate this further. From an educational point of view, the project also offers potential for e-learning schemes in an area where only 30% of children have access to education on a daily basis. That will lay the foundation for future economic growth.

In terms of competition, it has the laptop manufacturers worried - they will need to rapidly produce their own versions or perhaps die. Also, the fact that the XO comes with a built-in media player and software that can emulate MS-Word will have Microsoft worried too.

The next five years should be very exciting in terms of the economic impact on the world electronics industry.

Being Saarcastic

2007-09-20T03:15:00.000+01:00

Hands up all those who have heard of SAARC? The truth is you are more likely to be able to name the manager of Alloa Athletic football club than be able to name the chief executive of this organisation.

Everyone knows of the EU and ASEAN - and yet SAARC has the potential to be even richer and more powerful - perhaps even within the next fifty years. SAARC, you see, is the South Asian Association for Regional Cooperation and it includes India, Pakistan, Bangladesh, Sri Lanka - and the Himalayan countries of Nepal and Bhutan and the tourist islands of the Maldives. That's about 22% of the world's population. Afghanistan has also been invited to join.

So far, nothing much has happened. There are differences linked to religion, politics, the environment and culture that have kept them apart. However, things are changing quickly. The area now has the fastest growing economy after East Asia; small businesses are booming - thanks to the pioneering work of Nobel prize Economics winner Amartya Sen on microcredit - and old political and cultural differences are slowly being put to one side - Bollywood movies have started playing in Pakistan once again. All the countries, except Pakistan, have agreed to reduce tariffs to 20% between all member countries in 2007. This is a good sign.

Of course, there are potential problems - recent American threats to invade Pakistan have not helped business confidence for example; and the democratic deficit in Pakistan is also keenly felt in the region. In Sri Lanka, there is continuing ethnic conflict - and in Bangladesh, if global warming continues, much of the country may simply disappear. In Nepal, where the SAARC headquarters are based, there is political dissent. Also, India has jumped from being an agricultural nation into a service-based nation (50% of GDP is from services) without taking the trouble to build up a manufacturing sector of small-to-medium sized businesses first. Consequently, it has to import much of what it consumes and has a current account deficit.
Education is valued and the Health professionals are first-class but inequality is high and amazingly 30% of Indians are still illiterate - mostly in rural communities and living in some degree of poverty.

But things are definitely moving. The potential is enormous - so much so that China has expressed an interest in joining (so it would be in the world's two biggest economic blocs!) and has been reaching more and more bilateral agreements with India over the last ten years - the most recent last week when the foreign ministers of both countries met.

Let's see what happens in the next five years!

Welcome Back !!

2007-09-12T08:43:00.000+01:00

Welcome Back to all returning students!

Second-year A-level students and Foundation students will be wanting to look for their university courses as soon as possible. Here's a good place to start - an interactive map of all the universities which leads you to each of their websites and course information:

http://www.scit.wlv.ac.uk/ukinfo/

League Tables are not very reliable - for example, in the Premier League at the moment, West Ham United are only shown as being eighth - when clearly they are the best football club in the country.

However, students do like to look at the university league tables, so here they are:

http://extras.timesonline.co.uk/gug/gooduniversityguide.php

These are also broken down into subject area. For example, the league table for Economics is here:

http://extras.timesonline.co.uk/gug/gooduniversityguide.php?AC_sub=Economics&sub=&x=36&y=14

Good luck with your search!

Chinese Inflation

2007-09-11T16:37:00.000+01:00

As we start our work on indicators, let's take into account that Chinese inflation in China this month is 6.5%.

What's caused this? Well, you don't need to look very far. The trade gap has increased by 33% since last year - increasing demand. In addition, the number of pigs in the country has fallen by 10% because of blue-ear disease. Why are pigs an important indicator in China? Because pork forms part of the staple Chinese diet and demand is very inelastic. A 10% cut in supply has led to a 49% increase in pork prices. Non-food inflation is actually very low - so the solution is to either eat less pork (chicken is equally good for you) or breed more pigs.

Unfortunately, breeding more pigs would lead to the same factory-farming practices that led to the rapid spread of blue-ear disease in the first place. So it looks like chicken is king in China at the moment. Buy shares in KFC now!

iPhones - Apple Suicide Bid Part 2 - Emergency Treatment

2007-09-07T11:24:00.001+01:00

Further to the recent posting here about how Apple were developing a level of control in the market which enabled them to create abnormal profits:

We learn today that Apple have decided to cut the price of iPhones by $200 today - a significant victory for 'property rights' - the phrase we use when we mean that the consumer is able to exert moral, social or legal pressure on an organisation to change its behaviour. This is more commonly used in the field of externalities - but can also be applied in other cases of market failure.

In fact, the 8-gigabit version has been slashed in price by $400. Steve Jobs, the President of Apple, has even said he will pay back any customers who have 'overpaid' for the product.

Apple have clearly decided that the special relationship they have built up with their customers over many years - the brand image - is worth preserving as it will safeguard future earnings - or maybe it's because Steve Jobs is just a nice person.

Sub-Prime Disaster Explained

2007-09-05T11:12:00.000+01:00

A couple of weeks ago the US sub-prime market collapsed - sending the world's financial centres into a panic - share prices plummetted - things were looking bad - and then the central banks stepped in to inject an incredible $400 billion dollars to rescue many of the major banks and financial institutions that had been put at serious risk by the catstrophe - so what's it all about?

For the last 10 years, financial institutions in the US have been lending money more-and-more easily to Americans to buy homes. Many of these loans have been in the sub-prime market. Basically, these are high-risk borrowers who would not normally/should not be able to borrow the huge sums of money being offered.

In order to spread their risk, these financial institutions then passed on the loans to a variety of other lenders through a complex range of refinancing packages. Every time money moves hands, of course, someone takes a commission - and someone has to pay for it - in this case, the poor borrowers at the bottom of the pile - those least able to do so.

As money for mortgages became easier and easier, house prices rose rapidly. The original borrowers were then able to borrow more money using the increase in the value of their houses to back the loan.

This couldn't go on forever. Eventually, interest rate rises in the US drove many borrowers into bankruptcy, house prices collapsed as demand fell, the financial institutions panicked. Some very major banks looked seriously at risk - including France's no.1 bank, BNP.

The world's central bankers stepped in. They injecting $400 billion into the market, often buying securities or shares that they wouldn't normally touch by a million miles.

In the end, we will all pay for this disaster. As share prices fall, our pensions will be hit, businesses will find it harder to raise money for investment, confidence will suffer, many of the investments made by the central banks will fail diminishing the national asset.

The question is - will we learn from this?

Happy Planet Index

2007-09-04T03:52:00.000+01:00

During the first steps in Module 6, we will be looking at the standard indices for economic well-being - GDP, PPP, HDI and so on. We will then be concentrating on GDP, Economic Growth, the Economic Cycle and the causes of short-term and long-term economic growth.

However, before we get too deeply sucked into what might be called traditional economics, it can be fun to look at some of the other work that is going on in this field at university level.

The New Economics Foundation produces the Happy Planet Index - this attempts to analyse GDP in relation to the amount of Carbon Dioxide that is produced - in this ranking, the UK comes 21st out of 30 European nations - with Iceland coming out top. You can read more about the Index here:

http://www.neweconomics.org/gen/z_sys_publicationdetail.aspx?pid=244

Interestingly, when I clicked on the page above, I received a pop-up advertising cheap air travel linked to their site!

The Canadian Government have attempted to create and Index of Economic Well-being that takes into account income, wealth, inequality and economic security. The work was done for the MacDonald Commission and can be viewed here:

http://www.csls.ca/iwb.asp

The Genuine Progress Indicator is a recent attempt to link economic growth with the environment. There's a good Wikipedia article on this here:

http://en.wikipedia.org/wiki/Genuine_Progress_Indicator

The Chinese government also recently attempted a similar exercise but abandoned it when it emerged that it showed very little progress in some provinces.

The Big Mac Index, organised by the 'Economist' started out as a fun way of looking at economic well-being and PPP. It started by measuring how long you have to work in order to buy a Big Mac in your country. It's very crude and was never intended to be taken seriously. However, it can also be used as a way of estimating whether your currency is over- or under-valued, as we can see here:

http://www.economist.com/markets/indicators/displaystory.cfm?story_id=8649005

It took on greater significance recently when US commentators used the index as a way of claiming that the Chinese government was deliberately under-valuing the yuan by linking it to the dollar.

It's perhaps the European Union that has taken this whole field of social indicators into the 21st century. It uses a net of indicators called the Laeken Indicators:

http://en.wikipedia.org/wiki/Laeken_indicators

The great debate in economics, of course, is which of these indicators are truly independent indicators and can therefore be combined into a super-index and also - which of these indicators are leading, contemporary or lagging. As undergraduate and post-graduate students, you will enter the debate when you progress to your university - but for the moment, let's focus on GDP!

Population

2007-09-03T12:54:00.000+01:00

Have a quick look at the World Population Clock:

http://math.berkeley.edu/~galen/popclk.html

Scary, huh?

But why should economists care about that? Well, first of all, it affects the way in which we read Economic Growth figures. Most magazines, including the 'Economist' show economic growth as the change in GDP for the country as a whole - but a more useful figure is the change in GDP per person. The USA at the moment has economic growth of 1.9% a year - but its population is growing by 1% a year - so the growth per person is roughly 0.9% a year - almost in recession.

Similarly, the UK has economic growth of 3% a year but the population is growing by 0.75%, making it more like 2.25% per person. Russia, on the other hand, has economic growth 0f 7.9% but the population is falling by 0.5% a year - making it more like 8.4% growth per person.

Population growth is a good thing in many ways. If the growth is through young skilled immigrants entering the country, as it mostly is the USA and UK, it will bring productive workers into the economy, helping to support perhaps a naturally ageing workforce. However, if growth is too rapid, it may cause problems with housing and pressure on schools, healthcare and other resources - especially water in some parts of the world.

As individuals become wealthier, it has historically been the case that they have fewer children. If this trend continues, it's quite likely that world population will peak at 9 billion - sometime around 2050.

iPhones - A suicide bid from Apple?

2007-08-28T14:00:00.000+01:00

The decision by Apple to lock the iPhone into American company AT&T's carrier network is a good example of barriers to entry - in this case both technical and legal. If you can create a barrier to entry, you can of course increase your prices substantially creating abnormal profits. Apple are also hoping that their brand identity as a 'modern, progressive, people-based' company will enable them to bring their largely sympathetic customer base over to the AT&T network with them. What we also have here is an example of vertical bundling - a manufacturer (Apple) dictating which service provider you should use (AT&T). It's questionable whether this is even legal under EU Competition Policy where the emphasis is on creating competition in the different parts of interconnected markets - eg the rail network and railway journey providers; the gas pipeline infrastructure and the gas service provider - and so on.

But can Apple make it work? Pressure already seems to be mounting on them. On the technical side, it appears relatively simple to break the lock. Irish company Unique Phones claims to have already done it - as well as a 17-year old hacker, George Hotz, who clearly lives up to his name. In addition, website iPhonessimfree.com is already offering access to multi-network iPhones. In some areas, it seems that if you get your services from AT&T partner companies, you can also use your iPhone with the partner without paying AT&T a penny. Some US consumer organisations are also calling for an iPhone boycott by consumers.

So Apple and AT&T are having to resort to stronger and stronger legal threats to back up their plan - thus damaging Apple's brand as a people-friendly company. People had already questioned Apple's link with AT&T - a company with a somewhat mixed history.

But if it works, this could catapault Apple up the league table in the mobile phone industry. It will be interesting to see if Apple can reach their dream of penetrating 80% of the mobile phone market or whether it will be swept aside in a wave of discontent over high prices and lack of choice.

World's Most Expensive City

2007-08-12T07:47:00.001+01:00

Which is the World's most expensive city to live in? New York? Paris? Tokyo? No, it's Moscow, according to the Mercer Human Resource Counselling Group - an organisation that helps multinationals set salary levels for their executives in different countries.

Moscow has the world's highest concentration of billionnaires (that's billion, not million) with over fifty of them - and a small army of millionnaires. This does, however, illustrate to some extent the growing inequality in Russia (Gini Coefficient of 53 whereas 40 is seen as 'acceptable'). Moscow also appears to be developing a two-tier society quite quickly, suggesting an even higher coefficient in the capital. One group - the very rich - live in protected estates with high security, shop only in the expensive malls around Alexander Gardens and the Kremlin, educate their children overseas and have holidays in Florida and Goa. For this group, a cup of coffee in the restaurants around Stary Arbat through Tverskaya costs an average of £3.14. Most Muscovites, however, live a different life - not so very different from people in the UK. If you know where to look, you can still get a cup of coffee in the local shopping areas for 30p.

London is the world's second most-expensive city with housing costs being the main reason for this. Average price for a house in London is now £350,000 - much higher as you move towards the centre. This is about 18 times the annual earnings of the modal average group. Ironically, part of the problem surrounding housing costs in the capital comes from rich overseas investors and property groups injecting money into the capital's booming housing market (and football clubs like Chelsea!). On the other hand, if it wasn't for the size of this capital injection, the UK might have some difficulty coping with its poor current account position - swings and roundabouts, as we say here.

Cities 3, 4 and 5 are all in the booming Asian economy - Seoul, Tokyo and Hong Kong. Much of the investment for China's booming economy comes from these three financial centres and profits flood back. Seoul is also helped by the strength of the won at the moment, increasing the relative strength of average earnings in dollar terms. Hong Kong now has officially the world's greatest concentration of millionnaires with more than 1 in 20 of the population being in this fortunate position according to Guangdong News. As half of these live on Hong Kong Island, it means that 1 in 7 people on the island are millionnaires.

And what's the world's cheapest city? That can be a bit difficult to decide depending on how you define a city - but it looks like it could be Asuncion in Paraguay. In Asuncion, a beautiful riverside property, will cost you £36,000. It's easy to buy property in Paraguay which welcomes overseas investment with no restrictions and property prices are rising by 10% a year in real terms - so you should even make money from the deal. Worth a thought on a cold rainy day in England!

How To Get Rich

2007-07-19T03:23:00.000+01:00

"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!

Radio Economics

2007-07-18T04:19:00.000+01:00

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:

http://radioeconomics.com/1/

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:

http://www.econtalk.org/

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!

Fiscal Policy - Weird Taxes

2007-07-17T04:51:00.000+01:00

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:

http://en.wikipedia.org/wiki/Tax

Roaring Dragon

2007-07-16T12:50:00.000+01:00

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:

http://www.chinadaily.com.cn/bizchina/

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

http://www.chinaeconomicreview.com/

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

http://www.china-ces.org/CES_About/default.asp?title=About_CES

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:

http://www.chinability.com/

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.

Reith Lectures - Jeffrey Sachs

2007-07-15T06:32:00.000+01:00

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:

http://en.wikipedia.org/wiki/Jeffrey_Sachs

And you listen to all the Reith lectures here:

http://www.bbc.co.uk/radio4/reith2007/lectures.shtml

Dollar Crisis

2007-07-12T12:14:00.000+01:00

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:

http://www.washingtonpost.com/wp-dyn/content/article/2007/07/11/AR2007071101371.html

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

http://web.mit.edu/krugman/www/dollar.html

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!

Let's All Go To The Movies!!!

2007-07-11T12:37:00.000+01:00

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.

Bill Gates Dethroned!

2007-07-10T05:53:00.000+01:00

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.

Will Hutton - China

2007-02-08T13:21:00.000Z

Will Hutton is one of the UK's most respected journalists and economists. His latest book is called "The Writing on the Wall - China and the West in the 21st Century". It's an epic work and well worth reading by all our students. Ask Pat in the Library to get a copy for you to borrow.

Will recognises the tremendous strides that China has made in the last twenty years through modern assembly-line industrialisation; its massive infrastructure development and the success of its international trade policy.

However, he is also sensible enough to recognise the strains and stresses that China will be facing in the next ten years - its need for oil and water; the environmental problems created by its over-reliance on coal-fired energy generation; its difficulty in creating world-class brands in an already crowded consumer market and its low levels of domestic consumption.

He argues convincingly for the need for the West to engage progressively with China and criticises the knee-jerk reactions of western politicians who continually look for enemies instead of working together as friends.

Where the book is a little weak in places is in its assumption that China needs westerners to help it through its problems. In fact, as our Chinese students know, there are many Chinese economists who are working actively on China's problems as well - and they are quite capable of coming up with their own new and imaginative solutions - China's Partners in Africa and Partners with India policies are good examples.

For a good weekend's reading, read also 'Being Indian' by Pavan Varma. Remember that by 2020, one-third of the world's population will be either Chinese or Indian - that's a big market!

Evanomics

2007-02-06T05:03:00.000Z

The BBC has created a number of very high quality blogs - the Economics one is by their Economics correspondent Evan Davis and is well worth a visit:

http://www.bbc.co.uk/blogs/thereporters/evandavis/

Valentine's Day

2007-01-18T04:34:00.000Z

With the annual agony of Valentine's Day about to hit us once again (last year I only got one card and that was from my dog so it doesn't really count!), it's time for Economics students to give some thought to the Economics behind the situation.

Here's an interested e-lesson from the Economics America which is a good place to start:

http://www.umsl.edu/~econed/lesson2.htm

If you want to find out more about the different types of roses you can buy - and some cheaper alternatives for those on your B-list - you can read about them here:

http://www.flowers.org.uk/press/press-a%20rose%20is%20a%20rose-2006.htm

Here's a tip by the way, generated from personal experience, always make sure the flowers are delivered by a handsome young man in uniform in a public place when your target is surrounded by her friends so that she is making them all jealous by receiving them - it's worth the extra tip to achieve that effect!

Also, remember that a single red rose in a presentation box has exactly the same effect as a giant bouquet - and it's much cheaper.

Meanwhile, economist Brian Kaplan looks at why women bother with a man who has already shown that he can be unfaithful in his always excellent EconLog. In particular, he relates it to the lemons problem of imperfect information - except in this case of course, the woman usually knows that she is buying a lemon, so it's not quite the same thing:

http://econlog.econlib.org/archives/2006/02/lemons_for_vale.html

Perhaps Valentine's Day is summed up best by Russian economist Michael Kouliatvtsev:

http://faculty.philau.edu/KouliavtsevM/valentines_day.htm

And finally, if you're the sort of boring person who wants to find out who St Valentine really was, it's all here:

http://en.wikipedia.org/wiki/Saint_Valentine

Past Papers & Mark Schemes

2007-01-15T13:51:00.000Z

Once again, here is the link that will take you to all the past papers and mark schemes for the AQA exams.

Good luck with the re-sits this week:

http://www.aqa.org.uk/qual/gceasa/eco_assess.html

Kyle MacDonald

2007-01-01T07:43:00.000Z

Kyle MacDonald is a very remarkable young man from Montreal. He succeeded in trading-up from one red paperclip to a house within a year - by simply asking people to give him something a little bit better than the object he currently had.

You can read his story here:

http://abcnews.go.com/Technology/wireStory?id=1849375

For those of us interested in Behavioural Economics, this is a fascinating story - an example of altruism. Why on Earth would you willingly give to someone you don't know something of more value than that you receive in exchange? Of course, it must depend on whether the exchange is merely about the object itself or whether there are other factors related to the exchange (such as publicity, excitement, rooting for the underdog and so on) that add value to the object being received.

Kyle also has his own blog which can be found here:

http://oneredpaperclip.blogspot.com/

So here's the plan: I have a packet of drawing pins. When you get back from the holidays, I will give each of you a drawing pin and you can spend the next three months trading-up on ebay. At the end of the three months, you can all give me everything you've gained from the exercise in exchange for the drawing pin I loaned you (well, okay, I'll let you keep 10% - that's fair). The one who gives me the most wins a signed copy of all my lecture noted on Business Ethics - it's got to be a good deal, right?

Okay, so let's get started...... I have a drawing pin.... what will you give me in exchange?

Nobel Peace Prize

2007-01-01T07:28:00.000Z

In growing recognition of the contribution that a stable and growing economy can make towards world peace, the Nobel Peace Prize has been awarded this year to Muhammed Yunus, the Bangali economist who developed the concept of microcredit.

You can hear an interview with him here:

http://nobelprize.org/nobel_prizes/peace/laureates/2006/yunus-interview.html

And you can read Muhammed's story here:

http://en.wikipedia.org/wiki/Muhammad_Yunus

Normally, bank loans are given on a secured basis - meaning that the person receiving the loan must have enough wealth to pay back the loan should something go wrong. What Muhammad Yunus showed is that statistically it is worth banks making small unsecured loans using a number of other criteria - such as commitment, potential, future projections of income and so on. The Grameen Bank has shown that the payback to both the bank and the person from such loans is greater than that often received from secured loans - even allowing for the occasional business failure.

The microcredit approach allows people in developing countries to work their way out of poverty and has been a remarkable success story in South Asia.

Development Economics - module 6

The Corporation - for free!

2006-12-24T06:10:00.000Z

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:

http://torrentfreak.com/sundance-winner-the-corporation-released-for-free-on-bittorrent/

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:

http://www.hbo.com/docs/programs/whentheleveesbroke/

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.

Business Channel

2006-12-07T07:46:00.000Z

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.

United Nations University - Wealth & Inequality - Module 5

2006-12-06T04:25:00.000Z

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.

Past Papers & Mark Schemes

2006-11-28T08:11:00.000Z

For those students building up to the exams in January, you can find all the past papers and mark schemes here:

http://www.aqa.org.uk/qual/gceasa/eco_assess.html

Good luck!

American Economics Classroom

2006-11-26T15:29:00.000Z

Students at Bellerbys will be familiar with our use of the Economics platforms from websites in the UK such as bbc.co.uk and tutor2u.net, but you might also be interested to know that there are similar websites in the USA.

One of the best of these is: http://www.econedlink.org/

Here you can find many sample lessons related to Economic teaching up to grade 20 (grade 12 is about A-level). For example, here's one on the future of the Chinese economy:

http://www.econedlink.org/lessons/index.cfm?lesson=EM651&page=teacher

But Econedlink has rivals - competition! - and one of the best of these is Ecedweb - which can be found here:

http://ecedweb.unomaha.edu/lessons/lessons6-12.cfm

And a third is e-connections. A sample lesson on widget production can be seen here:

http://www.e-connections.org/lesson4/lesson4.html

So there you have it - free Economics lessons to support your education wherever and whenever you want them - you need never be bored with nothing to do again!

China - An Econocracy?

2006-11-23T03:17:00.000Z

Since 1989, the Chinese leadership has pursued a relentless drive for economic growth. Political issues have been put on the back-burner for the moment, though it is likely that these will become more important once again as Chinese influence in world politics increases.

Meanwhile, I have invented a new word for China - an econocracy - a society where economic efficiency takes priority over other all other policy decisions during the development phase of the economy. You can read my complete paper on this in a new economics journal early next year. Perhaps India is now also passing through the same phase.

More evidence of this can be seen in this week's new trade deal between China and India. The two countries have long-standing differences over political issues - but these have been put to one side for the moment - as both countries work hard to establish themselves in the world economy.

On most indicators, China has a comparative advantage over India in most fields at the moment but as we ll know from Modules 2 & 6, this doesn't mean that they can't both benefit from further specialisation and trade - and this is the key component of the new agreement. Easier access to Chinese manufactured products will boost the Indian economy as well as increasing the export market for India. Meanwhile, India's vast pool of cheap (compared to China) English-speaking labour provides extra possibilities for investment for Chinese business people. India's main area of absolute advantage, however, IT and software development, has a number of businesses keen to invest in China's rapidly developing electronics sector.

Trade between China and India is now expected to double by 2010. The deal also brings India closer to ASEAN, which China is set to join in 2010. Together, China and India represent 35% of the world's population and as their economies grow, we will continue to see a shift of economic and political influence towards South and East Asia.

NOTE: Any students now revising for the January exams who would like a complete set of revision notes for the module they are taking should send me an email and I will send it in reply.

Black Gold - No, Not Texas Tea!

2006-11-22T03:54:00.000Z

There's another excellent movie circulating at the moment that will help you to pass the time between now and that commercial trap we call Christmas - it's called 'Black Gold'. It's perfect for Module 1 revision.

Multinational coffee companies dominate the coffee industry which is worth over $80 billion, making coffee the second most valuable trading commodity in the world after oil.

However, whilst we continue to pay ridiculous prices for the equivalent of two beans in a cup in Starbucks or Coffee Republic, the price paid to coffee farmers remains so low that many have been forced to abandon their coffee fields.

This is because of what economists sometimes call the agricultural paradigm. The more farmers who are encouraged to produce cash crops like coffee - often to help pay off the international debts of their governments - and the more efficient they become at it, the more that supply increases. As the supply curve shifts to the right, the price falls and falls until the equilibrium point is reached at subsistence level. Many farmers see no hope for the future and simply give up.

Of course, there are ways to overcome the problem - agricultural policies, buffer stock systems and so on - but many governments don't have the money or the organisational skill to run these.

What happens when the farmers give up? Well, most of them will migrate to the local city. In theory this might not be so bad if their labour could be used productively - adding value by providing work in factories or in infrastructure products - as in the Lewis Theory of Development (Module 6) - but in practice, this often doesn't happen. They may end up living in shanty towns, scratching around for odd jobs in areas where they have no specific skills (productive and allocative inefficiency), sometimes filling their time on the margins of the black economy (module 6) - crime, drug-running and so on.

The film, which has been heavily criticised by Starbucks, focusses on Tadesse Meskela from Ethiopia - a man on a mission. He is trying to save 74,000 struggling coffee farmers from bankruptcy in his home region. As his farmers strive to harvest some of the highest quality coffee beans on the international market, Tadesse travels the world in an attempt to find buyers willing to pay a fair price. It doesn't sound very promising as a movie - but believe me it's as gripping as any thriller.

Against the backdrop of Tadesse's journey to London and Seattle, the enormous power of the four multinational companies that dominate the world's coffee trade becomes apparent. They form a classic oligopsony extracting abnormal profits from both the suppliers and the consumers. New York commodity traders, the international coffee exchanges, and the double dealings of trade ministers at the World Trade Organisation reveal the many challenges Tadesse faces in his quest for a long term solution for his farmers.

As always, you should analyse economic movies in a critical way - how good is the economics in the movie, what are the benefits and the costs to each of the stakeholders from the situation described, what opportunities exist for increasing economic efficiency and so on - but believe me, you will never be bored by this movie - and the next time you drink a cup of coffee, you will think carefully about the long chain of events that brought those two beans to your cup.

The directors are Marc and Nick Francis.

An Inconvenient Truth

2006-11-21T04:27:00.000Z

Those of you now about to embark on Module 3 - either for the first time or as part of your revision for January exams, would do well to see the Al Gore's (former Vice-President of the USA) movie, 'An Inconvenient Truth'

This explores in ninety minutes all the issues relevant to global warming in a very accessible way. As this is the topic that occurs most often in Module 3 papers, it would be a very sensible investment to have a look at the film at a cinema near you - or perhaps get it on DVD from Amazon or eBay. It's not released in the UK until Dec. 26th - but it's possible to buy it from the States over the net already.

The department will of course get a copy in due course but that may be too late for January.

Amazon and eBay, by the way, are an interesting example of what we were talking about in some classes recently about Choice Theory. Despite the fact the barriers to entry to creating at least a functional auction site are low (or at least low for a business with some money like Virgin or Tesco), nearly everyone gravitates towards eBay and Amazon - in a free market too much choice can lead to loss of efficiency - people seem to know that instinctively - except my wife when she goes shopping for shoes, of course.

You can find the top list of auction sites here:

http://auctions.nettop20.com/

And here's some more information on Choice Theory - rapidly becoming a big topic in universities, not just because of the way it applies to humans, but also to the way it applies to corporations and governments. One of the most interesting areas is where the best interests of corporations and governments may conflict with the best interests of the consumer and producer - and what we should do about that.

http://en.wikipedia.org/wiki/Rational_choice_theory

Three Chinese Billionnaires

2006-11-19T08:08:00.000Z

The new Forbes list shows three Chinese billionnaires - the country's first.

The richest man in China appears to be the head of Gome appliances - Huang Guangyu - worth £1.2bn. Guangyu is closely followed by property developer Xu Rongmao and then by Hong Kong's Larry Rong Zhijian.

You can find out more here:

http://news.bbc.co.uk/1/hi/business/6109084.stm

With the rapidly growing number of billionnaires and millionnaires in China, some businesses are cashing in. One of the most interesting is China's love boat where lonely millionnaires can find a wife to help them count their money. It sails from Shanghai next year. Find out more here:

http://news.bbc.co.uk/1/hi/business/6146776.stm

Become President of your own Country

2006-11-04T13:54:00.000Z

Now's your chance to run your own country!

You make all the decisions - increase taxes or interest rates; invite overseas businesses to run your health service; invest in the railways - it's entirely up to you!

All you have to do is visit www.simcountry.com - the latest episode in the always popular sim series. And it's entirely for free! This is the most sophisticated economic model - much more detailed than the one used by the Chancellor's office for example - that I've ever come across and yet it's being promoted as a game for teenagers!!

Give it a try and learn the hard way what can go wrong when you are el Presidente!

If you enjoy simulations, the American Foundation for Teaching Economics also offers a wide range of examples. You can see their materials here:

http://fte.org/teachers/lessons/lessons.htm

News Review

2006-10-18T04:09:00.000+01:00

UNCTAD is the United Nations organisation that monitors international trade, so they are helpful to us in dealing with module 6. Their most recent report illustrates some of the newest trends in inward investment.

Developing countries have become increasingly significant in terms of investment overseas. The economic booms in India and China; the oil revenues in Russia and Venezuela; and offshore investment centres such as the British Virgin Islands. In BVI rich people can leave their money in virtual banks who then reinvest the money worldwide paying almost no tax on profits gained.

You can find out more here:

http://news.bbc.co.uk/1/hi/business/6054866.stm

Meanwhile, I have noticed several of my Chinese students wearing items of clothing with the Playboy logo. The original Playboy organisation is now moving in on this. You can find out more here:

http://news.bbc.co.uk/1/hi/business/6043832.stm

Since China entered the WTO, it has become much more supportive of international agreements regarding copyright. However, as we discussed in Module 1, does copyright act as fair protection for original creators - or does it act as a barrier to entry for new firms reducing innovation and creativity? What is the right balance to be found for the consumer?

The Russian seaport of Kaliningrad is fascinating as it is actually in the north of Poland on the Lithuanian border - hundreds of miles from Russia. It sits right in the middle of the European Union - Europeans joke that Europe must be bigger than Russia because it surrounds it!
Kaliningrad has a wonderful history (the famous Mathematical Three Bridges Problem is based on the bridges that cross the river there) and is now open to tourists. It is enjoying an extraordinary economic boom and yet its trade with the EU is still very limited. Hopefully, this will change in the future and Kaliningrad will lead the way in terms of EU-Russia co-dependence.

You can find out more here:

http://news.bbc.co.uk/1/hi/world/europe/6048708.stm

China's Richest Person

2006-10-12T05:26:00.000+01:00

From the BBC:

China's economy is creating greater inequality. Paper-recycling tycoon Zhang Yin has become the first woman to top the list of China's richest people, with a fortune of $3.4bn (£1.8bn).
Ms Zhang is the 49-year-old founder of Nine Dragons Paper, which buys scrap paper from the US for use in China.
Her wealth rose from $375m last year, when she was 36th in the annual China Rich List, compiled by Hurun Report.
Nine Dragons' shares have almost tripled in value since they were listed on the Hong Kong stock exchange.
Ms Zhang is now the richest self-made woman in the world, ahead of US TV celebrity Oprah Winfrey and Harry Potter author J.K. Rowling.
She takes over the top position from retail magnate Huang Guangyu of Gome Electrical Appliances.
There are 35 women on the 500-strong Hurun list, which contains 15 billionaires, double the number from 2005.
In July, Chinese president Hu Jintao called for greater measures to tackle the wealth gap.
The divide has accelerated as market forces exert a greater control over the economy, which grew at 11.3% in the second quarter of 2006.

Meanwhile, here is a list of the world's richest people:

Bill Gates ($50 billion)
Warren Buffett ($42 billion)
Carlos Slim Helú ($30 billion)
Ingvar Kamprad ($28 billion)
Lakshmi Mittal ($27.7 billion)
Paul Allen ($22 billion)
Bernard Arnault ($21.5 billion)
Prince Al-Waleed ($20 billion)
The Lord Thomson of Fleet ($19.6 billion)
Note: Kenneth Thomson died on June 12th, 2006. His son, David Thomson, 3rd Baron Thomson of Fleet is expected to inherit the entirety of his father's estate. Due to changes in the value of the Canadian Dollar he may have been richer than shown at the time of his death.
Li Ka-shing ($18.8 billion)
Roman Abramovich ($18.2 billion)
Michael Dell ($17.1 billion)
Karl Albrecht ($17 billion)
Sheldon Adelson ($16.1 billion)
Liliane Bettencourt ($16 billion)
Larry Ellison ($16 billion)
Christy Walton ($15.9 billion)
Jim Walton ($15.9 billion)
S. Robson Walton ($15.8 billion)
Alice Walton ($15.7 billion)

The last four jointly own Wal-Mart, the world's biggest supermarket chain

Nobel Prize - Edmund Phelps

2006-10-10T05:21:00.000+01:00

This year's Nobel prize for Economics has gone to Edmund Phelps, one of the most distinguished and approachable economists of the modern era. Edmund works out of Columbia University in the USA.

Much of his early work was centred around the natural rate of unemployment - what caused it and how it could be shifted.

His later work looks more at the social inefficiencies created by too much inequality - in particular the problems of the very lowest paid and how they may be forced out of work by a minimum wage that is simply too low. You can read more about this in his most recent papers to be found here:

http://www.project-syndicate.org/contributor/37

They are perfect for A-level economics - in particular, module 5

His most recent book, "Rewarding Work" is also very readable. If you would like to look at this, please talk to Pat, the librarian.

The complete list of Nobel prizewinners for Economics can be found here:

http://nobelprize.org/nobel_prizes/economics/laureates/

Bellerbys Students - Totally Irrational!!

2006-10-07T18:22:00.000+01:00

Microconomics is based entirely on a myth - that people and businesses always make rational decisions.

The truth is that we don't. One of the biggest areas of Economics is Behavioural Economics, looking at the way we really make decisions. This should be of particular interest to those of you thinking of applying to Cambridge and Warwick - the two leading universities in this field in the UK.

This article from Newsweek provides a useful introduction:

http://www.msnbc.msn.com/id/5570554/site/newsweek/

A more detailed analysis of this field can be found in an excellent Wikipedia introduction here:

http://en.wikipedia.org/wiki/Behavioral_economics

Several of the most recent Nobel prizes for Economics have been awarded in this area - especially where it looks at the way in which Behavioural Economics meets Game Theory.
You may wander why we sometimes play games in Economics - the stock market game, the international trading game and sometimes smaller games to sharpen decision-making skills. Well, the answer is that this topic is at the very heart of modern Economics - Life, it's a funny old game, isn't it?

Economics - It's Murder!

2006-10-07T06:34:00.000+01:00

I'm grateful to Ashley Huang for pointing out that if you like murder mysteries - and I'm a bit suspicious about Ashley's keen interest in the techniques of murder - there is an excellent series of murder mysteries by Marshall Jevons, starring Harvard economics professor and amateur detective, Henry Spearman.

They are: Murder at the Margin, Fatal Equilibrium and A Deadly Indifference. Henry is able to solve the murders by applying the principles of economics to the crime - read the books to find out how.

The economics is a little bit dated (the books were written in the 1970s) but still good fun. You can ask Pat in the library to track a copy down for you - or you could buy your own from Amazon.com

The Long Tail

2006-10-06T10:44:00.000+01:00

The Long Tail by Chris Anderson is a fascinating new look at the world of microeconomics as it may have been changed forever by the Internet.

Traditionally, shops only sell their top products - it's not possible for them to sell marginal products of interest to only a few customers because of space.

The Long Tail looks at how this has changed on the Internet and how this is affecting not just consumer choice - you can buy pretty much anything you want to buy now through the net - but also the process of production. For example, knowledge items such as books no longer need an agent (such as a publisher) to produce them. It's possible for you to publish your own book, or make your own music, on the web - and then sell it to an audience of billions overnight.

As an experiment in this direction, Dr Cheng and I are putting together a book of biographies of women mathematicians written by the students. If you would like to join in this process, please let one of us know and we'll sign you up to the team.

If you are interested in starting your own web business through the Bellerbys Business Club, let me know and I'll help you sort it out.

If you are interested in reading 'The Long Tail', let the librarian know and she will be able to find you a copy.

American Universities

2006-10-01T14:50:00.000+01:00

A number of students have asked me about American universities in the past week.

Of course, you have every right to apply to an American university - but you should always do this in addition to applying to British universities through UCAS - never as a replacement for UCAS.

Unfortunately, the College is not really able to offer much support for American applications, as each American university operates its own independent admissions system - with a few exceptions. You must manage your own application.

Here is some help from the American embassy in Latvia - but the process is the same from wherever you apply:

http://riga.usembassy.gov/study_en/en_applying.htm

The US universities league tabl can be found here:

http://www.usnews.com/usnews/edu/college/rankings/brief/t1natudoc_brief.php

New Minimum Wage

2006-10-01T14:46:00.000+01:00

The minimum wage for students over the age of 21 is now £5.35 and for younger students it is as follows:

The minimum rate for workers aged between 18 and 21 has increased by 20 pence to £4.45, while 16 to 17-year-olds will now receive £3.30, a rise of thirty pence.

No one is allowed to pay you less than this under any circumstances.

A student visa normally allows you to work for up to 20 hours in term time and full time during the holidays. However, I think we would probably advise you to do less than this. Working in the UK is useful for you in that it provides experience, helps you to meet people and helps you to develop your language, but it is very important that you do not allow it to damage your studies by occupying too much of your time.

Let's All Go To The Movies

2006-09-27T08:48:00.000+01:00

Excellent film from PBS has just been released called 'Who Killed The Electric Car' which looks at the way the motor and oil industries in the USA, in particular, worked hard to resist environmental legislation and to prop up demand for oil. Even as recently as 2005, General Motors were talking of crushing all their electric cars.

However, with oil prices rising rapidly, global warming concerns, instability in oil-producing countries and other problems, the electric car appears to be making a comeback - either in its pure form or as a hybrid with some petrol usage. Toyota's Prius continues to sell well and Honda has just announced the launch of its own hybrid vehicle.

On the other hand, we must remember that even electric cars do not come with zero emissions - even electric cars need energy - so we must also focus on the source of that energy - which is cleaner: coal-fired stations, nuclear or renewables such as sun and wind?

You can find out more here:

http://www.pbs.org/now/shows/223/electric-car-timeline.html

http://www.msnbc.msn.com/id/13459799/site/newsweek/

You can see the movie at the Duke of York's cinema in London Road, Brighton next weekend

New Mobile Phone Generation

2006-09-26T12:59:00.000+01:00

The latest kickstart to the mobile phone industry starts today with the introduction of the .mobi suffix to website addresses.

To create a website using the .mobi suffix, your website must meet technical standards which will make them easy to download to mobile phones, providing a much better internet experience for mobile phone users than the current generation allows.

Insiders predict that within three years, access speeds will be equivalent to broadband connections. True internet access for mobile phone users will shift the way we work away from static computers to dynamic mobiles - a new revolution is beginning right here right now as I write this piece!

This is supply-side innovation at its best - creating a new industry, new jobs, more efficient use of resources, increasing the speed of information exchange (sometimes called the sixth factor of production) and the velocity of spending - as we will soon be able to buy things through our mobiles and have the cost added to our mobile accounts or subtracted from our top-up cards which will increasingly become more general debit cards or credit sticks.

You can register new .mobi addresses for as little as £14 if you prefer to be on the supplier rather than the consumer side of the market.

The future starts here and it looks like the future is orange.

VAT Fraud

2006-09-25T04:45:00.000+01:00

VAT is the sales tax paid in the UK - 17.5% is added to the price of the product before sale.

The UK has been hit by a fraud worth £8.4bn - according to Eurocanet, a monitoring service. That's equivalent to a 1% rise in income tax.

The fraud succeeds because exporters are able to claim back the VAT on products exported. So, they set up an import company which imports the products and 'sells' them to an exporter. The exporter adds on the VAT figure for retail - but instead of selling the product within the UK, the products are exported (often back to the company they bought it from) - and the VAT is claimed back form the government through the normal accounting channels.

The exporter then closes his business down so there is no chance of the government reclaiming the VAT it has paid out.

Then, of course, a new company is set up and the cycle is repeated.

You can see more details here on a BBC Panorama programme that covered the issue in some depth:

http://news.bbc.co.uk/1/hi/programmes/panorama/default.stm

We will look at this again in Module 5 when we study the broader issues of corporate governance and business ethics.

Romanian & Bulgaria

2006-09-24T10:47:00.000+01:00

The EU has confirmed that Romania and Bulgaria will join the EU on January 1st, 2007. This will bring the number of EU countries to 27.

Bellerbys College is doing its bit to welcome the new countries into the family by leading a project linking schools together in the UK, Italy and Romania in the first year which it is hoped will expand to include Bulgaria and Turkey in the second year.

Bellerbys students will be invited to undertake a number of joint student development projects with students from the other colleges in the project. More details on the exact nature of these projects will be made available in November.

Syllabus

2006-09-18T08:56:00.000+01:00

New students can find a copy of the syllabus here:

http://www.aqa.org.uk/qual/pdf/AQA-5141-6141-W-SP-08.PDF

You will also be issued with a hardcopy of the syllabus in due course from the examinations office.

There are no changes in the syllabus from the previous year.

BBC Economics

2006-09-17T08:43:00.000+01:00

The BBC's excellent Economics site that you should try to visit as often as possible has now moved to here:

http://news.bbc.co.uk/1/hi/business/economy/default.stm

Those of you now starting module 6 should try to look at the underlying trends in any item of daily news.

For example, the news item that describes the rapid increase in trade between India/China and Africa has lots of implications for development economics. It demonstrates that India/China are following up on the policy initiated two years ago to promote trade between the BRIC countries (Brazil, India, Russia, China) and other developing countries as a way of accelerating growth in these countries. The recent free trade deal between Brazil and India is another example of this.

Also, the pressure being placed on China to increase the value of the yuan has implications for the US and China current accounts; for controlling inflation within China; for increasing the overseas purchasing power of Chinese consumers (Bellerbys courses would become cheaper!) - but also for the domestic value of China's large foreign exchange holdings which are held mainly in dollars and the competitiveness of Chinese labour costs on the world market - a big issue!

Also, the terrible news that Zimbabwe's rate of inflation is 1200% illustrates many of the points that we will discuss as module 6 unfolds.

Let's All Go to the Movies!!

2006-09-15T07:32:00.000+01:00

It's Friday, it's 5 o'clock and it's movie time!!

My recommendation for this week is "An Inconvenient Truth", a great new documentary about global warming presented by Al Gore, the US presidential candidate who some argue should have won the 2000 American presidential election.

It sounds like it might be a bit boring - but actually the previews I've seen have been absolutely gripping - like the most exciting Hollywood disaster movie - except that unfortunately the images in this movie have not been created by special effects - they are real!

This is a must-see for all students thinking of re-sitting module 3 in January. Try to get to see it if you can - it covers just about the whole of the module 3 syllabus in 90 minutes. When it comes out on DVD, we'll get a copy for the library.

Meanwhile, this term's edition of 'Economics Today' magazine is now available and can be read in the library - or you may be able to borrow my copy when I've finished with it. There are a number of excellent articles this time - including one on buffer stock systems and another on elasticity, both important parts of module 1.

Finally, here once again is the link to the website about personal statements that some of you have been asking me about:

http://www.studential.com/personalstatements/

Have a great weekend!

Malaysia News

2006-09-14T12:32:00.000+01:00

The Malaysian economy continues to make good progress with economic growth this year of around 5.5%. Inflation is running a little high at 3.9% and this may result in an increase in interest rates soon. In turn, this may reduce growth and exports a little - one of the effects of an interest rate rise being an increase in the exchange rate over a period of time, making exports more expensive.

Malaysia has a good current account surplus of around $7bn annually and exports mostly electronic products. GDP PPP per person is around $10,000 placing Malaysia in the middle income group of countries.

The only dark cloud on the horizon is the Prime Minister who is coming in for a lot of criticism for appointing friends and relatives to high positions. His own future looks in doubt.

Meanwhile, it appears that the biggest growth industry in Malaysia is the beauty industry with a rapid increase in expenditure on plastic surgery, botox treatments, skin blemish removal and so on.

Tutor 2U Blog

2006-09-13T13:06:00.000+01:00

There are many excellent economics blogs on the web now.

There's this one of course - but also the Tutor2U blog which is very useful for A-level economics students. You can visit it here:

http://www.tutor2u.net/economics/economics_blog_april2006.html

You can also gain access to a wide selection of views here:

http://www.nabe.com/publib/links/econblogs.html

Amongst my own favourites are:

Dear Economist - Tim Harford is the rising star of TV Economics - check out his TV series, 'Trust Me, I'm An Economist'. He also wrote 'The Undercover Economist'

Freakonomics - Can now be found here: http://feeds.feedburner.com/FreakonomicsBlog

You need to take care when reading blogs and websites of course - even this one - because you are only dealing with one person or one group's opinion. A good economist should always ask themselves - 'What is the source of the information' and 'What are their objectives' - but bearing this in mind, you can have a lot of fun browsing through Economics blogs and learn a lot of useful stuff.

Wang Hui

2006-09-01T15:29:00.000+01:00

Wang Hui is a professor at Qinghua University in Beijing. He is editor of the magazine Duzhu and has written an excellent book looking at the forces shaping modern China and the challenges that lie ahead - it's called "The New Model China". You can ask Pat in the library if she can get it for you.

The book is in three parts:

Firstly, it identifies the groups that are forcing the pace of change in China:
- Intellectuals and students seeking a more open society
- Workers in the cities seeking greater social security and better public services
- Business people seeking more opportunities

Secondly, it identifies the problems facing modern China
- Institutional corruption
- Growing inequality
- The changing role of government

Finally, it considers what may be the best approaches to solving the conflicts that exist such as
- Traditional v Modern approaches
- City v Country
- The role of the nation-state in a globalised world

The emphasis throughout the book is on the need for humanism (considering the needs of the individual and the community) and the importance of pursuing development policies that we have come to describe as supply-side polcies.

Wang Hui covered most of these topics in a lecture he gave at the LSE in London last year and if you want to gain an overview of what's happening in modern China, this is a good place to start.

Welcome Back!!

2006-08-31T12:58:00.000+01:00

Welcome Back to all second-year Bellerbys students - and many congratulations on the excellent set of results that you picked up in June - truly tremendous. You just have to maintain this standard for one more year!!

Welcome also to first-year students on my Economics courses - I'm going to do the very best I can to make this an exciting and enjoyable experience for you. I also hope to help you to learn a few things too about this wonderful world we live in and the way that it works - Economics, after all, means - the study of everything!

For second-year students whose thoughts are turning to university applications, here are a few notes on personal statements:

I've already had some questions about personal statements: You don't need to lose any sleep over this. Personal statements are most useful for older people who are trying to get into university but perhaps don't have any A-levels - just years of practical working experience.For most A-level students, the personal statemens are really just a formality. Most universities barely glance at them - remember they may be processing tens of thousands of applications in one year - the process is now highly automated. Offers are issued automatically for most courses - the grades required being the 'price' of that course based on supply-and-demand for places.

Sample personal statements can be found here:http://www.studential.com/personalstatements/

If you would like to write your personal statement in rough and email it to me, I would be pleased to smooth it out for you - many other teachers here are willing to do the same.

Basically, the personal statement should include:

a) Where you come from
b) Why you have chosen the field of study that you have
c) What you see yourself doing in five/ten years time
d) What extra-curricular things you have done / work experience you may have had and what you learned from it
e) specific personal interests - what motivates youThe last two may include things like voluntary work, or paid work, competitions you have entered, teams you have played for, interesting visits you have been on and so on. Personal interests should not include reading, watching TV, playing computer games, going to the movies - everyone does that. But maybe you play the piano, or you are a taekwondo champion or things like that.

For some universities - Oxford and Cambridge in particular - the personal statement is critical. Everyone who applies to Oxbridge will get A's in all their subjects, so they decide on offers based entirely on the personal statement and interview. I would be pleased to give you a mock interview nearer the time - and others would as well. The interview is also important for UCL - although it is rumoured that UCL will be phasing out the interview soon as it is expensive. Most universities no longer give interviews.

Here is some more information on applying to Oxbridge:

http://scintillae.org.uk/html/printguide.htm
http://www.oxbridgeapplications.com/page.asp?id=32

The other common question I get asked at this stage is: what are the best universities for Economics. Well, here's the league table so you can see for yourself:

http://extras.timesonline.co.uk/gooduniversityguide2005/20economics.pdf

Good luck with all your applications